Market Buzz

Market Buzz is a weekly column written by Bethel resident and Realtor® Pat Forger.

Should I Rent or Should I Buy: Part 2

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SHOULD I RENT OR SHOULD I BUY? PART 2 ~ By Patricia Forger

Last time we discussed the options of buying or renting when you are fresh out of college and are just starting out.  You have realized that renting is probably your best option at first.  So, the first thing you need to do, after you have found your rental, is sign a Lease Agreement.  This document protects not only you but the Landlord and commits both of you to a set term for your tenancy.  In most instances, the Lease Agreement is boilerplate and straight forward.  But, make sure you read the entire Agreement and if you have any questions at all, have someone else review it or consult with an attorney.   Here is a link to a sample lease agreement: http://aniceapartment.com/967_new_lease_with_sample_lease_only.pdf

You will be required to pay the first month’s rent and a security deposit which could be either one or two months.  The security deposit is not normally used for the last month’s rent.  In Connecticut, the Landlord is required (in residential leases) to put the funds in an interest bearing account and the current interest paid (it can change yearly) is 1.5%.   Here is a great link to the CT Department of Banking site which discusses rental security deposits and can answer some commonly asked questions: http://www.ct.gov/dob/cwp/view.asp?a=2247&q=299050

One other option which I have not yet discussed is renting with an option to buy.  It’s not a normal every day occurrence but it can be a possibility.  Since the real estate market in Connecticut is much different now than it was 5 years ago, Sellers are finding themselves in a bind with home values dropping substantially from what they paid when they purchased the house.  They may not be able to sell their home to cover the mortgage payoff.  Some Sellers have lost their jobs and need to relocate for a new job but since they cannot sell the home and payoff the mortgage, they need to figure out what they can do.  Some Buyers may not yet qualify for a mortgage as they are just starting out but may be able to after a a year or two.  Renting with an option to buy could help both of you out.  Basically, this means you, as the tenant,  are renting a property with an option to buy it at a future date. The price of the property to purchase should be set and agreed upon by both the tenant and landlord at the time the lease-option is signed.   Either an up-front payment (deposit) is put down by the tenant to purchase the property.  This amount varies.  It can be handled by the tenant paying an extra set amount each month with the rent.  The extra funds are held by the landlord and used toward the purchase price of the home at the end of the lease-option period.  However, Buyer beware, as the extra amount that the tenant is paying is not returned to the tenant at the end of the lease-option if the tenant decides not to purchase the property.  An attorney is needed to review any lease-option agreement to protect both the landlord and the tenant’s rights.

Whatever your decision – to rent or buy – will come after some hard work and a reality check – here’s a place to start – http://realestate.yahoo.com/calculators/rent_vs_own.html.  This “rent vs. buy calculator” can help you  get started!  Good luck with whatever you decide and remember – always start with a Realtor® to help you in your search!

Pat Forger, Sales Executive, Realtor®

Turning your dreams into an address!

Cell:  203-300-6168

Patricia@NeumannRealEstate.com

Tweet me: @dream2address

Should I Rent or Should I Buy? Part 1

POSTED BY  ⋅ SEPTEMBER 2, 2011 ⋅ LEAVE A COMMENT

SHOULD I RENT OR SHOULD I BUY? – PART 1 ~ By Pat Forger

So, you’re fresh out of college, have secured the job, have benefits, 401-K, vacation time and possibility of a bonus at the end of the year.  (Yes, even in this economy there are people out there with the great jobs!).  You are also saddled with school loans and very little savings as you needed to buy a car to get you to that job.  But, you are ready to move from home and find your own place.  What are the options?

Obviously, home values are so low that you think about buying instead of renting but, you must first think of some of the obstacles:

1.         The lenders out there are very hesitant in giving loans to someone just starting a new job and have not had a steady income for more than a year.  Most businesses have their new employees on a probation period which means the job you thought was secure could end after 3 to 6 months.

2.         You may not have any established credit.  The car you bought came with a car loan and you are paying that monthly but you need to prove that you can keep up with the payments.  Of course you may have a credit card or two but again, you need to show that you can pay it every month and on time.

3.         You don’t have the 10% to put down on a home.  Even if you did, financing 90% could be difficult for you.   Plus you need to furnish the home and what if your car breaks down?  In this economy, it’s smart to have at least 6 months of savings in the bank to meet any unforeseen emergencies.

So, since you are just starting out, renting seems to be the best option for you.  I personally think it’s the best thing to do as you can begin to manage your monthly expenses.  In most cases, you, as the tenant, will be responsible for paying the utilities which mean, electric and gas, heat, cable, water/sewer, garbage pickup.   Also, you will need to pay a security deposit which normally consists of two months rent plus paying the first months rent.

The rental market is hot right now.  There are a lot of people who can no longer afford to stay in their homes and are looking to rent so tread carefully.

I’ve said it before and I’ll say it again, first off, find a Realtor®!  You want to make sure you are protected and have someone working just for you.  Make up your list of what you are looking for in a rental, what you can spend monthly (rent and utilities) and where you want to live.  Once you meet with your Realtor®, they will be able to assess your needs and supply you with a list of possibilities.  Keep an open mind and don’t refuse to see a rental just because it’s not what you have in mind.  Bring along a family member or friend to give you another perspective as begin your search. You may think you want a condominium but instead you look at a unit in a multi-family house and instantly fall in love.

If you plan on living alone instead of having a roommate, think about a smaller place which will come with a smaller monthly price tag.  That way you can begin saving every month to put toward your future down payment for a home.   Also, think about a roommate or two.  That will enable you to split the rent and all expenses, accordingly.  If you do go the roommate route, make sure the lease is in all of your names to avoid one or more of you being stuck with all the expenses if one roommate decides to skip out.  Sharing a rental can definitely be tricky.  You need to know who you are rooming with and make sure the room selection, bathroom schedule, cleaning and shopping details are all figured out and agreed upon before you sign that lease.  Remember, you had roommates in college and you remember how much fun or how miserable that was!

Next week we’ll continue with Part II which will include the lease agreement – what should I expect?

Pat Forger, Sales Executive, Realtor®

Turning your dreams into an address!

Neumann Real Estate, Christie’s International Real Estate

72 Route 37

New Fairfield, CT 06812

Cell:  203-300-6168

Patricia@NeumannRealEstate.com

What Do I Want Versus What Do I Need?

POSTED BY  ⋅ AUGUST 18, 2011 ⋅ LEAVE A COMMENT
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What Do I Want Versus What Do I Need? ~ By Pat Forger

I mentioned in early articles that when you are ready to buy a home you need to figure out what type of home you want – single family, condominium, two-family, etc.  Well, what about inside the home?  When you first start looking at homes either on-line or in person, you see a lot of options.  You may even see things that you never thought you would want and then find that you would not be able to live without them.  So, of course, my Number 1 rule is – start a list!

1) Of course, you need the basics – bathrooms, kitchen, living room, bedrooms.  But, what about a den, garage or family room?  Is the house you are looking for one that you will grow into with your family or one where you are downsizing?

2) Then there is the kitchen – do you enjoy cooking?  Is a gas stove a must?  What about a pantry?  Wouldn’t it be nice to have cherry cabinets and stainless steel appliances?  What about a wine refrigerator and an island large enough to fit some chairs and can also be used as a breakfast bar?  Is tile or wood floors preferable?  And of course, granite or Corian® countertops?

3) Bathrooms – ahhhh soaker tub or Jacuzzi® type tub?  Separate shower and radiant floor heating?

4) What about the backyard – do you want a large yard?  Do you need a fenced in area for your pet?  What about a pool?  Would you prefer a lot of grass or would rather have a large patio with mature landscaping and minimal grass to cut?  What about a deck?

5) Location, location, location – would  you mind living on a busy street?  Is parking an issue or would you prefer to live in a rural neighborhood with a cul-de-sac?

6)  Is central air a must?  Do you want a fireplace or wood stove?

After you think about everything that you may want, after each item ask yourself, How important is this to you and your family and give it a ranking between 1 and 5 with 5 being the most important.  Make sure you include your entire family – even the younger children!   After the list is completed, make sure you give a copy of it to your Realtor®.  It will help guide him/her in finding the right home for you.  Your Realtor® will also be able to show you what you can and cannot afford at the present time.

When your list is complete you will see it more as a wish list as an actual “this is what I can afford” list.  But, that’s okay.  Unless the house you are looking at is brand new, and gives you the opportunity to pick the options and finishes, you can buy an existing home and slowly update it – either yourself or with help.  Remember it’s the bones of the house that is so important.  If you can only afford a smaller home but know that you may one day want to expand, check that out before you buy the house.  Make sure you that you can add additional rooms or outdoor areas.

Granite countertops are not the end all – there are so many types of less expensive options that you can finish your kitchen and bathrooms with.   Formica has come a long way and the look and finish can be just as desirable as its more expensive alternatives.   Also, there are many types of flooring options besides tile or hardwood floors – take a look at laminate flooring.

The one thing you need to remember is that you should never go overboard when buying a house.  You can slowly renovate to make the house your home.  The most important thing is to make sure you’re happy with your choices and have cash in your pocket to insure you will enjoy your new home for years to come!

Next time – Renting vs. Buying – what option is best for me?

Pat Forger, Sales Executive, Realtor®

Turning your dreams into an address!

Neumann Real Estate, Christie’s International Real Estate

72 Route 37

New Fairfield, CT 06812

Cell:  203-300-6168

Patricia@NeumannRealEstate.com

To Sell Or Not To Sell; That is the Question, Part 2

POSTED BY  ⋅ AUGUST 12, 2011 ⋅ LEAVE A COMMENT

To Sell Or Not To Sell; That is the Question, Part 2 ~ By Pat Forger

To continue from last week – There are many reasons to sell your home.  You might want to downsize if you are retiring or empty nesters.  Or you may need a bigger home to accommodate your growing family.  However, it seems that in this economy, the prevalent reason is because you can no longer afford the mortgage payments, taxes, insurance and other related costs because of job loss or illness.

Here are additional tips for you once you list your home on the market:

 1. Do I really need an open house?  Yes you do!  When you sign with a Realtor® they will explain to you the two types of open houses.  The first type will be to invite other Realtors® to tour the house.  This may be done by a caravan where a group of Realtors® from the same office and other offices stop by in the hopes they have potential clients who will be interested.  This type of Realtor® open house is normally held during the week.

You may also have an open house for possible Buyers which is normally held on a weekend.   In this instance, anyone who sees the open house notice may stop by and look around.  Yes, this includes neighbors or those just being nosy but it definitely is a good thing as they may have a friend or relative that would be a perfect fit for your home.  Remember, however, you should NOT be present for either open house.  Your Realtor® will be there to represent your interests and answer any questions they may have.  The worst thing for you to do is to overhear possible criticisms about your home.  This only makes the process of selling your home unbearable.  Also, the potential buyers may feel ill at ease if they know the owner is present.

2.   After the open houses, sit down with your Realtor® and review what comments they have heard throughout both type of open houses.   These comments will give you a better indication if the house is priced right for the neighborhood and market and if any further cosmetic touches are required.  You may want to think about updating your kitchen or bath.  You don’t have to necessarily spend a lot – it may just be replacing a worn out appliance, flooring or fixtures.  As I said in last week’s column, you can visit home improvement stores and see what items are on sale, have been returned or on the “scratch and dent” list.  Sometimes the scratches and dents are not visible.  Remember, the smallest upgrade can bring a large return.

3.  So, your home has been on the market for quite some time, you and your Realtor® have dropped the price but the interest is just not there.  Look at your finances again.  Would it be worthwhile to move out of your house and in with friends or relatives and rent out your home?  Would the rent cover the mortgage, taxes and insurance?  In most instances, the answer is probably no. Discuss this option with your Realtor® who will be able to tell you what rent amount you can expect to receive.  The rental market is volatile right now as more and more people are unable to afford to buy a home, so renting is very desirable.  It especially holds true if your home is within walking distance of a beach or lake and has beach rights.  You may be able to rent out your home for a few months during the summer at a premium price that would be worth your while to rent and pay the mortgage payments from the rental.

Remember, you need to be patient, work with your Realtor® and lender and keep all lines of communication open.  You want to sell your house but not walk away from your mortgage and damage your credit long-term.  However, if you have exhausted all options and it’s beginning to affect you and your family, you need to know when to cut your losses and move on.

Next time – Wish list vs. Practicality – what do I really want and need in a home?

Pat Forger, Sales Executive, Realtor®

Turning your dreams into an address!

Neumann Real Estate, Christie’s International Real Estate

72 Route 37

New Fairfield, CT 06812

Cell:  203-300-6168

Patricia@NeumannRealEstate.com

So You’re Ready To Buy? (GULP!) Part 2

POSTED BY  ⋅ JULY 28, 2011 ⋅ LEAVE A COMMENT
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SO YOU ARE READY TO BUY [GULP] PART II! ~ By Patricia Forger

To continue on with last weeks column –  You made the choice and realized that the time is right to buy your first home.  Home prices are the lowest they have been in years.  Interest rates for mortgages cannot be beat.  But, you’re wondering, where do I start?  Here are some more tips to give you the best possible advantage for finding the home of your dreams

1. What exactly are you looking for in a home?  Will this be a starter home, your dream home or your retirement home?  You need to figure out how long you plan to live there.  Will your job require relocation?  Do you eventually want to retire in a different state?  Or, do you want to find your dream home and remain there for 20 – 30 years?  With the economic climate, you just need to make sure you can afford what you are buying.  So take your time and make sure you are buying what fits your needs – whether it’s short term or your “forever” home.

2. Visit open houses!  You can find so many open houses around your area and in Towns that you have never visited before.  Take a look on-line or in the paper as most open houses are on Saturdays and Sundays.  Get a map, and plan on spending a good part of the day visiting the homes.  It also will give you ideas of what you really want.  Is the gourmet kitchen important?  Do you have to have a full finished basement?  Can you really live without a dining room or that extra ½ bath?  You will even find amenities you never thought of and find out what you really cannot live without.  Bring along a pad and pen and write down  your thoughts and findings.

3. Check out the neighborhoods!  A great website is the Connecticut Economic Resource Center, Inc. (CERC) at http://www.cerc.com.  You can access individual Town profiles, compare state-by-state showing comparisons of population, taxes, labor, education and cost of living, and find out what you need to do business in Connecticut.

4. When you do find a home you are interested in, see if you can meet the neighbors!  Especially when the weather is nice, you may find people working outside their homes – go over and introduce yourself!  For some people, especially with children, a family oriented neighborhood is a must. For those that are retirement age, they may be looking for something quieter.

5. If you’re not familiar with the Town/City – check out the downtown!  Are restaurants important to you?  Make sure you visit the libraries, grocery stores, and see what the Town has to offer.

Finally, remember that the house you buy will be one of the most important investments you ever make in your life.  You need to have a plan and never jump into something or offer too much on a home that you could ultimately lose because you’re over your head.  If you can’t find something you know you can afford, think about renting for another year or downsizing into a smaller, less expensive rental while you save up to add to your down payment.  Just because the housing prices are so low does not mean that everyone is ready to buy.  Owning a home means sacrifice sometimes so take your time, do your homework and make sure this is the time for you to make that important decision!

Next time – I want to sell my house – will I be able to?

Pat Forger, Sales Executive, Realtor®

Turning your dreams into an address!

Neumann Real Estate, Christie’s International Real Estate

72 Route 37, New Fairfield, CT 06812

Cell:  203-300-6168  Patricia@NeumannRealEstate.com


So, You’re Ready To Buy?  (GULP!) ~ By Pat Forger

You made the choice and realized that the time is right to buy your first home.  Home prices are the lowest they have been in years.  Interest rates for mortgages cannot be beat.  But, you’re wondering, where do I start?  Here are some tips to give you the best possible advantage for finding the home of your dreams.

Be prepared!  Did you know that Connecticut consumers may obtain a free copy of their credit report once a year?  The Federal Trade Commission amended the Fair Credit Reporting Act by requiring that the three nationwide consumer reporting agencies – Equifax, Experian, and Trans Union – provide to consumers, upon their request, a free copy of their credit report once every 12 months.   If you are married, you should get the reports for both of you.   Mistakes can happen and the earlier you spot them the better position you will be in to fix them.

Take a long hard look at your finances!  You may be used to paying rent, utilities and tenant’s insurance.  If you are not on a budget, now is the time to prepare one.  When buying a home, you will be paying a monthly mortgage, real estate taxes, homeowner’s insurance on top of utilities and other expenses.  You will also be responsible for maintaining your own home – there won’t be a landlord to call if you find a leak or an appliance breaks down.

Do you qualify for financing?  Call your local bank where your accounts are and tell them you are ready to purchase a home and want to meet with a loan officer.     You want to be pre-approved for a mortgage not pre-qualified.  Pre-Qualified simply means that you have spoken with a loan officer and have given them your overall financial picture.  After evaluating your information the loan officer can give you an estimate of the mortgage amount for which you may qualify.   Pre-Approval is much more involved.  You will complete a mortgage application (and usually pay the application fee) and provide the lender with your last 2 years of income tax returns, recent pay stubs and bank statements so that they can do an in-depth analysis of your financial situation and current credit rating.  Once that has been done, you will receive a conditional commitment in writing for the exact amount of the mortgage that you are qualified to receive.  Having that in hand, brings us to the next step.

Contact a Realtor®!  It is so important to have a Realtor® represent your interests as the Buyer.   When you have that Pre-Approval in hand, you can meet with your Realtor® and review what it is you can afford to buy.  Why waste time looking at homes that you think you can afford and look at homes that you can afford!  Remember, too, that when meeting with your Realtor® you will be signing an agency agreement between yourself and them.  There is always a term limit in the agreement and think about a three-month term to start.  That way, it gives all of you the time to get to know one another and to make sure the connection fits.

Do you want a condominium or a single family home?  The best way to determine that is to look at both!  With a condominium you are normally not responsible for maintenance of the outside of your unit.  Someone else will mow the grass and remove the snow.  However, that comes at a price by way of a monthly payment called “common charges” that is paid to the Association that manages the condominium complex.  With a single family home you are the maintenance person – are you ready for that?

Next time – what exactly are you looking for in a home?

Pat Forger, Sales Executive, Realtor®

Cell:  203-300-6168

Patricia@NeumannRealEstate.com

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