Blog :: 08-2013

A Home's Material Facts: Let us Ask and Disclose

Today's real estate climate is not the "Buyer Beware" of decades ago.  No longer do you hide the facts and hold your breath that the Buyer doesn't ask the right questions.

Even with the most honorable intentions, issues can arise. Typically, the more serious issues that come up between buyers and sellers are questionable boundary lines (location of, easements, rights-of-way), septic problems (failing system), and moisture issues around rot and mold. These can become contentious, leading to terminated contracts or legal battles.

Disclose, disclose, disclose. That is the key to keeping things moving forward and avoiding the post-closing litigation. A property owner who lists with a professional will be asked to fill out a 6-page Seller's Property Information Report. This facilitates full disclosure of material facts regarding the home. It encompasses 7 sections: Land, Mechanical systems, structural components, water supply, sewer/septic wastewater system, additional information, and condo/homeowners' associations.

Sellers are expected to fill this out accurately and to the best of their knowledge. Such disclosures protect both the buyer and the seller.

If a home is not listed with a professional, a buyer needs to ask all the right questions, and a Seller needs to come clean about everything related to the house. This includes, but is not limited to, information regarding flood areas, underground storage tanks, accurate boundary lines, rights-of-way/easements, condition of appliances, septic maintenance, and results of radon and water tests. Getting this information in writing is essential.

This is not a don't ask, don't tell situation. If you are aware of or should be aware of material facts about the home, you need to disclose.  There is no perfect home and buyers understand this.  They just want there to be no surprises after the fact. They want to be aware of everything before jumping in.

The home inspection is a time when the unknowns should come to light, including home issues that the seller was not aware of. If an inspector's list of issues includes a handful of things the buyer was told about pre-inspection, those things are not deal breakers. It's the surprises that tend to slam the breaks on a deal, or at least make everyone head back to the negotiation stage.

So, whether you are using a real estate professional or going it alone, make sure you disclose everything about the home. If you are on the buying side, ask lots of questions. When it comes to the material facts of the home, nothing is off limits.

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Financing Your Vermont Home

If you've been following home-buying news and trends over the past four years, you have heard that lending is tight and it is hard to get a home loan. With expertise in the Vermont market, I have to say this is not the reality of the situation.  Mortgage underwriters are requiring more verification's than the pre-2008 era and you may need to provide a bit more documentation, especially if you are self-employed, but loans to purchase Vermont real estate are still readily available.

If you are a first time home buyer looking to get into the Vermont real estate market you are in luck.  This is a great time to purchase a home, especially in the Burlington, Richmond, Waterbury, Stowe or Morrisville area.  Mortgage interest rates are still low, home prices are beginning to recover, and there are plenty of good lending programs to allow you entrance into the market.

One such lending program is the FHA program, allowing you to purchase a home with as little as 3.5% downpayment, possibly a gift from a parent or grandparent, and the seller can pay your closing costs.  FHA will allow as low as a 640 credit score and a debt-to-income ratio as high as 50%.

Another great program available to interested buyers in Vermont is Rural Development. This product allows 100% financing, though it does have a few more restrictions, such as income limitations and geographic restrictions. Luckily, most of the Vermont real estate market will allow buyers to qualify for such financing. In addition, Fannie Mae and Freddie Mac have low down payment programs, with as little as 5% down on a primary residence or 10% on a second home.  For the most success using a conforming loan such as this one, you will want to have a stronger credit score.

The best thing to do is to meet with a loan originator to go over your situation, see which programs you qualify for, how much you can borrow, and decide how much you are comfortable paying each month. Then you will be ready to go out and shop in whichever Vermont real estate market you choose. So, get pre-qualified and happy house hunting.

Article written for NELR by Jeff Teplitz, Mortgage Loan Officer, EverBank - Dedicated to helping clients throughout the mortgage process, with over 8 years of mortgage experience and a thorough knowledge of the Vermont and Northern New England markets.

Vermont Real Estate News: Time to Jump Into the Market

To buy, or not. That is something many people have struggled with over the past 5 years.  Will home prices decrease further? Will interest rates stay low or continue to rise? Can I time it just right to get the best value for my money? Well, if you are out there looking now, then I would say that you have timed it well.

But now your worry may be, will my offer be better than the competition's offer? News flash: homes are getting looks from buyers...many buyers.  And we are seeing multiple offers on properties in varying price ranges. Wait a minute. Is this a flash back to 2006? 2006 is often referred to as the end of the hot market but if we compare today's market to that of 2006, it becomes clear that now is an ideal time to jump into the housing market.

Looking at Vermont real estate trends, specifically in Chittenden, Lamoille and Washington County, we see that the average number of homes sold in quarter 2 (about 900) and the average sell price (about $280,000) is about the same this year as it was in 2006. The difference is, homes aren't selling quite as quickly in this market even though interest rates are lower now than they were then. In 2006, interest rates in Vermont were at 6.75% and with that rate a $300,000 loan for 30 years would cost about $1945 a month in principle and interest. Now, if you were to get the same loan with today's interest rate of 4.75% it would cost $1565, about $400 less. It is also important to note that people are employing much more creative financing these days. In Vermont in 2006, the home selling market was fueled almost entirely by conventional loans. Now, in 2013, there are many more low-income loans, cash sales, and with many veteran's returning from war, there is a large increase in veteran's association financing for home sales. There are certainly more financing options available to you than just the conventional loan.

If you look at the numbers, it is a buyer eye-opener. Supply is low; demand is high. The Vermont real estate market, as well has national trends, show that inventory has been decreasing in the last six months and while Interest rates have risen 1 point in last year and 2 points in last 5 years inventory is having a more significant impact on the market. National Association of Realtors Chief Economist Lawrence Yun said last month that compared to interest rates "the bigger concern remains too few homes available for sale, especially among homes in the lower price range" (http://speakingof realestate.blogs.realtor.org). So, while there has been talk about rising interest rates, they still remain historically low and owning is often more economical choice than renting. In fact, the mortgage you will pay on that $250,000 home is comparable to what you would pay to rent a modest 2-bedroom house.

Let's not forget the other advantages of owning your home.  Every month you pay your mortgage you are putting money into your own pocket. You have a tax deduction as well as a payment toward equity.  And don't forget appreciation. All market indications show that home prices have leveled, with the average sell price remaining about the same in the Vermont real estate market over the past seven years, leaving us to expect housing prices to see modest appreciation in the next few years and beyond. That should prompt you to start your home search.

As wonderful as all of this sounds, it still is only attainable for those who feel a sense of job security, have taken care of their credit, and have managed to save money for their required down payment and closing costs.

Go out into the home buying arena prepared. Talk to your lender to see what you can afford. Go out there with your eyes wide open. You may be surprised. And as always, feel free to contact us at New England Landmark Realty with any questions you may have.