| Greater Montana Realty Red Lodge, Montana www.greatermontanarealty.com Buyer Information |
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Appraisals & Market Value
You can get some idea of your home's value by searching the Internet. A number
of Web sites and services crunch the numbers from historic public records of
home sales to produce the statistics. Some services offer an actual estimate of
value based on acceptable software appraisal standards. They also depend on
historic home sales records to calculate the estimate. Neither of these services
produce official appraisals. They also don't factor in market nuances or other
issues a certified appraiser or real estate professional might in assessing the
value of your home. A comparative market analysis and an appraisal are the
standard ways consumers, lenders and realty agents determined what a home is
worth. Your real estate agent will be happy to provide a comparative market
analysis, an informal estimate of value based on comparable sales in the
neighborhood. You also can research "the comps" yourself by checking on
recent sales in public records. Be sure that you are researching properties that
are similar in size, construction and location. An appraisal, which generally cost
$300 to $600 to perform, is a certified appraiser's opinion of the value of a home
at any given time. Appraisers review numerous factors including recent
comparable sales, location, square footage and construction quality.
You can get some idea of your home's value by searching the Internet. A number
of Web sites and services crunch the numbers from historic public records of
home sales to produce the statistics. Some services offer an actual estimate of
value based on acceptable software appraisal standards. They also depend on
historic home sales records to calculate the estimate. Neither of these services
produce official appraisals. They also don't factor in market nuances or other
issues a certified appraiser or real estate professional might in assessing the
value of your home. A comparative market analysis and an appraisal are the
standard ways consumers, lenders and realty agents determined what a home is
worth. Your real estate agent will be happy to provide a comparative market
analysis, an informal estimate of value based on comparable sales in the
neighborhood. You also can research "the comps" yourself by checking on
recent sales in public records. Be sure that you are researching properties that
are similar in size, construction and location. An appraisal, which generally cost
$300 to $600 to perform, is a certified appraiser's opinion of the value of a home
at any given time. Appraisers review numerous factors including recent
comparable sales, location, square footage and construction quality.
Escrow & Closing Costs
Studies show that the closing costs, which can average 2 to 3 percent of a total home purchase price, are
often more costly than many buyers expect. Closing costs are the fees for services, taxes or special interest
charges that surround the purchase of a home. They include upfront loan points, title insurance, escrow or
closing day charges, document fees, prepaid interest and property taxes. Unless, these charges are rolled
into the loan, they must be paid when the home is closed. Closing costs are either paid by the home seller
or home buyer. It often depends on local custom and what the buyer or seller negotiates. A clear title
report ensures there are no liens placed against the prior owners or any documents that will restrict your
use of the property. A preliminary title report provides you with an opportunity to review any impediment that
would prevent clear title from passing to you. When reading a preliminary report, it is important to check the
extent of your ownership rights or interest. The most common form of interest is "fee simple" or "fee," which
is the highest type of interest an owner can have in land. Liens, restrictions and interests of others excluded
from title coverage will be listed numerically as exceptions in the report. You also may have to consider
interests of any third parties, such as easements granted by prior owners that limit use of the property.
Some buyers attempt to clear these unwanted items prior to purchase. A list of standard exceptions and
exclusions not covered by the title insurance policy may be attached.
Choosing a Home
Asking the following questions: Is the surrounding neighborhood or the home itself the most important
consideration? Is each of the neighborhoods safe? Is quality of the schools an issue? Do any of the areas
seem to attract more families with children or adult residents? And where do you fit in? Home inspections,
seller disclosure requirements and the agent's experience will help. Home ownership offers tax benefits as
well as the freedom to make decisions about your home. There also are a number of economic
considerations. Unlike renters, home owners who secure a fixed-rate loan can lock in their monthly housing
costs and make prudent investment plans knowing these expenses will not increase substantially.
Home ownership is a highly leveraged investment that can yield substantial profit on a nominal front-end
investment. However, such returns depend on home-price appreciation.
Home Inspection
Buying a home "as is" is a risky proposition. Major repairs on homes can amount to thousands of dollars.
Plumbing, electrical and roof problems represent significant and complex systems that are expensive to fix.
A home inspection is when a paid professional inspector - often a contractor or an engineer - inspects the
home, searching for defects or other problems that might plague the owner later on. They usually represent
the buyer and or paid by the buyer. The inspection usually takes place after a purchase contract between
buyer and seller has been signed. Your realty agent is one source to identify an inspector and inspectors
are listed in the yellow pages. You can ask for referrals from friends. Ask for their credentials, such as
contractor's license or engineering certificate. Also, check out their references. Rates for the service vary
greatly. Many inspectors charge about $400, but costs go up with the scope of the inspection.
Insurance Policy
A standard homeowners policy protects against fire, lightning, wind, storms, hail, explosions, riots, aircraft
wrecks, vehicle crashes, smoke, vandalism, theft, breaking glass, falling objects, weight of snow or sleet,
collapsing buildings, freezing of plumbing fixtures, electrical damage and water damage from plumbing,
heating or air conditioning systems. Such policies are "all-risk" policies, which cover everything except
earthquakes, floods, war and nuclear accidents. A basic policy can be expanded to include additional
coverage, such as for floods and earthquakes and even workers' compensation for servants or contractors.
Home-based business-coverage, an increasingly popular rider, does not cover liability associated with the
business. Insurance experts recommend that homeowners obtain insurance equal to the full replacement
value of the home. On a 2,000-square-foot home,for example, if the replacement cost is $80 per square
foot, the house should be insured for at least $160,000. For personal items, homeowners can increase
their coverage beyond the depreciated value of items such as televisions or furniture by purchasing a
"replacement-cost endorsement" on personal property. Some experts recommend an inflation rider, which
increases coverage as the home increases in value.
Making an Offer
You should always do your homework about comparable prices in the neighborhood before making any
offer. It also pays to know something about the seller's motivation. A lower price with a speedy escrow, for
example, may motivate a seller who must move, has another house under contract or must sell quickly for
other reasons. A low-ball offer is a term used to describe an offer on a house that is substantially less than
the asking price. While any offer can be presented, a low-ball offer can sour a prospective sale and
discourage the seller from negotiating at all. Unless the house is very overpriced, the offer will probably be
rejected. While your low offer in a normal market might be rejected immediately, in a buyer's market a
motivated seller will either accept or make a counteroffer. Full-price offers or above are more likely to be
accepted by the seller. But there are other considerations involved: Is the offer contingent upon anything,
such as the sale of the buyer's current house? If so, a low offer, even at full price, may not be as attractive
as an offer without that condition. Is the offer made on the house as is, or does the buyer want the seller to
make some repairs or lower the price instead? Is the offer all cash, meaning the buyer has waived the
financing contingency? If so, then an offer at less than the asking price may be more attractive to the seller
than a full-price offer with a financing contingency. Remember, that the listing price is what the seller would
like to receive but is not necessarily what they will settle for. Before making an offer, check the recent sales
prices of comparable homes in the neighborhood to see how the seller's asking price stacks up. Most offers
include two standard contingencies: a financing contingency, which makes the sale dependent on the
buyers' ability to obtain a loan commitment from a lender, and an inspection contingency, which allows
buyers to have professionals inspect the property to their satisfaction. A buyer could forfeit his or her
deposit under certain circumstances, such as backing out of the deal for a reason not stipulated in the
contract. The purchase contract must include the seller's responsibilities, such things as passing clear title,
maintaining the property in its present condition until closing and making any agreed-upon repairs to the
property. Fixtures, any kind of personal property that is permanently attached to a house (such as drapery
rods, built-in bookcases, tacked-down carpeting or a furnace), automatically stay with the house unless
specified otherwise in the sales contract. But you can consider anything that is not nailed down negotiable.
This most often involves appliances that are not built in (washer, dryer, refrigerator, for example), although
some sellers will be interested in negotiating for other items, such as a piano. In some states, you do need
an attorney to complete a real estate transaction, but in others you do not. Most home buyers are capable
of handling routine real estate purchase contracts as long as they make certain they read the fine print and
understand all the terms of the contract. In particular, you should be clear on the terms of any contingency
clauses that will allow them to back out of the contract. If you have any questions at all, it may be advisable
to consult an attorney to avoid future legal hassles. In looking for an attorney, ask friends for
recommendations or ask your real estate agent to recommend several. Call to inquire about fees and to
check on their experience. In general, more experienced attorneys will cost more, but real estate fees as a
rule are small relative to the cost of the property you are buying.
Studies show that the closing costs, which can average 2 to 3 percent of a total home purchase price, are
often more costly than many buyers expect. Closing costs are the fees for services, taxes or special interest
charges that surround the purchase of a home. They include upfront loan points, title insurance, escrow or
closing day charges, document fees, prepaid interest and property taxes. Unless, these charges are rolled
into the loan, they must be paid when the home is closed. Closing costs are either paid by the home seller
or home buyer. It often depends on local custom and what the buyer or seller negotiates. A clear title
report ensures there are no liens placed against the prior owners or any documents that will restrict your
use of the property. A preliminary title report provides you with an opportunity to review any impediment that
would prevent clear title from passing to you. When reading a preliminary report, it is important to check the
extent of your ownership rights or interest. The most common form of interest is "fee simple" or "fee," which
is the highest type of interest an owner can have in land. Liens, restrictions and interests of others excluded
from title coverage will be listed numerically as exceptions in the report. You also may have to consider
interests of any third parties, such as easements granted by prior owners that limit use of the property.
Some buyers attempt to clear these unwanted items prior to purchase. A list of standard exceptions and
exclusions not covered by the title insurance policy may be attached.
Choosing a Home
Asking the following questions: Is the surrounding neighborhood or the home itself the most important
consideration? Is each of the neighborhoods safe? Is quality of the schools an issue? Do any of the areas
seem to attract more families with children or adult residents? And where do you fit in? Home inspections,
seller disclosure requirements and the agent's experience will help. Home ownership offers tax benefits as
well as the freedom to make decisions about your home. There also are a number of economic
considerations. Unlike renters, home owners who secure a fixed-rate loan can lock in their monthly housing
costs and make prudent investment plans knowing these expenses will not increase substantially.
Home ownership is a highly leveraged investment that can yield substantial profit on a nominal front-end
investment. However, such returns depend on home-price appreciation.
Home Inspection
Buying a home "as is" is a risky proposition. Major repairs on homes can amount to thousands of dollars.
Plumbing, electrical and roof problems represent significant and complex systems that are expensive to fix.
A home inspection is when a paid professional inspector - often a contractor or an engineer - inspects the
home, searching for defects or other problems that might plague the owner later on. They usually represent
the buyer and or paid by the buyer. The inspection usually takes place after a purchase contract between
buyer and seller has been signed. Your realty agent is one source to identify an inspector and inspectors
are listed in the yellow pages. You can ask for referrals from friends. Ask for their credentials, such as
contractor's license or engineering certificate. Also, check out their references. Rates for the service vary
greatly. Many inspectors charge about $400, but costs go up with the scope of the inspection.
Insurance Policy
A standard homeowners policy protects against fire, lightning, wind, storms, hail, explosions, riots, aircraft
wrecks, vehicle crashes, smoke, vandalism, theft, breaking glass, falling objects, weight of snow or sleet,
collapsing buildings, freezing of plumbing fixtures, electrical damage and water damage from plumbing,
heating or air conditioning systems. Such policies are "all-risk" policies, which cover everything except
earthquakes, floods, war and nuclear accidents. A basic policy can be expanded to include additional
coverage, such as for floods and earthquakes and even workers' compensation for servants or contractors.
Home-based business-coverage, an increasingly popular rider, does not cover liability associated with the
business. Insurance experts recommend that homeowners obtain insurance equal to the full replacement
value of the home. On a 2,000-square-foot home,for example, if the replacement cost is $80 per square
foot, the house should be insured for at least $160,000. For personal items, homeowners can increase
their coverage beyond the depreciated value of items such as televisions or furniture by purchasing a
"replacement-cost endorsement" on personal property. Some experts recommend an inflation rider, which
increases coverage as the home increases in value.
Making an Offer
You should always do your homework about comparable prices in the neighborhood before making any
offer. It also pays to know something about the seller's motivation. A lower price with a speedy escrow, for
example, may motivate a seller who must move, has another house under contract or must sell quickly for
other reasons. A low-ball offer is a term used to describe an offer on a house that is substantially less than
the asking price. While any offer can be presented, a low-ball offer can sour a prospective sale and
discourage the seller from negotiating at all. Unless the house is very overpriced, the offer will probably be
rejected. While your low offer in a normal market might be rejected immediately, in a buyer's market a
motivated seller will either accept or make a counteroffer. Full-price offers or above are more likely to be
accepted by the seller. But there are other considerations involved: Is the offer contingent upon anything,
such as the sale of the buyer's current house? If so, a low offer, even at full price, may not be as attractive
as an offer without that condition. Is the offer made on the house as is, or does the buyer want the seller to
make some repairs or lower the price instead? Is the offer all cash, meaning the buyer has waived the
financing contingency? If so, then an offer at less than the asking price may be more attractive to the seller
than a full-price offer with a financing contingency. Remember, that the listing price is what the seller would
like to receive but is not necessarily what they will settle for. Before making an offer, check the recent sales
prices of comparable homes in the neighborhood to see how the seller's asking price stacks up. Most offers
include two standard contingencies: a financing contingency, which makes the sale dependent on the
buyers' ability to obtain a loan commitment from a lender, and an inspection contingency, which allows
buyers to have professionals inspect the property to their satisfaction. A buyer could forfeit his or her
deposit under certain circumstances, such as backing out of the deal for a reason not stipulated in the
contract. The purchase contract must include the seller's responsibilities, such things as passing clear title,
maintaining the property in its present condition until closing and making any agreed-upon repairs to the
property. Fixtures, any kind of personal property that is permanently attached to a house (such as drapery
rods, built-in bookcases, tacked-down carpeting or a furnace), automatically stay with the house unless
specified otherwise in the sales contract. But you can consider anything that is not nailed down negotiable.
This most often involves appliances that are not built in (washer, dryer, refrigerator, for example), although
some sellers will be interested in negotiating for other items, such as a piano. In some states, you do need
an attorney to complete a real estate transaction, but in others you do not. Most home buyers are capable
of handling routine real estate purchase contracts as long as they make certain they read the fine print and
understand all the terms of the contract. In particular, you should be clear on the terms of any contingency
clauses that will allow them to back out of the contract. If you have any questions at all, it may be advisable
to consult an attorney to avoid future legal hassles. In looking for an attorney, ask friends for
recommendations or ask your real estate agent to recommend several. Call to inquire about fees and to
check on their experience. In general, more experienced attorneys will cost more, but real estate fees as a
rule are small relative to the cost of the property you are buying.
