Helpful Tips

How do I start looking for a home?

Congratulations on taking the leap and decide to purchase a home. There are many questions about how to get started. Start with the very basics and speak with a Realtor about purchasing a home. They can best explain the process, costs and timelines involved in purchasing a home. They will also guide you to several mortgage professionals that can assist getting you pre-approved for a mortgage.

Getting pre-approved for a mortgage allows the buyer(s) to understand what they can afford for a purchase price and monthly payment that falls within their budget. Once that information has been established, they buyer can start the conversation with their Realtor about searching for a home that fits their needs and budget.

It’s been called the emotional rollercoaster ride for buyers when they don’t get pre-approved for a mortgage before shopping for a home. They may spend weeks looking at properties, identify one they love and get excited about. They proceed to apply for a pre-approval letter to make an offer a home. Sometimes the lender provides a lower-than-expected pre-approval letter or states the buyers are not able to get pre-approved for a loan based on a low credit score, excessive debt, or unexpected issues the buyers may not even be aware of. It’s heartbreaking and may discourage the buyers from continuing to search.

Do I need to be pre-approved for a mortgage?

Getting pre-approved for a mortgage is one of the most important first steps you can do. Purchasing a home is more complex versus renting, purchasing a car or applying for a credit card. The financial institutions have many guidelines they must adhere to when qualifying a buyer for a mortgage. They will review many personal items such as your credit score, credit history, debt, income, student loans, child support payments, part-time versus full-time work, self-employment, or independent contractor status.

A few of the low-down payment programs have income limitations or geographic restrictions. The mortgage professional will use your financial information to determine how much you can qualify for and what the monthly mortgage payment will be using the purchase price, property taxes and insurance. If you are searching for a condo, they will also factor in the monthly homeowner’s association fee.
When a property becomes of interest, most seller’s agents and the seller will want to see a pre-approval letter when deciding to accept your offer or not. If there are multiple bids on the property, having the pre-approval letter will be critical.

Most pre-approval letter can be easily accomplished by simply completing an application from a lender. For those who are self-employed, the process may take longer for the letter to be issued. Once you are pre-approved, the letter is good for up to 90 days. They can easily be renewed.

It’s best to get pre-approved right away. This way you don’t miss out on a property.

Is there a difference between buying a single family home and a condo?

There are differences between purchasing a single-family home, multi-family and a condo.

Condos or townhomes were built with a format of either a planned unit development (PUD) or as a condo development. The two have different mortgage guidelines. The monthly Homeowner’s association (HOA) fee is included as part of the mortgage qualification. The higher the monthly dues, the lower the qualification will be. Certain loan programs such as FHA, RD and VA have restrictions on condos. FHA and VA require the condo development to be approved by their organization to receive financing. RD has geographic restrictions on town the property is located. It may be possible to finance a condo with VA even if it’s not approved. Speak with a mortgage professional about the how an individual condo can be approved.

Multi-family homes are a great way to build equity in the home by providing rental income from the other units. The mortgage company can use the rental history to qualify the buyer for the property. There may be additional inspections required such as a fire and safety inspection to complete the loan. If the house was built before 1978, you may want to check to see if there is an annual essential maintenance practice requirement from the town for lead-based paint.

If purchasing a multi-family property as an investment property, contact a mortgage professional first. Typically, they will require a higher down payment. The closing costs and interest rates will be higher.

Single family homes usually have less restrictions and offer more options for financing. FHA, VA, and RD loans will have requirements for the condition of the property such as deferred maintenance, handrails and basic safety requirements. If you are looking at an older home, foreclosure or property that may be distressed, contact your Realtor or mortgage professional to make sure the property will qualify.

Are there any upfront costs?

There are costs associated with purchasing a home that will need to be paid upfront. When purchasing a home, it is encouraged to perform inspections on the home. Inspections could be, but not limited to a building inspection, radon test, asbestos testing, water testing, mold testing, lead based paint testing and other inspections. These inspections all carry costs that must be paid at the time the services are rendered.

When purchasing a single wide or double wide home using FHA financing, the lender will require an engineer’s certification is home meets FHA guidelines.

Some mortgage companies will require the appraisal fee to be paid in advance of a closing.

FHA offers a renovation loan program. There are two levels for this program. The standard involving renovations over $36,000 will require the buyer to hire a consultant that acts as the liaison between the buyer, building inspector and the mortgage company.

What are closing costs and how are they handled?

Closing costs are the expenses associated with processing the loan and all the components needed to close on the property. One of the largest expenses is the VT Transfer tax charged by the state at the time of closing. This is charged to the buyer. If the buyer is purchasing the property as a primary residence, the rate is tiered at .5% for the first $100K. Anything over $100K is charged at a rate of 1.45%. Second homes, vacation properties or properties not purchased as a primary home will be charged 1.45% on the entire purchase. Buyers using VHFA will receive a discount on the transfer tax.

The mortgage company will charge a fee for processing a loan, often called an origination fee. The cost will vary from lender to lender. It’s best to ask what the fee is when speaking with a mortgage professional. The mortgage company may charge points as well. Points are often associated when purchasing an investment property or if the buyer’s credit score is low.

In Vermont, attorneys are utilized to close the property. The attorney will perform a title search and render a title opinion to you and the mortgage company indicating if there is an issue or clean title. The attorney charges a fee for services rendered. The attorney also provides title insurance as part of the closing. Title insurance is a policy meant to protect the buyer and mortgage company from damages or financial losses caused by bad title due to title defects.

Title insurance is required by the mortgage company and optional for the buyer to purchase. It is good idea to purchase the policy for yourself. It’s a one-time fee due at the time of closing.

Another cost for closing is creating an escrow account for property taxes and property insurance. Mortgage companies want assurances the property taxes and insurance will be paid. To make sure that occurs, the mortgage company will collect enough funds at the closing to establish an account. When the payments come due, they will pay them automatically. Your monthly mortgage payment includes principle, interest, taxes, and insurance (PITI). How much is collected at the closing depends on how many times a year taxes are due from the town. This will impact your closing costs. Some mortgage companies do not require this for closing.

Other expenses include a fee to create the escrow account. There is a recording fee to record the mortgage and deed into the land records of the town you are purchasing in. Appraisal fee can be a part of the closing costs. If there are points being purchased on the loan, that will be assessed at the closing. Since mortgage payments are paid in arears, there will be interest accruing on the property from the time of closing until the first mortgage payment is due. The interest accrued needs to be paid at the time of closing to keep the account current.

The other expenses involve prepaids. Prepaids are property taxes, dues, fuel, water bill, or prebate that have already been paid by the seller in advance of closing the property.

What is buyer representation and how does that work?

Every state has regulations on how Realtors interact with buyers. Vermont is unique with how that interaction occurs. When you first meet with a Realtor, you are deemed to be a customer in the eyes of the state. A customer is a person or persons you may show property to, however, do not have a contractual arrangement with. This means there is not confidentially between you and the agent. The agent can answer questions about the property and provide resources such as mortgage companies, inspectors, or other contractors in real estate. The agent is not allowed to provide opinion of price that doesn’t support the seller’s price or other brokerage services that are reserved for a client status.

A client is deemed to be a person or persons that have entered into a contractual agreement with a buyer or buyers to represent them in purchasing a home. It’s very east to become a client. There are a few documents that need to be signed. The documents consist of establishing a fee for service, length of time, property being sought after and other legal provisions. Once signed, the buyer or buyers enjoy the benefits of representation from the agent and firm.

It should be noted Vermont does not recognize dual agency as a form of representation. Dual agency is the process of which the agent represents both the seller and the buyer in the same transaction.

Some of the benefits include price analysis, assistance searching for a property, negotiations on offers and/or building inspection items, interpretation of pricing and market conditions, writing offers, providing resources for real estate professionals, showing properties, trusted confidant, strategy advisor, closing coordinator, record keeper, and many other benefits that can be discussed.

If you are purchasing a home for the first time, it is beneficial to have a first-time buyer consultation with the agent prior to viewing properties. The consultation consists of explaining the details of purchasing a property from getting pre-approved, costs associated with purchasing a property, steps of making an offer, process once the property goes under contact and finally what to expect for a closing. The agent also will explain the market conditions, tactics and advice on how to be competitive in a multiple bide offer situation.

How do I prepare an offer on a property?

Preparing to place an offer on a property involves several steps.

The first step is to make sure you have a pre-approval letter that is current from a mortgage company. There is always the debate of using a local mortgage company or one from not of the area. That is your decision to make along with guidance from your agent. If you are making an offer using cash, it’s best to have a bank statement showing proof of funds. Make sure to redact the account numbers from the statement for security purposes if you plan on emailing the statement.

Second step is consulting with your agent regarding the offering price. The agent will provide you with a market analysis of similar homes that have sold in the area. The agent will also discuss offer options and tactics if there are more than one offer on the property. A couple of popular tactics are escalation clauses, rent back option and extended closing dates for sellers needing to find a place to live.

The agent will prepare a list of legal documents outlining the price, terms, conditions, inspections, important dates for you to review. An agent can provide an overview of the documents, however, is not permitted to go into legal definition of the documents. That is reserved to a licensed attorney to review with you if there are additional questions. A provision for an attorney review can be added to the contract or consult with an attorney prior to submitting the offer if time permits.

Once the document has been reviewed and any corrections have been made, the buyer can sign the offer. It is customary when making an offer on a property, an earnest money deposit is included as part of the offer. There isn’t a rule regarding contract deposits. It’s best to consult with you agent about a strategy with the deposit.

the agent will present the offer to the listing agent and summarize the contents of the offer. The agent also has the right to present the offer directly to the seller accompanied with the seller’s agent. This can be beneficial because your agent can present the benefits of the offer and why the buyer would be the best choice.

There is a timeline for acceptance on the offer. The seller has until the established date and time on the offer to respond. The seller can either accept the offer or reject it. If the seller signs the offer, it will constitute a binding agreement. If the seller does not sign the offer by the deadline or makes a counteroffer, the original offer becomes null and void.

It should be noted if the offer submitted involves multiple bids from other prospective buyers, the agent should ask if there will be a second round of offer or is this the final and best situation.

What happens once an offer has been accepted?

Congratulations! Your offer was accepted by the seller! The next steps in the purchase process have begun.

It’s important to make sure to provide a copy of the fully executed contract with your mortgage professional and submit the application for the mortgage in a timely manner. The contract has a stated timeline of which this must occur. Failure to submit a timely application may have financial consequences later if a problem on closing or termination occurs. Your agent or attorney can explain further.

Second is to choose an attorney to represent you at the closing. A copy of the contract should be provided to the attorney along with the contact information of the seller’s attorney and mortgage professional.

The next step is to make arrangement to provide the named escrow agent named on the contract, the deposit check. This needs to be done within days of the acceptance date on the contract.

After that, the inspections need to be scheduled that are part of the contract. Please remember, there is a time of the essence provision in the contract. All inspections must be completed and settled by the date mentioned in the contract. If not, it could constitute a breach or waiver of the contingency.

The mortgage company will be requesting additional documentation beyond the original needed for the pre-approval. It’s important to respond quickly with the information to keep the process moving forward.

The mortgage company will order the appraisal, if applicable to the loan.

The mortgage company will submit all the documentation to the underwriting for final consideration. If you are purchasing a condo, the underwriter may send a condo questionnaire to the association to complete as part of the process.

The underwriter will process your personal information and the appraisal. If the loan is approved and has met value from the appraiser, you will be issued a commitment letter. This states the loan was approved. Sometimes there are conditional approvals, meaning there may be a few outstanding conditions that need to be fulfilled by the buyer before the closing.

The closing date is established and set with your closing attorney.

The buyer will be provided a copy of the closing disclosure from the mortgage company at least three days prior to the closing date. This provides a financial statement of the purchase price, closing costs, prepaids, interest rate, terms, and conditions of the loan. They must be accurate to the original statement provided to the buyer at the beginning of the process.

There is a final walkthrough performed on the property. The contract allows up to 24 hours prior to the closing to perform this. The final walkthrough is designed to allow the buyer to walk the property and house to make sure the personal contents have been removed from the property; The items stated in the contract as staying are still at the property; The appliances and other aspects of the property are working properly;To make sure there isn’t any new damage to the house from the first showing.

The buyer will attend the closing at the mortgage company or closing attorney’s office. The option for Power of Attorney may be possible as well if needed. The mortgage company will need to know in advance if there is a POA. Documentation, an explanation of the POA an approval from the mortgage company will be needed.

All funds needed to close the property will be necessary at the time of closing. Please make sure to discuss what will be needed and the means of transferring the funds with your closing attorney within a week of the closing. It is also advised to bring a personal check to the closing in case there are any last-minute adjustments. Attorneys can accept a personal check for under $1,000. It’s also important to bring proper ID to the closing such as a driver’s license or passport.

Congratulations! The papers have been signed and the keys to your new home are in hand. You now can move into the home.

How long will it take to sell my house?

The timelines to sell your house can depends on several factors that can influence a buyer’s decision to purchase the house such as location, price, condition, time to close and other factors. We will discuss a few of them.

The biggest factor on the time to sell is pricing the home correctly. The older philosophy of pricing higher and negotiate the price has been less effective over the years. In the age of online shopping, buyers have information available at their fingertips regarding values of properties. If the perceived value is not present, potential buyers may not visit the property if the property appears to be priced above other houses in the area.

Pricing the house to be competitive with other properties for sale can produce quick responses or even multiple buyers presenting offer on the property. Allow you agent to present comparable sales on properties that have closed, under contract and currently on the market to decide how to price your property. Longer days on market or markdowns may cause buyers to question the property or submit lower offers.

The old saying in real estate is “Location, Location, Location! “This is certainly true in a slow market. Buyers may look at certain locations to be positive or a negative light. It’s not possible to pick the house up and move it, however it should be recognized that some areas are less desirable and should be priced accordingly.

Having a longer than average close time may deter some buyers from purchasing the property. The seller may need time to find suitable replacement housing. Although not an unreasonable request, some buyers may be concerned about locking an interest rate. Offering a rent back situation should also be considered as a possibility. This allows the buyer to lock an interest rate and the seller to remain in the home until suitable housing is found.

Make obvious repairs on the house that are visible. Pealing paint, damaged wood or materials around the exterior may send a signal to a buyer the property has been neglected. It may raise concern that other, more costly aspects of the house, have also been neglected.

The average closing time once the property goes under contract is 45-60 days. It is possible to close a property in 30 days or less under the right conditions.

How much is my house worth?

Determining the worth of a property takes into many considerations with the location, land, improvements, landscaping, outbuildings, and other components of the house. When evaluating a home to place on the market for sale, there are several key factors to consider.

The location of the property plays a role in pricing. Desirable neighborhoods, lake front property, mountain view, close distance to amenities are just a few examples of value created for a property. The saying goes in real estate is “Location, location, location!”

The square footage of the house, bedrooms, bathrooms, garage space, green technologies are all evaluated and compared to similar properties that have sold in the area.

Upgrades and materials used in the house are also considered for value. Hardwood flooring, granite or quartz countertops, tile flooring, updated cabinetry newer appliances add value to a property. Owned solar panels are also considered an asset that adds value to the property.

Since VT has many rural communities, there may not be exact duplicates to use as compatibles. Therefore, similar homes in or outside the area are used to compute a home’s potential worth.

This information is used to compare to homes that have already closed. This is typically what appraisers use to evaluate the property for the mortgage company. Homes that are currently under contract are also used. Even though the final sale price hasn’t been disclosed yet, the asking price and days on market can be used to estimate if the house sold at, below or above the asking price.

Expired listings can be used to evaluate pricing. If the property didn’t sell, there is a reason. The underlying issue might be buyers didn’t perceive value on the property. Price tends to be the underlying issue. For the right price, any property will sell.

All this information is used to calculate a potential value of the property. It should be noted, these are opinion of price and may not necessarily reflect actual market value. Market value is established once the home is on the market. Either the home receives multiple offers in a short period of time, gets moderate showing activity or just sits there with little or no showings.
Each one is an indication of buyer interest and value of the property. Therefore, it’s important to put your best foot forward with a competitive pricing when first placing it on the market.

What will I need to do to make my house ready for sale?

Preparing your home for sale is an important part of the selling process. There are many things that can be done to make the house appealing to buyers.

Once of the biggest things that can be done is decluttering the house. Remove excess pictures from the walls and nick knacks from the living space. If there is large furniture in the rooms, it may make the room appear smaller. Consider removing unnecessary furniture. How the house appears online may determine whether the buyer wants to visit the property or not. It has been proven staging a home may bring up to 23% more on the selling price versus properties that are not.

Make obvious repairs around the house. Check to see if the exterior has peeling paint, damaged wood, or other materials. Consider repainting rooms that have bright colors or worn-out paint. Use neutral and warm colors that would be easy to match décor with. Neglect in the exterior may have the buyers questioning what other aspects of the home have been neglected.

Keep the lawn mowed during the summer months and the house picked up for showings. Presentation is the key factor here when a house is shown.

Wash the windows and doors and clean any cobwebs around the ceiling. Buyers do take note of a dirty house.

For those looking to be proactive about selling their home without complications from buyer inspections, consider conducting your own inspections in advance of a buyer submitting an offer. Here are a few examples.

1. Conduct a building inspection.
2. Conduct a radon test on the house.
3. Have the water tested if on a private well.
4. Have the chimney, fireplace, woodstove and/or pellet stove cleaned and inspected.
5. Have the septic system cleaned and inspected if on a private system.
6. There are several advantages of performing inspections in advance. First, you get to see any potential problems that exist on the property. This allows the seller to decide whether

Second, it saves the seller time and money by not having to find contractors because of buyer demands for repairs on a tight schedule.

Third, the possibility of buyers offering higher bids knowing the property has already been inspected. Buyers have more confidence in the property when they have an opportunity to review the inspection reports. That confidence is reflected in higher offering price for the house

Fourth, there is less change of the home going back on the market after going under contract. Buyers conducting inspections are more likely to terminate the contract once they perform an inspection versus receiving the reports in advance. They already know what they are buying.

The winter months can be difficult to have the septic system pumped due to the lack of access from the frozen ground. Having it performed in the warmer months allows the system to be checked and prevents expensive escrows at the closing. There have been several occasions the closing attorney is demanding an escrow be placed until the system can be checked in the spring.

The costs spent performing the inspections in advance have been proven to save the seller time and money with better offers.

What costs will I incur when selling my house?

Closing on a property for a seller is far less expensive than when purchasing a home. The expenses for selling are considerably lower.

Here are the costs to expect when selling a home.

1. You will need to hire an attorney to prepare the deed, obtain the payoff statement, and coordinate with buyer’s attorney for the closing. This cost will vary depending on the attorney.
2. Most towns have certificate of compliance that must be obtained for the closing. This is a small fee. If you own a condo, you will need to pay for the resale certificate package and condo questionnaire for the buyer and mortgage company. There may also be the cost of a fire and safety inspection. Fire and safety inspections consist of the fire marshal coming to the property to conduct a safety check. This includes checking the smoke detectors, fire extinguisher, handrails, GFCI outlets, labeling of the electrical panel, egress windows for bedrooms and basement living space and other components considered safety items. They will want to see proof the heating system or any fuel combustible device such as a fireplace, woodstove or pellet stove has been services within the last two years. The dryer went would also need to be serviced within the last two years. Since the code is revisited every three years for possible update, it may be possible to out of compliance from when the time the condo was purchased.
3. If you own a multi-family property, there may be an additional cost for filing EMP, if not already done, fire and safety inspections and certificate of occupancy.
4. Payoff for a mortgage or home equity loan.
5. Overnight fee to pay off the mortgage once it has closed.
6. Final water meter reading if on public water and sewer.
7. The other expense will be the Realtor’s fee.

What happens when there is a showing?

There are several things that take place when there’s a showing. Typically, the listing agent or showing service will reach out to schedule a showing. We make sure the potential buyers have been pre-approved for a mortgage or can provide a proof of funds if it’s a cash sale.

Most showings usually last between 30 minutes to an hour. You should leave the house 15 minutes prior to the showing and arrive back 15 minutes after the scheduled showing is to be completed. Sometimes the agent may be early or running behind schedule.

Leaving the lights on for the showing provides a better atmosphere for the buyers. Light, bright, and cheerful shows the house better than a dark space. We have the agent leave the lights on when leaving the home just in case there are other showings.

Soft music in the background has a calming effect and promotes the buyer to walk around the house longer. You may consider baking cookies or other treats for the buyers. It provides a familiar sent that promotes the sense of home.

We typically leave a sign on the front door for the buyers and agent to remove their shows when entering the home and leave a business card when exiting the property.

There is a lockbox on the front door that allows the agent to access the property. They agent must enter their personal code to access the lockbox. The box sends an email to us stating when they arrived and left the property.

It is best to keep the home clean clutter free when the property is shown. Presentation is a key factor when selling your home.

Do I need a Realtor to sell my house?

Getting pre-approved for a mortgage is one of the most important first steps you can do. Purchasing a home is more complex versus renting, purchasing a car or applying for a credit card. The financial institutions have many guidelines they must adhere to when qualifying a buyer for a mortgage. They will review many personal items such as your credit score, credit history, debt, income, student loans, child support payments, part-time versus full-time work, self-employment, or independent contractor status.

A few of the low-down payment programs have income limitations or geographic restrictions. The mortgage professional will use your financial information to determine how much you can qualify for and what the monthly mortgage payment will be using the purchase price, property taxes and insurance. If you are searching for a condo, they will also factor in the monthly homeowner’s association fee.
When a property becomes of interest, most seller’s agents and the seller will want to see a pre-approval letter when deciding to accept your offer or not. If there are multiple bids on the property, having the pre-approval letter will be critical.

Most pre-approval letter can be easily accomplished by simply completing an application from a lender. For those who are self-employed, the process may take longer for the letter to be issued. Once you are pre-approved, the letter is good for up to 90 days. They can easily be renewed.

It’s best to get pre-approved right away. This way you don’t miss out on a property.