How can you save money on closing costs?

You  get your Truth in Lending Statement from the bank and it says your closing costs are WHAT???? Yes, that piece of paper can certainly be a shocker, but here are a few ways that you can save thousands on closing costs, and try to relax, that number is intentionally high.

The bank estimates a number of fees at worst case scenario, such as your attorney costs- so the first thing to do is to look at those figures.  They may not coincide with your legal fees.  They may also include POC fees. ( P.O.C. means Paid Outside of Closing)  and that most likely, you have paid aready, so subtract those fees off the total

Did you know that the actual day of the month that you purchase your home also affects your closing costs?  That's right!

• Tip: 1:  If your mortgage payment will be $4,000 for example,  the day that you close can affect your closing costs by up to $4,000. If you know that the bank collects mortgage  payments for the month ahead, then it would make sense to you that if you close on the 2nd of the month, the bank (in this example) would require $3733. for the remainder of the month at closing. If you closed on the 30th of the month before, that same line item charge would be less than $134.  There's over $3,600 savings just  because you closed on your purchase 3 days earlier.   

You may have heard that you are supposed to close at the end of the month- now you know why. A few times, I have had clients that needed to close in the first few days of the month, and they would have incurred that big expense. What I will tell you is sometimes, but not always, you can negotiate  with the bank to NOT take this amount at closing. The result would be that your first mortgage payment would be due  the 1st of the next month, instead of the first of the following month .

Then, there are pro-rated taxes. The bank likes to have a two month share of taxes in escrow, even though the taxes are included in your actual payment, which leads me to my next closing cost cutting measure:.

• Tip: 2:  Each town collects taxes from the bank in their own manner- some collect every 6 months, some collect every 3 months, and here's where it can get somewhat complicated.  If you are closing on a home in the most inopportune month of the cycle in a town where tax collections are made from the bank every six months,  the bank will require more of an escrow (holding account) at closing.

In some cases , there  can be  7 months worth of taxes to  include in your closing statement.  Closing on the same house in a different month  will only cost 3 months of taxes in advance. If the monthly taxes work out to be $500 per month, which is still fairly cheap, your timing alone on this item alone can save you $2,000  in this minimal scenario.  When every penny counts, speak with your mortgage broker to discuss the tax collections and anticipated closing costs for the town that you are planning to move in.  Most realtors do not know about this cost-saving measure, and to be honest, I only found this out about 15 years ago- so talk to your mortgage broker or your attorney regarding  when is the most cost effective time to close on a home in the town(s) that you are interested in moving to.

• Tip: 3: Fuel costs.  If the home you are purchasing has oil heat, or propane heat, there will be a storage tank for the fuel on the property. You re-imburse the seller at market rates for the fuel that is left in the tank. So kindly ask the seller NOT to fill up the fuel tank(s), and only have the minimum delivery if they are low. New clients can often work out a deal with a fuel company, and I can almost guarantee you that the price you pay for fuel will be less than what you will need to re-imburse the seller for. Depending on the size of the tank, your estimated  re-imbursement costs can save you upwards of $500 at closing.

As always, consult professionals regarding the purchase or sale of your home. We are available 7 days a week, nights and weekends, and you can even set up an appointment online for the date and time that's most convenient for you.

Are Fairfield County home prices stabilizing?

Is it possible to gauge whether home prices in our area are beginning to stabilize, or is it just wishful thinking? The answer is yes, it is possible to gauge market stabilization, however there has to be enough sales to make an accurate judgement- right now, there are not enough sales to back up the rosy outlook that we all want. BUT that does not mean  that the market is all gloom and doom- it's not.

I have always been  fascinated by statistics, and have kept lots of market data throughout the years, and reported market data for various publications. I am not new to this- I have been actively engaged in real estate for 27 years including  selling through  a similar market. Like so many others at that time, we  didn't see it coming. One thing for sure though, I made sure that I paid special attention to what happened as we were getting out of that horrible market.

I won't beat up on the first quarters sales statistics too much. We had  the worst winter on record, here, and buyers and sellers alike waited just for that alone- so the quarterly stats may not look fantastic, but they must be seasonally adjusted, so if  you hear the media speaking somewhat pessimistically about this first quarter sales in the Northeast, I am asking you to remember that they are reporting  news as they see it from a  multi-state region- and honestly, you know as well as I do that even if you hear a report on Hartford CT real estate, it doesn't really have too much of a bearing on where we are in Fairfield County, now does it?  

The first thing that happens in a market rebound is that certain "price pockets" begin to sell in each town. What I mean by a price pocket is (for example)- a range from $500-600K will start to  move more quickly than it has, and at the same time, another price pocket of maybe 1mil- 1.2 mil will start to move. The overall market may not seem to be moving in general- (if you look at that way)  but if you pay attention to certain price points, it is.  What I see right now, is a beginning indicator of better things to come.

One thing that's always very important to remember - Pricing is all relative. If your home is worth less than it was 1 year ago, remember that the house you are buying is also worth less than it was a year ago, too. If you are purchasing a higher priced home, that seller has more to lose than you do- couple that with low interest rates, and you make out pretty good!

I would be happy to analyze your current situation with your home, and give you an honest opinion as to whether it's better for you to move now, or wait a few months, or wait a year. It will not always be the same answer- everyone's situation is different. So feel free to contact me, I love sharing my knowledge and expertise when someone can benefit.

What happens if the house you want to buy does not "appraise", and you can't get a loan because of it?

The bank sends an appraiser out to a property to ensure it is worth the amount you are willing to pay. Consider it an additional unbiased  check on the value. If you require a $500,000 mortgage on a property that is deemed to only be worth $500,000, the bank may  not give you a loan (It would be considered 100% financing) The bank looks at lending  money that is secured on a property as an investment. There would be no equity in the house on that particular scenario, and in case of a default, the bank would have a hard time recouping its investment.

Three  things can happen in this instance. The seller can reduce his price to what the bank feels that its worth. The buyer can put more of a deposit down, or the buyer can walk away from the transaction, with no penalties. Incidentally, there would be no penalty for the seller, either.

Sometimes, if and when an instance like this occurs, the seller may opt to hire an independent appraiser (that is certified through the buyers bank) for another opinion. Appaisers sometimes make mistakes, too- but don't worry too much about this- it's a rare occurrence these days. Years ago, buyers were not represented by agents. All realtors worked for the seller, even if they wrote an offer for the buyer. With buyer representation, the contracted agent holds a fiduciary relationship with the buyer. Justr another good reason to hire an agent to represent you in yuor purchase

How often should your agent conduct a market analysis of your home?

The real estate market changes daily, and certain local, national or even global events can affect your market value.There could be a recent sale that strengthens or even enhances your position in the marketplace, or a recent sale that hurts your possibility of obtaining the price that you and your agent once considered appropriate.

When a bank requests an appraisal (either for a buyer or for a re-finance) the appraiser is instructed to utilize only up to 6 months of prior sales.  So an appraisal conducted last year on your home is not an appropriate analysis for today.  If you look at my market statistics reports, you'll see that  there are changes weekly, and those changes need to be addressed as they pertain to your home's value. So the short answer is AS OFTEN AS NEEDED. That could be 15 days from the time you list your home, or every 30 days that your home remains unsold.

When is it time to reduce the price of your home?

Your home has been on the market for two months. You've had some showings, but no offers. Is it time for a reduction? and how much do you reduce the price to?

You might think to yourself, "well, the market is slower right now, my home is priced fairly- it's just a matter of time and having enough buyers come to see my house. Change your mode of thinking!

I don't care what type of market we're in, if your home does not have an offer within two weeks- a month AT MOST, reduce the price. Buyers flock to a new listing- they are actively looking and any time that something new comes on the market, they will want to see that home if it fits their criteria. Your best opportunity for an offer resulting in a sale comes when your home is first listed.

After that, you just wait for new buyers to come into the market. Your biggest pool of buyers occurs when your home is first listed. The next biggest pool of buyers comes when you reduce the price, and that has to do with two things. Buyers that may have seen your home come on the market  and felt that your price was just a little rich for them and were hoping it might come down, and the buyer pool in your new price range.

As fas ar how much to reduce, here are the hard facts. You may not like it, but here it is. 27 years worth of experience has taught me this much at least. Reduce your home by a minimum of 5% for it to make any dent.

Here's why- A lot of buyers will consider offering 90% of asking price for a home, and they do not feel like it's a lowball offer,- most houses sell at an average of 95% of asking price anyway in our area. If  your house was priced "right on the money",  they would have offered something already by this time. So, reducing your price by that 5% will surely incite someone to make an offer, where you can start to negotiate. No one says that you have to give your house away, and no agent should ever push you into accepting an offer that you are not comfortable with. I know I wouldn't. Just remember,  buyers ultimately determine market value.