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Real Estate Myths: Debunked

Are you ready to start looking for your first home? Buying a home can seem intimidating, but it doesn’t have to be. Your home will likely be the biggest investment you’ll make in your life, which can also make it your biggest risk. Don’t fall for the following myths:

Myth: If you pre-qualify for a loan, you will be approved for a mortgage

Loan approval involves an underwriter analyzing hundreds of pages of documentation, as well as considering other factors like the home appraisal report. A pre-qualification letter, however, is based on a quick, preliminary analysis of your credit report. Getting the letter is a recommended early step to show you’re a serious buyer, but it doesn’t mean a loan approval is guaranteed.

Myth: You need 20% for a down payment

There’s an array of loan options that don’t require 20 percent down — in fact, this amount is rare in today’s home buying market. According to the National Association of Realtors, 60 percent of millennials are putting just 6 percent down on average.

Saving for a big down payment can be advantageous, but you don’t want to deplete your savings or risk coming up short on your mortgage payment. Instead, you should save as much as possible for unexpected expenses.

Myth: You don’t need a real estate agent

Realtors are so important to the home buying process. Real estate agents get a commission, but the home buyer does not pay their fee. It is paid by the seller and is built into the selling price. Every seller expects to pay a buyers agent commission. If you show up without one thinking you can get a 3% discount on the price you will quickly regret it. Realtors help you get the lowest purchase price with their expertise and using comparables. Real estate contracts are long and often hard to understand for the average person. There are many items such as home appraisals, inspections, opt-out clauses, etc. that you need to know about in depth in order to protect yourself.

Myth: You need a perfect credit score

Your credit score doesn’t have to be flawless for you to be able to find a mortgage that fits your budget. It surprises many when they talk to a lender and realize that they can still qualify, even with a lower credit score. To offset potential negative factors on your credit history, you may need to have a larger down payment or meet other qualifications, but you don’t need to have a “perfect credit score” to qualify.

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Do a Home Inspection Before Listing to Sell

Be ready for the buyer’s home inspection. Find out the exact condition of your home before you put it on the market to sell. The home inspection is often where the deal falls apart because buyers will make their offer contingent on approval of the results. Hidden defects or problems can turn the negotiating into the buyer’s favor. Even if you offer to fix a problem that arises on the buyer’s inspection report, skittish buyers may be hesitant to close the deal. Knowing before you list your home gives you the opportunity to fix the problem or price accordingly.

Buyers use items that need to be repaired on a home inspection to ask for a reduced price. The reductions are commonly based on estimates that are often inflated. When you fix the repairs, you can call the contractor with the best price, saving you money in the long run.
Sellers can justify listing price through a pre-inspection. You can feel confident in the price you are asking with the results available to buyers. In a hot market, some buyers will make an offer on a home without the home inspection contingency.
According to Forbes, “…. pre-inspection is a goodwill gesture. It demonstrates a willingness to go beyond what’s expected, and that sets you apart from other sellers. You’re sending a signal that your house is an “open book,” and that you’re being upfront about the property. All of this can give potential buyers peace of mind and confidence.”

Once you have the pre-inspection report in your hand you can’t ignore any issues that came up. You’ll be required to disclose that information as a known defect or fix it before anyone makes an offer. There may be some issues that you aren’t able to take on and it will be reflected in the price. You and your Realtor will be able to establish the right sale price including what you can or can not fix before putting your house on the market.

The bottom line: As a seller, getting a home inspection before listing your home gives you more time to make the repairs that you can and to shop around and control the costs for the work. Be sure to hire an experienced Realtor that will know how to interpret inspection reports, and to let you know which issues are vital to address before listing your home.

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Quitclaim Deeds

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When a mortgage is in danger of becoming an unsustainable burden a homeowner’s finances, they may sign a quitclaim deed that will transfer some ownership interest in their home to another party. Quitclaim deeds are most often used when a home is transferred between family members or to cure a defect on the title, such as a name that has been misspelled, or when an owner gets married and wants to add a spouse’s name to the title, or when the owners divorce and one spouse’s name is removed from the title. Sometimes, they may be used to transfer ownership of a home from an individual to a sole proprietorship or corporation.

Common facts needed to understand a quitclaim deed:

The quitclaim deed contains no warranties of title or ownership. If the grantor owns nothing, the grantee receives nothing.
When purchasing a home, the buyer should receive a general warranty deed, not a quitclaim deed. Title insurance is favorable and often required by mortgage lenders.
A real estate purchaser under a quitclaim deed is in many legal situations considered to be on notice that the title has defects. It is recommended that an experienced professional undertake a title examination based upon a title search and render a title opinion prior to completing the purchase.
If one has borrowed money under a real estate mortgage, a quitclaim or other deed to a third party does not release one’s liability for the mortgage debt. The lender may release a debt, but a borrower can’t avoid payment by unilaterally shifting that debt to a third person.
Subsequent ownership by the grantor after the delivery of a quitclaim deed is not impacted or transferred by the quitclaim deed.
Recording any deed in the public records at a local courthouse or recorder’s office, as determined by state law, only gives public notice of one’s claim of ownership. A deed does not guarantee actual title or ownership.
If two or more individuals are co-owners of real estate, a quitclaim deed by one owner only transfers at best that one owner’s ownership rights. If the quitclaim deed requires the signature of all co-owners, the deed is invalid unless all co-owners have signed it and the deed is then delivered to the grantee. However, if the quitclaim deed allows one co-owner to sign it and claims to transfers the entire property to a grantee who takes physical possession of the property, then the deed may create an adverse possession ownership claim to the entire property.
If one individual owns real estate and desires to add a co-owner such as a spouse, a quitclaim deed might be used. It’s in the best interest to contact an attorney before doing so, in order to curtail any taxation or inheritance issues.
Call the best Title Insurance Agency because a title examination is necessary.
There can’t be a reversal in a quitclaim unless the original owner proves that the quitclaim deed was signed under duress in a court.

As efficient as quitclaim deeds are in transferring real estate ownership from one person to another, they suffer from certain shortcomings that make them inappropriate for all but their intended purposes. Whereas they transfer title to a property, nothing more and nothing less, purchasers demand transfer assurances that quitclaim deeds can’t provide. They want warranties that guarantee “clear title” or lack of ownership encumbrances in the property. In such transactions, sellers transfer their real properties with general or special warranty deeds that offer those assurances to their buyers.

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Marketing Your Home to Sell

The MLS will grab the largest exposure for homes on the market because it reaches other websites and the most people online. However, anyone selling their home should interview and find the most aggressive Realtor that will take advantage of all the opportunities to get the home in front of people. It is now more important than ever that the person hired to sell any home utilizes the internet and social media for promotion. 70% of American adults are online. More than 1 billion people in the entire world log in to Facebook on any given day. The potential to reach a huge number of people is exceptional.

Photographs: The very best Realtor should help stage and prepare the home for professional pictures. All rooms should be clear of any clutter. The pictures MLS displays are usually grainy and poor quality. Homebuyers more times than not, begin the search for their new home online. Take advantage of this. Stand in the doorway to rooms and snap the photo shooting into the room. There are never too many photos!

Facebook: Now those beautiful photos need to be posted and announced, showcased and marketed. A good Realtor might even host open houses via Facebook LIVE and interact with people that are watching. Another option is to make a targeted ad and pinpoint people by location, interests, behaviors, age and more.

Instagram: The worlds largest photo sharing platform is the perfect place to showcase the photos taken of the home. A good Realtor should know how to use hashtags because that is how Instagram helps users find relevant content. Spread the pictures throughout the day.

The bottom line: Everyone wants a Realtor that can be trusted and will do everything he/she can to get the most money for their home in the least amount of time. The Realtor is the homeowner’s advocate. The marketing of the home should be exceptional. Beyond using the MLS (Multiple Listing Service) there should be professional pictures to use on websites and every social media platform available.

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Cyber Threats in Real Estate

Buying, selling & refinancing a home requires submission of personal information to the lender which includes social security numbers, bank account numbers and credit/loan account numbers. Sadly, there are hackers out there looking for this personal information to steal.

Never trust wiring instructions sent by email, especially if there is a claim made that submitting a payment has changed and a new account is provided. The hackers are sending out sophisticated and convincing emails that look like they are coming from your Realtor. They often contain signatures, fonts, and logos that are an exact match to the original. Always confirm in person or by telephone to a verified and trusted phone number. Never wire money without double checking that the wiring instructions are correct.

How to avoid getting into this situation:

Never send wire transfer information, or any type of sensitive information, via email. This includes all types of financial information, not just wire instructions.
Never conduct business over unsecured WiFi
Make sure you learn your Realtor/Lenders email and communication practices. For instance, do they expect to be sending you sensitive information through email?
If wiring funds, first contact the recipient using a verified phone number to confirm that the wiring information is accurate. The phone number should be obtained from a reliable source.
If email is the only method available for sending information about a transaction, make sure it is encrypted.
Delete old emails regularly, as they may reveal information that hackers can use.
Change usernames and passwords on a regular basis, and make sure that they’re difficult to guess.
Make sure anti-virus technology is up to date, and that firewalls are installed and working.
Never open suspicious emails. If the email has already been opened, never click on any links in the email, open any attachments or reply to the email.

Cyber threats in real estate are too incredibly common. We all need to be vigilant and have security practices in place. One mistake acted on by a fraudulent request, could result in the loss of hundreds of thousands of dollars or personal data loss.

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Pricing Your Home to Sell

When it’s time to sell your home in Ohio, having the best Realtor is key to making it happen fast. You need an agent that will price your home properly – the most important thing a skilled Realtor can do. Too many Realtors tell sellers what they want to hear instead of what they need to hear to sell their home.

Pricing a home is a skill that takes training, understanding of the market and the comparable sales (comps). When a home is listed too high, buyers pass on even looking at it. It will end up being on the market for a long period of time and the price will eventually be forced to be lowered to be competitive. But, by that time buyers assume there must be something wrong with the home and it will gain a bad reputation and continue to be bypassed. Even the buyers who do look at it will lowball the new price and the home will end up being sold for less than what it would have had you priced it correctly to being with. Homes sell for the most money when they are on the market for less than 30 days in almost all markets.

You don’t want your home priced lower than it is worth, but you want it low enough to create excitement among buyers and possibly even multiple offers coming in. This is an excellent option if you want to sell a home fast.

A good Realtor will make sure that the seller’s home shows up in online searches. To make sure this happens, a proper price is paramount. If the neighborhood comps are lower, the house may not show up if it’s even slightly higher! For instance, if the comps top out at $300,000, and the buyer wants a 4 bedroom home in that neighborhood under $300,000, the house listed at $325,000 won’t even show up in the search.

Pricing a home to sell properly is a skill that the best Realtors have. It is the most critical piece to selling your home. The right price is 75% of the marketing for any home on the market. It’s what will attract buyers. So, when you are interviewing Realtors to sell your home, ask the question “what’s my home worth” and know they can’t tell you what it will sell for but expect comparable sales, pending sales, and active sales. Finally, ask to see a track record of their previous listings – the original price and the final sale number. And, don’t be afraid to ask for a personal guarantee from them.

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The Importance of Title Insurance

No one gives much thought to the importance of title insurance. Something that can protect owners of real property events and matters that can be brought up form the past. But what happens when an old title issue surfaces and a claim is made on a policy? Many homeowners decline title insurance but once they know how it is created to protect them from unknown claims against their property that can pop up years down the road.

Title insurance is much more than a lender requirement. It’s knowing that what you are buying is free of any third party claims to ownership or use of any part of it. It assures the homeowner that they are clear of anything that would affect the ability to sell or borrow against their new property. After thousands of real estate closings here at Title First, we can give you a rundown of the most common issues we can save you from:

Mistakes on titles, especially lately, that are transferred through a sale of foreclosure without certain rulings met, thus making the transfer of the title invalid.
Mistakes within all the paperwork brought to a closing, somewhere along the line there may be a forged signature or recorded documents signed by people without legal authority.
Mistakes made during the probate process for the previous owner that overlooked someone else’s rightful claim (undisclosed heirs) to the property or someone else’s interest in the property. Misinterpretation of wills and deeds.
Mistakes made in the description of the property.
Mistakes missed where claims, tax information or easements have not been recorded properly in the public record.
Mistakes missed of liens on the property or judgments against the previous owner.
Mistakes in unpaid taxes or mortgages and unpaid debts.

Investors need to be alert when protecting their investments. Title insurance assures the homeowner that the title to the property purchased is free of any defects and is “clear to close”. It is a guarantee that all matters of record that could harm the title of the new property have been disclosed and resolved. Title insurance protects the homeowner against any potential claims should an undisclosed event threaten the ownership of the property. Give us a call today at Title First Agency: 1-866-320-8400

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