Michael Falotico

What effects your credit score more than anything else?

Michael Falotico — Mon, 14 Dec 2009 13:07:00 GMT

What dings on your credit affect your score and why it seems all the good loans (low rates, low/zero point, and even product availability), seem to favor those with good credit.

There are five major ‘dings’ that impact your DCS (Decision Credit Score, or FICO score) the most, some obvious, some not so obvious:

Maxed out credit cards: Doesn’t seem like a big deal in the grand scheme of things, right? Oh, it is: a maxed out credit card can reduce your DCS anywhere from 10 to 45 points, according to Fair Isaacs, a hefty price to pay for accumulating debt.
30 Day late mortgage payment: In addition to the late fees, this occurrence adversely impacts your DCS by 60 to 110 points … a whopping impact for being late on your mortgage.
Debt settlement: Also known as debt arbitration or debt negotiation, it is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full. The downside, a 45 to 125 point drop in your DCS.
Foreclosure: Unfortunately, an occurrence we are seeing far too often as of late. In addition to the event, it will reduce your DCS 85 to 160 points.
Bankruptcy: The event that would have the single biggest negative impact on your DCS, reducing your score 130 to 240 points; an almost irreparable event.”

FICO has its own web site, fico.com, dealing with the scoring prices and it’s a good starting place for those trying to repair their credit rating.

Here are the three credit reporting agencies that use the FICO score:

Equifax (www.equifax.com)

TransUnion (www.TransUnion.com)

Experian (www.Experian.com)

The House and Senate Pass Extension and Enhances First Time Home Buyer Tax Credit

Michael Falotico — Fri, 06 Nov 2009 14:40:00 GMT

The House approved an extension of the tax credit for home buyers on Thursday, sending the measure to President Barack Obama for signature. The vote was 403 to 12. The bill, approved unanimously by the Senate late Wednesday,extends the first-time home buyer tax credit until April 30, and expands it to include some people who already own a house. Obama is expected to sign this bill on Friday. More details to come.

30 Year Fixed Rates Fall Below 5 Percent

Michael Falotico — Fri, 06 Nov 2009 14:21:00 GMT

McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.98 percent with an average 0.7 point for the week ending November 5, 2009, down from last week when it averaged 5.03 percent. Last year at this time, the 30-year FRM averaged 6.20 percent.

The 15-year FRM this week averaged 4.40 percent with an average 0.6 point, down from last week when it averaged 4.46 percent. A year ago at this time, the 15-year FRM averaged 5.88 percent. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.35 percent this week, with an average 0.6 point, down from last week when it averaged 4.42 percent. A year ago, the 5-year ARM averaged 6.19 percent. The one-year Treasury-indexed ARM averaged 4.47 percent this week with an average 0.5 point, down from last week when it averaged 4.57 percent. At this time last year, the 1-year ARM averaged 5.25 percent.

"Mortgage rates fell back this week pulling interest rates on 30-year fixed mortgages under 5 percent," said Frank Nothaft, Freddie Mac vice president and chief economist. "Lower mortgage rates should help homeowners lower their monthly payments and feed the ongoing recovery in the housing market." For instance, the Federal Housing Finance Agency reported that Freddie Mac and Fannie Mae have financed more than 3.5 million refinance loans during the first nine months of 2009.

Freddie Mac estimates that borrowers who refinanced their conventional loan during the third quarter reduced their interest rate by a median of 1.1 percentage points, which will save these borrowers an aggregate of $3 billion in mortgage payments over the next 12 months. "Further, pending sales for existing homes rose for the eighth straight month in September to the strongest pace since December 2006, while spending on private residential construction jumped 3.9 percent and represented the largest gain since July 2003. In the third quarter of this year, residential fixed investment added almost a full percentage point to economic growth."

Long-Term Rates Down for Third Consecutive Week

Michael Falotico — Fri, 18 Sep 2009 10:48:00 GMT

Freddie Mac today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 5.04 percent with an average 0.7 point for the week ending September 17, 2009, down from last week when it averaged 5.07 percent. Last year at this time, the 30-year FRM averaged 5.78 percent. The last time the 30-year FRM was lower was the week ending May 28, 2009, when it averaged 4.91 percent.

The 15-year FRM this week averaged 4.47 percent with an average 0.6 point, down from last week when it averaged 4.50 percent. A year ago at this time, the 15-year FRM averaged 5.35 percent. This is the lowest the 15-year FRM has been since Freddie Mac started tracking it in 1991.

"Interest rates for fixed-rate mortgages eased for the third consecutive week and remained at 3-month lows," said Frank Nothaft, Freddie Mac vice president and chief economist. "Interest rates for 30-year fixed-rate mortgages have averaged just above 5 percent through mid-September, which is roughly a percentage point below last year’s average and suggests that 2009 may reach a record annual low since the survey began in 1971."

"Low mortgage rates are aiding new home construction. Housing starts for single family homes have increased consecutively over the five past months ending in July, although starts eased slightly in August. Moreover, homebuilder confidence improved for the third straight month in September, with all four regions showing positive gains, according the National Association of Home Builder’s Housing Market Index."

Housing Market Continues to Show Improvement

Michael Falotico — Tue, 15 Sep 2009 10:37:00 GMT

Freddie Mac's reports that increases in sales of new and existing homes over successive months, and favorable reports on home prices during the second quarter reinforces the message that housing markets are stabilizing. These latest developments signal a shift in the risks to the economy.

A growing threat to the economic outlook now comes not from housing, but from the weak labor market, as the housing recovery and consumer spending cannot be sustained without growth of jobs and incomes.

Nevertheless, the weak labor market does not damp the prospects for a gradual economic recovery over the remainder of this year, followed by a return to trend growth during 2010.

New $8000 Tax Credit for First Time Home Buyers

Michael Falotico — Fri, 20 Feb 2009 20:02:00 GMT

There has been a lot of chatter about the tax credits for first time home buyers contained in the new stimulus bill. Last week both the House and Senate passed the American Recovery and Reinvestment Act of 2009, and President Obama signed it into law this week.

The providions of the bill pertain to the tax credit for first time home buyer are as follows:
- The $8000 tax credit or 10% of the home's purchase price, whichever is less is available only for First Time Home Buyers(Definition of a "First-time buyer" is a buyer who has not owned a principal residence during the trhree-year period prior to the purchase).

- There is a $75,000 adjusted gross income limit for tax filers filing as single and $150,000 limit for joint return filers.

- The $8000 tax credit is available only for primary residence purchases.

- The tax credit does not require a repayment for mose cases.

- The tax credit does have a repayment provision if the homeowner does not occupy the property for a minimum of 3 years from the closing date.

- The home buyer must purchase a home between January 1, 2009 and December 1, 2009.

- The $8000 tax credit is received when yo file your tax return. An example of how the credit would work:

How does the credit affect the taxes I owe and the refund I get?

The credit reduces you tax liability, that is, in the amount of taxes you are required to pay. Depending on your tax withholdings, you could get a bigger refund or owe less in taxes when you file.

If, for example, your taxes oweed for one year are $6000, you've had $5000 withheld from your wages, and you buy a home worth $150,000, the housing credit would entitle you to a refund as show below:
                                     Tax Liability                                        $6000
                                     Minus Housing Credit                          - 8000 (The tax credit would be 10% of $150,000 or $8,000 which ever is less)
                                     Minus Withholding                              - 5000
                                     Refund                                               $7000

But, if for example, your tax liability was $10,000, and you had no withholding, then the credit would reduce the taxes you owe as illustrated below:
                                     Tax Liability                                        $10,000
                                     Minus Housing Credit                            - 8000
                                     Minus Withholding                                 -       0
                                     Taxes Due                                            $2,000

Keep in mind that if you purchased a home between April 9, 2008 and December 31, 2008 you're still elibible for the $7,500 tax credit. This tax credit does have a repayment providion to be paid back over a 15 year period, interest free.

Settlement offering free credit monitoring

Michael Falotico — Sat, 12 Jul 2008 09:41:00 GMT

If you're thinking about buying a home or refinancing, even if you've got excellent credit, you may want to avail yourself of a forthcoming free service that could help you get a better mortgage rate.

Under the terms of a national class-action settlement, you may qualify for six or nine months of daily monitoring of your credit file plus unrestricted access to your credit report and score. To be eligible, you need to have had any form of open credit account at any time between Jan. 1, 1987, and this past May 28. Those accounts can include a charge card, student loan, auto loan or a mortgage.

An estimated 160 million American consumers can meet that criterion, though eligibility expires Sept. 24.

The free monitoring services could prove especially useful for homebuyers who need to keep a sharp eye on their credit reports in the months immediately preceding their loan applications. Any significant glitch, inaccurate negative information, or missing positive information in their files could depress their credit scores dramatically.

That, in turn, could make it tougher for them to obtain the best rates in today's market, where lenders are demanding higher credit scores for their standard rates and often won't touch applicants who have low scores.

Here's a quick overview of the class action and how it might be valuable to you. Under the terms of a settlement agreed to by TransUnion, one of the three dominant credit repositories, you can visit a special Web site (www.listclassaction.com) or can call a toll-free number (1-866-416-3470) to register a claim.

The litigation against TransUnion dates back to 1998, when plaintiffs first charged that the company sold consumers' personal data to marketers in violation of federal law. Sixteen class-action suits from around the country were later consolidated into a single case against TransUnion filed in U.S. District Court in Chicago.

TransUnion denied all wrongdoing, but as part of the settlement agreed to create a $75 million fund to compensate affected class members. Since the class was defined as virtually anyone who had an open credit account anytime during the past 21 years, there's a good chance you're a member.

The settlement sets up a tiered menu of remedies for you to choose from, including:

Nine months of free credit file monitoring services if you agree not to file an individual lawsuit against TransUnion seeking damages. In addition to monitoring, where the bureau alerts you by e-mail within 24 hours of any significant change in your credit data, you can also lock your entire file so that lenders, insurance companies and others cannot access your TransUnion report without your permission. On top of this, you can receive "unlimited daily access" to your credit report and TransUnion credit score, plus a "suite of insurance scores and a mortgage simulator service" to help you qualify for a better home loan rate. TransUnion estimates the current retail value of this option at $115.50.

Six months of free credit monitoring, credit lock privileges and unlimited access to your credit report and score. This option, valued at $59.75, allows you to receive a possible cash payment out of the $75 million fund if any money is left over after paying lawyers' fees, notification costs, and priority payouts to named plaintiffs.

Even if you opt to file an individual lawsuit against the company, you are still eligible to receive six months of free credit monitoring.

The key value of the settlement options is the unlimited access you can get to your credit file, with none of the usual costs. Plus with the monitoring service, you'll be able to spot any monkey business going on in your files, such as unauthorized use of your credit cards or identity theft.

My Termite Inspection Identified a problem, what do I do now.

Michael Falotico — Thu, 29 May 2008 11:08:00 GMT

I have mentioned before, it is always a good idea to get a termite inspection when purchasing a home in the Lowcountry - and the buyer should pay for it. But what do you do if the termite inspection notes a problem.

Well, if you're like most people and will be taking out a loan, you have to address this issue. Your lender won't give you your loan without a qualifed contractor investigating the issue, and either fixing the problem or writing a letter (on their letterhead) stating that upon further review there is no problem and the reason why. If the problem had to be fixed, then make sure you get receipts from the contractor doing the work and a statement, in writing, that the work has been completed and the problem taken care of. Any letters you get from the contractor stating either the work has been completed or not needed, send them over to the lender immediately. If they are not sufficient evidence for the lender, then the lender needs to let you know that they need some additional information, otherwise you can consider the matter closed.

Getting the termite inspection problem investigated and fixed is really in the buyers best interest and not just to satisfy the lender. You never know when the problem maybe very serious, involve extensive repairs and additional termite control measures. If the home is under a termite bond, it's still a go idea to get the inspection, if nothing more than peace of mind that you know of any pre-existing termite conditions. This way you'll be purchasing the home with your eyes open and full knowledge of the condition of the home - termite inspections typically cost less than $100.

Preparing Your Home for a Successful Open House and Buyer Showings

Michael Falotico — Mon, 14 Apr 2008 13:54:00 GMT

Buyers are drawn to homes that appeal to their senses. This is important to remember when preparing your home for an Open House or Buyer Showings. Through sight, sound and smell, buyers should leave your home with a lasting impression. Here are some tips to showcase your home in the best-possible light.

Exterior

Start outside by inspecting the front of your home from across the street. Does it have curb appeal? It should look inviting, with a trimmed lawn and flowerbed and a freshly painted front door. Polish door handles and knockers and replace worn items such as a rusty doorbell. Consider adding a new doormat and flowering plants at the entrance. Do the windows need cleaning? Be sure to remove oil stains from the driveway. How does that old adage go - "You only get one time to make a first impression".

Next check the side and back yards. Add some flowering plants to the back as well. Rearrange the outdoor furniture to look inviting. Put away gardening tools. Tidy around the grill area.

Interior

Now focus on the inside of the home where cleanliness, space, smell and lighting are key.

First, get your house in tip-top condition by cleaning and clearing away clutter. Steam clean and vacuum the carpet. Make sure your floors are waxed and shiny. Touch up nicks on walls and make sure the porcelain sinks and tubs and metallic fixtures shine. Your kitchen and bathrooms should pass the white glove test. Be conscious of any lingering odors such as smoke, pets or strong-smelling foods. You may need to air out your home prior to the Open House. Consider grinding fresh lemons in the garbage disposal or even baking chocolate chip cookies. And don’t forget to empty all trashcans.

Next, set the mood. You want buyers to be able to picture your home as their own. Consider rearranging the furniture so that rooms look more spacious. Add accessories from rooms with too many furnishings to those that appear bare. Look at your countertops in the kitchen and bathrooms and the tops of your bureaus. Do they seem cluttered? Clear away and store as much as possible. The idea is to make your home appear spacious.

Lighting is also an important factor in creating an inviting atmosphere. Bright lights provide a cheerful environment and make a small space appear larger. Pull back all the drapes and open the blinds. Turn on all the lights. Make sure all the light sockets have working bulbs and install the maximum-wattage bulb that is safe for that fixture. For rooms that you want to have a warm, cozy feeling, use softer lights.

Don’t forget little touches such as fresh flowers, lighted candles in the bathrooms, new logs in the fireplace, or a bowl of fresh fruit on the kitchen counter. You may even want to set your dining room table with color-coordinated table settings.

An Open House is a terrific way to show your property to many people in a short amount of time. However, keep in mind that buyers may see seven or eight homes in a single day. The most memorable home will be the one that seemed the brightest, the most spacious and the most cheerful. So, don’t rely on buyers to use their imagination. Help them capture it. Work with your real estate professional to get more tips on creating an unforgettable home.

6 Ways to Kill Your Credit Score

Michael Falotico — Wed, 26 Mar 2008 11:45:00 GMT

Lenders, insurers, landlords and others will charge you more or flat-out reject you if you show up with a low FICO score. Here's how you may be doing yourself some harm.

Be a big spender at the wrong time

The bigger your total balance as a percent of your total credit limit across all your credit cards, the lower your score will be. FICO credit scores - the most widely used among lenders. Scores range from 300 to 850 - the higher the better, with anything above 760 being the most desirable.

Experts estimate that you lose 1 point for every percent of your credit limit that you use. So if you have a total credit limit of $10,000 and have an outstanding balance of $4,000 (40%), your score would be 40 points lower than if you had a $0 balance.

Ideally, credit experts say, your never want your balance to exceed 30 percent of your credit limit.

It's always good to pay off your balances every month. But creditors may take a few weeks or even a couple of months to report your payment to the credit bureaus.

To boost your score: Don't charge anything for at least 60 days before applying for a loan, Johnson said. That way it's likely that all the payments you've made to date will be reflected in your credit score by the time a lender requests it.

If you can't pay off your total balance in full, at least keep it under 30 percent of your total credit limit.

Be a payment-slacker

Sending in your loan or credit card payments late can really hurt.

When you're 30 days past due and your balance is still unpaid, your score could take a 60-point hit. That kind of drop could mean a much higher interest rate on loans you take out (See table below).

Late payments from your past that you have since paid off will have less and less of a negative effect on your score as time goes on. Johnson estimates that on average past delinquencies that have since been resolved might cost you 15 to 20 points.

To boost your score: Pay your bill in full and mail it as soon as it arrives, or at the very least the minimum due. Set up automatic online bill payments so you'll never be late. Or, if you are late one month, be sure to pay off what you owe as soon as possible.

How your score affects your mortgage rate
For a $300,000 30-year fixed-rate loan
FICO score	APR	Monthly payment
760-850	5.860%	$1,772
700-759	6.082%	$1,814
660-699	6.366%	$1,870
620-659	7.176%	$2,031
580-619	8.820%	$2,375
500-579	9.679%	$2,562

Be too thin

When it comes to your credit record, fat is good, emaciated bad.

Even if you're the most responsible, on-time, in-full bill payer on the planet, your credit score won't be as high as it could be if you have just one credit account.

The reason: Your credit profile is too thin and lenders ideally like to see a potential borrower responsibly managing a mix of revolving debt (such as credit cards, where you can reuse the credit after paying it back) and installment debt (such as a car loan or most mortgages, where you pay the same amount every month for a certain period).

To boost your score: Consider opening another credit-card account or two, or taking out a car loan or small bank loan.

How your score affects your auto loan rate
For a $25,000 36-month auto loan
FICO score	APR	Monthly payment
720-850	7.115%	$773
690-719	7.934%	$783
660-689	9.404%	$800
620-659	10.960%	$818
590-619	14.404%	$859
500-589	15.020%	$867

Be too young and eager

Old credit accounts count more than young ones in your credit score.

Lenders prefer borrowers who have responsibly managed the same accounts for years. That's a more reliable indicator of creditworthiness than a few months of exemplary behavior on a new account. Accounts open less than six months will hurt your score somewhat. Those open six months or more won't, while those open at least two years will help your score.

Lenders also don't like to see a borrower who's gone on a credit binge, applying for a lot of new accounts or loans in a short period.

Every time you apply for new credit, your score may be dinged by 5 points. That's not the case, though, if a broker shops around for the best loans on your behalf. In that case, if they approach multiple lenders who all pull your credit report, that will only count as one inquiry so long as they all do so within a two-week window.

To boost your score: Avoid applying on your own for a lot of loans and credit cards, particularly in a short period. And avoid excessive card-hopping.

Be too tidy

The bigger your balance relative to your credit limit, the lower your score.

But while it may be tempting to close out a credit card account when you transfer the balance to a lower-rate card, you may inadvertently hurt your score. That's because your total balance stays the same but your credit limit goes down when you close an account.

Say you have three credit cards with a combined credit limit of $24,000 ($8,000 each) and you owe $6,000 total. Your balance represents 25% of your credit limit. If you then close out one of your accounts, your credit limit goes down to $16,000 but your debt is still $6,000, which now represents 37.5% of your credit limit.

To boost your score: Don't close unused accounts when you transfer debt.

Be too nonchalant

You may be a great credit risk, but your score won't reflect that if there are errors in your credit report. The last thing you need is to have someone else's delinquencies wrongly assigned to you.

Or you may think you've got great credit, but don't realize that your spouse has been hiding debt from you, and killing your score in the meanwhile.

Unless you make yourself aware of what's in your credit report a few months before applying for a loan, you'll have no idea how a lender will perceive you, rightly or wrongly. And you won't give yourself the opportunity to improve your score.

To boost your score: Order a free credit report once a year from each of the three major credit bureaus, and make sure they're accurate. Order one every four months by going to annualcreditreport.com or calling 877-322-8228.

Two annoying but true facts: Credit scores aren't free, and the credit bureaus don't share information on you, so your credit reports and the scores based on them may vary. So if you're planning on applying for a mortgage or other big loan, you might do well to order a the 3-in-1 deluxe package from myFICO.com for $47.85. That will include your credit reports from all three credit bureaus as well as the FICO scores based on those reports.

When should I lock in my interest rate?

Michael Falotico — Fri, 14 Mar 2008 13:19:00 GMT

Your guess is good as mine. I'm not a loan officer, but I have seen clients win and lose by betting which way the interest rates are going to move. As I am writing this article, interest rates have fluctuated more than a point in the past month. In early February 2008 I had a client secure a 100% financing loan for 5.625, that same loan today would have cost them one point more. So they lucked out, but according to the loan officer, if they had waited a week, they might not had qualified because the interest rates rose so quickly.

So getting back to the question of when should you lock in your interest rate. My suggestion, is lock in the rate when you are comfortable that the rate you have been quoted is affordable. Trying to time interest rates is like trying to buy stocks at the very bottom of the market. Even though the Feds my lower the prime rate, doesn't necessarily mean that the mortgage rates will be positively affected. A lot of people believe in waiting for the Feds to lower the prime, but loan officers have told me that when that happens it spurs borrowing in other than mortgage markets, and pulls funds away from banks to make loans on homes. So don't necessarily wait for this to make up your mind. I had another client that was quoted 6%, but the Feds were planning to met and everyone expected they would lower the prime by a .25% points. They did move the rate down by .5%, and the mortgage rates went up for my client.

So what do you do - talk to your loan officer, review the interest rate market, and make this your decision when to lock in, and don't look back. After all, you're the one that will be paying the bills.

One important note - when you tell your loan officer to lock in, put it in writing and confrim that it has happened - follow up the next day. If for some reason the loan officer forgets, you're the one out of luck. Ask the question - "Do you need anything else to lock in this rate". Sometimes they will say they need a copy of the purchase contact, or some signed document that was missing from your loan application. If this is the case, immediately get the information over to the loan officer so the lock in can happen on the day you want it.

Also, just because you have qualified for a loan doesn't mean you are lock in to any particular rate. These two loan elements are not necessarily tied to each other. You can be approved for a loan without being locked into an interest rate.

How Important Is A Home Inspection?

Michael Falotico — Sun, 09 Mar 2008 11:10:00 GMT

Should a buyer get a home inspection for a home they are buying? Should a seller order a home inspection prior to putting the property on the market? There are advantages for both.

Simply put, a home inspection is a visual examination of both the physical structure and major systems of the entire home including: walls, ceilings, floors, decks, exterior covering, the roof, foundation, insulation and ventilation, plumbing, electrical, heating and air conditioning. It is not an appraisal to validate the value of a home, nor a pass/fail exam. A third-party inspector will give a report on the physical condition and suggest repairs.

Buyers

For buyers, a home inspection clause in the written offer that makes the purchase contingent upon the findings can provide peace of mind. If a serious problem is found, it allows room to renegotiate the purchase price or “opt-out” of buying the home altogether. However, this is usually uncommon. Typically, the seller will already have told the buyer about any major problems.

More often, inspections reveal less serious defects that aren’t enough to warrant backing out of the transition. However, knowing about these minor problems can prevent major disasters down the road. In addition, if specified in the inspection clause, the cost of the repairs can be at the seller’s expense. And don't think just because it is a new home, it shouldn't have an inspection. Most buyers are very excited to be purchasing a new home and they won't see things that an inspector will find. I remember one of my buyers resisting me about having a home inspection on a $800K home, but the inspector found more problems with the home than most pre-owned homes. In fact, the inspector found no insulation had been installed in the attic, something the buyer probably wouldn't have found until years later.

Another advantage to having a home inspection is it offers buyers an opportunity to become familiar with their new home and learn about maintenance to help in its upkeep. Although not required, it’s recommended that buyers be present during the inspection. This allows them to observe the inspection; ask questions about the condition of the home; and receive an objective opinion.

Inspection reports can be lengthy and appear that the home is falling apart. So be prepared. The inspector will often point out major and minor issues, and as mentioned above maintenance of the home.

Sellers

For sellers, conducting a home inspection (or pre-inspection) before listing their homes puts the control back into their hands.

When the buyer inspection finds problems, it can impede negotiations and cost the seller more in repairs. By having a pre-inspection, the seller can help eliminate any surprise findings after an offer has been made. The seller can make repairs before placing the home on the market and possibly even increase the value of the home.

A pre-inspection can also serve as a great marketing tool. Sellers are required by law to disclose any known defects in the home. Having a pre-inspection report available for buyers tells them that the seller has nothing to hide. It also gives them a clearer picture of the condition of the home.

If there are major problems found during the pre-inspection, it gives the seller an opportunity to disclose the condition up-front, making it less likely for the buyer to pull out of the deal or try to renegotiate the price.

Sellers really resist having their homes inspected. Why - because they know the buyer will be having their own inspection so why bother spend the money. I would rather know what the issues are and take care of them before the home is on the market. This gives me the choice to fix them myself or bring in a licensed contractor for the more extensive problems. And knowing the true condition of a home can bring peace of mind to buyers and sellers; and be one less hurdle in the home buying and selling process.

Your real estate sales professional will be able to provide you with a list of certified independent home inspectors in your area. The cost of these home inspections depend mostly on the size of the home, whether it is built on a slab or is raised, and one story or two, but typically range between $250 - $400. Because I want the inspector working for my clients, I always recommend my clients pay for the inspection

My house didn't sell, now what do I do?

Michael Falotico — Tue, 26 Feb 2008 03:55:00 GMT

In today's real estate market homes will normally be on the market for a longer time than they were just a year or so ago. This is to be expected if you price the home unrealisticly expecting a price that was only obtainable in 2005 or 2006. Those years were years for Sellers in Charleston, and for most of the country as well.

When you put your house on the market you did so with a goal in mind. Whether you had decided to move to a larger or smaller home, another area around Charleston or another State altogether, you put your home on the market to move. Don't give up on your plans just yet. Think about a few thinks first and give yourself an honest answer. Did I try to sell my home during the holiday season? Was my house ready to sell?. Did you price the home correctly? Was my home marketed agressively? Let's take a look at each one of these and maybe we can find the answer.

Selling During the Holiday Season - while I encourage my sellers to keep their home on the market during the year end holiday season (anyone looking at homes during this time of the year are serious buyers), it doesn't mean it's the best time of the year to sell a home either. We a now entering the buying season. Most sales are made in the Charleston area during the coming months of peaking in June and July, so now is the time to keep the home on the market. If you wait too long the peak timeframe to sell this year will have past you by.

Ready to Sell - just because you are ready to move on doesn't mean your house is ready to be sold. Have your Real Estate agent give you an honest assessment of it's condition - room by room and don't forget the closets. Unclutter. And this does't mean move all the stuff to the garage. Buyers want to see your garage as well. If you don't want to throw something away, and you don't have room - rent a storage unit. I tell my clients "Go to a large builders model home and see what they have done to make it a showcase". They are the experts at model homes - make yours look like theirs. De-personalize - take down the personal photo's. Buyers want to envision themselves living in the home, it's hard to do that with family photos spead throughout the home. Remember, the day you decided to sell your home it's no longer your home, it's a product for sale. Get over it.

Pricing - the number one reason homes don't sell. Too often I hear things like "I've got credit card bills that I need to pay off", or "I need this much money out of the house". While both of these statements might be true, it does't mean the buyer is going to help you with your finances. Buyer's don't care that you owe money to someone else, they only care about getting the home for the current market value. Because you could have gotten more for your home as couple of years ago, also doesn't mean buyers are willing to pay those prices in today's market. Have your Realtor do a Comparable Market Analysis (CMA) that will establish a pricing range, and it should be based on the latest 6 months of sales. Anything older than that is outdated and irrelvant.

Marketing - not all Real Estate Agents are good marketers. Some agents, particularly agents that haven't kept up with the latest technology, will think marketing is putting a sign in your front lawn and listing your property on Charleston's Multiple Listing Service(MLS). If your agent doesn't show you a comprehensive marketing plan, move on to another agent. A comprehensive marketing plan should consider using multiple forms of media to get the word out that your home is for sale - print, signage, word of mouth, the internet, direct mail - both regular mail and email, etc.; plus the agent needs to target prospective buyers, and other Real Estate Agents as well.

Finally, if your agent hasn't sold your home within 6 months, why would you give your home to the same agent for another 6 months or more. I see this time and time again. And I ask myself why would someone do that. To do the same thing over and over again, and expect different results doesn't make sense to me. Move on - give another Realtor with fresh ideas a try. Ask for a Comprehensive Marketing Plan - it's your money and plans that are on hold because your home didn't sell.

You would like to purchase a home, but closing cost are over $5,000 - what can a buyer do?

Michael Falotico — Thu, 24 Jan 2008 23:32:00 GMT

Depending on the cost of a home, the closing cost can be $5000 or more. This includes a number of expenses:

Lender cost include Loan Origination fees (typically 1% of the loan), Application fees, Appraisal fees,
Attorney Fees
Title Search
Title Insurance - lender and optional for buyer (but highly recommended)
Recording Fee
Home Inspection Fee
Termite Inspection Fee
One-time contribution to the Homeowners Association (.5% to 1% of the purchase price)
One year upfront payment for Property Insurance (reguired in SC)
Establishing an escrow account for Property Insurance - 3 months, and Taxes - 2 months
Courier Fees

While most of these expenses are paid at the day of closing, all of the above needs to be paid prior the the buyer getting the keys to their home. How can a buyer, especially first time home buyers afford this and at the same time have money left over to fix up their new home? Have the seller pay for some if not all of these cost.

When I run into a situation that the buyer will want to either perserve their cash to fix up the home, or they don't have this kind of money saved up, I will develop a strategy early in the buying process that we need to get the seller to pay for this expense. I have been successful over the past several years in accomplishing this for my buyers. How? Sometimes the seller is highly motivated and is willing to concede a number of terms to get their home sold in a buyer's market. Other times, the buyer is willing to pay a little more for the house, but have the seller pay for the closing cost. Each party is looking for a bottom line that they will accept - it's just a matter of how you get there.

For instance, if the seller is willing to sell their home for $200,000, and the buyer would have to come up with $6,500 for closing cost. Then as long as the home will appraise for a higher dollar amount - say $206,500, offer the seller $206,500, but have the seller pay up to 3% of the purchase price for the buyers closing cost, including prepaids (insurance and taxes). This will net the seller about the same money ($200,305), and the buyer doesn't have to come to the closing table with very much money at all - ($6,500-3% of the purchase price of $206,500 or $6,195). In this example the buyer only needs $305 at closing instead of $6,500.

Will the buyer be paying more monthly for the loan - yes. But, at today's rates that equal to about $6 for every $1000 borrowed, or $39 a month more - just over a $1 a day in the situation outlined above. But this often works out better for buyers when they want to hold on to the cash they have saved - for their new house or whatever it is needed for.

Not only is this a good strategy for buyers, but sellers need to adopt this type of strategy to make it easier to sell their home and set themselves apart from other competition. The easier seller's make it to purchase a home, especially homes under $300,000, the more they are likely to find buyers more interested in their property than other homes for sale in their neighborhood.

Why work with a Realtor when purchasing a home?

Michael Falotico — Fri, 18 Jan 2008 14:38:00 GMT

Working with a Professional Realtor provides you with many benefits.

Protection
Most likely if you were to look at homes currently on the market the home for sale will be listed with a Realtor. So the seller is has representation, why shouldn't you. If you choose to use the same Realtor the seller has employed, that Realtor is now in a Dual Agency role. That is, they can't by SC law, provide both you and the seller their full services. You loose and so doesnt' the seller. For you to receive full services from a Realtor, choose a Realtor that can be your advocate - an Accredited Buyer Representative Realtor.

Efficiency
By using a Realtor you will make better use of your time. You will be able to preview more homes in the shortest amount of time. Buyers often tell me that they saw a house the like - what they really mean is they drove by the house and saw the outside and the neighborhood. Using the services of a Realtor, you will preview the entire house - inside and out. The Reator will be able to provide you with the sales history, current taxes, and a Seller Disclosure statement that outlines any deficiencies of the house known by the seller. The Realtor will layout a plan to see the most homes to your liking, as efficiently as possible. My goal is to make sure buyers have a successful sale, not just a sale. A successful sale is one where the Buyers get to the closing table on their schedule, with the best possible terms and conditions the market will bear, and as stress free as possible.

Advice and Guidance
You have that power of the pen. You have total control whether you make the purchase and at what terms and conditions. The role the Realtor should play and take is to provide you with Advice and Guidance every step of the way, so YOU can make an informed decision.

Services offered by Realtors
Working with a Realtor provides you with 6 key services. CONFIDENTIALITY - whatever you tell a Realtor in confidence, stays with the Realtor, now and forever. OBEDIENCE - Realtors are required to follow your directions, as I have mentioned earlier, you have the power of the pen. ACCOUNTABILITY - Realtors are responsible for the money that will change hands during the real estate transaction, and all the documents, like contracts, that will be developed during the process. LOYALTY - in my opinion one of the most important services, the Realtor is loyal to only you the buyer, not the seller, the Realtor is your advocate and is responsible for looking out for you best interest only. DISCLOSURE - Realtors should always disclose material facts they know about of any home you preview. REASONABLE CARE AND SKILL - of course, anyone you hire should be in a positon to know their trade and provide you with professionalism. These services however, are only offered if you sign a Agency Agreement with a Realtor. If you choose to represent yourself, you should not expect to receive these services.

In a Dual Agency situation that I mentioned earlier, that is, when a Realtor is working for both the Seller and Buyer, the Realtor can not offer two very important services - CONFIDENTIALITY and LOYALTY. After all, how can a Realtor listen to both parties inner most thoughts about a home and pass these thoughts on to the other party - they can't. And how can a Realtor be an advocate for both the Seller and Buyer at the same time - they can't. Again you best bet is to work with a Realtor that is ONLY working for you - the Buyer.