Frequently asked questions home buyers and sellers:
Question: Is my earnest money automatically non-refundable when I offer on a home?
Answer: NO! When you get an offer accepted, you will be required to deposit earnest money, but it does not become non-refundable right when it is deposited. In the real estate purchase contract you have two deadlines that you would need to pass before the earnest money becomes completely non-refundable. The first is the “Due Diligence” deadline and the second is the “Financing and Appraisal Deadline”. The Due Diligence includes your inspection of the property. If for some reason the house has problems and issues that you cannot resolve with the seller, you can cancel the contract and get your earnest money back as long as you do it before the deadline. The deadline is typically 10-14 days for a residential home purchase. You can also get your earnest money back if for some reason you cannot secure the intended financing you thought you could get. You also would have to cancel this before the deadline in order to get the deposit back. The financing and appraisal deadline is usually 20-24 days.
Question: I have my 3.5% down-payment for an FHA loan. Is there anything else I need to pay for when I buy a home?
Answer: YES! When you buy a home and financing is involved you will have closing costs, in addition to the down-payment. The closing costs involve all of the lender fees such as loan origination, document preparation, lender policies, and appraisals. They also include the title company’s fees for recording the property and handling the settlement process. However, the buyer can ask the seller to offer concessions to pay for these closing costs for the buyer. For example, if the closing costs on a $200,000 totaled $5,000, the buyer can offer $200,000 but then ask the seller to pay $5,000 for them to go towards closing costs. This would eliminate the buyer having to come out of pocket for these expenses, and only have put the 3.5% down on the home.
Question: If I don’t use a buyer’s agent, can I negotiate the 3% commission that a buyer’s agent would have received off of the list price of the home?
Answer: NO! Many buyers get confused about this principle because they feel there is a commission that can be used as a negotiating point if they don’t have a realtor. They couldn’t be more wrong. What buyers fail to understand is who pays the commission, and who the commission contract is between. The seller pays the commission. This is decided BEFORE the house even hits the market and it is included in the listing agreement between SELLER and LISTING AGENT. The listing agreement is a completely separate contract between only the seller and listing agent. Typically the agreement is for 6%. The seller agrees to pay this 6% to listing agent when the house sells. The listing agent then puts the home on the market and advertises to other realtors that they will get 3% if they bring a buyer. If no other realtors are involved, the listing agent can keep the full 6% as agreed upon previously. So in essence, the seller has agreed to pay a 6% no matter if there is a buyer’s agent involved or not. The commission contract is not between buyer and seller, so the buyer cannot effectively negotiate the commission out of the purchase price. The buyer is better off being represented by a competent realtor who understands negotiations, the market, and the home buying process.
- Get pre-approved with the Josh Mettle Lending Team
This step is one of the most simple and crucial steps to buying your first home. This step is important because Josh Mettle’s team will be able to tell you how much you can afford and what your actual payments will be. Many times buyers simply find an online mortgage calculator to figure out principal and interest requirements, but don’t take into account mortgage insurance, taxes, HOA fees, homeowners insurance, credit scores, and debt to income ratios. The preapproval will also look at your credit score and Josh’s team can give you tips on how to improve it.
2.Identify your needs and wants
After you know how much you want to spend, you need to sit down and identify and your actual needs and wants. This includes everything from cities and neighborhoods, to square footage, number of bedrooms, and style of home. Being realistic about your needs and wants will save you time and headache. The biggest need should be the area you want to live. Have a realtor send you properties in different areas to get an idea what is out there. Drive different neighborhoods and see if they work for you and are close enough to your work, recreation, friends, etc. If the neighborhood doesn’t meet your requirements, then you need to scratch any houses in that area. The three L’s of real estate are Location, Location, Location and this applies to you with your home search. The best house on the planet will lose its “cool” for you if it doesn’t fit in the area you want to live in.
3-Search for a home
Once you know where you want to live, the fun can begin. Touring four to five properties in one morning will tell you if you will be able to find your perfect home in the area you have selected. If you are encouraged by the homes you see, keep looking in that area. When you see a great home, don’t be afraid to jump and make an offer.
4-Write an offer
“How much should we offer?” This phrase is usually the first thing that comes out of buyers’ mouths when they find the perfect home. The answer is, “Depends on the house!” There is no simple equation or formula that tells you how much you can offer off of list price. You need to work backwards with your realtor to determine the value of the home. Before you simply “lowball” every house you see, sit down with your realtor at a computer and review the comparables. By doing this you will be able to determine the market value and make an appropriate offer. Some houses are overpriced and you can justify putting in an offer 10% less than market value. Others are priced very competitively and you can offer 1-3% off list price, while others (such as bank repos) are priced extremely competitively and you may have to offer at least list price or even over to have a shot at landing the house.
5-Get an inspection
Once you have the house “Under Contract”, you can begin your inspection process. This includes a physical property inspection by a licensed inspector. Inspectors will check all the systems of the house including plumbing, electrical, heating, and A/C. The inspector will also look for leaks and cracks in the roof and foundation. They also can do meth and radon tests. We like to tell people this is similar to a doctor’s checkup. The inspector will not make any repairs, rather he will make suggestions and if the property needs a specialist, such as a roofer, we will get the roofer out there to look at the problem. In addition to the physical inspection, you will also inspect the title report for any possible problems with title report such as liens or judgments against either the buyer or seller. Remember that in Utah, property is sold “As-Is”, meaning the seller is not obligated in any way to fix or perform any repairs for you, however sometimes sellers may be willing to do some in order to get the deal closed.
6-Get an appraisal
Throughout the whole process you will be in touch with the lender by providing them with any information they need to get the loan processed. The lender will order your appraisal through a third party company. The appraiser will view the property and compare it to other comparable properties that have sold recently. The lender will send you a copy of the appraisal once it is complete.
7-Do a final walk through
Once the appraisal and inspection items have been completed, you are close to closing! You can do a final walk through of the home with the realtor to see the condition of the home and verify that any requested repairs were completed. This is a good time to figure out where you’re going to put the new 60” flat screen or the new sectional you are buying.
8-Settlement
Settlement takes place at a title company and involves you signing all the loan documents. You will sign a settlement statement which shows the breakdown of the monies involved in the transaction. The lender and realtor are typically present and can help answer any questions you may have. Once you have signed the title company will receive the wire from the lending institution that is giving the money and disburse it accordingly (this is called funding). Once the seller and buyer have signed and the funds are wired, the title company can record the house in your name!
9-Get the keys and move in!
As soon as the house records, it is yours and you can move in! This typically happens within one day of settlement, but can be up to four days. If you are planning to move in over the weekend, be sure to tell your realtor and lender that you’d like to sign by Tuesday or Wednesday if possible so that funding and recording can take place with no problem. Time to move in and enjoy the house! Don’t forget to invite your realtor and lender over for the house warming party!
SALT LAKE CITY — The stalled development not-so-affectionately known as the “Sugar Hole” could soon be showing signs of life.Developer Craig Mecham says hes secured financing for his most recent vision for the corner of 2100 South and Highland Drive in Sugar House.If all goes to plan, construction on the $51 million mix of street-level shops and restaurants, topped by five levels of apartments, will begin in spring 2012.”We think this will be a great asset for the community of Sugar House,” Mecham said.Its a scaled-back version of the project he first pitched in 2007. Those plans included a seven-story office structure and an abutting eight-story residential building, with retail on the ground floor of both buildings.The revised plans call for 44,000 square feet of retail space, with 204 one-, two- and three-bedroom apartments. Plans also include two levels of underground parking.”Given the prominence and significance of this particular location, were very excited that Mecham has his financing and designs in order and is moving forward,” said Soren Simonsen, who represents Sugar House on the Salt Lake City Council.The City Council, acting as the Redevelopment Agency of Salt Lake City, voted Tuesday to lend Mecham $5 million for construction of the underground parking garage. The developer also has secured a $36 million construction loan from Wells Fargo, he said.Mecham plans to repay the RDA loan with parking fees collected from tenants and the public. Rent from commercial and residential properties will go toward the bank loan. The developer is putting up about $10 million for the project, according to financial documents.”Its going to be a major complement to the Sugar House area,” Mecham said.That hasnt been the case for the past four years. In January 2008, crews began demolishing the eclectic row of shops that faced 2100 South to make way for a planned 4½-acre mixed-use development.The credit crunch created by the Great Recession made securing financing for the project difficult. The development also was a casualty of Salt Lake Citys then-maligned planning division.”With the economy and political environment, there have been a lot of issues weve had to deal with,” Mecham said. “Its been a long, drawn-out process.”
via Developer secures financing for Sugar Hole project | ksl.com.
New tax deal may speed Cottonwood Mall revivalBy cathy mckitrickThe Salt Lake TribunePublished: May 18, 2011 12:34PMUpdated: June 2, 2011 02:31AMAl Hartmann | The Salt Lake Tribune A fence remains around the empty lot of the former Cottonwood Mall at 4835 S. Highland Drive. Holladay officials hope the approval of an extension of tax increment financing will jump-start the redevelopment of the property.With the exception of Macy’s department store, the 57-acre Cottonwood Mall property sits vacant in Holladay, a victim of the recent recession.However, buildings soon could sprout on the sprawling space if its new developer, Dallas-based Howard Hughes Corp., can obtain a four-year extension from the city and other affected government entities on the scheduled start date of a 20-year tax subsidy.A 2008 agreement channels 75 percent of new property tax dollars generated by the urban renewal project back to the developer over a 20-year period, starting no later than 2013. Holladay city also pledged to give back 75 percent of its sales tax revenue during that time.Howard Hughes consultant Kris Longson told the Holladay City Council last week that the company needs more time to build the first phase, which is why it needs an extension on the subsidy.“We need to represent to our board that it’s all still in place that if they move forward, they can still make it work financially,” Longson told the council.At stake is $96 million in new property-tax dollars to offset the project’s infrastructure costs.Longson seeks a new vote of the project’s taxing entity committee — which includes the county, city, school district and others — that would authorize the 20-year diversion of new tax dollars to begin no later than 2017.Completion of Cottonwood’s Phase 1 will start the flow of tax dollars to the developer. As previously agreed, the Howard Hughes Corp. must invest a minimum of $226 million into Phase 1, constructing 134 residential units and adjacent retail and office amenities.General Growth Properties owned the 1960s-era mall and razed it in 2008, intending to invest $550 million to build a high-end, phased neighborhood of homes, retail and office space in its place. Preliminary work took place to reroute Cottonwood Creek through the property and also to raise portions of it several feet.However, the economic downturn drove GGP toward bankruptcy, stalling the ambitious construction project for more than three years.In November 2010, General Growth emerged as two publicly traded companies, having completed the spinoff of the standalone Howard Hughes Corp., which focuses on master-planned developments.On its website — howardhughes.com — the company touts the Cottonwood project as a town center that will one day “serve Salt Lake City’s most affluent neighborhoods.”At build-out, the property could feature 614 residential units, 575,000 square feet of retail and 195,000 square feet of office space.Randall Feil, attorney for Holladay’s Redevelopment Agency, said Howard Hughes Corp. would need all 20 years of tax incentives to make the project work.“If they finish [Phase 1] in 2014, the trigger year would be 2015,” Feil told the City Council.City Manager Randy Fitts remains cautiously optimistic about how soon and how fast the immense overhaul can happen.“When they arrive in our building permit office and lay some plans down, then we’ll get excited,” Fitts said.The start of actual construction will be cause for celebration in this small east-side city, Fitts added. “Next to our city’s incorporation, that will be probably the biggest news we’ve had.”cmckitrick@sltrib.comTwitter: @catmck
via New tax deal may speed Cottonwood Mall revival | The Salt Lake Tribune.
The combination of stabilizing home prices and super-low interest rates has led to housing becoming more affordable now than it has been at any time over the last two decades, according to a press release by the National Association of Home Builders.Homes are more affordable now than they have been in two decades. Now if only we could obtain some credit… © Galina Barskaya – Fotolia.comThe latest NAHB/Wells Fargo Housing Opportunity Index HOI showed that 72.9 % of homes sold over the last quarter, were affordable for families that earned an income of at least $64,000, which is the present national median income. This is the eleventh successive quarter in which this housing affordability measure has scored over 70%. In previous years, the measure rarely scored over 60%, showing just how far housing affordability has come in the last few years.However, just because homes are affordable, doesn’t mean that everyone can take advantage of the fact. Bob Nielsen, chairman of the NAHB, was quoted as saying that although housing affordability is at its highest level in 20 years, the difficulty in obtaining credit remained one of the biggest stumbling blocks to people looking to buy a home:“Tough economic conditions — particularly in markets that experienced major changes in house prices and production — as well as extremely tight credit conditions confronting home buyers and builders continue to remain significant obstacles to many potential home sales.”But for those lucky few who do have the means to obtain credit or buy a property outright, the pickings now are exceedingly rich. Take the Lakeland-Winter Haven, Fla., area, where a nationwide high 92.5% of all homes sold in the last quarter were said to be affordable to those households earning at least $53,800, the median annual income for that area.Other major markets in which homes are extremely affordable right now included Indianapolis-Carmel, Ind.; Toledo, Ohio; Youngstown-Warren-Boardman, Ohio-Pa.; and Ogden-Clearfield, Utah.And it’s not just larger markets where homes are becoming more affordable – some smaller markets have seen an astonishingly high number of affordable property sales over the last quarter, such as Fairbanks, Alaska, which led the nation with 97.8% of all homes sold being rated affordable for those earning the state’s median annual income of $91,700.It’s not all easy pickings though, as some areas are still proving to be completely unaffordable. New York-White Plains-Wayne, N.Y.-N.J., led the nation in having the least number of affordable home sales, at just 23.3%.
via Home Affordability At Its Highest in Nearly Two Decades.
This was just posted in Realtor Magazine. They have done a study of the 8 healthiest real estate markets in the country. Utah is Number 3!! Finally some good new to read. This was no surprise to us, as we have had one of our best years ever in sales.. If you have any questions about the Real Estate market in Salt Lake City, UT give us a call.
3. Salt Lake City, Utah
2011 Building Permit Forecast: 1,294
2012 Building Permit Forecast: 1,181
With lots of high-tech businesses, Salt Lake City is poised to have some grains in employment and income in the coming year. After a drop in home prices, prices are expected to rebound and increase 4.7 percent next year.
via The 8 Healthiest Housing Markets | Realtor Magazine.
The dominant theme for the third quarter was flight to safety, with bonds generally rising and stocks falling sharply. In an environment marked by particular concern about the Eurozone, both the US dollar and Japanese yen were sought as safe havens by investors.
as of September 30, 2011
Economic
Review
Most US bond indexes delivered positive numbers, with results ranging from approximately +3 to +6%. Notably, long-term US Treasuries benefited handsomely from the implementation of Operation Twist, the Federal Reserve’s program to sell short-term and buy long-term government debt.
Within US equities, the typically riskier small caps were down more than large caps. As well, international equities, encompassing emerging and developed markets, underperformed the US market. While the MSCI All Country World ex-US Index retreated -19.78% for the quarter, the drop in the US S&P 500 Total Return Index was smaller at -13.87%.
Commodities and real estate also lost ground. The Dow Jones UBS Commodity Total Return Index ended the quarter down -11.33%, while the FTSE NAREIT All Equity REITs Total Return Index fell -15.07%.
Challenges Facing Europe
Much of the risk aversion in the equity market can be traced to continuing economic challenges in Europe. In particular, Greek default remains a possibility; Spain and Italy are both financially strained; the European financial sector is under stress; and European companies in general are warning of “shortfalls.”1
1 Ewen Cameron Watt, et al, “Recalibrating Investment Strategies After a Summer of Volatility,” BlackRock Special Market Update, September 12, 2011.
2 Bob Doll, et al, “What’s Next for the Global Markets?” BlackRock Special Market Update, September 27, 2011.
3 Robert Scherfke, PhD, “Watch the World: Markets Versus Policy,” Wellington Management Viewpoints, September 2011.
These hurdles, however, are not insurmountable. The European Union may successfully expand the available capital needed to stabilize various countries and put plans in place that could support growth. 2 And when assessing potential outcomes in Europe, it is important to keep in mind that “there is more room for monetary stimulus in Europe. The European Central Bank (ECB) actually raised rates [recently]… and it could certainly cut rates by quite a lot.”3
Grounds for Optimism in Asia and the US
There are also bright spots in both Asia and the US to consider. Despite signs of slowing in global growth, which can threaten exports, “Asia still has much more policy flexibility than the developed world.” And
SALT LAKE CITY — Rock-bottom prices and record low interest rates have not been enough to drive people back into the housing market.”The mentality of this generation is apprehensive,” said Colin Wright, CEO of Henry Walker homes. “Is this really a good deal, a good value?”This morning on Sunday Edition Bruce Lindsay discussed housing trends with developer and Adjunct Professor at the University of Utah, Colin Wright. He believes the younger generation will have much different housing needs and wants. They want smaller yards and shorter commutes, which will lead to more urban housing. Getting out of debt will be more of a status symbol than a big house, and energy efficiency will also be important.The important measuring stick right now is home prices. Thirty percent of homeowners in Utah have negative equity, and the starter home may have to become the dream home for a lot of families.”Weve lost that part of the market. They cant move up. They are stuck,” said Jim Wood, director of the Bureau of Economic and Business Research at the University of Utah.He has watched Utahs housing market closely and believes home prices have hit bottom. But, he adds, we are still years away from full recovery. Short sales are keeping prices down and discouraging people from entering the market.The mentality of this generation is apprehensive. Is this really a good deal, a good value?–- Colin Wright, CEO of Henry Walker homes.”Thirty to 40% of all homes sold are bank owned or short sales,” he said. “And those are distressed sales…Most people dont want to get in there until prices stabilize.”Unemployment and poor credit have also soured the housing market, but its causing a boom in the rental industry. “The apartment market is highly attractive right now,” said Kip Paul, executive director of Commerce Real Estate Solutions. “We are actually seeing prices exceed the peak from three years ago.”In the past year, all types of apartment units experienced increases in average rental rates. A three-bedroom unit now costs about $1100 a month, and Salt Lake County only has a 5.2 percent vacancy rate -5 percent is generally considered a tight market.”We are building more but not quite enough to keep pace with what the anticipated demand is going to be,” he said.And demand within the rental industry is also changing.”Over half of those renters are now in single family homes, condos, town homes. They are not in traditional apartments,” Wood said.If rental prices keep going up, homeowners will have more options to rent their home and cover their mortgage.
via Housing market at low, options and priorities have changed | ksl.com.
| Mortgage Rates Move Higher Again |
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Average 30 yr fixed rate |
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Weekly Jobless Claims fell to the lowest level since the week ending July 10 |
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The July Trade Balance was
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The Beige Book reported that the economy is still growing, but with “widespread signs of deceleration” |
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The Fed’s Fisher expressed reluctance to ease monetary policy until fiscal policy becomes clearer |
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Dow: 10,450 +50 |
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NASDAQ: 2,240 +15 |
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| Stronger than expected economic data pushed mortgage rates a little higher again last week. Following a string of weekly drops since the middle of June, mortgage rates have now risen for two straight weeks.
Over the summer, mortgage rates have fallen substantially. Weaker than expected economic reports and the debt crisis in smaller European countries caused investors to reduce their forecasts for economic growth and produced a flight to the relative safety of government guaranteed bonds, resulting in the lowest mortgage rates in decades. Now, however, some investors are asking whether they can fall further. Weaker than average economic growth, low inflation, and an “unusually uncertain” economic outlook still make the current environment supportive of low mortgage rates, but some investors feel that these factors have been fully “priced in.” These investors feel that economic growth must falter significantly for mortgage rates to drop much from here.
Also contributing to the fall in rates was the possibility that the government would take action which would push mortgage rates lower. The political climate has turned less favorable for this, though. Growing opposition to fiscal spending of any type has reduced the chances for additional government support for the housing market and mortgage rates. |
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| The most significant economic data this week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of “intermediate” goods used by companies to produce finished products and will come out on Thursday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Friday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Retail Sales, an important indicator of economic growth, will be released on Tuesday. Retail Sales account for about 70% of economic activity. Industrial Production, another important indicator of economic growth, is scheduled for Wednesday. Empire State, Import Prices, Consumer Sentiment and Philly Fed will round out the week. |
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