The Waiting Game

At the beginning of a real estate transaction, both buyer and seller have a lot to do and plenty of paperwork to sign. After the contract, there's the inspection period and possibly even more paperwork! Next is the appraisal, scheduled through the lender, which takes a bit more time and the buyer and seller don't end up signing anything more unless it comes in too low. But once that's settled, most buyers and sellers feel that the excitement has suddenly dropped off...it could be weeks before closing. What should the buyer and seller be doing after the appraisal?

Essentially, during this period you're waiting for the title company to research the title on the property. They're also communicating with lenders from both sides of the transaction to prepare the necessary closing paperwork. The buyer's lender is also working to pass the file to underwriting, the magical department that gives final approval for your mortgage. Your Realtor is the conduit, communicating regularly with the lender, the title company, and you. However, just because you're waiting on all those people to do their jobs doesn't mean the buyer and seller are done.

Now is the time to really focus on your upcoming move. Pack those boxes, pick a mover, notify the utility companies, file your change of address with the USPS, and make all or your plans for pet care, child care, and time off work to make sure you are ready for moving day. If you already know that you plan to make repairs or renovations at your new home, you can start talking to contractors to determine who will be available and within your price range.  You can also inform your credit card companies and your employer that you will have a new address as of the occupancy date in your contract. Most importantly, you don't want to be that person who is still cleaning the house at 5:30am the day of closing, so find a cleaning company to give the house a thorough once-over if you're the seller (or if you're the buyer of a distressed property)!

Let a Multifamily Property Pay Your Mortgage

Wikipedia

Rents are rising, and if you pay any attention at all to the news, you'll hear that renters are starting to look more actively for homes to purchase. I was lucky enough to sell my home in California to a woman weary of exorbitant rents in San Francisco back in 2013...and the Midwest (including Cincinnati) is starting to see the same trend. For some, the idea of owning a home rather than paying someone else's mortgage is their version of the American dream. For others, though, the responsibilities and maintenance costs associated with owning a single family home are downright frightening.

Pro tip: You can use the same type of mortgage financing -- even FHA! -- to purchase a 2-4 unit building in Ohio as you would to buy a single family home.

By living in one unit and renting out the others, you'll have a ready-made income stream to help you pay your mortgage and make periodic improvements to the property. You'll be able to balance the peace of mind that comes from knowing who's responsible for fixing things with the security of tenants paying their own utilities (this may vary by building) and ultimately contributing to your bottom line. Renters will likely prefer living in the same building as the owner, because they know you will be even more invested in making sure the place is livable. This would also be a great solution if you're self-employed, or if you want to stay home with the kid(s). And best of all, when you're ready for a single family home of your very own, you'll still have this awesome income property!

The downside? Obviously, you won't have as much privacy in a multifamily as you would in a single family home. You'll also need to learn all the ins and outs of being a landlord, such as tenants' rights, housing discrimination laws, calculating and tracking your rental income, rental deposit limits and record keeping, and so on. And you'll still be responsible for any major repairs just as you would be with a single family home.

Choosing the right multifamily will depend on your particular needs and skill set. If you're going to live there, it will need to be in a neighborhood you like and would enjoy living in; the more popular the better if you want to attract a constant stream of tenants! If you're not too handy and the thought of following YouTube video tutorials makes you squirm, try looking for a building that has been recently updated and has no significant inspection issues -- it may cost more up front, but it will give you time to either develop handyman skills or find a good one to keep on call. Other good things to consider during your search would be parking, public transportation access, and available storage. 

Do you have a story about owning and occupying a multifamily? Tell me in the comments!

What's Inside: Contract to Purchase

You've found the right home! Time to get with your agent and write up an offer. While differences in language will be found depending on your location, the basic parts of a real estate purchase contract are pretty similar across the board. Here's a run-down of the most important points to discuss.*

1. Purchase price: Seems like a no-brainer, right? Make sure that your offer is not so low that it offends the seller, but not so high that you have no room to negotiate. Talk to your agent about the current market conditions (More buyers than sellers? You may need to be aggressive.) and this particular property to arrive at a number that works for you.
2. Earnest money: While not required by law, in Ohio and many other areas it is customary for a buyer to offer earnest money as a show of good faith. This money is deposited in a special trust account by one of the brokers involved once the contract is final, and is held there until closing. Talk to your agent about what makes sense for the property you are interested in.
3. Financing: Making an offer contingent upon your ability to secure financing for the property is widely accepted. That means that if you can't find a bank to give you a mortgage, you won't be obligated to complete the sale. This is why it's a great idea to get pre-approved by at least one lender before making an offer.
4. Seller contribution: If you know that you're going to have high closing costs, or if you only have enough for the down payment without the other fees associated with buying a home, you may want to ask the seller to pay for a portion of your closing costs. Again, talk to your agent about this -- if it's a seller's market, it may be in your best interest to forget about this request.
5. Inspections: Unless you're an experienced home inspector, you should get a home inspection for any home you make an offer on. The contract will allow you to specify how long you have to schedule inspections, and how long you'll have to negotiate any repairs or credits with the seller. Your agent should know how busy local inspectors are to make sure you have enough time to get this done and carefully consider your options.
6. Inclusions & exclusions: Know what you're buying! Just because you saw appliances and window treatments at your showing doesn't mean that the seller plans to leave them for you. Make sure your agent has stated in the contract exactly which items you would like to be included in the sale.
7. Closing: The date of closing, when the property officially transfers ownership, is going to depend on clear title and loan approval. Your loan officer and your agent should be able to advise you whether the closing date should be 30 days away or longer; if you need additional time to sell a home or for school to let out, make sure you specify that in the contract.
8. Occupancy: It used to be customary in Ohio to allow the seller 30 days after closing to move their belongings out of the home, but today we're seeing more and more buyers requesting occupancy at closing due to liability concerns. Talk to your agent about what's customary in your area to determine what works best for you.

This definitely doesn't cover everything in the contract, but hopefully provides a nice summary of the big things to consider when making an offer. As with any legal document, you have the right to go over it with an attorney to ensure your rights are protected.

* I'm not an attorney, and this article is not legal advice. It merely describes what one might read in a real estate purchase contract.

Privacy forever!

Did you know that your real estate agent has a legal obligation to keep all details that are not public record regarding your sale or purchase private? Forever?

Public information varies depending on where you live, but in the Greater Cincinnati area the public has access to the following details about residential transactions:

• When you purchased or sold a property and to whom
• What the property taxes are on the property and whether they are current
• Your tax mailing address

In addition, real estate agents, lenders, appraisers, and other real estate professionals have access to some additional data. This is to assist us in making fair evaluations of properties and their values by providing us a more complete picture of how real estate transactions usually happen:

• The type of financing used to purchase a property (e.g. conventional, FHA, cash)
• The amount of time the property was on the market
• Any additional incentives offered as a part of the sale (e.g. seller-paid closing costs)
• Whether the property has any history of foreclosure action, even if it was resolved

Have I left anything out? If you have questions or comments about privacy in real estate, let me know in the comments!