Zillow can be fairly accurate under the right conditions but otherwise is a waste of time and can lead you to miss out on a well-priced house or still pay too much for a house you do buy.

If you are looking in a very consistent neighborhood with many recent sales, a Zestimate can give you a good ballpark estimate.  For example, if all the houses in the subdivision are about the same size, same size lot, same number of bedrooms and baths, have not been renovated (or they all have been), all have garages (or none do), etc., and have had six sales in the last few months, then a Zestimate will be fairly close to market value. However, if the subdivision isn’t made up of very similar houses, or doesn’t have a lot of recent sales, you’ll have a “garbage in, garbage out” situation.  For example, if you are looking at a townhouse community that also has back-to-back or piggyback townhouses, those will be included in finding the value for the larger traditional townhouse you’re looking at and whit a much higher true value.

It is a skilled human that makes the difference between a market analysis or an appraisal and a Zestimate.  A human can see and adjust for the differences that affect the value of a property, a computer program just can’t.  Even Zillow’s management admits there is a problem.

What’s an “as is” house?

by on March 15, 2013

A house being sold “as is” can mean a number of things but basically the seller is making no representations about anything is the house and will make no repairs.  Usually with an “as is” house, you can have a home inspection but then have to decide whether to go on with your purchase or walk away.  Other inspections (termite, radon, etc) can usually be done during the time allowed for the home inspection but not with the expectation of the seller making any repairs. You will probably not have the property condition protections of a regular sale although the seller is still required to disclose any defects they know of that aren’t readily apparent.  Foreclosures and short sales are typically sold as is. A good home inspection is even more critical with an as-is property, although in some cases the seller’s attorney or agent may have advised the as-is status.

An appraisal is used to establish value for a particular property.  A lender will always have an appraisal on a home you’re purchasing to make certain it is worth the amount they are lending you.  You’ll usually pay for the appraisal when you apply for your mortgage.

Appraisals are now ordered from a central organization so that a lender doesn’t have control of the appraiser as had been the case with many of the fraudulent loans done in the mid 2000’s.  Unfortunately it also means that you could have a not-so-good appraiser or one who isn’t familiar with the subtle nuances of an area which may affect the value of a property.

I would say almost always but there’s just no way to know how much margin the seller built in.  Since most people search by increments of $10-25,000, ie.: $200,000 – 250,000, or $200,000 - $260,000, sellers will try to come in under one of these cutoffs so may list their house at $249,900 when they really want $262,000.  They may not have much to play with at $249,900, which would affect their acceptance of your lower offer, or if they can afford to give you any closing costs. If inventory is low and multiple offers and escalation clauses are being used, a seller could reasonably expect to get higher than list price and will price their home lower than expected.

The bare minimum you’ll probably need is at least 5 % of the purchase price.  There are a number of options that need to be considered, including having the seller pay some or all of your closing costs or finding a program to help with the down payment.  Contact a Buyer’s Best buyer agent to determine the best loan, to look at all your options, and to see if your credit will work. That 5% minimum can be a gift from a relative.

There certainly are.  Besides the basic FHA mortgage (which isn’t just for first-time homebuyers), there are closing cost and other programs available, often in the form of forgivable or low-cost loans.  These are often local programs and are usually only available for a limited time and/or have restrictions on income, credit or location.  Call us before locking in to a lender so we can make sure you have the most beneficial loan(s) for your situation.

How Can I Find a Good Inspector?

by on February 4, 2013

Like many other questions, this one is easily answered by the “first find a good exclusive Buyer Agent who is truly representing your best interests” answer. A good buyer agent will have been on many home inspections and will know inspectors who will find the things you need to know about your house. Traditional agents will often have two sets of inspectors – the ones they use when they are representing the seller and the ones they use when they are representing the buyer. Many simply have one inspector who they are sure won’t find much wrong no matter what.

Do I have to have 20% to put down?

by on January 28, 2013

No, not at all.  You can buy with as little as 3 ½%  down and a total of 5% including closing costs.  The 20% down amount means you won’t have to buy mortgage insurance, which can add to your closing costs and your monthly payment. There are also some programs that allow even less down payment and carry no mortgage insurance although have a slightly higher interest rate. Mortgage insurance rates have risen in recent years as a result of the foreclosure melt-down and are usually tied to credit scores.

When you’re interviewing agents, see if they just seem to know the area. Do they suggest neighborhoods to look based on your interests.  While an agent can’t say that one school is better than another, they can (and should) have a good idea of which school districts are ranked highest and which are ranked lowest based on objective criteria like test scores. Do they make you aware of local issues like new highways, giant incinerators, etc., that could impact home values? Can they tell you what the market is doing in a particular area and direct you to sources of more market information? There are some local ways to tell also – in Montgomery County can they tell you all the names of Rt. 355?  In Frederick County, besides what 355 is named there, can they pronounce Ijamsville? Feagaville?

It is really important to remember to avoid being influenced by the list price.  Sometimes it is a valid number, but it may just be an inflated amount that the sellers think their house is worth, or a high number that the selling agent has used to get the sellers to list the house with him or her.  Much more important would be to have a good market analysis prepared by your Buyer’s Best buyer agent.  That would be your best indicator of actual market value, and a good guide for you to know what to offer and when to walk away