Buying a Home – Out of Pocket Expenses, What to Expect.

Lehigh Valley Homes & Real Estate: Out of Pocket Expenses when Buying a Home – What to Expect?

When it comes to CASH out of Pocket there should be NO Surprises!

So, what should you expect when Buying a Home in the Lehigh Valley?

Depending on What “Type” of Home you purchase will depend on the out of pocket expenses you may have. But, in most cases there are “standard” out of pocket expenses you will have and I will even give you the time frame as to when you will need this CASH on hand.

Standard out of Pocket Expenses for the purchase of a Residential Home

1) Making your offer in the Lehigh Valley – Your Good Faith Deposit – This Should be as much money as you can put down – nothing less than $1000.00.  Unless you are working with a Down Payment and Closing Cost Assistance Program like the Lehigh Valley HOOP Program or PHFA. This is proof that you do not have lots of money saved or in the bank and the seller understands the lower down money with your offer.

Once your Home Offer has been accepted and signed by the Seller

2) Home Inspection Fee in the Lehigh Valley – within 5 days of your offer getting signed, in my opinion – Nothing less than $350.00 up to $600.00 (if the home has well and septic and is vacate…this will increase the cost up to and including $600.00) If the homes you are looking at have Public water and sewer and you get a Home Inspection and Termite..You are looking at about $350.00 to $400.00. Depends on what Home Inspection Company you use.

3) Appraisal Fee in the Lehigh Valley – This must be paid at your application appointment within the first 10 days of your offer getting accepted. This can cost on Average of $475.00.  This is one major reason why you should have your home inspection done within the first 5 days.  This way if you find out something that is major on the inspection and the seller will not negotiate with you..You are not wasting another 475.00 on an appraisal. Verify with your Mortgage Company

4) First Full year from Homeowners Insurance in the Lehigh Valley – This must be paid at least 2 weeks prior to settlement day.  Settlement is Typically 30 to 45 days from the time your offer get’s signed.  But, if you are purchasing a Foreclosure, then typically it may take 60 days to close. Short Sales are another story. Estimate Annual Cost: Average $700.00 per yr but depends on coverage.

5) That’s it – Then you will bring the rest of the Down Payment for your Loan that you will be getting to settlement.  Example: FHA Loan requires you put 3.5% down – $100,000.00 purchase price you would need a total of $3500.00 – $2000.00 down when you make your offer and then the remaining $1000.00 and ALL closing costs the day of settlement.  NOTE: Rule of Thumb for closing costs are 6% of the purchase price. But, it will depend on the home purchase price and the property taxes for the home…so, you need to get an estimate on each home that interests your before you count on anything. This will come from your Real Estate Agent & Mortgage Officer.


The Home Inspection: 4 Things Buyers and Sellers should Know

Lehigh Valley Homes & Real Estate – The Home Inspection 4 Things Buyers and Sellers should know – When selling a home in Allentown, Bethlehem, Easton or the surrounding should be prepared when it comes to the home inspection.

Tips for Lehigh Valley Buyers and Sellers about the Home Inspection.

This information will apply to you ONLY If you plan on working with a Real Estate Agent to buy and or sell a home in the Lehigh Valley PA area.  If you plan on selling your home as a For Sale By Owner..this may not apply to you. This ONLY applied to those who will be using the PA State regulated Residential Standard Agreement of sale for the Sale of Real Estate.

These Tips will help Buyer’s Make stronger offers that will stand up against other competing offers and give Seller’s ideas of key areas that they should consider with negotiating the offer they get on their home. In my opinion these Tips are beneficial for the buyer and the seller.

1) Buyers & Sellers – You have two options when negotiating the Home Inspection condition of the agreement of sale.

OPTION 1: Says “Mr. Seller I am a smart buyer and I am going to get a home inspection and no matter what the home inspection report says, I have the right to walk away and get my deposit money back”

OPTION 2: Says “Mr. Seller I am a smart buyer and I am going to get a home inspection and no matter what the home inspection report says, I will be forced to negotiate with you first BEF
ORE I walk away and get my deposit money back”

MY Opinion: Option 2 keeps everyone communicating and while the intentions of both sides is for the buyer to buy and the seller to sell…this is just a much better way to sign an agreement of sale with a home inspection condition in my eye’s.

2) Buyer’s & Seller’s – When the offer is being negotiated be familar with the Home Inspection Exclusion Clause area of the Agreement of Sale…you should be keeping in mind if the home is being listed and sold with the roof needing to be replaced as an example or the buyer knows that the Furnance is at it’s end of life and they plan on replacing it and this is the reason for their offer at lower than current market value…items that are not being considered to be conditioned on the home inspection should be written as an exclusion in the home inspection condition section.  This is really important when negotiating…because if a seller is going to give a buyer a large discount due to replacing the roof or doing any major mechanical items…then the buyer comes back and says..after the home inspection..well, the inspector says the roof needs to be replace…anything that is NOT in writing is NOT in writing.  Keeps everyone honest and also makes a buyer’s offer stronger against other competing offers…because very few people use the exclusion field of the Agreement of Sale.  I have beat many competing offers due to adding exclusions to this area.

3) Buyer’s & Seller’s – You should know that there are a few different types of inspections that will be conducted the home for the buyer during the execution of the agreement of sale. Which can cause reasons for re-negotiations 2 to 3 times over before settlement. There may will be the following inspections on the home depending on the Home Buyers Type of Mortgage, The inspection conditions requested by the buyer, Home Insurance Company selected, the Muncipality the home is located in.

Who may inspect the home which can cause a reason for future negotiations due to
repair requests

1) The local municipality for a CO resale inspection
2) The Typical Home Inspector
3) The Mortgage Appraiser – Could be for FHA or Conventional apprasial
4) The Septic Inspector (unless it’s public water)
5) A Water Test if it’s well water (unless it’s public water)
6) A Radon Inspector

7) The Homeowners Insurance Company
8) A Termite Inspection

All Inspections must be conducted within 15 days ACCEPT the appraisal. The appraisal needs to be completed prior to the Mortgage approval Date which is another deadline within the Agreement of Sale.

4) Buyers & Sellers – The Typical Home Inspection time Frame and Who should Attend? A Home Inspection for a home that is 2000 sq ft takes about 3 hours.  Seller’s you really should not be home – Buyer’s you should be there …not only to learn about your new home, but to make sure the inspector is doing what he is suppose to be doing a
nd I even believe the Buyer Agent should also be present just in case there are issues …so everyone can get a visual of the problem and negotiations can be conducted in a clearer and more professional manner.

What is a Buyers Agent?

Lehigh Valley Real Estate & Homes – What is a Buyers Agent? Okay, so we have Real Estate Agents – Some are called Seller’s Agents and Some are Called Buyer’s Agents, What is the Difference and why should I care?

In the State of PA you can have many different relationships with a Licensed Real Estate Agent.

I am going to talk to you about working with a Lehigh Valley Real Estate Agent for the purpose of selling or buying a Residential home in Allentown, Bethlehem, Easton or a 35 mile radius of this within PA (not including New Jersey)

The Real Estate Agent and WHO they represent in a Transaction
(think of it like a Doctor or Attorney relationship)

The Seller – When a Real Estate Agent helps a Seller sell their home and they place a FOR SALE sign in the front yard.  This Real Estate Agent is know as the Listing Agent and/or Seller’s Agent.  Their job is to represent the seller in selling their home, make sure they work on behalf of the seller to negotiate and protect the best interest of the seller at all times.  Main Objective to get the most money and best conditions for the seller when a buyer makes an offer on their home.  Usually, this is the Real Estate Agent you are meeting at the Open house BUT not always…many times other Real Estate Agents help the listing agent by hold open houses for them.

The Buyer
– When a Real Estate Agent helps a Buyer – Buy a home – meaning help the buyer with searching for a home – finding a mortgage on a home and evaluating current market value for the home they are interested in making an offer on…The Agent’s main objective is to represent the buyer in purchasing a home, make sure they work on behalf of the buyer to negotiate and protect the best interest of the buyer at all times. This Real Estate Agent is known as a Buyer’s Agent.

A word of Caution – It is not in the best interest of a buyer to call a FOR SALE sign and request that the seller’s agent show them the home.  There are complicated reasons why….but one really good and simple reason is the seller’s agent works for the seller NOT the BUYER.  You need your own agent to show you the property AND this agent should be someone you have interviewed or researched as the home you are interested in looking at may be your dream home and since this is one of the most important decisions in your life…don’t just pick an agent out of a hat.  This person is just as important as choosing your doctor or attorney…trust me.  Do you research and compare agents…do a search on google and see what comes up.

Side Note: A Real Estate Agent “Buyer Agent” can show you any home that is listed for sale in the state of PA.  Although most work in certain territories…as an example I primarily work in the Lehigh Valley area which includes Lehigh & Northampton counties  But, from time to time I also cover just over the lines of Bucks, Berks, Monroe, and Carbon county too.

A surprising Fact – How much do you pay to have a Buyer Agent?:
When a Home Buyer requests the assistance of a Buyer Agent to purchase a home that is listed on the Lehigh Valley MLS – The Buyer pays nothing for this Buyer Agent to help them through out the home buying process.  which is typically 3 to 6 months from the time you start looking for a home to the time you go to settlement on a home.  Depending on your needs of course.  Once a Listing is added to the Lehigh Valley MLS this actually makes a contract between the Listing/Seller’s Agent and ALL of the Buyer Agents in the Lehigh Valley that when the Buyer Agent helps sell the property by helping their buyer purchase the home listed by the seller’s agent…the seller’s agent will share the commission paid to them by the seller at settlement. Pretty cool huh?!

10 Things to know about Buying Foreclosures

10 Things to know about Foreclosures in the Lehigh Valley Area – Thinking about Buying a Foreclosure, Bank owned, REO or Short Sale Property? Things you need to know first.

Foreclosure’s can be a great opportunity for a Home Buyer to get a property at a discounted Price.

BUT Before just jumping into this head first and ONLY looking for a Foreclosure to purchase…let’s make sure you know some details about buying a Lehigh Valley Foreclosure.

1) Typically a Foreclosure has been vacate for about 1 year BEFORE it has become available on the MLS for you to purchase. Typically, Foreclosures are sold & Listed at 20 to $30,000.00 under current Market Value.  Some are more and some are less.

2) Over 75% of the Time the Utilities in the property have been turned off and the home has been winterized. So, Bring a Flash Light to your showing 🙂

3) Not all Foreclosures can get financed by the standard FHA or Conventional Loan BUT can get financed by using an FHA 203K Streamline Loan.

4) The buyer will be responsible for turning on all the utilities in their own name to conduct any Buyer requested home inspections and leave the utilities on for the Mortgage appraisal, Homeowners Insurance Company Inspection and Municipal Resale inspection, if required.

5) The buyer will be responsible for ordering and paying for the Municipal Resale inspection for the purpose of getting a clear certificate of occupancy from the Local Municipality and also be responsible for any repairs that come up on this report.  These repairs do not need to be completed prior to settlement but usually will need to be completed and the property reinspected between 30 days and 1 year from the purchase date.

6) You can have your Real Estate Agent setup a search on the Lehigh Valley MLS to ONLY search for Foreclosured properties if you would like.  Just ask them to search the special condition of Bank Owned and this will accomplish your goal.  Today: 11-7-09 there are 247 Bank Owned Properties for sale in Lehigh and Northampton county.

7) Foreclosures come in the form of several different names: Bank Owned, REO “Real Estate Owned” , Foreclosure, HUD owned.  Depending on the type of Foreclosure and the Bank who owns the Home, will depend on the process in which you will be required to make your offer
and also the additional addendum’s you will be required to sign.

8) Foreclosures can take anywhere from 2 to 6 weeks just to get a reply from the bank.

9) Banks do prefer to have cash transactions, then conventional loans, then FHA loans.  But, do not be afraid to give it a shot if you are interested in a foreclosure…the worst thing that could happen is that your offer does not get accepted.  When your offer is going through the reply process and You are waiting on an reply to your offer from the bank…I suggest you keep watching the market just in case your offer does not get accepted.

10) Not all Real Estate Agents like working with Selling Foreclosed Properties.  So, make sure when you are looking for  a Buyer agent that you find out what types of properties they will help you purchase.

LAST NOTE: A Short Sale is NOT a Foreclosed Property.  A short Sale is a pre-foreclosure…this is when a homeowner trying to avoid the foreclosure process by conducting a short sale on their property.