Kenneth's Pittsburgh Real Estate Blog

Details on the Homebuyer Tax Credit

Kenneth Belferman (Prudential Preferred Realty) — Thu, 28 Aug 2008 11:18:46 -0500

In a previous blog, I mentioned the Homebuyer Tax Credit for first-time buyers which is included in the housing bill recently passed by Congress - the Housing and Economic Recovery Act of 2008.

To recap - the bill provides a credit of up to 10% or $7500 (whichever is less) for first-time home buyers. The "credit" is actually a loan which is paid back over 15 years in equal payments. If you sell your home before the credit is paid back in full, the balance is due at time of sale.

The credit applies to the purchase of a home made between April 9, 2008 and July 1, 2009.

Here are a few more details on this credit:

Residency - The home you buy must be your primary residence until you pay back the credit. So, if you’re thinking of buying and then renting out the property, you’ll have to pay the balance of the credit in the year that you first rent it out.

Repayment - Starts two years after the year in which the residence is purchased.

First-time homebuyer - According to the CCH Group (a tax advisory company), "a person is considered a ‘first-time homebuyer’ if he or she (or spouse) had no ownership interest in a principal residence during the three-year period before the new home is purchased."

Income Eligibility (based on adjusted gross income) - For married couples, you can receive the full tax credit if your income is less than $150,000/year. The credit is then phased out up to an income limit of $170,000. If you’re single, you can receive the full credit if your income is less than $75,000/year; the credit is then phased out up to a limit of $95,000/year.

Claiming the credit - The credit is claimed after you purchase the home, so it cannot be applied to your closing costs.

For more information on real estate in the Pittsburgh area, visit my web site at Pittsburgh Homes R Us.

Monroeville Garage Sale to Benefit Make-A-Wish Foundation

Kenneth Belferman (Prudential Preferred Realty) — Thu, 21 Aug 2008 20:18:33 -0500

Prudential Preferred Realty of Monroeville will be sponsoring a huge garage sale on September 27, 2008 to benefit the Make-A-Wish Foundation.

Donations are encouraged.

For more information please visit the Pittsburgh Community Events page on the Pittsburgh Real Estate Blog.

The Make-A-Wish foundation is a non-profit organization that fulfills the favorite wishes of children under the age of 18 who have been diagnosed with life-threatening medical conditions. The work of this foundation would not be possible without the help of volunteers, contributors, corporations, businesses, and individuals from the community.

Townhouse for sale in Chalfant Boro

Kenneth Belferman (Prudential Preferred Realty) — Tue, 19 Aug 2008 13:00:54 -0500

Low-maintenance at an affordable price ...

1010 Pin Oak Court
East Pittsburgh, PA 15112

Move-in condition, 12 year-old, 2-story townhouse on a cul-de-sac at the edge of Forest Hills. Newer paint and carpeting, kitchen pantry, lots of closet space, vaulted ceilings, skylight, private patio, security system.

$102,900

MLS# 736066

Offered for Sale by

Ken Belferman/Pat Koloskee
Prudential Preferred Realty
3911 William Penn Highway
Monroeville, PA 15146
412-372-1050 x340

For more information on real estate in the Pittsburgh area visit my web site at Pittsburgh Homes R Us.

Important Information on the Homebuyer Tax Credit

Kenneth Belferman (Prudential Preferred Realty) — Tue, 19 Aug 2008 12:14:08 -0500

You may have heard about the First-time Homebuyer Tax Credit that is part of the Housing and Economic Recovery Act of 2008.

I have included here the highlights of the credit and how it may apply to you.

Even if you are not considering a purchase at this time, you may know someone who is thinking of buying a home in the near future - so please pass along this information.

I also have available "Frequently Asked Questions" about the tax credit from the National Association of Realtors, which provides additional details. Feel free to contact me at anytime to receive a copy.

HOUSING AND ECONOMIC RECOVERY ACT OF 2008

First-time Homebuyer Tax Credit

FEATURE	H.R. 3221 - Housing and Economic Recovery Act of 2008
Amount of Credit	Ten percent of cost of home, not to exceed $7500
Eligible Property	Any single‐family residence (including condos, co‐ops) that will be used as a principal residence
Refundable	Yes. Reduces income tax liability for the year of purchase. Claimed on tax return for that tax year
Income Limit	Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000, respectively)
First‐time Homebuyer Only	Yes. Purchaser (and purchaser's spouse) may not have owned a principal residence in 3 years previous to purchase
Recapture	Yes. Portion (6.67 % of credit) to be repaid each year for 15 years. If home sold before 15 years, then remainder of credit recaptured on sale
Impact on District of Columbia Homebuyer Credit	DC credit not available if purchaser uses this credit.
Effective Date	Purchases on or after April 9, 2008
Termination	July 1, 2009
Interaction with Alternative Minimum Tax	Can be used against AMT, so credit will not throw individual into AMT

For more information on real estate in the Pittsburgh area, visit my web site at Pittsburgh Homes R Us.

Buying Foreclosures in the Pittsburgh Area - Update

Kenneth Belferman (Prudential Preferred Realty) — Fri, 11 Jul 2008 11:54:40 -0500

As a follow-up to my series of articles about purchasing foreclosures in the Pittsburgh area, I'd like to add a comment about buyer funding.

Banks and mortgage companies will consider all offers, regardless of the type of buyer funding. However, these companies have their preferences for the type of funding a buyer uses. In short, cash is king - and the fewer contingencies asked for by the buyer, the better.

The least desirable funding for a seller is an FHA loan. The reason is that the FHA requires that an FHA appraiser must inspect the property and make sure that it meets FHA guidelines for physical condition. This appraisal inspection is in addition to, and should not be used by the buyer instead of, a regular home inspection.

In this scenario, if the FHA requires repairs, the repairs must be done before closing. If the seller does not agree to make the repairs and the buyer will not or cannot make the repairs, then the buyer can walk away from the deal. Obviously, this is not a favorable position for the seller.

Conventional loans are more appealing to the seller. However, even with a conventional loan, the lender may have certain requirements for property condition, such as pest inspections and code requirements for electrical systems.

Buyers should be aware that if they are using a loan to purchase a foreclosure property, sellers will give preference to cash deals that come with no contingencies. In fact, sometimes a seller will accept a lower price offer under these circumstances because there is less chance that the deal will fall through.

As I mentioned previously (and this bears repeating) I do not recommend that a buyer waive the inspection contingencies, unless the buyer is very knowledgeable about building construction and the operation and evaluation of all home systems.

For a free pdf copy of this report or for more real estate information for the Pittsburgh area, visit my web site at http://www.pittsburghhomesrus.com

Rental Property For Sale in Regent Square

Kenneth Belferman (Prudential Preferred Realty) — Mon, 30 Jun 2008 23:01:23 -0500

Here's something that may interest investors:

Excellent Regent Square rental location - tree-lined street and walk to Frick Park. Nice 2-unit (duplex). Each unit has newer multipane windows, formal dining rooms, deco fireplaces, updated baths, sunroom/den, newer rear doors, and original woodwork. 2 newer furnaces '06, roof '05, newer concrete steps, newer 100 amp electric service, lots of basement and attic storage.

$189,900

MLS #725349

Contact me for more information or to schedule a showing. I can be reached at 412-372-1050 x340, by e-mail, or thru my web site at http://www.pittsburghhomesrus.com

Unique and Spacious Home in Plum Boro for Sale

Kenneth Belferman (Prudential Preferred Realty) — Tue, 15 Apr 2008 20:31:53 -0500

I would not normally post a listing to my blog - but this home is very unique and the owners have just dropped the price so I thought readers in the area who are looking for a home in the Pittsburgh area might be interested. It's a lot of home for the money ...

Very spacious (3800 sf) 9 year-old, 4/5-bedroom home on a half-acre at the end of a cul-de-sac in desirable area of Plum Boro. Located just minutes away from the Oakmont Country Club and Golf Course.

Features include elevator with power backup and access to all levels, hardwood floors, and wall-to-wall carpeting. Upgraded Custom Kitchen with newer countertops, pantry, newer flooring, island, 2 stoves, microwave oven, and custom-installed Sub-Zero fridge. First floor laundry room in kitchen area could be 2nd pantry.

Master bath with whirlpool tub and recessed ceiling heat lamps. Vaulted bedroom ceilings, cedar-lined closets thru-out the home.

Family and game rooms with surround sound audio and electric fireplaces.

Custom-designed lower level features an in-law suite with walk-in closet, direct access to elevator, walk-out to yard, and kitchenette. Separate laundry and utility rooms. Security system, outdoor Norwegian sauna, above-ground pool with newer cement walkway, and maintenance-free Trex decking. Plus, a 3-car heated garage and AHS Home Warranty.

MLS # 713690

Price: $235,000

Please contact me for more information or to schedule a showing.

Ken Belferman can be reached at 412-372-1050 x340, by e-mail, or thru his web site at http://www.pittsburghhomesrus.com

Tips for Selling Your Home in Pittsburgh

Kenneth Belferman (Prudential Preferred Realty) — Fri, 04 Apr 2008 19:34:56 -0500

Tips for Selling Your Home in Pittsburgh

There are numerous articles and blogs available for home sellers that deal with how to prepare a home for sale. So, why am I diving into the fray?

The answer is that this aspect of the home sale is so important that it never hurts to remind sellers. We are in a very competitive market right now and anything you can do to give your home an edge in this market will certainly benefit you in the long run.

Here are my tips for a quicker home sale:

1. Pre-inspection - Probably the number one deal-killer is the home inspection. With a lot of homes to choose from, buyers are not shy about walking away from a deal if they don't like what they see in a home inspection report.

A pre-inspection will alert the seller to any problems. Regardless of how long you have owned your home, and how well you think you know it, there will usually be something that comes up in an inspection that you were not aware of. Knowing what the problems are in advance can give you a head start in figuring out how to deal with the repairs.

You can either make the needed repairs or decide in advance how much to offer in concessions to the buyer by getting an estimate for the repairs. The bottom line is that you won't be caught by surprise.

My advice is to make the repairs, if at all possible, rather than take it to the negotiating table where things could get sticky and the deal could fall apart.

Another advantage to a pre-inspection is that you can present prospective buyers with the inspection report, along with documentation on any repairs you made. That should go a long way in gaining the buyers' trust.

Cost for a complete home inspection, including pest and radon test, will probably cost around $450. However, it's a small price to pay for the possibility of selling your home faster and at a higher price. At the very least, it will minimize the possibility of losing a sale.

2. Home Warranty - Whether or not you choose to go with a pre-inspection, offering a home warranty to the buyer is a great selling point. Home warranties typically cover all the major home systems - heating, cooling, ductwork, plumbing, electrical, water heater, dishwasher, stove, and other items. The more peace of mind the buyer has before making an offer, the more likely an offer will submitted.

Some companies are now offering a la carte "flex plans," which will allow you to pick and choose the systems that are covered, at varying costs.

2. Interior - The smallest of things can give a buyer the impression that a home has not been well maintained - even if it's in otherwise excellent condition.

A burned out light bulb, dust bunnies scurrying across the floor, chipping paint, clutter (in the home as well as the garage), dirty windows, stained carpets, scratched flooring, dripping faucets, odors - any of these can, and usually will, send up a red flag for a buyer.

Note: In the case of odors, try to figure out what's causing the problem, rather than try to mask the odor with air freshener. The heavy use of these fresheners can arouse suspicion that you're trying to hide something.

If you can afford to paint, refinish hardwood floors, or replace carpeting, do so. But be careful about the colors you choose. Neutral is always best.

Try to move out as much furniture as you can to create a feeling of spaciousness, especially in smaller homes.

3. Let there be light - A dark home will probably turn off a buyer. Make sure the shades are up and drapes are pulled back for showings. Turn on all your lights, even if it's in the middle of the day.

4. Exterior - Make sure lawns are mowed and leaves are raked. Check for loose or disconnected downspouts. Screen doors should be in good condition. Consider new paint or a power wash for siding. Replace the doormat if it looks worn. De-clutter the yard, front and rear. Check the condition of your deck if you have one.

5. Updates and upgrades - There are also larger projects you may want to consider, such as updating your kitchen and baths, which buyers consider the two most important rooms in the home. However, you'll have to be careful that you don't over-improve. In other words, you want to avoid having a lot more money invested in the home than what it can sell for in your particular market.

You may also want to consult a professional in the field of home staging. These people are trained to bring out the best in the appearance of a home.

If you can't afford to make all the repairs or improvements that are needed, do as much as you can. Every little bit will help. If nothing else, keep your home spotless (especially kitchens and baths). It will go a long way toward making a good first impression.

For more suggestions on how to prepare your home for sale, visit HGTV's web site at:

http://www.hgtv.com/hgtv/ah_real_estate_selling/article/0,,HGTV_3165_5819925,00.html

Ken Belferman can be reached at 412-372-1050 x340, by e-mail, or thru his web site at http://www.pittsburghhomesrus.com

Buying Foreclosures in the Pittsburgh Area - Part 3

Kenneth Belferman (Prudential Preferred Realty) — Sun, 23 Mar 2008 13:00:36 -0500

Buying Foreclosures in the Pittsburgh Area

PART 3 OF 3 - FORECLOSURE PRICING

In this final part of the series on buying foreclosures, I'd like to discuss the topic of how foreclosures are priced. Some people are under the impression that you can buy a foreclosure for pennies on the dollar. This is very rarely the case and usually leads to wasted time and effort and disappointment for buyers.

Lenders will price a foreclosure based on a number of factors. These include the money owed on the mortgage and any other outstanding liens such as mechanic's liens or unpaid property taxes. The lender has other expenses as well, such as legal fees as part of the foreclosure process, clearing the property of debris, and the cost to market the property.

According to Freddie Mac (Federal Home Loan Mortgage Corporation), the average cost to foreclose on a loan is in excess of $50,000, and the average loss on sale at foreclosure is 20 percent to 25 percent of the loan's value. This is why lenders will usually work with owners to avoid foreclosure if the owners notify the lender ahead of time that they are in financial trouble. This is also why lenders are not willing to sell these properties at bargain-basement prices.

Before placing a property on the market, the lender will have an appraisal performed to determine market value. The pricing is then based on how much is still owed on the property and the current market value, while taking into consideration the cost of work needed to put the property into good condition.

For example, a home that would normally sell for around $100,000 and needs $30,000 worth of work would probably list for around $70,000. Even at a sale price of $70,000 it's more than likely that the seller is losing money on the deal.

The average Sale Price to List Price (SP/LP) ratio in Allegheny County in 2007 was 90%, which means these properties sell at an average of 90% of the listing price. However, this ratio can vary widely by area. Below is a sample of SP/LP ratios based on 2007 statistics taken from the West Penn MLS:

McKeesport - 86%
Monroeville - 96%
Hampton - 96%
Murrysville (Westmoreland County) - 97%

All of which is to say is that the belief that a buyer can put in an offer which is 30% of the listing price and expect to even get a counter offer is, for the most part, a myth.

So, how can a foreclosure be a good buy? If you're prepared to do all or most of the work yourself or if you know a contractor who is willing to give you a break on prices, then there are some good deals lurking out there. Even if you pay the going market price for repairs you still could save some money.

If you're patient, you can also wait for price reductions made by the seller if the property sits on the market for a while. But with this approach you run the risk of losing it to someone else.

You should team up with a real estate agent who can show you a foreclosure before you submit an offer and who can perform a Comparative Market Analysis, which will provide an estimate of the property's market value.

When you look at a foreclosure in person, have someone with you who is experienced with recognizing problems and estimating repair costs, if at all possible.

At this point you should be able to determine whether or not a purchase would work for you.

Ken Belferman can be reached at 412-372-1050 x340, by e-mail, or thru his web site at http://www.pittsburghhomesrus.com

Buying Foreclosures in the Pittsburgh Area - Part 2

Kenneth Belferman (Prudential Preferred Realty) — Thu, 20 Mar 2008 20:59:26 -0500

Buying Foreclosures in the Pittsburgh Area

PART 2 OF 3 - BUYER'S COSTS

This is part 2 of a 3-part series dealing with issues to be aware of when considering the purchase of a foreclosed property. This article will address the topic of buyer's costs.

In a foreclosure situation, some of the costs that are normally paid by the seller are passed on to the buyer. These costs may include:

Full amount of Transfer Tax
Dye test
Occupancy permit inspections
Turning on utilities in homes that have been winterized (if applicable)
De-winterization and re-winterization of the property (if applicable)

The seller will normally supply the buyer with addendums to the sales agreement which will indicate what each party will be responsible for in terms of costs and other matters related to the sale and closing. These addendums will usually override the related terms of a standard agreement of sale.

You should review these addendums with your real estate agent or lawyer before putting your final signature on a sales agreement or the addendums.

What follows is a worse-case scenario of the additional costs for buyers. Each seller will differ as to the terms of the sale so be sure to read the addendums.

TRANSFER TAX

In the State of Pennsylvania, conveyances of real estate are taxed (gee, what a surprise!). The tax rate varies from area to area and is based on the final sale price of the property. Below are some examples of transfer tax rates by area:

City of Pittsburgh - 4%
Monroeville - 2.5%
McKeesport - 3%
Murrysville - 2%

Most areas of Allegheny and Westmoreland Counties have a transfer tax rate of 2%.

Normally, the buyer and seller will split this cost, although this can be negotiable. In the case of a foreclosure, expect to pay the full amount.

DYE TEST

Many areas (not all) require a dye test for a property before it is sold. The purpose of this test is to make sure that any water run-off on the property is not going into a sanitary sewer system.

Normally, the seller pays for this test, which could cost anywhere from $100 to $250, based on the requirements of the municipality in which the property is located. Any repairs necessary to comply with the dye test ordinance are negotiable between the buyer and seller. If problems are found, repair costs can be reasonable (under $1000) or significant (much higher).

However, with a foreclosure, be prepared to at least pay for the test. You may be able to negotiate repair costs.

OCCUPANCY PERMIT INSPECTIONS

Some areas require an occupancy permit inspection to make sure a property is in compliance with local safety and health codes. When required, the seller usually pays for the inspection and often will pay for repairs to meet compliance, as the property cannot be sold without the permit being issued.

With a foreclosure, be prepared to pay for the inspection. Cost will vary by area. Repairs may be negotiable.

TURNING ON UTILITIES IN HOMES THAT HAVE BEEN WINTERIZED (IF APPLICABLE)

When a property is foreclosed, the seller will usually turn off all utilities and have it winterized to prevent water from freezing in the pipes during the winter. As water expands when it freezes, pipes could crack or burst if not properly winterized.

With a foreclosure, the seller will usually require that the buyer pay to have the utilities turned on. The utility company may waive this charge under certain conditions. You should be aware that the seller will usually hold the buyer responsible for any damage that may occur when the utilities are turned on.

DE-WINTERIZATION AND RE-WINTERIZATION OF THE PROPERTY (IF APPLICABLE)

The seller will usually require that the buyer pay all costs for de-winterizing and re-winterizing a property for the purpose of home inspections. Expect the cost for this to be around $250.

That's a basic run-down of the additional costs you can expect to incur in the purchase of a foreclosed property. Again, responsibility for these costs can vary.

Ken Belferman can be reached at 412-372-1050 x340, by e-mail, or thru his web site at http://www.pittsburghhomesrus.com

BUYING FORECLOSURES IN THE PITTSBURGH AREA - Part 1

Kenneth Belferman (Prudential Preferred Realty) — Sun, 16 Mar 2008 20:51:15 -0500

Buying Foreclosures in the Pittsburgh Area

Part 1 of 3

Purchasing a foreclosed property has become an attractive alternative to buyers now that money is tight and the number of foreclosures has increased. Seasoned investors know how the process works; people who are new to this and purchasing a home as their primary residence - especially for the first time - or buyers who are considering getting into investing, may not be quite as savvy.

The purpose of this series of articles is to help buyers make an informed decision as to whether or not a foreclosure is the right choice for them. The topics I'll be covering include:

Part 1 - Condition
Part 2 - Buyer costs
Part 3 - Pricing

These articles are not intended to be exhaustive of the subject matter but to give a general overview and they address the most common scenarios. Remember - in real estate every transaction is different in some way.

Before diving in to this subject, let's define a foreclosure. A foreclosure is a legal procedure in which property pledged as security is sold to satisfy the debt. This procedure passes title to the property to either the person holding the mortgage document (bank, mortgage company) or to a third party who purchases the property at a foreclosure sale.

A foreclosed property can be purchased by anyone at a foreclosure sale (also called a sheriff's sale or auction), but that's a riskier venture and is a topic for another article.

Condition

Foreclosures are almost always sold as-is. This means that the seller, in most cases, will be willing to make very few, if any, repairs on the property.

Another thing to keep in mind is that whereas in a normal property transaction (not a foreclosure or estate sale) the seller will provide a document disclosing his/her knowledge of any problems with the home, in a foreclosure this is not the case. The bank or mortgage company holding title will not have lived in the property and therefore will have no knowledge of the physical history of the property or of any current problems. In other words, the seller's disclosure will be blank. This is where the buyer needs to exercise due diligence in having the property thoroughly inspected. Cosmetics (paint, carpeting, plastering, missing plumbing and electrical fixtures, landscaping, etc.) can be the least of the problems.

Buyers should always elect to have a home and pest inspection performed as part of the contingencies of purchasing any property. In most cases, these inspections will be required by a lender. If you're paying cash and have extensive experience in construction and knowledge of home systems, hiring a home inspector may not be necessary.

However, home inspectors are trained in the thorough examination of all systems and the structural integrity of a home. If there's any area you feel you don't know enough about, don't chance it - hire a trained professional! Additionally, the recent concern about radon exposure may inspire you to have a radon test performed as well.

Some of the more common areas of concern I've seen in foreclosed properties include termites, plumbing, electrical, heating (furnace), structural damage, and mold.

In the Pittsburgh area it is not uncommon to find water intrusion problems, especially in older homes. This is how mold starts. While you may be able to solve some minor mold problems with Clorox and elbow grease, there is no way to be certain without consulting someone who is certified to determine the type of mold present. Some types of mold are highly toxic and will require professional mitigation.

Another problem that is becoming more common is the theft of copper plumbing. As the price of copper rises, so does the incidence of theft. Homes that sit vacant for extended periods of time, as foreclosures often do, become more prone to vandalism, especially if the home has not been thoroughly secured.

If the copper plumbing is stolen, the seller may offer to have it replaced - but is not obligated to do so. If the seller does not replace the missing pipes, this adds a problem to the purchase, as the plumbing system will not be able to be adequately inspected.

Electrical problems can run the gamut from inadequate or poor quality wiring to outdated wiring, i.e., fused panels or knob-and-tube wiring on some older properties. While this type of wiring can still be perfectly functional, some lenders will not approve a loan without having the wiring updated and making sure it is up to code. It may be difficult or more expensive to purchase homeowner's insurance as well. This situation can apply to the purchase of any property.

Generally speaking, the condition of foreclosed properties tends to be poor to fair. This doesn't mean that you can't find one that will need a minimal amount of work - just expect to pay more for it.

Ken Belferman can be reached at 412-372-1050 x340, via e-mail, or thru his web site at http://www.pittsburghhomesrus.com.

How Does the Escrow Process Work?

Kenneth Belferman (Prudential Preferred Realty) — Mon, 01 Oct 2007 15:04:45 -0500

One of the stages of the home buying process is escrow. This process begins when the offer is accepted and ends once the financing is approved and the buyer and seller have fulfilled their requirements. So how does it work?

A neutral third party agent of the principals-buyer, seller, lender and borrower-is designated the escrow holder. This agent assists with the transfer of ownership by ensuring that the terms of the transaction are completed including safeguarding all funds (including the buyer's deposit) and documents.

The escrow holder keeps track of obligations of the seller or buyer. For example, if the seller is required to supply a termite inspection, the escrow holder will make sure it is fulfilled before any funds are transferred to the seller. Findings in the termite inspection report must be corrected on or before the close of escrow.

In addition, the escrow holder receives from the title company a complete ownership history of the property and any liens on record in the preliminary title report. Any discrepancies that affect the condition of the title, such as condo liens, judgments, etc., against the buyer and seller, must be addressed prior to close of escrow.

The escrow process can last any number of days depending on what is agreed upon between the buyer and the seller. To assure a timely closing, it is important that each party provide the escrow holder requested information as soon as possible. For example, a lender will not fund a new home without a homeowner's insurance policy. Without the lender's verification that there is insurance, the escrow process may be delayed. An unsecured source of funding, such as a personal check can also delay the process, because it takes longer for those types of funds to clear.

The escrow process is just one step towards fulfilling the dream of homeownership. Your real estate professional can provide more detail on the escrow process, as well as answer other questions you may have about home buying and selling.

Ken Belferman can be reached at 412-372-1050 x340, or thru his web site at http://www.pittsburghhomesrus.com/. Prudential Preferred Realty is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity.

What is the Role of a Title Company?

Kenneth Belferman (Prudential Preferred Realty) — Mon, 23 Jul 2007 21:11:36 -0500

Title companies provide title insurance services to buyers, sellers, lenders and developers, essentially anyone who has an interest in real estate. Services vary throughout the country, depending on local practices and laws. In many states, title companies handle escrow as well as perform and insure title searches. A title search involves searching public records to ascertain if the seller has the legal right to sell the property. In other states, attorneys conduct title searches.

Title companies conduct a chain of title, which is a review of the owner history of the property, checking for who purchased the property, who sold it, and when. They perform judgment searches to determine whether there are any general liens against the property, as well as tax searches to verify the present status of taxes.

Some title companies conduct on-site inspections to verify lot size, the location of improvements, and evidence of unrecorded easements.
They issue a "Commitment of Title Insurance" to lenders after completion of the title search and they receive instructions and documents for the closing. Title companies also prepare a final Settlement Statement.

If it acts as the escrow holder, the title company receives a buyer's earnest money, which is deposited in an escrow account until the closing, or final settlement.

As a neutral third party agent of the principals-buyer, seller, lender, and borrower-the title company helps with the transfer of ownership by ensuring that the terms of the transaction are completed. This includes safeguarding all funds (including the buyer's deposit) and documents. Once all the details have been settled, the escrow holder disburses the funds and documents to the appropriate parties.

Another important role of the title company is to issue title insurance. Although a title search is conducted, it's nearly impossible to guarantee a title is clear of hidden defects, such as mistakes in interpretation of wills and other legal documents, impersonation of the real owner, forgery, missing heirs, falsification of records and confusion stemming from similar names. Title insurance guarantees the title as reported.

Should hidden defects surface at any time challenging an owner's rights, the title company will defend the title, in court, if necessary, and cover the owner's losses up to the full value of the policy.

Indeed, a title company can be crucial to the process of buying a home, so select a company that's known for service. If you need a recommendation, talk to your real estate professional.

Ken Belferman can be reached at 412-372-1050 x340, or thru his web site at http://www.pittsburghhomesrus.com. Prudential Preferred Realty is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity.

How Important Is A Home Inspection?

Kenneth Belferman (Prudential Preferred Realty) — Tue, 22 May 2007 20:06:06 -0500

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.

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.

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.

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. Ask your real estate sales professional for a list of certified independent home inspectors in your area.

The ABCs of Closing Costs

Kenneth Belferman (Prudential Preferred Realty) — Wed, 25 Apr 2007 13:50:05 -0500

You've found your dream home, the seller has accepted your offer, your loan has been approved and you're eager to move into your new home. But before you get the key, there's one more step-the closing.

Also called the settlement, the closing is the process of passing ownership of property from seller to buyer. And it can be bewildering. As a buyer, you will sign what seems like endless piles of documents and will have to present a sizeable check for the down payment and various closing costs. It's the fees associated with the closing that many times remains a mystery to many buyers who may simply hand over thousands of dollars without really knowing what they are paying for.

As a responsible buyer, you should be familiar with these costs that are both mortgage-related and government imposed. Although many of the fees may vary by locality, here are some common fees:

•· Appraisal Fee: This fee pays for the appraisal of the property. You may already have paid this fee at the beginning of your loan application process.

•· Credit Report Fee: This fee covers the cost of the credit report requested by the lender. This too may already have been paid when you applied for your loan.

•· Loan Origination Fee: This fee covers the lender's loan-processing costs. The fee is typically one percent of the total mortgage.

•· Loan Discount: You will pay this one-time charge if you have chosen to pay points to lower your interest rate. Each point you purchase equals one percent of the total loan.

•· Title Insurance Fees: These fees generally include costs for the title search, title examination, title insurance, document preparation and other miscellaneous title fees.

•· PMI Premium: If you buy a home with a low down payment, a lender usually requires that you pay a fee for mortgage insurance. This fee protects the lender against loss due to foreclosure. Once a new owner has 20 percent equity in their home, however, he or she can normally apply to eliminate this insurance.

•· Prepaid Interest Fee: This fee covers the interest payment from the date you purchases the home to the date of your first mortgage payment. Generally, if you buy a home early in the month, the prepaid interest fee will be substantially higher than if you buy it towards the end of the month.

•· Escrow Accounts: In locations where escrow accounts are common, a mortgage lender will usually start an account that holds funds for future annual property taxes and home insurance. At least one year advance plus two months worth of homeowner's insurance premium will be collected. In addition, taxes equal approximately to two months in excess of the number of months that have elapsed in the year are paid at closing. (If 6 months have passed, 8 months of taxes will be collected.)

•· Recording Fees and transfer taxes: This expense is charged by most states for recording the purchase documents and transferring ownership of the property.

Make sure you consult a real estate professional in your area to find out which fees-and how much-you will be expected to pay during the closing of you prospective home. Keep in mind that you can negotiate these costs with the seller during the offering stage. In some instances, the seller might even agree to pay all of the settlement costs, if permitted by the lender.