United Realty of Denton

Our hopes of an economic recovery did not materialize as the upward trend from January did not continue in February. Sales in Feb 2010 took another negative dip.

As you can see from the chart, January sales took a sharp turn upward over last year. Each year is compared to the previous year to show the percentage change. This is a good indicator that the economy might be on the upswing finally. We will have to watch this and hopefully it will continue over the next several months.

If you are a first time homebuyer or are in the low to moderate income range, buying a home listed through the Department of Housing and Urban Development (HUD) is an appealing option. HUD homes are actually available to anyone who can qualify for a mortgage. Although they are popular with middle income families, they are also appropriate for savvy consumers looking for a great deal. HUD also has special purchase programs for teachers and law enforcement police officers, which may qualify them for discounts up to 50%.

If you have fallen on hard times or have less than stellar credit, you may still be able to purchase a home with government assistance. There are several government programs available to those in need. You can go over your alternatives with a HUD funded housing counseling agency.

In order to find a HUD home, go to your state’s HUD website or search our mls at United Realty of Denton property search. You will be able to browse the available homes. When you find a home you like, we, as a HUD approved real estate office can schedule a time to view the properties of your choice. When you meet with an agent, the process is much like buying any home. You want to lay out your wants and needs so that the agent knows what you are looking for in a home. Pictures may not be enough to base your decision on, so you need to have an open dialogue with the agent.

The home buying process is a little different for HUD homes than it is for a regular listing. If a homeowner with a HUD insured mortgage cannot make the payments, the home is auctioned off after the lender forecloses.

HUD pays the lender for what is owed on the property and takes ownership of the home. These homes are sometimes auctioned off for less than the appraised market value. This is why such great deals can be found on HUD homes.

The auction is considered the “offer period”. Everyone places their bids and the highest bidder gets the house. The first ten (10) days of the offer period is reserved for owner occupants only and if you bid during this time frame you will have to sign an affadavit to that effect if you win the bid. Investors can submit a bid any time after that period. If HUD approves your bid, your agent will be contacted within 48 hours.

In the event that your bid wins, your agent will help you with the paperwork. Your settlement date will usually fall within 30-45 days of your winning bid. It is important to remember that you cannot finance a home through HUD. You need to have your own financing arrangements made in advance of placing your bid. You will also be required to submit an earnest money deposit at the time you place your bid. The amount of the earnest money check is dependent upon the price you bid on the home. If your bid wins, but you do not close, you may lose your deposit.

If the home is in need of repairs, the responsibility falls on the buyer. HUD homes are sold “as is” and do not come with a warranty. HUD will not make the repairs because the price of the home is always adjusted downward to reflect the cost of repairs.

Don’t consider buying a HUD home unless you are willing to absorb the cost of repairs. The repairs might be minor, so don’t turn your back on a good home because it needs a little work.

Before looking for homes, you should determine what your repair threshold is and stick to that. Some like the challenge of it and others would prefer to keep repairs to a minimum. It is important to have the home inspected prior to making an offer so that you can figure the cost of repairs into your bid.

If you are purchasing a HUD home for real estate investing, you should be aware that you cannot bid during the initial offering. Families in need of housing take priority; therefore, the initial offering is only available to buyers with the intent to live in the home. If no one bids on the home, investors can then place their bids.

There are several things that should be avoided before purchasing a home. If you aren’t careful to avoid these common mistakes, it is possible that your closing will be delayed or even canceled. (continue reading…)

Do I Really Need One?

If you are buying a home in the Denton Texas area, you may want to consider purchasing a home warranty as well. A home warranty is not much different from a warranty you might have on your car, your computer or your home entertainment center. A warranty on your home usually covers all of your home’s major mechanical systems, including hot tubs, pools, wells, septic tanks and all of your appliances. Some policies even cover the roof of your home and almost anything else you’d like to include, as long as it’s specified in the policy.

Home warranties are obtainable for most any dwelling, including mobile homes, condominiums, town houses and manufactured homes. They can be purchased by either the buyer or the seller; most sellers include a home warranty policy to make purchasing their home more attractive. Including a home warranty with the sale is an excellent idea, especially if the home is older and the systems and appliances are aging. This signals buyers that the owner most likely took care of their home and is willing to back it up with a home warranty.

Since the policy can be purchased at closing, the seller doesn’t have to come up with the premium out of pocket. Further, the cost of the policy can be split between the buyer and the seller, depending on the terms of the sale.

Home warranty policies are generally effective for one year and are renewable. However, you can expect to pay a little more for coverage each year, as the items covered continue to age. This is reasonable. Policy costs vary according to the list of things covered, but an average cost would be between $350 and $500 per year. Obviously, when obtaining a policy it is important to be specific about coverage. You can expect to pay a small co-payment when the repair person responds to make a repair. This is an industry standard. Your payment will range from $50 to $75 per visit.

According to a Gallup poll, 79% of buyers and sellers surveyed, rated home warranties as one of the most important aspects of buying a home. These policies are not like hazard insurance, which covers losses due to fires, storms and accidents; home warranties cover normal wear and tear breakdowns.

A new home and its major systems are usually warranted by the builder for at least one year; thereafter, your home warranty policy coverage will take effect. Be sure to understand the limitations and intent of your home warranty.

As an example, should your microwave oven catch fire and damage your kitchen cabinets, your home warranty would cover the cost of the microwave; your home owners insurance would pay to fix the cabinets.

Before buying your home warranty policy, you should shop around and find the best and most cost-effective provider. Get recommendations from your mortgage company, your builder, your friends, and from the Better Business Bureau. Obviously, some companies are better and more reliable than others. Ask specific questions: Do they subcontract their work? What is their normal response time? If your freezer stops running you need someone to respond quickly.

When trying to decide whether or not you need a home warranty, the rule of thumb is: the older your home, the more you will benefit from a home warranty policy. Most systems and appliances covered under a home warranty can be expected to last at least 5 years. Therefore, during the early years of your new home, the home warranty policy may not be necessary.

As the components of your home age, the need for a home warranty policy becomes more critical. It is obviously more attractive to pay $400 or $500 in policy premiums than shell out several thousand dollars for a new furnace or even several hundred for a new refrigerator. The policy will easily pay for itself if a major home system has to be repaired or even one major appliance has to be replaced.

If you’re the owner of rental property, you should definitely consider a home warranty policy. Unlike the appliances and systems in your own home, you have little, if any, control over the frequency and manner in which these things are used by your tenants. Odds are that you will have to replace or repair items and systems more frequently in your rental property than in your own home. As a landlord, your home warranty policy may very well save you money, but just as importantly, it can buy you peace of mind.