Top 5 Real Estate Questions People Ask Me

I get asked, it seems like, a thousand questions a day.  They are all relevant questions, but there is a number of questions that come up frequently.   Here are my top five Real Estate Questions people ask me.

Is now a bad time to buy a house in Atlanta?  Real estate prices are almost back to their peak.

This is an interesting question.  My best answer is – Do you have a choice?  The market took a
huge hit over the last 5-7 years.  Housing has rebounded but the are not back to pre-recession levels is some areas.  Here is the thing, values are not going to drop.   They will level off and then have an average appreciation.  The Urban Land Institute rates Atlanta as #5 on markets to watch for 2016.  Experts predict housing values to increase  5-6% in Metro Atlanta this year.

Back to my answer – it is never a bad time if you want a house.  The home values will not drop – those days are long gone.  You have to adjust your strategy.  Remember a few things:

• Interest rates fluctuate –  They are still low – 4 – 4.25% and lower, depending on loan program and credit score.
• The starter home market is back to the “True” starter home.  When the recession hit, the starter home was a home that was newer, larger, and more updated.  These homes were the move up homes – usually in the $200,000 – $250,000 range.  Now that the market has rebounded, the starter homes are “True” starter homes.  They are smaller, not as updated, basic homes.  They are good homes but not what they were in the recession.
• Change your thinking.  The days of the great deal or have negotiating power is over.  Price points $600,000 and under are in a sellers market.  There is less inventory, negotiating power, and more competition.  You must act when you find a home you like and submit a strong, competitive offer.

Should I put 20 percent as a down payment so I do not have to pay mortgage insurance (MI)?

This is probably number one of the top 5 Real Estate questions.  The best way to put this, it all depends on your situation.  I wrote a blog post about this because it is a question buyers ask.  20 percent down payment and mortgage insurance is all about the numbers and what your personal financial situation is.  I would look at two things.

• Evaluate overall financial plan – check to see if you have enough funds for savings, emergencies, retirement, college funds, etc.
• Do the numbers – look at how much you would be saving per month with no mortgage insurance.  Then calculate how many months it would take to recoup your down payment with the monthly savings.

If you evaluate those two things and feel that you can afford the 20 percent down payment and you are OK with the numbers, then do it.

Read my blog post on Mortgage Insurance, for more information and how to calculate the number of months and years it will take to recoup you down payment.

Why do new windows and a roof not add value to my house?

When I meet with sellers and talk about selling their home, one of the first questions I ask is “What do you think your house is worth?”  They typically respond, I think is worth ….  because I put in new windows, roof, water heater, and painted the house.  When a homeowner does those things, that is fantastic.  It does not add value but does makes it sell easier.  Here is what I mean. All the items above are considered maintenance items that help to maintain the quality of the home.  It does make your house more appealing.  If there were two homes in the same subdivision that have similar price and similar layout, the home with the new windows, roof, etc. would sell first.  The reason is that the maintenance on the home has been done.  A buyer will look at it and see the value of not having to do that work. Where you get more value, when you sell, is by doing the following;

• Updating the kitchen and baths
• Hardwood flooring
• Finishing the basement
• Doing an addition that adds square footage
• Adding a deck or screened porch

All these things add monetary value to a home.  Read my blog on the differences between upgrades and maintenance on a home and another good one is affordable ways to upgrade your home.  These will give you good ideas and some cost effective ways to add value to your home without breaking the bank.

Do the sellers pay closing costs?

Yes and no.  Closing costs are a negotiable item in the contract.  Before we talk about that – Closing Costs are not one lump number.  Most people get closing costs confused.  Here is the breakdown.

• Closing costs – These are fees charged by the closing attorney and lender to complete and close the loan. Some fees include:
  • Title Search
  • Notary Fees
  • Attorney Fees
  • Transfer Tax
• Pre-paids (Escrow) – This is related to the setting up the escrow.  An escrow account – is an account that will collect a certain amount each month to pay your:
  • Property taxes
  • Homeowners insurance (called hazard insurance)
  • Mortgage insurance (if less than 20 percent equity in your home).

These items are included in your mortgage payment.  The amount of these items needed to start the escrow account depends on where you are in the escrow calendar.  An escrow calendar determines how many months of reserves you will need.  For example,  Cobb County pays property taxes October 15.  If you buy a house in Smyrna, in November, you will have less money to put into your escrow, for property taxes, because the taxes were paid the previous month.  If you are buying in May or June, you will have to pay more money to the escrow account because there is less time to collect before taxes are due.

Back to the original question.  Closing costs are negotiable.  Sellers, make sure that you are paying only the closing costs and not the pre-paids or escrow amount.  If you get an offer on your home and the buyer is asking for 3% of the purchase price in closing costs, there will be some pre-paids for the escrow that you, the seller, is covering.

Most price points are in a sellers market.  Due to a sellers market, sellers can negotiate a little harder on closing costs and get a better deal.  Here is great blog on closing costs vs. prepaids

When  I sell my house, why is my mortgage payoff higher than what is on my mortgage statement?

Great question.  There is a straight, forward answer to this.  Lets say you are buying a home in Marietta.  When you close on your home, you have to pay the interest on the loan through the end of the month.  For example, if you close December 12,  you will pay the interest on the loan until the 31st.  The interest is included in the closing costs.  Then you have a month grace period.  If you close in December, your first payment will not start until February 1st.  During the grace period, the month that you did not pay, you will still owe the interest.  For example,

• Amount owed on your mortgage statement is $214,253.
• Daily interest rate is $34.10 a day.
• Take $34.10 x 31 days in January (using the example above) – this is $1.057.10. in interest.
• Add $214,253 + 1,057.10 = $215,310.10.  This would be your payoff amount on your loan.

This is called a “In the rears.”  This just means that the interest that you did not pay for that month grace period will be due when you sell the home.  That is why your payoff is a little higher than what your mortgage statement says.

Hopefully the top 5 real Estate Questions that I talked about today will help.  Please feel free to contact me if you have any questions or need more clarification.

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