H Julie Tétreault H

Direct: 860.539.0263    Bus: 860.644.5667 x135    Email: JRTrealestate@hotmail.com

Licensed Connecticut Realtor

 

Real Estate Agency

Week of April 28, 2008

Many homebuyers and sellers don’t understand the importance of hiring a Realtor.  Part of it is due to lack of understanding of the duties of an agent.  The agency relationship is based on one person representing the interest of another person.  Real estate agents are licensed by the state to represent a person in the purchase, sale, exchange, or lease of real property.  The responsibility of the real estate agent is defined by state law, the Realtor’s Code of Ethics, and general principles of agency law.

The type of relationship formed between the agent and the client is called a fiduciary relationship.  A fiduciary relationship is one based on trust and duties the agent owes the client: Loyalty, Obedience, Diligence, Disclosure, Confidentiality, Accountability, and Reasonable Skill and Care.

Loyalty: This duty obligates the Realtor to act at all times solely in the best interest of their client.

Obedience: The agent must obey promptly and efficiently all lawful instructions of their client.

Disclosure: The agent is obligated to disclose all relevant and material information that the agent knows and that pertains to the scope of agency.

Confidentiality: The Realtor is required to safeguard any confidential information that may weaken the client’s bargaining position if it were revealed.

Reasonable Care and Diligence: An agent is obligated to use reasonable care and diligence in pursuing the client’s affairs.  This includes an obligation to affirmatively discover facts relating to the client’s affairs that a reasonable and prudent real estate broker would be expected to investigate.  They are expected to have skill and expertise in real estate matters superior to that of the average person.

Accounting: An agent is obligated to account for all money or property belonging to the client that is entrusted to them.  This duty compels an agent to safeguard any money, deeds, or other documents entrusted to him that relate to the client’s transaction.

Whether buying or selling, it is always in your best interest to have a Realtor on your side.

Tips for the Mortgage Madness

Week of March 31, 2008

As a prospective home buyer it is important to educate yourself about the home buying process.  One of the biggest pieces of the puzzle is qualifying for a mortgage.  The high inventory of housing makes it a great time to jump into the market, but before doing so read these five tips to give you an edge.

Down Payment: Consider putting at least 5% down.  Generally you will see better loan terms if you can put a minimum of 5% toward the purchase price.  The zero down programs have virtually disappeared, and many programs are moving toward higher initial deposits.  FHA now requires a minimum of 3% down.   

Shop Smart For Your Rate: Don’t shop by the interest rate alone, fees are critical and affect your overall cost in obtaining a mortgage.  An interest rate that may sound high could be your better option as it has no fees.  The lower rate could include fees that may make the actual financing cost higher.  As a result, lenders are required to provide all the costs associated with a loan in a form called a “Good Faith Estimate.”  This form should be carefully checked against the HUD-1 Settlement Statement to ensure no “surprise” charges. 

Be wary of advertising: TV and radio are plastered with advertisements of the Federal Reserve cutting interest rates.  In actuality, when the Fed meets to cut rates, they are cutting the Federal Funds rate.  This is the rate that member banks charge each other and is indirectly related to mortgage backed securities (MBS); which are eventually tied to your interest rate.  So although you may hear, “The Fed cut rates…” be aware the Fed does not control the long-term fixed interest rates for mortgages, there are other factors involved.

Consider paying more for your home: By paying more for the home, you may end up paying less for the transaction.  Instead of negotiating down the sales price, bargain with the seller to pay for the closing costs to “buy down” your interest rate.  Lenders will offer you the option of purchasing points to reduce your monthly interest payment.  Talk to your lender to help you calculate the actual savings.

Improve your credit score:  Now more than ever, lenders are looking at credit scores to qualify buyers especially those with less than 20% to put down.  Keep all credit card accounts open and distribute the balances as evenly as possible.  Use old cards every few months to keep your accounts active.  Check your credit report for any errors and have them resolved.  Address any liens, charge offs, or late payments.  All these little steps will have a quick and positive effect on your credit score and will result in much more favorable mortgage terms.

Week of March 24, 2008

Cost Effective Remodeling


Are you looking to sell your house, but feel it needs some updating to be competitive? As home prices are dropping around much of Connecticut and home loans are becoming hard to come by, it is important to look at a cost effective remodel, rather than breaking the bank. Remaining practical with your remodeling project will payoff when it comes time to sell; or if you decide to stay, can also add long term value such as energy conservation.


Remodeling Magazine’s annual Cost vs. Value Report showed that high end remodeling projects recouped less of their cost in 2007 versus 2003. The average return on investment after one year for an upscale remodeling project in 2003 was 82.5% compared to 70% in 2007. With that stated, let’s look at some cost effective remodeling tips.


Kitchen
Kitchens and baths sell homes. Making the right improvements without going overboard can earn back an average of 83% of the investment. The single biggest item in a kitchen-remodel are new cabinets. To save money and freshen your look, keep the old cabinetry and freshen them up with new paint and hardware. Painting your old cabinets white will not only make them look newer, but will make your kitchen appear more spacious.


Still looking for more of a change? For $35,000 to $40,000 you can install new cabinet fronts, hardware, sink, paint, flooring, light fixtures, granite counter tops and new appliances. A full remodel of a ten foot by ten foot kitchen will run about $70,000. This however involves moving walls, replacing cabinets, appliances, lighting, and flooring.


Although granite countertops are all the rage, Silestone is a great substitute when you’re on a budget. It is a low-maintenance quartz composite that is 10-15% less expensive than granite. The material is strong enough that you can cut food and place a hot pot directly on the surface without marring it.


Bathrooms
Just like the kitchen, remodeling a bathroom can become pricy real quick. A five by eight foot bathroom completely with the addition of new cabinets, granite countertops, sink, tub/shower, toilet, tile flooring, light fixtures, vent fan, paint, and new window can end up costing $18,000 to $20,000.


Instead, look to reface the existing cabinetry and purchase new hardware. A new countertop isn’t always necessary. Look for tiles of granite or other stone and tile over the existing vanity. On the walls, put on a fresh coat of paint and replace the towel bars with something trendy. For cost savings, tile the floor, but not the tub. Don’t forget the light fixtures. Dated light fixtures can really bring down any improvements a homeowner has made, look for the brushed nickel or other trendy, but classic pieces for your lighting. Remodeling a bathroom boosts the resale value of your home and can generally recoup 78% of the investment.

 
Exterior
Curb appeal is one of the most important impressions you can convey to a potential buyer. Therefore siding and windows are two exterior renovations that can make all the difference. Homeowners that reside their homes earn back an average of 83% on a $10,000 investment, plus a savings in their heating bills. In addition to these perks, some siding products offer little to no maintenance.


Homeowners have a wide variety of choices for siding including vinyl, acrylic, fiber cement, metal, and wood. When comparing, balance the cost, insulation, color durability, ease of maintenance, stringy, and attractiveness. Acrylic is great choice on a budget because of its ability to mimic the appearance of wood clapboards. In addition it is made with a foam backing with an insulation rating of R4 (typical R ratings for siding are 1-3, with the highest possible rating of R4.8). Acrylic siding is solid and has a low-glass, unlike its vinyl siding counterpart which is vinyl and has a plastic sheen. The true bonus with acrylic is the colors are baked on, NO painting is EVER needed!


Replacing old windows with new energy efficient ones will payback in the resale value of your home. Homeowners who spend up to $10,000 on new window replacements, generally recoup 80% of the cost when selling their home. Window efficiency is rated by a U-factor ranging from 0.1 to 1.2. The lower the number the better, and the more it costs. When shopping for new windows, just look for the government’s Energy Start seal for the most energy efficient windows.


By investing in any of these budget proof fix ups, you will find a savings in energy, better resale value, and a new love for your home! For specific information about updating your home for resale value, contact me for property specific tips. I would be glad to help!

Foreclosures 101

Week of March 9, 2008

Foreclosure is when the bank, or lender, can repossess a property to recover the outstanding amount owed on a defaulted loan.  If a homeowner fails to satisfy their repayment obligation the three stages of the foreclosure process will take effect.

Stage 1: Pre-foreclosure.  This begins when the homeowner is delinquent on their mortgage payments (or other terms of the loan, such as taxes, home owners fees, etc).  Lenders generally give a grace period of 3 or 4 missed payments before sending a notice which becomes of public record.  After receiving the notice, the homeowner has a period of time to respond to the notice and settle the outstanding payments and fees, usually done via selling the home.

Stage 2: Foreclosure.  During the time, the homeowner may or may not be evicted from the home when it comes up for public auction.  In Connecticut, most forecloses take place on Saturdays and are placed in the Hartford Courant one week prior to the sale.  At the foreclosure sale, the bank will require a certified check of a minimum of 10% (of the asking price) to allow you to bid and sometimes even preview the inside of the property.  If the home successfully sells, the proceeds are used to pay off the remaining mortgage amount, taxes, and/or other prior liens, services charges, etc.  Any money remaining from the sale is given to the former homeowner.  Most of the time, the amount collected is less than what is owed and the lender is able to hold the buyer accountable for the difference.  In many instances the lender is reporting the difference to the IRS and the homeowner must now claim that difference as income earned.

Stage 3: Real Estate Owned.  If the home is unable to be sold at auction either because no one bid, or the bids were too low to cover the loan amount owed, the home becomes property of the lender.  At this time since lenders do not want the burden of carrying the empty home on their books, they list the property with a Realtor.

            FHA has just increased their loan limits in Hartford County to $440,000 which is calculated to help an additional 138,000 Americans own a home, but more importantly will save nearly 200,000 homeowners from foreclosures.  If you are interested in learning more about buying foreclosed homes and how the process works, contact me for more information.  My office is a HUD broker and has access to show all foreclosed homes in Connecticut.

Week of March 2, 2008

Adding Value with Curb Appeal

According to a new survey of real estate agents, when it comes to purchasing a home, buyers do judge a book by its cover.  The survey found that curb appeal is essential to getting buyers in the door and fostering a sale.  82% of agents have had buyers decline to even step a foot inside a home based upon the exterior appearance.

This research solidifies the importance of window and door curb appeal when it comes to home sales.  Other noteworthy findings include:

Given the importance of curb appeal in today’s market, agents were shown pictures of an average 2,000 square foot home and asked to estimate its value in their area.  When shown the same home with updated entry and garage doors, agents estimated the property to be worth an additional $16,000. 

Week of February 25, 2008

Home Buyers Timeline

So you think you’re ready to buy a home, but aren’t sure how far out it will be until you sign the paperwork.  Use this timeline as a frame of reference to understand where you are in the process.  Note, some buyers will require a year or more to straighten out finances, while others will be able to purchase within a couple months.  It is always good to be prepared and know where you stand.  The more time you give yourself for this process, the better.

1 Year Out (or as soon as possible)

Get your credit reports.  It is essential to know your credit score and catch any errors on your report that can cause you to pay a higher interest rate or your mortgage, or worse, ruin your chances at obtaining a loan.  By law, you are allowed to check your credit score three time a year for free.  Equifax, Experian, and TransUnion are the three major credit bureaus.  Check for accounts opened that aren’t yours and collection accounts for debts you don’t owe.  If you see any of these on your report, you should be able to dispute the error with the bureaus and get them removed.

If necessary, improve your FICO credit score.  This three digit number is used by lenders to gauge your creditworthiness and determine the rate and terms of your loan.  By doing this a year in advance you improve your chances of upping your credit score.  Improving your credit score includes, paying your bills on time, paying down your credit cards (and other revolving debt), and keeping all current lines of credit open while in the market for a mortgage.  This shows loan officers you are financially stable and living within your means, thus worthy of a mortgage.

Save, save, save!  Put away as much money as possible.  As the mortgage market becomes more stringent, it will be important to have at least 5% to put down.  The more you are able to put down, the more financing options will be available to you.  Ideally, brokers like to see you have reserve funds of 2 or 3 months mortgage payments after you are in the home.

Pay your bills on time.  A single 30-day late payment can knock up to 100 points off your score, and it can take many, many months to recover.  Be sure every bill is paid on time.  If you struggle to remember your bill payments, consider using automatic bill pay.

 

6 Months Out

Sort through your mortgage options.  Many people are in foreclosure today, because they didn’t understand what type of mortgage they had.  As a buyer, shop your mortgage and ask questions, know your terms.   Part of this process is calculating how much house you can afford.  Keep your housing expenses (mortgage, taxes, insurance, condo fees, etc) to 25% of your gross income and you’ll be able to live more comfortably.

Research all the costs of owing a home.  Having a mortgage is just the start.  In addition, you will have to pay property taxes and home owners insurance.  If you purchase a condo, condo fees are another expense.  You may face higher utility bills, maintenance, and repair costs.  Furnishing and decorating a home can be pricy as well.  Be sure to consider all of these expenses before making your move.

Adjust your savings strategies.  As you continue to save, think of what you want the money to go toward.  A bigger down payment, can get you a bigger or upgraded home.  It can also buy down your mortgage and get you a lower monthly payment.  Or you can save to build up an emergency fund for any unexpected home expense.

 

3 Months Out

Keep a tight eye on your credit score.  Don’t open or close any accounts until the mortgage process is completed and you’ve moved into your new home.

Get an idea of the mortgage rate you can expect.  Obtain a pre-approval letter from the mortgage broker you have chosen.  Pre-approval is the process of a lender reviewing your finances to determine the loan amount you can afford with a specific rate and terms.  This is very important for you and your Realtor.  This paperwork helps the Realtor to locate a home within your means and write up a contract with terms favorable to you.   

Now that you have completed all those steps, you are ready to shop for a home!  Still have questions?  Contact me with your specific questions.

Week of February 18, 2008

Economic Analysis

It seems everywhere you look, the news has doom and gloom about the real estate industry.  The problem with these news stories is the reporters are basing their story on the aggregate economy.  Real estate is all about “Location, location, location.”  As a result, we need to base our numbers and analysis at the microlevel. 

The Warren Group’s 2007 home sales report shows that Connecticut home prices rose last year despite price drop-offs in neighboring states.  Timothy Warren Jr., CEO of The Warren Group says, “Connecticut has so far avoided the curse of falling home prices that has faced its neighbors, but with sales in the Nutmeg State falling so rapidly at the close of 2007, 2008 could be a different story.”  Now this isn’t to say our housing market will crash tomorrow, rather the market has turned. 

Remember, we are leaving one of the hottest real estate markets in recent history.  Earlier this decade we had record prices and record sales volume.  Couple that with historically low interest rates and you have a booming market.  We were spoiled by homes selling in days rather than months, so now we are frustrated and blame the market and economic conditions for these issues.  The truth of the matter is, we are in a decent economy.  Inflation is stable, unemployment is low (on average 5%), interest rates are still at record lows, and our exports are strong.  Compare today’s conditions to the 1970’s and our economy would appear to be booming! Why then all the negative resentment toward the housing market?

If you are a buyer, now is the best time to be in the market.  Listening to the doom and gloom will only frustrate and confuse you.  Interest rates are low, inventory is high, and prices are slowly falling.  Two years ago, people were buying at the peak of the market.  Prices were high and interest rates were higher than today’s.  This goes against all economic reasoning.  Think of it as purchasing an investment; you want to buy low and sell high.  This is the time to do so; rates are favorable, prices are low, and inventory is high.  

February 3, 2008

I want to buy a home, but where do I begin?

The last couple weeks have been very interesting in the real estate world.  Interest rates have been cut and people are becoming more confident in the industry.  As a result I am getting many first time home buyers asking me, “Where do I begin?” 

The first step in purchasing a home is to get pre-qualified.  It is so important to speak to a mortgage broker before you even begin looking.  It is disappointing to find your dream home and discover the financing is not available to you.  Pre-qualification is the process of running your financial information to determine how much money you can afford to borrow.  Generally you will be asked for your W2’s for the past 2 years, and 1 current pay stub, residence addresses for the past 2 years, names and addresses of each employer for the past 2 years.  In addition they will require all pages of the last 2 months bank statements for all checking, savings, mutual funds/401K etc.

A mortgage broker will educate you about different loan programs, discuss rates, and advise you through the financial end of the deal.  Be sure to question your broker and don’t be afraid to shop around for rates and other programs.  Ask your broker about providing a good faith estimate of his/her closing costs.  Many brokers can tell you their average in dollar amount of how close they are with their estimate and actual closing.  Ask how long you can expect until the loan is fully processed.  This is crucial when purchasing a home as mortgage contingency dates need to be met.  The inability to obtain a mortgage can result in a losing your home.  Finally, ask them to run different programs with your numbers.  Tell them what idea you have for a monthly payment and ask them to find a program that fits that.  Ask about any special programs they may have access to.  Many have special mortgage programs based on employment (i.e. teacher, police officer, veteran, nurse, etc.) If you don’t know a mortgage broker, ask your Realtor, family, and friends for references.

I will be hosting a first time home buyer seminar, Wednesday February 13, 2008 at 5:30.   It will take place at Wallace-Tustin Realty, 1496 Sullivan Avenue, South Windsor, CT 06074.  Come have your questions answered by myself as well as Ken Snelgrove of McCue Mortgage.  Even if you aren’t a first time home buyer, stop by.  You may be surprised to learn how the real estate industry has changed since you last purchased or sold your home.

Week of January 28, 2008

Should I sell my house, or will I lose money on the deal?

The answer to this varies by your situation, but here is a simple calculation to determine if this is the right time for you to sell. 

Determine your cost basis.  This would be the price you paid for your house plus any improvements you have made to it.  Improvements such as adding hardwood floors, remodeling the kitchen, finishing the basement, etc.  Subtract your cost basis from the probable selling price and that will tell you your profit or loss. 

Let’s say for example you purchased a home in 2002 for $200,000 and made $20,000 in improvements.  This gives you a cost basis of $220,000.  Over the six years your home has appreciated and you are being offered $295,000 for it.  After paying closing costs, real estate fees, and legal fees you net around $275,000.  Subtract the cost basis ($220,000) from what you net ($275,000) and you will see you have a profit of $55,000.

Now it gets complicated when you look at what your neighbors house sold for and begin to compare it to yours.  A couple years ago you were told your home would sell for $320,000, netting around $310,000.  Many people subtract the $275,000 from the $320,000 and come up with a loss of $45,000.

You need to keep in mind the value of what your home would have sold for last year or the previous year is irrelevant.  You are selling it now and you need to use current market numbers to determine actual profit. 

Week of January 21, 2008

Spring Outlook

Are you thinking about buying but are undecided when you want to jump into the market?  This is a very common feeling that many potential buyers are facing.  Today’s market favors the buyer. 

As of Monday, January 21, 2008 CHFA rates for first time home buyers are at 5.125%.  If you are thinking about renting, you may want to reconsider.  Many one bedroom condos are available in the Greater Hartford Area for under $100,000.  At this first time home buyer rate, you can have a mortgage for less than you’d pay rent!  In addition to saving money in your monthly housing expenses you will be building equity, gaining a tax write off, and have a place to call your own.  Contact me if you would like me to run a rental versus owning comparison with your personal finances.  You might be surprised to find out how easy home ownership is available to you. 

Besides favorable interest rates, inventory is growing.  Sellers that were waiting until after the holidays to list their homes have done so.  Thus, today’s buyer has a wide variety of homes to choose from.  As a result, buyers are able to negotiate a contract with favorable terms.  Don’t wait too long however.  Although inventory is growing, so is the desire for homeownership.  Many buyers are waiting for the spring market to make a decision.  This spring we should see a pocket of activity as the pent up demand keeps growing. 

Week of January 13, 2008

Lease To Own Properties

Rent to Own, or Lease to Own properties are a great option for some looking to get into the real estate market, but don’t have the best credit or need to get things in line before qualifying for a mortgage.  For many, spending an additional year to clear up a credit score can save you percentage points on your mortgage rate.

A Lease to Own is a home for lease with the option to buy within a specified time frame.  The price is agreed upon up front and the lease option in generally within three years.  In leasing the property, the borrower pays a rental premium, plus an option fee (usually 1-5% of the purchase price).  The option fee is credited toward your purchase price as well as a certain percentage of the rent payment.  If the borrower decides not to exercise the purchase option, then the buyer loses the option fee and the premium paid on the rent. 

This may seem to be a one sided street, but contracts can be written and modified to make the terms favorable and fair for both parties. Having a long option period has pros and cons.  The longer you have with the option period, the more time you have to build equity and fix credit.  Be aware however, if after the extended period you are unable to purchase the home you forfeit the rent premium and the option fee.

In addition, with the lease to own, you are essentially “test driving” your future home.  Instead of the traditional real estate process where you decide on the house after a matter of a few weeks, you get to experience the home.  This is definitely a plus for someone not sure which area of town they want to live in or you discover the home you are renting has a major flaw that requires an expensive repair.

As we are heading into a slower market, many have been unable to sell their homes and are having to move and carry two mortgages.  We are seeing many more homes going on the market for rent because the cost of carrying two homes is pricy.  Although many of these homes are not marketed as lease to own, the possibility is there.