New construction or moving into an established home? On the surface, new and shiny seems like the obviously answer. New builds are – well – new! You can customize the cabinets, the floor plans, new appliances… it all sounds great. BUT is it really the best choice? Today we’ll dive into the differences between new construction and existing home purchases and why you might choose one over the other.
The average residential resale value in Spokane for last month was a little more than $245,000, while the average cost for new construction homes on less than an acre was almost $370,000. That’s about a $125,000 price difference. It really adds up once you start adding the cost of upgrades or any fees that result in changing the floor plan. Plus there is much more opportunity for some negotiating when you’re buying an existing property. That option isn’t really available with new construction: it is what it is. You also have to consider the cost of adding fencing, landscaping, grass, etc. to new construction. That can tack on an additional $10,000 – plus time and effort.
Everyone knows there’s more to homeownership than just the listing price, though: repairs and renovations add up! That’s one nice thing about new construction. They are unlikely to need big repairs for several years and if they do? It’s typically covered under warranty. Plus renovations are few and far between, because you can do all that customizing when you are building!
New builds can take six to nine months to complete. This could be a positive or a negative, depending on your situation. You have more time to gather a down payment and there’s less competition…but you’re waiting almost a year for your home to finish. Once you find a home to buy on the resale route, you can move-in in about 30-45 days.
New construction is typically happening where there’s a lot of land…and that’s usually where there is a long commute. You’ll likely be on the outskirts of town, which is a HUGE draw to many people, but an equally big downfall for many others.
So to wrap up, existing homes give buyers more flexibility in cost and location, and you can move into them a whole lot faster. However, with new construction homes you won’t have to deal with repairs for awhile, you are typically further from the hubbub of the city and there’s more time to stockpile your down payment. You just need to look at all the variables and determine what’s best for you and your family.
So you’re starting the house hunt – or at least entertaining the prospect – and you’ve heard step one is getting pre-approved. Today we’ll dive into what “pre-approval” means, why it’s important and the documents a lender will likely need to make it happen.
What is a pre-approval?
First of all, pre-approval is a mortgage amount that a lender is saying 1) he or she is confident you have the ability to make the necessary down payment of X amount and 2) you have an income that can sufficiently cover mortgage payments for the pre-approval amount. It’s not a commitment or a guarantee to loan you that amount of money. Why? Because it still has to go through underwriting once you have an accepted offer. It’s the lender saying: “I am 99% sure they can qualify just fine for this amount and I have gotten to this number by checking into their financials.”
What will the lender need from me?
What financials are they talking about? Well you’ll need to provide income information, such as: a couple months of pay stubs, tax returns and W-2s from the last two years, bonuses, child support, etc. The lender will also need to see your other assets like bank account statements or investments. And finally, he or she will need to check out your credit score. Those are the basics, but they may ask for other documents or information to get you pre-approved.
Why do I have to get pre-approved?
So why is it so important to get pre-approved? First of all, in a competitive seller’s market like we have today, offers aren’t getting the time of day if you don’t supply a pre-approval letter. It proves the ability to purchase the home from a financial standpoint AND that you have done due diligence of getting pre-approved – so you’re serious about this! Plus, do it for your own sake. There isn’t much worse than falling in love with a house, deciding to make an offer for $250,000, only to find out you can only get a loan for $240,000. You might know you have amazing credit or the ability to make a large down payment, but it is so important to take this step early and make sure all your ducks are in a row.
Can’t I just get pre-qualified?
There is also a huge difference between getting pre-qualified and getting pre-approved. A quick 10 minute call with a lender, telling him or her that you “make X amount of money, can put Y amount down and your yearly expenses are Z” can get you pre-qualified. But that doesn’t hold very much weight with sellers. It’s more for your own information. Getting pre-approved will prove to be worthwhile.
How long does the process take?
The whole process of getting pre-approved can take about a week or two – depending on how long it takes you to get the documents together. So if you’re considering buying a home, get the process started early! It’s free, there’s no harm in it and the pre-approval will last for about three months.
If you’re looking for a lender to get started with, let me know. I have a couple tried-and-trues whose contact information I can gladly send your way. I promise they’ll help you out and make the whole process pretty painless!
So you’ve decided to sell your house. Well, now what? Today we’re going over how to get the ball rolling and what you need to do before all those potential buyers come traipsing through your door.
First you need to get ahold of an agent who knows what they’re doing! The first step is for them to come to your home and do an initial walkthrough. It will only take about 30 minutes. This allows the agent to get a feel/layout of the house and take some preliminary photos for their own recollection when they build the CMA (we’ll get to more about that in a second.) This is also the time where you and the agent can make sure you’re on the same page: chat about your goals, an ideal timeline and any expectations you have.
The agent will then put together an CMA, or a comparative market analysis. This is a compilation of nearby homes most similar to yours that have recently sold. The agent will take everything into account: from the square footage and numbers of bedrooms or bathrooms, to the age of the furnace and roof, to the condition and updatedness of the whole shebang. At the end, the agent will likely produce a range for what your home could likely sell for in the current market. It is so important that you listen to the agent’s expertise in regards to the price, because pricing a home too high has all sorts of negative impacts…but that’s a discussion for another day.
Next, you’ll meet again to go over the CMA, talk numbers and the agent can explain how he or she got to the number that they did. They’ll also go over their marketing strategies, revisit your timeline and chat about staging ideas. During this time, the agent may also make recommendations in terms of repairs to be made to the home. If you’re open to the constructive criticism, it can greatly help your end goal – whether that’s a price you net or a quick sale. The agent will put their “buyer hat” on and go through your house, pointing out small changes you could make that will really help elimiate any red flags for potential buyers. These changes can be deferred mainaence issues or minor repairs, such as changing light bulbs or a hole in the wall. Or other times it’s something unsightly, like a neon green bathroom they recommend you paint or something larger like worn carpeting that needs replacement. Sometimes it’s an unpleasant smell, where something as small as moving the cat’s litter box will help.
At this point, some sellers are ready to sign the paperwork immediately, while others want to think about the listing price or even chat with other agents about listing the home. Both options are completely fine. However, once you decide to move forward with getting your house on the market, I recommend signing the agent’s paperwork as soon as you are comfortable. This allows the agent to get it all inputted into the system and uploaded in the MLS. Then, once the photos are taken and you are ready to go “live,” it’s as simple as pressing submit.
During the time between signing the paperwork and going live, get to cleaning and making those repairs. You need to clean and scrub every single surface in your house to make sure a buyer’s thoughts are “wow, they really took great care of this home.” That will help you make the most you can on the sale AND sell it ASAP. Until next time, thanks for joining me on the welcome mat.
So you’ve taken the big step and decided you’re ready to buy a house… now what? Today we’ll go through the steps of the buying process and what you can expect when buying a house.
Step one? You have to find an agent who you click with and who knows their stuff. First you’ll need to have a consultation with them. It’s a quick 30 to 45 minute meeting to go over your wants and needs for your new house. It’s a chance for you and the agent to get on the same page, you can ask them any questions you might have and they can get a better understanding of what your goals are and what’s important to you.
Next you need to get pre-approved. Your agent might have a preferred lender or a couple of lenders they’ve worked with and who are quite reliable. They can give you contact information for them, or if you have someone you’ve worked with in the past, feel free to use them as well! Don’t hesitate to contact a couple of lenders. You can chat with them, see who you’re most comfortable with and who you click with the most. Then you’ll work with them to get going on the pre-approval process. If you are able to get required documents to them quickly, they can likely get back to you in a day or two. However, it can take a whole lot longer if you drag your feet on getting them what they need: so make it happen soon! A lot of people say “I have great credit, I’m not worried about getting approved” or “I make good money. I know I can afford a payment of X.” That’s great, but more goes into it than that. Both credit and what you make are of course key factors, but lenders will go through all financials. Plus, GOOD lenders will chat with you about your comfort level of payment. Just because you can afford a $2,000/month payment, doesn’t mean that it won’t stretch you thin and cause a lot of stress in your life! Plus, pre-approval letters are requirements with offers (and some showings) in today’s market.
Now the fun part: looking at houses! A lot of buyers want to skip to this step, but it’s important you do the other two first and get your team set. Let’s be real: with social media and the internet, you’ve been looking at homes for much longer than when you contacted the agent or lender. But to physically get into those houses is a whole other story! I get it. I’ve had buyers who fall in love with the first house they see. They put in an offer and they get it! Then I’ve had buyers who have looked at 30 houses and it took 4 different offers until theirs was accepted. So this stage could go really fast or it could take awhile. It depends on your motivation level and what is out there.
From there on out, you put in an offer and once it gets accepted, you need to get an inspection and an appraisal. From the time you put in an offer on a house until it closes and it’s yours is typically anywhere between 30 and 45 days.
I’ve put together a handy packet that I give all of my potential buyers. It goes through this whole process with a bit more detail and expected timelines of each stage. If you’d like a copy, let me know and I can send one your way!
So you’re thinking of selling your house and going “for-sale-by-owner.” I know it sounds like a good idea: you know, saving on all those real estate agent fees. In theory, that may sound like a good idea, but here’s why most for-sale-by-owners regret the decision and why you might want to reconsider.
Pricing is huge. This is the key factor to selling in a reasonable amount of time, and it isn’t as easy as you might assume. Yes, you can go online and check out your Zillow Zestimate and look for what homes around you recently sold for: but are you comparing apples to apples? Just because your neighbor sold her 1500 square foot rancher two blocks away for $280k doesn’t mean that your 2000 square foot split-level house on a busy street is the same. A good Realtor can put together a market analysis that takes all kinds of features into consideration: from condition differences to improvements and desirability. Because do you know how to account for square footage differences or how much the pool affects price or that brand new carpet you just put in? You don’t want to leave money on the table, but you also need to price correctly to stay competitive and not stay on the market for so long that potential buyers skip over your home because they assume something is wrong with it.
Throwing up some yard signs and marking it “for sale” on Zillow isn’t going to cut it. Buyers are tech-savvy and for the most part they aren’t just aimlessly driving around looking for yard signs. The sign is really just a locator. And yes, it is important to be “live” on Zillow… but almost every single buyer uses an agent. And agents use the all-powerful MLS to check for their listings and send out emails for listing to their clients. In order to have your home seen by the most amount of buyers (and more eyeballs means potentially more offers!) you need to be on the MLS – aka the number one way buyers find homes.
Agents are good filters
And let an agent be the filter for you. A good majority of buyers don’t like contacting sellers directly. It’s weird and uncomfortable for them. An agent is a good, approachable “middle man” to them. Plus, let them be the filter for YOUR benefit, too. Craigslist can be creepy. There are a lot of scammers and criminals and dangerous people on there who are searching for your name, your phone number and other pertinent information. They might call you and set up a showing, when really they aren’t interested…they just want to look at what you have in your house. When you have an agent representing you and your home, any potential buyers only see the house in the company of an agent who is in good standing with their association – which includes frequent background checks, history, etc.
Don’t waste your time!
This leads into not wasting your time, too. If you’re your own agent, how do you decide who’s a serious buyer and who’s just wasting your time? Everything goes through your agent, so they can vet potential buyers BEFORE they see your home. They’ll ask about the buyer’s pre-approval letter, how long they’ve been looking, etc. to make sure they are serious about potentially putting in an offer and they aren’t just looking for the fun of it.
Legalities and paperwork
And finally, all that legal mumbo-jumbo and paperwork. Once you have verified a potential buyer and they put in an offer, you have to attend to all the details and make sure the sale goes through. But what happens if you forget a mandatory disclosure or form? It’s more than just the loss of the sale at that point…we’re talking the potential for serious legal repercussions, too. Agents are trained on the legality of this paperwork, can explain anything you are confused about and make sure everything is in order to protect you from any legal ramifications.
It all boils down to the hope of saving around 3%. It isn’t the normal ~6% because any buyer with an agent will likely require you to cover their agent’s ~3% fee or they have to pay it themselves. And yes, saving around 3% sounds really great! But when most people only sell a home a handful of times in their life, a professional guiding you along the way can take away SO MUCH HEADACHE. Let the pros pay for the photography and all the marketing, and let them deal with the hassle of negotiation and paperwork and vetting of buyers. I assure you, it is worth it in the end.
Once you decide to make the big step to purchase a new home, going inside prospective homes can really be an exciting time. However, it is important to make sure that you aren’t searching for a “Bigfoot.” I’m talking about that 100% perfect house, that checks every single one of your “wants,” and it’s at an amazing price. I’m here to tell you: it just doesn’t exist – unless you’re flexible. Here are some important things to keep in mind when starting the search to make sure you aren’t being unrealistic.
A lot of house hunting comes down to price. What kind of house does my budget afford? If you have been approved for a $250,000 mortgage, you can find a perfectly wonderful home. However, you will not find a home for $250,000 dollars that is 3,000 square feet, updated with gleaming hardwood floors throughout, brand-new stainless appliances, a huge backyard, new roof, air conditioning, and in one of Spokane’s most desirable neighborhoods. It’s just not going to happen. A big backyard and a minimum of 2,800 square feet might be non-negotiables for you – and that is completely doable. BUT it’s important to know that you will need to give a little in other areas to stick to your $250k budget. Perhaps the home is a little dated or the location might not be exactly where you ideally wish it were.
Stick to your budget
It might be easy to think: “oh, I’ll just go look at houses that are $300,000 and meet my criteria. That’s close enough!” But if you’ve been pre-approved for a $250,000 mortgage or that’s the price you’ve decided you are most comfortable at for monthly payments, you need to stick to that price range. You wouldn’t go test drive a 2019 Lamborghini when your budget only allows you to afford a Ford. I’m not knocking Fords! There are plenty of wonderful Fords, but don’t be testing out the Lamborghini’s or you’ll be bummed about the Ford. When you’re searching for your next home, it’s important to stay focused, and that includes being and staying within your realistic budget.
And finally, I suggest making a needs list and a wants list before you start searching. Needs are exactly that: non-negotiables; “I’m not buying the house unless it has X.” Needs tend to be things that are more difficult to change: location, square footage, lot size, whether there’s a basement or an attached garage, etc. Wants are “nice to have” items, but not deal-breakers: updated appliances, new carpet, number of bathrooms or bedrooms, landscaping, a pool. It’s okay to have a lot of items on your wants list, just don’t get too attached to them all and be willing to flex a little bit.
Buying a house takes time. And no house – even that perfect little rancher with the wrap-around porch and fenced-backyard that just came on the market yesterday! – is worth jumping into before you’re ready. Make sure you have all your ducks in a row, that you aren’t overextending yourself financially, and that your agent is on the same page as you…oh, and that you aren’t searching for a Bigfoot.
We are in full winter-mode: I’m talking hot chocolate, snow and Santa. It’s not typically a time most people consider putting their house on the market. Around this time of the year, lots of people say “we want to list our home, but we’re going to wait until spring.” So today we’re diving into the market and answering the question: “when is the best time to sell a house?”
First off, this isn’t a simple question. If I had to give a short answer, it’d be: it depends. A lot of sellers assume that spring and summer are the best times to list a house. The biggest benefit of listing in warm months? There are just more buyers vying homes. This brings up the likelihood that you may get yourself into a multiple-offer situation, driving up the listing price. Buyers are more active in spring because a) moving in the snow is not appealing to many people, b) moving when the kids are out on summer break is appealing and c) houses just have a lot more curb appeal when the sun’s out.
On the other end of the spectrum, a big benefit of selling in winter? There’s less competition and inventory. Since a lot of sellers do gravitate toward listing in the spring, your home will really stand out and might get more attention if you list in the winter because there’s less inventory. There are serious buyers looking for a home year-round. Which brings me to point number two: the buyers who are on the prowl in winter are likely more serious. Yes, there are less buyers looking overall, but the ones who are searching are the real-deal. Less “window-shoppers,” if you will.
One caveat I’d like to mention? “Spring” in Spokane started in February last year. Things started getting really going again in February and by March, we were seeing the amount of inventory turnover that we typically see around May. So if you are considering getting your house on the market right when things get “going,” reach out to your agent in early February so you can start discussions to get on the market by March.
Every market is different and every single seller has his or her own goals for selling a home: whether it’s getting the most money possible, selling ASAP or something else entirely. I recommend chatting with your real estate agent and they will help you decide if you should list now or wait a couple months to be in the best position possible.
We’re revving up to head into winter in the Pacific Northwest. So today we’re checking out a couple winter activities around Spokane when you just need to get away (but not too far away) – besides just skiing and boarding!
What can warm you up better than a craft beer tour?! The Inland Northwest Ale Trail is a fun way to discover new, small batch beers from local craft breweries around town. There are almost 50 breweries on the handy Ale Trail map, so you can plan to hit up your favorites and some newbies! You can print off the Ale Trail map at inlandnwaletrail.com or pick one up at any of the participating breweries or sponsors. Then you’re off! Visit at least 12 breweries, get a stamp at each, and then collect your reward: a 32-ounce growler. There’s no time limit, so spend a couple weekends with friends, slowly collecting along the way!
Lake Coeur d’Alene Holiday Light Cruise
If you’re looking for something to really get you in the Christmas spirit, head to Lake Coeur d’alene and hop aboard the holiday light cruise! You’ll immediately be transported to gorgeous a winter wonderland. The boat will dock at the north pole about halfway through where the kiddos can go see elves, Mrs. Claus and of course Santa himself – who obviously knows all the kids names – and he’ll read out who made the cut on the nice list this year. Cruises start just after Thanksgiving and go through New Year’s Day. Good Morning America named the Coeur d’alene holiday light show as one of the nation’s best holiday destinations a few years ago, so you know it’s good! And while you’re in Coeur d’alene, check out some of the great shops and wonderful restaurants. You can definitely spend a full, joyous day here!
Okay, this might be cheating a little bit, because the primary focus here is skiing and snowboarding BUT I’m including it because those aren’t the only options there! There’s an indoor waterpark complete with a lazy river, surfing and of course water slides! If something a little more low key is your style, make sure to book a room at the adjacent hotel, where you can cozy up to the fireplace and relax with a good book! If you’d like to get on the mountain but skiing or boarding aren’t your thing, there’s a tubing hill that’s fun for all ages. You get to ride the gondola from downtown Kellogg to the top – which is a gorgeous activity on it’s own. Fun fact: that’s actually North America’s longest gondola – at 3.1 miles long. It was the world’s longest for a long time until it was topped by one in Turkey a few years back.
There are a lot of things to considering when moving, one of them being: where should I move to!? Here are the biggies that you should take into account when decide which area to move to.
Cost of living
Different areas within the same town typically have different price tags. For instance if you take a 1600-square foot, 3 bed, 2 bath house that is well-maintained and has some upgrades in the Shadle neighborhood and pick it up and plop it on the South Hill… the price is going to change. So what’s important in your house search? Are you looking for a lower price tag in a 1950s neighborhood? Or are you looking for old-school charm in a 1900s neighborhood?
According to Realtor.com, almost 75% of buyers say living in a good district is important to them. Of course this will come with a higher price, though. One thing to keep in mind is that real estate agents really can’t tell you if a school district is “good” or not. Due to the Fair Housing Act, agents can’t steer a buyer to or away from a neighborhood based on a buyer’s race, ethnicity, religion, gender, national origin, disability or family status. Because of that, we can’t say if a home is in a “good” or “bad” school district. The best I can do is give objective criteria, so school test scores and websites with more information…and you have to do the research yourself. For school stats, I recommend checking out greatschools.org or schooldigger.com. And if you see a house you love and are considering putting in an offer on? Schedule an appointment with the schools counselor. Do a walk through of the school. If your teenager is big into band? Ask the counselor about their program there! If they’re big into football? Ask to meet the coach! The school be able to help answer questions you have and then you can determine if the school is a good fit for you and your kiddos.
Along with the Fair Housing Act, agents cant say anything about crime in the area either. So if you ask the innocent question “is this a safe neighborhood?” or “what’s the neighborhood like?”, your agent can’t answer it, but he or she can point you to the right resources. The Spokane County Sheriff’s Office has a crime map with everything from car prowlings to robberies – just google Spokane County Regional Crime Map to find it. A few other sites are crimemapping.com and spotcrime.com. Plus, use your inspection period to visit the neighborhood during different times of the day. Just do a drive-around at night and you’ll get a feel for the neighborhood and if it’s a right fit for you.
Proximity to work and social activities
We’re lucky here in Spokane that the rush hour commute doesn’t typically tack on an additional 2 hours to our work day…each way. BUT it is incredibly convenient to be close to work, close to your gym, close to the kid’s club soccer facility, close to your parents. Wherever you find yourself driving to and from several times a week, it is helpful to be close.
Today’s lesson is homeowners insurance 101: what it is, why you need it for a mortgage and how much it is.
Homeowners insurance (also called home insurance or property insurance) covers several things:
- Property damage (pretty self-explanatory)
- Personal property loss (for example if your house is burglarized or damaged due to an event that’s covered by your insurance)
- Personal liability (if someone is hurt on your property or if you’re responsible for property damage or injury due to negligence)
What you receive in compensation completely depends on the damage done and the limits that are spelled out in your policy. When it comes to personal property, items like jewelry and cash on-hand typically have limits, but you can increase the limits with additional premiums.
So really, homeowners insurance is a safety net. If your house is damaged or completely destroyed, it can be difficult to make those costly repairs or possibly rebuild out-of-pocket.
Most states (like Washington) don’t require you to have homeowners insurance IF you own your home outright. However, if you are among the many who get a mortgage, your lender will require homeowners coverage. That’s because technically your mortgage company is part owner of the house and they need to protect its value.
As far as natural events go, standard insurance typically covers fire, wind, snow and sleet. A few natural events usually require additional coverage, such as flooding and earthquakes. That’s why if you live in a floodplain your lender will more than likely require additional coverage.
The cost of homeowners insurance is usually based upon the value of your property. Washington has one of the lowest rates in the nation. The national average is $1,288 while Washington’s average is $653. Spokane is right around $600. States prone to natural disasters (eg Florida, Oklahoma, Alabama) have premiums right around $3,000.
If you’re buying a new home and already have homeowners insurance through a provider with your current home, you can work with them to transfer coverage to your new house. If you don’t currently have homeowners insurance or if you’re a first time homebuyer, your lender can find and assign you one. I recommend doing some checking around with different companies and getting quotes. If your car insurance provider also provides homeowners insurance, you can bundle it and typically get a discounted price for both.
If you need to get setup with an insurance agent to chat with, let me know. I have a few recommendations that I can send your way.