First Time Buyers Club
Alphabet Soup of Contingencies - Is the Property Available or NOT?
May 19th, 2009 Categories: Arlington Dirt, First Time Buyers Club, Northern Virginia Real Estate Dirt
I know a lot of prospective buyers and even prospective sellers comb the Internet regularly to keep tabs on the market - favorite homes, comparable homes to theirs, homes they’d like to see with their agent, homes they’d like to see at an open, etc… Sometimes the status changes and one of the questions I get pretty frequently is “what does ‘CNTG/NO KO’ mean??
So I thought it might be helpful to spell out some of these terms and what happens during the process of contract acceptance to close date.
When a contract is accepted, either there are contingencies or not – if there are NO contingencies (finance, appraisal, home or radon inspection, etc…) then it gets entered into the computer as “CONTRACT.” These days that doesn’t happen very often but keep the definition in mind because it means that it is on it’s way to settlement with the only way out being default.
Normally there are purchaser’s contingencies like an appraisal contingency or a home inspection - in which case the status becomes “CNTG/NO KO” and what this means is that it is contingent but the purchasers may not be “kicked out” or displaced - the only way to cancel the contract lies with the purchaser for the reasons outlined in their particular contract, but NOT the seller.
On rare occasions, a seller will accept a purchaser’s contract contingent upon the sale of their existing home – in this scenario, a purchaser MAY BE KICKED OUT, or DISPLACED from their first position with proper notice, etc… this is depicted by CNTG/KO – when you see this, you should treat the property as available with acceptable terms/negotiation.
The only other thing we sometimes see is “PENDING” – our MLS system (MRIS) doesn’t use this term but sometimes another website might pick up a variety of “contract” status’ and call it “pending” meaning, generally, unavailable.
Hope that clears up some questions – if you have others, like how to buy in this market, how to get your $8,000 tax credit, how to take advantage of great interest rates or how to best get your home sold, feel free to call me today! (or tomorrow - I’ll be around!)
Happy Tuesday
Jennifer
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! And remember, spring is HERE!
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What Criteria DO Your or Should You Use when Evaluating a Real Estate Professional?
January 28th, 2009 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, First Time Buyers Club, McLean Dirt, Real Estate 101, Reston Dirt
There are probably a hundred different reasons to give for selecting (and maybe fewer for having an on-going relationship with) your real estate professional. Some seem very rational and reasonable and quantitative, others a little more intangible, qualitative and difficult to define. I’ve been thinking about this for some time and here are my thoughts, at least looking from 10,000 feet:
Things you SHOULD look for:
Friendliness
You might think this shouldn’t exactly be at the top of the list – but I will tell you that friendliness goes a long way. I was recently successful in a multiple contract short sale situation because I was friendly with the listing agent. People WANT to work with people they like – so choose someone friendly - know that they won’t offend someone or rub them the wrong way and most of the time, it will work in your favor!
Availability – Accessibility — Responsiveness
This is really important… is your prospective agent full time? Are they managing a client load that doesn’t allow for them to make time for you? Do they cancel? Are they late? How easy are they to reach via whatever means of contact you’re comfortable with? Do they text? Do they email? How quickly do they return calls and/or emails? Are their priorities straight?
Experience
This is a tough one – I believe even inexperienced agents can do a good job - after all, we were ALL inexperienced at some point in time. But you need to judge for yourself how their experience level matches with your expectations. Are they experienced in the neighborhood that you’re interested in, but not well versed outside of it? Are they great at understanding the contract but don’t have the “systems” down to manage your transaction seamlessly and painlessly? And when contemplating the brand new agent - do they know what they don’t know? Do they know when to say “I don’t know but I’ll find out for you” and/or when they need to bring in an expert to assist? That’s what you need to gain a comfort level with.
Trust
By this I mean many things but mostly how your relationship develops with 
your agent. Sometimes your agent will need to tell you tough things – you’d rather they were honest with you but sometimes it’s difficult to separate the message from the messenger. Sometimes it’s a discussion about the pricing of your home. Sometimes it’s about the market conditions that help determine an offer price. Sometimes it’s their advice about one property over another from an investment perspective. At the end of the day, the decisions and choices are yours, but you’ve hired a professional to assist in the process – heed the advice which you should be able to do if you have that trust.
What’s NOT so important?
How many “For Sale” signs have their name on it in the neighborhood that interests you?
Why should this be important? It suggests that only the agents who have signs there are knowledgeable of the neighborhood – it doesn’t always work that way. Don’t get me wrong, I love a sign call as much as the next girl, but you have to be sure all of the other factors are in place too!
Just because your boss used him, doesn’t mean he’s right for you…
OK, I’m braced for all the flack I’ll get for that statement – again, don’t get me wrong, I love a referral as much as the next girl, but it’s not always a good fit. I try hard to earn every piece of business I get whether it’s a referral, a reader of my blog, a past client, a sign call, someone I meet at an open house, etc… But at the end of the day, all of the factors I mentioned above need to be there…
How many clients they’ve helped in the past…
While this does tie into experience, as I stated above, it’s not the be-all and end-all in determining if they’re right for you.
So the bottom line is… decide what factors are important to you, do a little research, ask some questions and then, go with your gut. It usually doesn’t let you down. I’m always available to chat if you’d like!
Happy (icy) Wednesday!
Jennifer
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! And remember, spring is RIGHT around the corner!
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Will I Know it When I See It?
January 14th, 2009 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, First Time Buyers Club, McLean Dirt, Northern Virginia Real Estate Dirt, Reston Dirt
I get asked that question a lot from buyers, especially first time buyers, as we begin and move through the house hunting process. Unfortunately, there’s no easy answer, no magic bullet to help sort that out. It’s one part analysis and one part gut feel…
I usually tell them that I’ve had clients that looked at 3 houses and bought one of the 3. I’ve also had clients that I’ve shown 50 houses to and they decided to take a break from looking only to end up renting indefinitely. Who’s to say what’s right or wrong?
Steps to follow to make the process a little easier:
1) Get your financial homework done ahead of time. If you know what you are qualified for and you KNOW what you are comfortable with, you will not have to wonder and shift gears as far as price range goes, mid way through the process. Of course there are exceptions - if you begin looking when interest rates are at 6% and there are significant drops, as I’ve written about before it can have a tremendous affect on your purchase power and it’s definitely worth re-visiting. Otherwise, do that homework first and STICK TO YOUR COMFORT ZONE!
2) Have a good list of what you do and don’t want – I would highly 
recommend AGAINST making anything firm. I was once told by a couple that they didn’t want to look at cape cod style homes because they felt the upstairs wouldn’t be large enough for the husband. Well, you can see where this is headed - they ended up purchasing a cape cod that had a great addition on the back that enabled them to have a nice master closet and bath with PLENTY of head room, storage, etc… But back to my point, have some general ideas of what you want and what you don’t – if you have any showstoppers (Cannot live in a particular school district, cannot live with steps, etc…) it’s a good idea to note those too.
3) PATIENCE – some weeks there will be MANY homes to look at and others, slim pickins… Just be patient. When you see something that you can mentally begin moving into, that’s a good first sign that we’re onto something. That’s when it’s time to analyze how the space would work with your lifestyle, the commute, the longevity (how long could you live in that house if you had to? – e.g., there’s no point buying a “cuter” 3–bedroom house than the 3–bedroom one you already have if you’re outgrowing it – right?).
4) Gut Feel - this is the hardest. But if you can imagine your life in this home, imagine being excited to come home every day, imagine inviting your friends over for a party or for dinner or just to hang out; if you can see your furniture here, or what color you’d like to paint the walls or where your dog will sleep - these are all good solid indicators that you might have just found your new home.
It’s a fun process - call me today to get started!
Happy Wednesday!
Jennifer
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! And remember, spring is RIGHT around the corner!
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I Think I’m Ready to Buy - What Now?
April 30th, 2008 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, First Time Buyers Club, McLean Dirt, Northern Virginia Home Buying, Northern Virginia Real Estate Dirt, Real Estate 101, Reston Dirt
Oh boy, I hear this all the time - and it’s music to my ears. It means 
another new face will soon be added to the list of happy, satisfied customers of mine! But I guess I’m getting a little ahead of myself.
It can certainly appear to be a complicated process and one that doesn’t present itself as straight forward as it actually is. I got an email the other day from a reader indicating that he’s ready to start the process and looking for direction on where to start - so here are a few easy steps to begin with.
Lender
This is the first and MOST important place to start – interview a few good, solid local lenders – individuals that will stand beside you during this process - answer questions, walk you through specific scenarios where rates and/or points are adjusted with various what-if situations. These people will not let you down - their reputation hangs on how well they perform each and every time. Also, you must know that no loan is too big or too small. Many lenders offer unique programs or are well versed with a particular type or style of loan (maybe VA or VHDA or FHA or jumbo) – so that’s why I recommend talking with a few.
Property Characteristics — Location, Amenities, Size, etc…
OK, now that you know what you can afford, the next thing to do is to prioritize what it is you’re looking for. Sometimes this is easy because perhaps your budget already lines up with expectations. Other times, sacrifices must be made. Through a simple process, we can easily work together to narrow down some good possibilities for you. I can also make suggestions on neighborhoods that I might be aware of that might be a good compromise and/or buildings that might offer you some built in amenities to save costs elsewhere (gym memberships, parking at work if you’re on metro, etc…).
Hit The Road
Then it’s time to hit the road – by this time we’ve gone back and forth with
priorities, budgets, etc… and it’s time to actually go and see some of the front runners. Often times, once we’re out together, certain priorities will shift – perhaps a commute that was once thought do-able becomes suddenly unbearable – but that’s ok, this is the discovery phase! Perhaps you fall in love with a place that wasn’t want you had in mind at all to begin with!
Eventually we come across a place that makes your heart skip a beat and it’s the one that you find yourself imagining making coffee in, or decorating with your “colors” or walking down the street to one of your favorite haunts! Then we know we’re on to something.
Finding a great place to live can be a fun and rewarding process. I always say if you surround yourself with good people you will position yourself for outstanding results! It’s true – if you’re thinking about beginning the process, give me a jingle. I can point you in the direction of some excellent local resources and we can get started today! No time like the present!
Happy Tuesday
Jennifer
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! Spring is HERE!
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10 Things to Look for when Choosing YOUR Next Real Estate Professional
March 25th, 2008 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, First Time Buyers Club, McLean Dirt, Northern Virginia Home Buying, Northern Virginia Home Selling, Northern Virginia Real Estate Dirt, Reston Dirt
Choosing who will represent you on the purchase or sale of your home (or investment property) is a big deal! It’s probably 
one of the single largest purchases or sales you will make in your entire life and unless you’re a big investor, probably something you will only do a handful of times in your life. So when the time comes for your to choose that special person that will guide you through this process, it’s important to look for the qualities that are most important to YOU.
I started out thinking I would do a “Top 10 List” of sorts, a la David Letterman. But I quickly realized that the list will be different for everybody! What’s important to you may not be as important to your co-worker, stock broker or college roommate who has recommended an agent to you. Don’t get me wrong, a personal referral is an excellent source, but make sure they are the right person for YOU and your needs.
Here is MY list of what I would look for in a real estate professional (and remember they are in NO particular order - just train of thought):
1. Experience - While I don’t feel it’s necessary to have 30 years in the business (can’t hurt though) I think it’s best to have an agent with a proven track record of success – if they are less experienced, ask how they intend to best represent your interests - what is their plan? And this brings me to #2…
2. Resources - what types of resources do they have available to them? Are they being mentored? Do they have a broker that will assist them? Do they have other resources to lean on in busy times? Perhaps they are part of a team? How will that work? As long as it works for YOU, there is no wrong answer here.
3. Ethics - This is a biggie – and no real way to ask someone how ethical they are – as Realtors, we are required to abide by our Code of Ethics. It’s much more stringent than our local licensing bureau requires – so always be sure you are represented by a real estate professional who proudly understands and abides by the Code.
4. Education – How has your prospective agent kept up with the industry? Have they earned any of the recognized designations? For example, I have earned the GRI designation – I am a Graduate of the Realtor Institute. It took me a year to earn it – I went to classes once a month for an entire day in subjects like Ethics, Agency Law, Real Estate Finance, etc… I attend Continuing Education courses all the time to stay on top of the changes in my industry… ask a few questions as it relates to Education!
5. Market Knowledge – Look, we can’t all be perfect and we can’t know every statistic for every condo building, neighborhood, townhouse complex, etc… in EVERY city, town, nook, cranny that we service – but we CAN have a knowledge of where the market is, where it’s been, where it’s headed. We can understand some basic economic forces that drive it – some basic economic indicators that could give us a clue where things are headed?
6. Online Savvy – I think this one is HUGE. The world is online - if you’re reading this now, you’re reading a blog. Some don’t even know what a blog is – but whether your agent is representing you as a buyer or a seller, it’s important for them to understand how to market online, how to reach potential buyers ONLINE and frankly, how to communicate with YOU. It’s a different world now than it was even 10 years ago. Be sure your agent has kept up with the times!
7. Communication – Another biggie! And something that will mean something different to different individuals. Find out how your agent intends to communicate with you – and how often. If you need updates once a week or once a day, make sure your agent understands your needs and can accommodate them. Do you prefer email? Or a true voice-to-voice conversation? It’s important to understand? Or what about text messaging?
8. Empathy – This is a tough process. While it’s a business for us as agents, you are real people, with real emotions involved in a potentially stressful situation. It’s nice if your agent can be empathetic.
9. Area Knowledge – How familiar is your agent with the area your home is in if you’re a seller or the area you’re looking if you’re a buyer. As I said earlier, nobody can be a neighborhood EXPERT in every neighborhood, and I don’t believe your agent must be an expert in that neighborhood to provide excellent representation, but they must be willing to learn – to familiarize themselves with your immediate area, market trends, schools, demographics, other listings, etc… the list goes on. (ps I’m a local! 
)
10. And last but certainly not least, I believe a Sense of Humor is vital. It all gets a little serious, and it is. But it can be fun, enjoyable and you can make a new friend along the way.
Remember, these are unique individuals and you’re trying to find the best match possible. Trust your referrals, your references, your research; but in the end, trust your gut… oh, and give me a call!
Have a wonderful Tuesday!
Jennifer
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! Spring is right around the corner!
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Mortgages 101 - A First Lesson
February 29th, 2008 Categories: Alexandria Dirt, Arlington Dirt, First Time Buyers Club, McLean Dirt, Northern Virginia Home Buying, Northern Virginia Real Estate Dirt, Real Estate 101, Reston Dirt
Mortgages 101
One question I get asked a lot is “What are rates these days?”
And the answer is, drumroll please….. “well, that depends!” You know, back in the old days, real estate finance was fairly simple. You had to save up a nice down payment of 20% and there was 1 program (an 80% first trust loan) and a rate. That’s it – simple – so simple that the real estate agents used to qualify the consumers! Yep – you met with your Realtor, filled out an information sheet, then he or she would qualify you and after writing a contract, THEN you would head off to find a lender.
Wow have things changed! Now, the lender is one of the very first things we usually like to get taken care of. 1) It helps you to understand what you can afford and 2) you can choose the program that best suits your plans.
Some of the more popular mortgage programs are:
The Classic 80% - fully amortized loan
The Classic with a twist – maybe an 80/10/10 or an 80/15/5 that involve a 2nd trust or Home Equity Line of Credit
Interest Only
ARMS
Another twist now is that the interest rates are influenced by your credit score – the better the score, the lower the risk and therefore, the lower the rate.
Let’s look at some of these programs.
You’ve heard 1st trust, 2nd trust, 80/15/5 or 80/10/10… these terms get tossed around all the time – mainly these programs are determined by how much cash you have to put down at settlement. Example: If you’re looking to purchase a home for $400,000 by the old standards you would need to have $80,000 to put down and you would then finance 80% or $320,000. If you don’t have $80K, you might look at an 80/10/10 which means your 1st trust loan would be in the amount of $320,000 and you would have a 2nd trust loan in the amount of $40,000 which would reduce your down payment to $40,000.
If you don’t have $40K, then you could either look at an 80/15/5 which would lower your down payment requirement to 5% - $20,000 – or you could even consider 100% financing which is still an option today under certain circumstances! With the credit crunch and the tightening up of loan guidelines, you may find this is no longer an option for you – all the more reason to be working with a good, local, TRUSTWORTHY lender!
Once you determine what your cash position is and how much you’d like to 
finance, then you would need to choose a program – do you want to pay down your loan amount each month? That’s called a “fully amortized” loan – if you are more aggressive (and possibly a more disciplined investor) you might want to consider an interest only loan – NO principle is paid down, but the theory is that you can take that monthly savings and place it in your investment account.
In this scenario, you are relying on housing market appreciation to allow you to make a profit and move in years ahead. It’s all about risk. You should also consider the length of time you plan to stay in your home. If you’re looking at a 5-7 year investment, you might consider a 10 year ARM or Adjustable Rate Mortgage. If you’re in shorter – there are 3 or 5 year ARMS.
These days there is an additional category of loans that should be discussed, and I will do so in another post. Those are Government backed loans: FHA, VA, VHDA and the like. These are now VERY viable options whereas they used to be looked at as options only for those with credit issues. This is quite possibly the best route to take in some cases now.
One thing is for sure - you need to be well guided, well educated and ready to make some responsible choices for yourself — especially to avoid future problems. Many people have gotten in over their heads and are now going through the foreclosure process. If you’re conservative and have good advice, there are wonderful properties out there just waiting for you to call “home.”
I hope this has given an introduction to the very complex mortgage industry – de-mystifying some terms – it’s always good to partner with a good lender that can help you navigate through this complex process, making it simple and straight forward. I can help you find some great lenders if needed – I’m always here!
Happy Friday!
Jennifer Klaussen
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! The Time is NOW!
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To Inspect or Not? That is the Question…
February 19th, 2008 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, First Time Buyers Club, McLean Dirt, Northern Virginia Home Buying, Northern Virginia Real Estate Dirt, Real Estate 101, Reston Dirt
One of the questions I get asked a lot is “do I need a home inspection?” ![Images[3]](http://www.thearlingtondirt.com/wp-content/uploads/2008/02/images3-small.jpg)
Well, MOST of the time the answer is a resounding YES!!! Not only is it an opportunity to uncover possible deficiencies in your prospective new home, but it’s also your chance to learn about your home. Perhaps you’ve never bought a home before? Or perhaps you’ve always had a heat pump and in your new home it’s a gas furnace… Your Home Inspector will help you learn all sorts of wonderful things about your home and about home maintenance in general.
With regard to property condition, here in Northern Virginia, our contract stipulates that there will be 6 systems to convey to the purchaser in Normal Working Order: heating systems, cooling systems, plumbing, electrical, appliances and smoke/fire detectors. Aside from those, sellers generally aren’t required to warrant or disclose to a purchaser anything about the condition of their property. This is why a home inspection becomes very important.
So let’s look at some exceptions:
Condominium Purchase
If you’re purchasing a “traditional” condominium unit in a building - you know, like a box in a building – I’m not referring to the garden style with direct entry, maybe porches, patios, multi-level, etc… – but a traditional apartment style condo – there’s not a lot for the home inspector to uncover about your property that’s not already covered by the Normal Working Order requirements as described above. So they can look at the windows, the walls, floors, doors, etc… but really in a condo, I typically recommend a Home Warranty which covers most appliances, heating/cooling systems, etc… as an added protection for the first year. The only exception being if your eyes are telling you that you suspect problems… trust your gut!
If you’re purchasing a condo unit that is perhaps structurally a little more complicated, has attic access, dormer windows, has stairs, is significantly larger or generally you’re unsure of condition, it’s always a good idea to go ahead with the home inspection
An AS-IS Sale
Sometimes around here, sellers want to sell their homes in “as-is” condition. This just means that they’re not even going to conform to the standard contract language requiring those 6 systems listed above to be in normal working order… so they’re asking the purchaser to accept it in as-is condition as of the date of the contract. So basically what-you-see-is-what-you-get. In this case, it’s still a good idea to get a home inspection but what the seller is saying is that 1) they will not remedy anything and 2) they won’t let you out of your contract based on home inspection findings. Although special language can be written in acknowledging the first point, but still asking for an “out” based on findings. Anyway, in either case, it’s a situation to be a little leary of unless you basically already know what you’re getting into OR you’re VERY handy and it doesn’t matter.
Another tactic in these situations would be to go ahead with seller permission and have a home inspection completed prior to writing a contract. Then you’ve got a little protection.
So, I hope you’re a little more comfortable on the topic of home inspections… a few more thoughts… Always hire a home inspector that’s certified either through ASHI, NAHI or NACHI.
Any other questions? You know where to find me.
Happy Tuesday!
Jennifer
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! The Time is NOW!
| Discussion: 5 Comments »
Buyers - Buyers — Where For Art Thou?
February 18th, 2008 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, First Time Buyers Club, McLean Dirt, Northern Virginia Home Buying, Northern Virginia Real Estate Dirt, Reston Dirt
Some people see the glass half empty – others see it half full. But those that see this market as an enormous buying opportunity will be those who prosper in the end! You think that’s crazy? Let’s look at the current market conditions.
Inventory of Homes in Northern Virginia
Let’s see… There are over 6,600 homes for sale in Fairfax County alone, 2/3 of those under $500K! Think you might have some choices now? Uh huh! I think yes. Choices mean you get to be picky – picky about location, condition and, um, yes, PRICE!
Seller Contributions for Closing Cost Assistance
Yep - you betcha! In many cases we are seeing sellers more than willing to cover buyer closing costs. And, if your lender allows, you can accept as much as 6% subsidy from the seller, which often enables the already low interest rates to be bought down even further! There is a lot of creative financing being offered now and it’s NOT the types of programs that got folks into trouble - these are programs that can help you as a buyer get into your home by taking advantage of market conditions.
Price Flexibility
More than ever, sellers are making every attempt to price their homes properly. That is, pricing in order to get an offer in the first week or so at or near their asking price. Not all are able to hit this number, so once a property has been on the market for 30+ days, sellers are beginning to see their way to reducing prices and/or negotiating. Don’t be afraid to put an offer out there. You never know what a seller might be willing to accept - they even surprise us sometimes!
Interest Rates and how they translate to Purchasing Power
Interest rates are still in the extremely low ranges! Especially for borrowers who have been careful with their credit scores and have enough saved for good loan-to-value ratios (20% or more down). Did you know that on a $300,000 loan, the difference in just 1/2% of interest rate (say from 6% to 6.5%) either 
increases the payment by $100 OR it reduces your purchasing power by a whopping $16,000!!! That’s HUGE –
So I ask – why were buyers clamoring to make purchases while chasing the market upwards? Remember 2004 and 2005? Buyers were waiving their rights for inspection and sometimes appraisal; they were outbidding the nearest bidder sometimes by thousands of dollars; often they were behaving like this for homes they weren’t really in love with – it was just the home that happened to be available.
Here we sit in 2008 with inventory (read: choices), seller flexibility, and fantastic interest rates in our corner. Why on earth would you NOT think this would be a more ideal time to buy? You may be nervous about not hitting “bottom” yet – that’s valid - however, economic signs point to a healthy economy here in the Northern Virginia area for the forseeable future, so as long as you intend to stay in your home for the next 3–5 years MINIMUM, I say get your comfy shoes on, put in a call to your local lender and give me a call to get started.
Happy President’s Day!
Jennifer Klaussen
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! The Time is NOW!
| Discussion: 2 Comments »
Earnest Money Depost - Why? Who? How Much?
January 29th, 2008 Categories: Alexandria Dirt, Arlington Dirt, First Time Buyers Club, McLean Dirt, Northern Virginia Home Buying, Real Estate 101, Reston Dirt
You’ve heard the term “good faith deposit” or “earnest money deposit” but what does it mean exactly? Who keeps it? What’s the purpose? Why does it matter? How much should it be? Let’s see if I can address all of these issues, bringing clarity to the importance of understanding the earnest money deposit.
What is it?
Here in Northern Virginia, when a buyer writes an offer on a property, our contract 
calls for it to be accompanied by an earnest money deposit of some amount – typically in the form of a personal check. This amount is usually a percent or two of the sales price… as a general rule of thumb. I’ve seen more - the higher the amount, the more seriously your offer is taken. This money belongs to the buyer, but it gets deposited prior to settlement usually with the real estate brokerage that is representing the buyer. However it is applied at settlement towards your closing costs or down payment.
Why do I need it?
The purpose of it is to show the seller that the buyer is serious about the purchase. It is the money that they are risking to lose should they default on the contract. Remember, I said “default.” If the buyer finds something with the home inspection or the association documents that they are unhappy about and can’t work out a solution, they can walk away under most circumstances and they will receive that earnest money back from the broker. However, if they walk away with no cause, or with no “out” from the contract — it’s default and they stand to lose that earnest money deposit and sometimes more. So it’s the money they’re putting forward in good faith indicating their intent to follow through on the contract.
Does it really matter how much I write it for?
From the seller’s perspective, if they received 2 contracts, one with a deposit of a few hundred dollars vs. another with one that was $10,000 - which do you think they’d consider to be stronger? Right, the one that’s higher indicating a higher degree of seriousness.
Now, it’s not all about earnest money - there are plenty of other factors that go into writing a good solid contract – but it is certainly a consideration that everyone should understand in order to be aware of the implications.
For professional guidance through the home buying process, give me a jingle! I’d be more than happy to help educate you on all of the ins and outs of good contract writing. Then, when you’re ready to move forward with your offer, you’ll be knowledgeable about the process and the process can move along smoothly!
Happy Tuesday!
Jennifer Klaussen
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation! Spring is right around the corner!
| Discussion: 1 Comment »
Homeowners Insurance - the Ins and Outs
January 28th, 2008 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, First Time Buyers Club, McLean Dirt, Northern Virginia Home Buying, Northern Virginia Home Selling, Northern Virginia Real Estate Dirt, Real Estate 101, Reston Dirt
One of the necessary things to plan for when making a real estate purchase is insurance. But what do you need? Well, I’m not an insurance agent (read: insurance expert), but I can tell you from a property ownership perspective the minimums that you should have… read on.
Condominium Insurance Needs
When purchasing a condominium, the association carries a master insurance policy on the entire building structure. This is one of the costs that your condo fee covers. However, you’re not off the hook. You should have insurance to cover your personal belongings, as well as personal liability, so if anyone ever injures themselves on your property, you’re covered.
Single Family and Townhome Insurance Needs
When purchasing any other type of property with fee simple ownership (when you own the ground and air above – exterior walls, fireplaces, roofs, etc…) then you need a full featured home-owners policy, sometimes called a hazard policy, covering the structure, contents, liability, etc. There are specialty riders as well. For example, here in Northern Virginia, we don’t worry too much about earthquake policies and not too many properties are affected by the 100 year flood plain (although there are some) and require special flood insurance.
What to do?
One of your first jobs once you have a ratified contract will be to contact an insurance agent or two, get quotes and make application for insurance.
You’ll need to know such things as:
Wiring type
age of roof
# of layers on the roof (sometimes a new layer of shingles is nailed right onto the old layer)
distance to nearest fire hydrant
etc…
They will also run a C.L.U.E. report. The C.L.U.E. report (Comprehensive Loss Underwriting Exchange) will provide a 5 year history of losses associated with an individual and his/her property.
The home insurance policy will be paid for in full for the first year at the settlement table. Your lender will then begin to escrow 1/12 of your annual policy amount so that the beginning of year 2, they will have collected enough money from you to cover the premium that will come due at that point. IF for some reason you don’t go to settlement - say the contract gets voided because of an inspection item, or an appraisal issue – you’re not on the hook at all — after all, no service has been rendered. You simply call the insurance company and tell them the deal isn’t going through. They can sit tight until the next time!
Additionally, something many don’t realize, if you move to your new residence and have to leave a property vacant, communicating that to your insurance agent is very important. Since it’s obviously vacant, you won’t need to continue to insure the contents, but you will need to carry at a minimum a basic fire policy AND a comprehensive liability policy.
The key to good insurance is communicating with your agent. There are many great insurance companies out there - find one you’re comfortable with that offers competitive rates and you should be set. As always, if you want to talk further, don’t hesitate to give me a call or email.
Happy Monday!
Jennifer
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