Buyer’s Resource Page for Buying Your Reno or Sparks Nevada Home or Real Estate
By Krch Realty – REALTORS® in Reno Nevada
Below you will find area information, home buying tips, and informative definitions and explanations.
Welcome to Reno
Reno is the center of commerce and culture in Northern Nevada, with more than 189,000 residents who enjoy life in a high desert valley on the eastern slope of the sierra. A work-class tourist destination with a rich arts scene and year-round outdoor activities, Reno has something for everyone inside its 85.2 square miles and we are only 45 minutes away from Lake Tahoe and some of the country’s best ski resorts. People love living in the Truckee Meadows. It is a city with a rich history, known worldwide for its dynamic and vibrant downtown. Here lies a progressive and lucrative opportunity waiting for your dream home or your next business development, Reno, Nevada.
Reno rests at a comfortable 4,400 ft, and gets over 300 sunny days each year. We get about 12 inches of precipitation annually, with lots of snow falling at the 15 easily accessible ski resorts in the Lake Tahoe area.
|Average temperatures||Avg. High||Avg. Low|
|January – March||51||24|
|April – June||73||40|
|July – September||87||47|
|October – December||56||26|
Population & Homes
The population of Reno is growing. In 2000, US Census found 180,480 people in Reno. In 2005 we estimate 340,000 will live in Washoe county. The median age in Reno is 34.5 years. Almost a quarter of the population is under 18 years old, and 11.4 percent are over 65. Of those 25 years old or older, 82.4 percent have a least a high school diploma and 25 percent have college degrees. The median home sales price in 2002 was 179,300 in 2004 the median home sales price rose to 220,00.
The wall street journal said, “Reno’s strength is the product of more than two decades of effort.” and described the community’s economic development efforts as “a case study in the patience and perseverance needed to rebuild a local economy.” INC magazine rated Reno number 4 in the top 50 small metro areas to start and grow a small business. Forbes has reported Reno to being the number 3 place to buy real estate in the nation.
In 2002, the University of Nevada Reno was named one of “America’s Best Colleges” by the U.S. News and World Report. The designation placed the university among a superior group of only 249 public and private schools, including Harvard, Princeton and Yale.
Medical & Health
Washoe County has four major hospitals. They are Northern Nevada Medical Center, Saint Mary’s regional Medical Center, Washoe Medical Center, and VA Sierra Nevada Healthcare System. Washoe County also has many nursing homes in the Reno/Sparks area.
- Saint Mary’s Regional Medical Center
- 770-3000 235 W. 6th Street, Reno, Nevada
- Washoe Medical Center
- 982-4100 77 Pringle Way, Reno, Nevada
- Northern Nevada Medical Center
- 331-7000 375 E Prater Way, Sparks, Nevada
- VA Sierra Nevada Healthcare System
- 786-7200 1000 Locust Reno, Nevada
There are over 150 churches of various denominations in the area.
|Electricity/Gas (Sierra Pacific)||834-4011|
|Chamber of Commerce||337-3030|
|City of Reno||334-2050|
The business above are not indorsed or recommend by Century 21 Goldcrest Properties or Platinum Management Group. These have been provide for your convince only.
Greyhound Bus Lines provides service from Reno and Lake Tahoe.
Reno/Sparks has several taxi companies that provide service in the area. A shuttle service is also available to provide direct service to and from the Reno/Tahoe international Airport.
There is a rail service (passenger or freight) available in Reno/Sparks and is provided by Amtrak, Southern Pacific and Union Pacific. The one major airport is Reno/Tahoe International Airport. It offers: charter service, auto rental, airplane rental, taxi service, aviation fuel, and other support services.
- National Bowling Stadium
- 334-2600 300 North Center St, Reno
An architectural masterpiece, the state-of art National Bowling Stadium is a must see! The ceiling soars 44 ft over the 80 lane, 120,000 square foot playing area. Permanent seating for 1100 spectators, and covered parking. Come get a glimpse of what bowling is like in Heaven!
- Nevada Museum of Art
- 329-3333 160 West Liberty Street, Reno
Visit Nevada’s premier fine arts museum and enjoy world-class exhibitions ranging from contemporary to historic perspectives.
- Wilbur D. May Center
- 1502 Washington Street, Reno
An experience for people of all ages! It’s a museum, an adventure theme park, and arboretum. A display of everything from rare art to exotic plants. A place where kids can get animals or pan for gold and where gardeners gather seeds of knowledge. There is even a gift shop filled with unique gifts. The center is a collection of all that was important to local philanthropist Wilbur D. May.
- Fleischmann Planetarium
- 784-4811 University of Nevada, Reno
You’ve never seen anything, until you have seen us! Experience the Skydome-four times larger than standard 35-millimeter movies. The pictures are razor sharp, high impact and enhanced by a new 6 channel audio system.
- National Automobile Museum
- 333-9300 10 Lake Street South
Discover $28 million worth of fun! Explore the wonderful world of automobiles and experience a variety of exhibits, a multimedia theater, and one of the West’s most unique and extensive collections of classic cars. A great entertainment experience for the whole family.
8 Steps to Getting Your Finances in Order
- Develop a family budget. Instead of budgeting what you’d like to spend, use receipts to create a budget for what you actually spent over the last six months. One advantage of this approach is that it factors in unexpected expenses, such as car repairs, illnesses, etc., as well as predictable costs such as rent.
- Reduce your debt. Generally speaking, lenders look for a total debt load of no more than 36 percent of income. Since this figure includes your mortgage, which typically ranges between 25 percent and 28 percent of income, you need to get the rest of installment debt – car loans, student loans, revolving balances on credit cards – down to between 8 percent and 10 percent of your total income.
- Get a handle on expenses. You probably know how much you spend on rent and utilities, but little expenses add up. Try writing down everything you spend for one month. You’ll probably see some great ways to save.
- Increase your income. It may be necessary to take on a second, part-time job to get your income at a high-enough level to qualify for the home you want.
- Save for a down payment. Although it’s possible to get a mortgage with only 5 percent down – or even less in some cases – you can usually get a better rate and a lower overall cost if you put down more. Shoot for saving a 20 percent down payment.
- Create a house fund. Don’t just plan on saving whatever’s left toward a down payment. Instead decide on a certain amount a month you want to save, then put it away as you pay your monthly bills.
- Keep your job. While you don’t need to be in the same job forever to qualify, having a job for less than two years may mean you have to pay a higher interest rate.
- Establish a good credit history. Get a credit card and make payments by the due date. Do the same for all your other bills. Pay off the entire balance promptly.
8 Ways to Improve Your Credit
Credit scores, along with your overall income and debt, are a big factor in determining if you’ll qualify for a loan and what loan terms you’ll be able to qualify for.
- Check for and correct errors in your credit report. Mistakes happen, and you could be paying for someone else’s poor financial management.
- Pay down credit card bills. If possible, pay off the entire balance every month. However, transferring credit card debt from one card to another could lower your score.
- Don’t charge your credit cards to the maximum limit.
- Wait 12 months after credit difficulties to apply for a mortgage. You’re penalized less for problems after a year.
- Don’t purchase big-ticket items for your new home on credit cards until after the loan is approved. The amounts will add to your debt.
- Don’t open new credit card accounts before applying for a mortgage. Having too much available credit can lower your score.
- Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.
- Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management. This information is copyrighted by the Fannie Mae Foundation and is used with permission of the Fannie Mae Foundation. To obtain a complete copy of the publication, “Knowing and Understanding Your Credit,” visit http://www.homebuyingguide.org.
5 Factors That Decide Your Credit Score
Credit scores range between 200 and 800. Scores above 620 are considered desirable for obtaining a mortgage. These factors will affect your score.
- Your payment history. Whether you paid credit card obligations on time.
- How much you owe. Owing a great deal of money on numerous accounts can indicate that you are overextended.
- The length of your credit history. In general, the longer the better.
- How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay promptly.
- The types of credit you use. Generally, it’s desirable to have more than one type of credit – installment loans, credit cards, and a mortgage, for example. For more on evaluating and understanding your credit score, go to http://www.myfico.com/?lpid=NARI3.
Your Property Wish List
While your opinions on the type of home you want to own may change during the home buying process, use this easy checklist to help you prioritize and make the shopping process less time consuming.
- What neighborhoods would you prefer?
- What school systems do you want to be near?
- What architectural style(s) of homes do you prefer?
- Do you want a one-story or two-story house?
- How old a home would you consider?
- How much repair or renovation would you be willing to do?
- Do you have special facilities or needs that your home must meet?
- Do you require a fenced yard or other amenities for your pets?
Tips for Finding the Perfect Neighborhood
The neighborhood you choose can have a big impact on your lifestyle – safety, available amenities, and convenience all play their part.
- Make a list of the activities – movies, health club, church – you engage in regularly and stores you visit frequently. See how far you would have to travel from each neighborhood you’re considering to engaging in your most common activities.
- Check out the school district. The Department of Education in your town can probably provide information on test scores, class size, percentage of students who attend college, and special enrichment programs. If you have school-age children, also consider paying a visit to schools in the neighborhoods you’re considering. Even if you don’t have children, a house in a good school district will be easier to sell in the future.
- Find out if the neighborhood is safe. Ask the police department for neighborhood crime statistics. Consider not only the number of crimes but also the type – burglaries, armed robberies – and the trend of increasing or decreasing crime. Also, is crime centered in only one part of the neighborhood, such as near a retail area?
- Determine if the neighborhood is economically stable. Check with your local city economic development office to see if income and property values in the neighborhood are stable or rising. What is the percentage of homes to apartments? Apartments don’t necessarily diminish value, but they do mean a more transient population. Do you see vacant businesses or homes that have been for sale for months?
- See if you’ll make money. Ask a local REALTOR® or call the local REALTOR® association to get information about price appreciation trends in the neighborhood. Although past performance is no guarantee of future results, this information may give you a sense of how good an investment your home will be. A REALTOR® or the government planning agency also may be able to tell you about planned developments or other changes in the neighborhood – like a new school or highway – that might affect value.
- See for yourself. Once you’ve narrowed your focus to two or three neighborhoods, go there, and walk around. Are homes tidy and well maintained? Are streets quiet? Pick a warm day if you can and chat with people working or playing outside. Are they friendly? Are their children to play with your family?
Tips on Buying in a Tight Market
Increase your chances of getting your dream house instead of losing it to another buyer, with these easy steps.
- Get pre-qualified for a mortgage. You’ll be able to make a firm commitment to buy and make your offer more desirable to the seller.
- Stay in close touch with your real estate sales associate to find out first about new listings that come on the market. And be ready to go see a house as soon as it goes on the market.
- Scout out new listings yourself. Look at Internet sites, newspaper ads, and drive by the neighborhood frequently. Maybe you’ll see a brand-new “for sale” sign before anyone else.
- Be ready to make a decision. Spend lots of time in advance deciding what you must have so you won’t be unsure when you have the chance to make an offer.
- Bid competitively. You may not want to start out offering the absolute highest price you can afford, but don’t try to go too low to get a deal. In a tight market, you’ll lose out.
- Keep contingencies to a minimum. Restrictions such as needing to sell your home before you move or wanting to delay the closing until a certain date can make your offer unappealing. In a tight market, you’ll probably be able to sell your house rapidly. Or talk to your lender about getting a bridge loan to cover both mortgages for a short period.
- Don’t get caught in a buying frenzy. Just because there’s competition doesn’t mean you should just buy anything. And even though you want to make your offer attractive, don’t neglect inspections that help ensure that your house is sound.
5 Reasons You Need a REALTOR®
- A real estate transaction is complicated. In most cases, buying or selling a home requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page government-mandated settlement statements. A knowledgeable guide through this complexity can help you avoid delays or costly mistakes.
- Selling or buying a home is time consuming. Even in a strong market, homes in our area stay on the market for an average of 30 days. And it usually takes another 60 days or so for the transaction to close after an offer is accepted.
- Real estate has its own language. If you don’t know a CMA from a PUD, you can understand why it’s important to work with someone who speaks that language.
- REALTORS® have done it before. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. And even if you’ve done it before, laws and regulations change. That’s why having an expert on your side is critical.
- REALTORS® provide objectivity. Since a home often symbolizes family, rest, and security, not just four walls and roof, home selling or buying is often a very emotional undertaking. And for most people, a home is the biggest purchase they’ll ever make. Having a concerned, but objective, third party helps you keep focused on both the business and emotional issues most important to you.
- REALTORS® are members of the NATIONAL ASSOCIATION OF REALTORS®, a trade organization of nearly 1 million members nationwide. REALTORS® subscribe to a stringent code of ethics that helps guarantee the highest level of service and integrity.
Questions to Ask When Choosing a Real Estate Practitioner
- How long have you been in residential real estate sales? Is it your full-time job? (While experience is no guarantee of skill, real estate, like many other professions, is mostly learned on the job.)
- Are you a REALTOR®? (Members of the NATIONAL ASSOCIATION OF REALTORS®, a trade organization of nearly 1 million members nationwide, subscribe to a stringent code of ethics that helps guarantee the highest level of service and integrity.)
- What designations do you hold? (Designations, such as GRI and CRS®, which require that real estate professionals take additional, specialized real estate training, are held by only about one-quarter of real estate practitioners.)
- How many homes did you and your company sell last year?
- How many days did it take you to sell the average home? How did that compare to the overall market?
- How close to the initial asking prices of the homes you sold were the final sale prices?
- What types of specific marketing systems and approaches will you use to sell my home? (Look for someone who has aggressive, innovative approaches, not just someone who’s going to put a sign in the yard and hope for the best.)
- Will you represent me exclusively, or will you represent both the buyer and the seller in the transaction? (While it’s usually legal to represent both parties in a transaction, it’s important to understand where the practitioner’s obligations lie. A good practitioner will explain the agency relationship to you and describe the rights of each party. It’s also possible to insist that the practitioner represent you exclusively.)
- Can you recommend service providers who can assist me in obtaining a mortgage, making repairs on my home, and other things I need done? (Keep in mind here that real estate professionals should generally recommend more than one provider and should tell you if they receive any compensation from any provider.)
- What type of support and supervision does your brokerage office provide to you? (Having resources, such as in-house support staff, access to a real estate attorney, or assistance with technology, can help a real estate professional sell your home.)
- What’s your business philosophy? (While there’s no right answer to this question, the response will help you assess what’s important to the real estate practitioner – fast sales, service, etc. – and determine how closely the practitioner’s goals and business emphasis mesh with your own.)
- How will you keep me informed about the progress of my transaction? How frequently? Using what media? (Again, this is not a question with a correct answer, but that one reflects your desires. Do you want updates twice a week or don’t want to be bothered unless there’s a hot prospect? Do you prefer phone, e-mail, or a personal visit?)
- Could you please give me the names and phone numbers of your three most recent clients?
10 Steps to Prepare for Homeownership
- Decide how much home you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.
- Develop a wish list of what you’d like your home to have. Then prioritize the features on your list.
- Select three or four neighborhoods you’d like to live in. Consider items such as schools, recreational facilities, area expansion plans, and safety.
- Determine if you have enough saved to cover your down payment and closing costs. Closing costs, including taxes, attorney’s fee, and transfer fees average between 2 percent and 5 percent of the home price.
- Get your credit in order. Obtain a copy of your credit report.
- Determine how large a mortgage you can qualify for. Also explore different loans options and decide what’s best for you.
- Organize all the documentation a lender will need to pre approve you for a loan.
- Do research to determine if you qualify for any special mortgage or down payment-assistance programs.
- Calculate the costs of homeownership, including property taxes, insurance, maintenance, and association fees, if applicable.
- Find an experienced REALTOR® who can help you through the process.
How Big a Mortgage Can I Afford?
Not only does owning a home give you a haven for yourself and your family, it makes great financial sense, too. This calculation assumes a 28 percent income tax bracket. If your bracket is higher, your savings will be, too.
Rent: __________________ Multiplier: X 1.32 Mortgage payment: __________________ Because of tax deductions, you can make a mortgage payment – including taxes and insurance – that is approximately one-third larger than your current rent payment and end up with the same amount of income.
7 Reasons to Own Your Own Home
- Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, property taxes you pay, and some of the costs involved in buying your home.
- Gains. Between 1998 and 2002, national home prices increased at an average of 5.4 percent annually. And while there’s no guarantee of appreciation, a 2001 study by the NATIONAL ASSOCIATION OF REALTORS® found that a typical homeowner has approximately $50,000 of unrealized gain in a home.
- Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.
- Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.
- Predictability. Unlike rent, your mortgage payments don’t go up over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will rise.
- Freedom. The home is yours. You can decorate any way you want and be able to benefit from your investment for as long as you own the home.
- Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.
5 Common First-Time Homebuyer Mistakes
- They don’t ask enough questions of their lender and miss out on the best deal.
- They don’t act quickly enough to make a decision and someone else buys the house.
- They don’t find the right real estate professional who is willing to help you through the home buying process.
- They don’t do enough to make their offer look good to a seller.
- They don’t think about resale before they buy. The average first-time buyer only stays in a home for four years.
10 Tips for First-Time Homebuyers
- Be picky, but don’t be unrealistic. There is no perfect home.
- Do your homework before you start looking. Decide specifically what features you want in a home and which are most important to you.
- Get your finances in order. Review your credit report and be sure you have enough money to cover your down payment and your closing costs.
- Don’t wait to get a loan. Talk to a lender and get pre qualified for a mortgage before you start looking.
- Don’t ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion.
- Decide when you could move. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area?
- Think long-term. Are you looking for a starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that suit you best.
- Don’t let yourself be “house poor”. If you max yourself out to buy the biggest home you can afford, you’ll have no money left for maintenance or decoration or to save money for other financial goals.
- Don’t be naive. Insist on a home inspection and, if possible, get a warranty from the seller to cover defects within one year.
- Get help. Consider hiring a REALTOR® as a buyer’s representative. Unlike a listing agent, whose first duty is to the seller, a buyer’s representative is working only for you. And often, buyer’s reps are paid out of the seller’s commission payment.
10 Things to Take the Trauma Out of Home buying
- Find a real estate professional who’s simpatico. Home buying is not only a big financial commitment, but also an emotional one. It’s critical that the practitioner you chose is both skilled and a good fit with your personality.
- Remember, there’s no “right” time to buy, any more than there’s a right time to sell. If you find a home now, don’t try to second-guess the interest rates or the housing market by waiting. Changes don’t usually occur fast enough to make that much difference in price, and a good home won’t stay on the market long.
- Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas will make it much harder to make a decision.
- Accept that no house is ever perfect. Focus in on the things that are most important to you and let the minor ones go.
- Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price may lose you the home you love.
- Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself – room size, kitchen – that you forget such issues as amenities, noise level, etc., that have a big impact on what it’s like to live in your new home.
- Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate insurance availability, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.
- Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be some costs. Don’t leave yourself short and let your home deteriorate.
- Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big commitment, but it also yields big benefits.
- Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4 percent annually from 1998 to 2002, a home’s most important role is as a comfortable, safe place to live.
How High Tech Is Your Home?
If the latest technology or entertainment options are important in your new home, add the following questions to your buyer’s checklist.
- Are there enough jacks in every room for cable TV and high-speed Internet hookups?
- Are there enough telephone extensions or jacks?
- Is the home pre-wired for a home theater or multi-room audio and video?
- Does the home have a local area network for linking computers?
- Does the home already have wiring for DSL or other high-speed Internet connection?
- Does the home have multi zoning heating and cooling controls with programmable thermostats?
- Does the home have multi-room lighting controls, window-covering controls, or other home automation features?
- Is the home wired with multi-purpose in-wall wiring that allows for reconfigurations to update services as technology changes?
Hidden Home Defects to Watch For
No home is flawless, but certain physical problems can be expensive. Watch for:
- Water leaks. Look for stains on ceilings and near the baseboards, especially in basements or attics.
- Shifting foundations. Look for large cracks along the home’s foundation.
- Drainage. Look for standing water, either around the foundation of the home of in the yard.
- Termites. Look for weakened or grooved wood, especially near ground level.
- Worn roofs. Look for broken or missing copings and buckled shingles as well as water spots on ceilings.
- Inadequate wiring. Look for antiquated fuse boxes, extension cords (indicating insufficient outlets), and outlets without a place to plug in the grounding prong.
- Plumbing problems. Very low water pressure, banging in pipes.
10 Questions to Ask a Home Inspector
- What are your qualifications? Are you a member of the American Association of Home Inspectors?
- Do you have a current license? Inspectors are not required to be licensed in every state.
- How many inspections of properties such as this do you do each year?
- Do you have a list of past clients I can contact?
- Do you carry professional errors and omission insurance? May I have a copy of the policy?
- Do you provide any guarantees of your work?
- What specifically will the inspection cover?
- What type of report will I receive after the inspection?
- How long will the inspection take and how long will it take to receive the report?
- How much will the inspection cost?
What Your Home Inspection Should Cover
- Siding: Look for dents or buckling
- Foundations: Look for cracks or water seepage
- Exterior Brick: Look for cracked bricks or mortar pulling away from bricks
- Insulation: Look for condition, adequate rating for climate Doors and Windows: Look for loose or tight fits, condition of locks, condition of weather stripping
- Roof: Look for age, conditions of flashing, pooling water, buckled shingles, or loose gutters and downspouts
- Ceilings, walls, and moldings: Look for loose pieces, drywall that is pulling away
- Porch/Deck: Loose railings or step, rot
- Electrical: Look for condition of fuse box/circuit breakers, number of outlets in each room
- Plumbing: Look for poor water pressure, banging pipes, rust spots or corrosion that indicate leaks, sufficient insulation
- Water Heater: Look for age, size adequate for house, speed of recovery, energy rating
- Furnace/Air Conditioning: Look for age, energy rating; Furnaces are rated by annual fuel utilization efficiency; the higher the rating, the lower your fuel costs. However, other factors such as payback period and other operating costs, such as electricity to operate motors.
- Garage: Look for exterior in good repair; condition of floor – cracks, stains, etc.; condition of door mechanism
- Basement: Look for water leakage, musty smell
- Attic: Look for adequate ventilation, water leaks from roof
- Septic Tanks (if applicable): Adequate absorption field capacity for the percolation rate in your area and the size of your family
- Driveways/Sidewalks: Look for cracks, heaving pavement, crumbling near edges, stains
How Comprehensive Is Your Home Warranty?
Check your home warranty policy to see which of the following items are covered. Also check to see if the policy covers the full replacement cost of an item.
- Electrical Systems
- Water Heater
- Heating Ducts
- Water Pump
- Swimming Pool (may be optional)
5 Property Tax Questions You Need to Ask
- What is the assessed value of the property? Note that assessed value is generally less than market value. Ask to see a recent copy of the seller’s tax bill to help you determine this information.
- How often are properties reassessed and when was the last reassessment done? Generally taxes jump most significantly when a property is reassessed.
- Will the sale of the property trigger a tax increase? Often the assessed value of the property may increase based on the amount you pay for the property. And in some areas, such as California, taxes may be frozen until resale.
- Is the amount of taxes paid comparable to other properties in the area? If not, it might be possible to appeal the tax assessment and lower the rate?
- Does the current tax bill reflect any special exemptions that you might not qualify for? For example, many tax districts offer reductions to those 65 or over.
10 Questions to Ask Your Condo Board
Before you buy, contact the condo board with the following questions. In the process, you’ll learn how responsive – and organized – its members are.
- What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.
- What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can’t rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have an attorney review property docs, including the master deed, for you.
- How much does the association keep in reserve? How is that money being invested?
- Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs. To determine if the assessment is reasonable, compare the rate to others in the area.
- What does and doesn’t the assessment cover – common area maintenance, recreational facilities, trash collection, snow removal?
- What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board’s fiscal policy.
- How much turnover occurs in the building?
- Is the project in litigation? If the builders or homeowners are involved in a lawsuit, reserves can be depleted quickly.
- Is the developer reputable? Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. Request an engineer’s report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks aren’t in good repair, they become your problem once you buy.
- Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which you’re buying, may require separate assessment
10 Questions to Ask Your Lender
Be sure you find a loan that fits your needs with these comprehensive questions.
- What are the most popular mortgage loans you offer?
- Which type of mortgage plan do you think would be best for us? Why?
- Are your rates, terms, fees, and closing costs negotiable?
- Will I have to buy private mortgage insurance? If so how much will it cost and how long will it be required? NOTE: Private mortgage insurance usually is required if you make less than a 20 percent downpayment, but most lenders will let you discontinue the policy when you’ve acquired a certain amount of equity by paying down the loan.
- Who will service the loan? Your bank or another company?
- What escrow requirements do you have?
- How long is your loan lock-in period (the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if they drop during this period?
- How long will the loan approval process take?
- How long will it take to close the loan?
- Are there any charges or penalties for prepaying the loan?
10 Things a Lender Needs From You
- W-2 forms or business tax return forms if you’re self-employed for the last two or three years for every person signing the loan.
- Copies of one or more months of pay stubs from every person signing the loan.
- Copies of two to four months of bank or credit union statements for both checking and savings accounts.
- Copies of personal tax forms for the last two to three years.
- Copies of brokerage account statements for two to four months, as well as a list of any other major assets of value, e.g., a boat, RV, or stocks or bonds not held in a brokerage account.
- Copies of your most recent 401(k) or other retirement account statement.
- Documentation to verify additional income, such as child support, pension, etc.
- Account numbers of all your credit cards and the amounts of any outstanding balances.
- Lender, loan number, and amount owed on other installment loans – student loans, car loans, etc.
- Addresses where you lived for the last five to seven years, with names of landlords, if appropriate
6 Creative Ways to Afford a Home
If your income and savings are making home buying a challenge, consider these options.
- Investigate local, state, and national down payment assistance programs. These programs give loans or grants to cover all or part of your required down payment. National programs include the Nehemiah program (http://www.getdownpayment.com) and the American Dream Down payment Fund from the U.S. Department of Housing and Urban Development (http://www.hud.gov).
- Get the seller to provide financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you do a mortgage.
- Consider a shared-appreciation, or shared equity, arrangement. Under this arrangement, your family, friends, or even a third-party may buy a portion of the home and thus share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and all maintenance costs, but all investors’ names are usually on the mortgage. There are companies that can help you find such an investor if your family can’t participate.
- Get help from your family. Perhaps a family member will loan you money for the down payment and/or act as a cosigner for the mortgage. Lenders often like to have a cosigner if you have little credit history
- Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your down payment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.
- See if you can qualify for a short-term second mortgage to give you the money to make a higher down payment. This may be possible if you have a good income and little other debt.
Choices That Will Affect Your Loan
- Mortgage term. Mortgages are generally available at 15-, 20-, or 30-year terms. The longer the term, the lower the monthly payment if the same amount is borrowed. However, you pay more interest overall if you borrow for a longer term.
- Fixed or adjustable interest rates. A fixed rate allows you to lock in a low rate for as long as you hold the mortgage and is usually a good choice if interest rates are low. An adjustable-rate mortgage (ARM) is designed so that interest rates will rise as interest rates increase; however they usually offer a lower rate in the first years of the mortgage. ARMs also usually have a limit as to how much the interest rate can be increased and how frequently they can be raised. ARMs are a good choice when interest rates are high or when you expect your income to grow significantly in the coming years.
- Balloon mortgages. Balloon mortgages offer very low interest rates for a short period of time – often three to seven years. Payments usually cover only the interest, so the principal owed is not reduced. However, this type of loan may be a good choice if you think you will sell your home in a few years.
- Government-backed loans. Government-backed loans, sponsored by agencies such as the Federal Housing Administration (www.fha.gov) or the U.S. Department of Veterans Affairs (www.va.gov), offer special terms, including lower down payments or reduced interest rates – to qualified buyers. Slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment.
5 Things to Understand About Homeowners Insurance
- Look for exclusions to coverage. For example, most insurance policies do not cover flood or earthquake damage as a standard item. These coverages must be bought separately.
- Look for dollar limitations on claims. Even if you are covered for a risk, there may a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.
- Understand replacement cost. If your home is destroyed you’ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you’ll only receive $150,000.
- Understand actual cash value. If you chose not to replace your home when it’s destroyed, you’ll receive replacement cost, less depreciation. This is called actual cash value.
- Understand liability. Generally your homeowners insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it’s sufficient if you have significant assets.
10 Ways to Lower Your Homeowners Insurance Costs
- Raise your deductible. If you can afford to pay more toward a loss that occurs, your premiums will be lower.
- Buy your homeowners and auto policies from the same company. You’ll usually qualify for a discount. But make sure that the savings really yields the lowest price.
- Make your home less susceptible to damage. Keep roofs and drains in good repair. Retrofit your house to protect against natural disasters common to your area.
- Keep your home safer. Install smoke detectors, burglar alarms, and dead-bolt locks. All of these will usually qualify for a discount.
- Be sure you insure your house for the correct amount. Remember, you’re covering replacement cost, not market value.
- Ask about other discounts. For example, retirees who are home more than working people may qualify for a discount on theft insurance.
- Stay with the same insurer. Especially in today’s tight insurance market, your current vendor is more likely to give you a good price.
- See if you belong to any groups – associations, alumni groups – that offer lower insurance rates.
- Review your policy limits and the value of your home and possessions annually. Some items depreciate and may not need as much coverage.
- See if there’s a government-backed insurance plan. In some high-risk areas, such as the coasts, federal or state governments may back plans to lower rates. Ask your agent.
5 Things to Understand About Title Insurance
- It protects your ownership right to your home both from fraudulent claims against your ownership and from mistakes made in earlier sales, such as mistake in the spelling of a person’s name or an inaccurate description of the property.
- It’s a one-time cost usually based on the price of the property.
- It’s usually paid for by the sellers.
- There are both lender title policies, which protect the lender, and owner title policies, which protect you. The lender will probably require a lender policy.
- Discounts on premiums are sometimes available if the home has been bought within only a few years since not as much work is required to check the title. Ask the title company if this discount is available.
What Not to Over look on a Final Walk-through Be sure that:
- Repairs you’ve requested have been made. Obtain copies of paid bills and any related warranties.
- All items that were included in the sale price – draperies, lighting fixtures – are still there.
- Screens and storm windows are in place or stored.
- All appliances are operating.
- Intercom, doorbell, and alarm are operational.
- Hot water heater is working.
- HVAC is working.
- No plants or shrubs have been removed from the yard.
- Garage door opener and other remotes are available.
- Instruction books and warranties on appliances and fixtures are there.
- All personal items of the sellers and all debris have been removed.
Common Closing Costs for Buyers
The lender must disclose a good faith estimate of all settlement costs. A check to cover your closing costs will probably have to be a cashier’s check. The title company or other entity conducting the closing will tell you the required amount for:
- Down payment
- Loan origination fees
- Points, or loan discount fees, you pay to receive a lower interest rate
- Appraisal fee
- Credit report
- Private mortgage insurance premium
- Insurance escrow for homeowners insurance, if being paid as part of the mortgage
- Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.
- Deed recording fees
- Title insurance policy premiums
- Inspection fees – building inspection, termites, etc.
- Notary fees
- Pro-rations for your share of costs, such as utility bills and property taxes A Note About Pro-rations: Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Pro-ration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6th of the month. You would owe the gas company for only the days from the 6th to the end for the month. The seller would owe for the first five days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.
What Is The Procedure For Negotiating?
If you’re new to real estate, the negotiating process may seem arcane. However, it’s actually well thought out and when handled correctly, is effective and protects both buyer and seller.
Negotiation begins when you makes a written offer. An earnest money deposit should accompany the offer, demonstrating that your serious.
If the offer is for less than the asking price, the sellers have three choices:
- They can accept the offer exactly as proposed. If They do, you’ve just bought your home!
- Or, they can reject the offer outright, in which case the home is still for sale.
- Or, they can reject the offer and counter with an offer of their own, called the “counteroffer.”
It’s important to understand that, contrary to what most sellers would like to do, they cannot both accept and counter an offer.
What Is A Counter Offer?
A Counteroffer is there offer back to you. Usually, but not always, it’s for a compromise price somewhere in between what you originally offered and what the seller originally asked. Or, it could be for your price, but terms different than what the seller asked.
If they reject your original offer and make a Counteroffer, it’s very important to understand that they may be tossing away a potential deal. You are not under obligation to accept the Counteroffer. Rather, you can simply walk away with the deposit and no regrets or penalties.
Your Counteroffer is open to the same possibilities from the sellers side as your original offer was open to you. The seller can accept, reject or counter your counter. The same rules apply. You cannot both accept and counter the Counteroffer. This protects you from having a seller accept what you’ve offered and then, for example, add a clause lowering the price.
This countering can go back and forth many times until either agreement is reached, or no agreement is possible and both parties simply back away from the deal.
At any time, you can withdraw a Counteroffer, providing you haven’t been informed that the seller has signed it.
Although the process may seem confusing, actually it works quite well, particularly when it is well-oiled by the competent back-and-forth help of real estate professionals.
What Happens to the Deposit?
Until there is complete agreement, the deposit belongs to you. The moment both buyer and seller agree on price and terms, however, the deposit belongs to the seller. In actual practice, however, buyers are not required to give sellers the deposit. The reason is that if for some reason (not the fault of the buyer) the deal is not completed, it could be difficult getting the deposit back from the seller. A recalcitrant seller might simply refuse to give it back, or worse, spend it and not have it to give back!
For this reason, we insist that the deposit be held by a neutral third party, until the sale is consummated, usually in escrow or an agent’s fiduciary account.
Should I Offer What the Seller is Asking…Or Counter?
Before making this important decision, you should consult with your agent and, perhaps, with your attorney. The wrong move could cost you money… or lose the deal.
Ask yourself these questions:
- How desperate are you to buy? If you must buy, then you simply may not be willing to risk a counteroffer.
- How strong is the market? If you lose this home and this deal, is the market sufficiently strong that another seller/deal will likely soon be found?
- Can you live with the terms? The seller may have inserted a contingency that makes the sale improbable. For example, they may be insisting that your sale be contingent upon them selling their vacation house. If their house doesn’t sell, they aren’t committed to selling you their home. In a weak market with lots of sellers, you might want to counter by removing this contingency or by giving a short time limit for them to sell their vacation home.
An agent can be very helpful in explaining your options to you as well as framing the various counteroffers you might want to make.
- How does the escrow process work?
- The escrow is a depository for all monies, instructions and documents necessary for the purchase of your home, including your funds for the down payment and your lender’s funds and documents for the new loan. The escrow officer takes instructions based on the terms of your purchase agreement and your lender’s requirements. The escrow officer can hold inspection reports and bills for work performed as required by your purchase agreement. Other elements of the escrow include hazard insurance, title insurance and the grant deed from the seller to you. Escrow cannot be completed until the instructions (requirements) have been satisfied, and all parties have signed escrow documents.
- How do I open an Escrow?
- Your real estate agent will open the escrow for you. As soon as you execute your purchase agreement, your agent will place your initial deposit into an escrow account at the title company you are using or into the real estate broker’s trust account.
- How will I know where my money has gone?
- Written evidence of your deposit is generally included in your copy of your purchase contract. Your funds will then be deposited in your separate escrow or trust account and processed through your local bank.
- What information will I have to provide?
- You may be asked to complete a statement of identity as part of the necessary paperwork. Because many people have the same name, the statement of identity is used to identify the specific person in the transaction through such information as date of birth, social security number, etc. This information is kept confidential.
- How long is the escrow?
- The length of an escrow is determined by the terms of the purchase agreement and can range from a few days to several months. An escrow often takes an average time of 30 to 45 days.
- I’ve selected my home, executed my purchase agreement, made my purchase deposit and an escrow has been opened. What do I do next?
- Unless you are paying all cash, the next step will be to apply for a mortgage loan. Your real estate agent will be able to assist you in selecting a lender.
The Loan Process
- How does the loan process work?
- Your real estate agent can provide you with current financing information to help you in selecting a lender. The lender might be a bank, savings and loan or a mortgage company.
You will be required to complete a loan application that will require personal and financial information.
- What happens after I submit the loan application?
- The lender will begin the qualification process including verification of information submitted on the application and appraisal of the value of the property.
The lender will require that you obtain hazard/fire insurance if you are purchasing a detached home. However, if you are buying a condominium, there may already be a master hazard policy. Check with your real estate agent on this. Also, check with your insurance agent for additional coverage for your personal property. The lender will also require that you obtain title insurance and may have other requirements that will need your attention prior to the close of escrow. Your real estate agent can help you take care of these requirements well in advance.
- What are escrow instructions?
- Escrow instructions define all the conditions that must occur before the transaction can be finalized. Your escrow instructions represent your written statement to the escrow holder (the Title Company) protecting your interests. Your escrow instructions specify, in a debit and credit format, the disposition of your purchase funds. They also provide for title protection for your home.
- When do I sign escrow instructions and where do I do this?
- Your escrow officer or real estate agent will contact you to make an appointment for you to sign your escrow instructions and final loan papers. At this time, the escrow officer will also tell you the amount of money you will need (in addition to your loan funds) to purchase your new home. Your loan funds will be sent directly to the escrow by the lender.
You may sign your escrow instructions and loan documents at the title company’s office, your real estate agent’s office or some other location agreed upon by all parties.
Your Escrow Appointment
What do I need to do before my appointment to sign the escrow papers?
- Cashier’s Check.
- Obtain a cashier’s check or certified check made payable to your title company in the amount indicated to you by your escrow officer or escrow assistant. A personal check may delay the closing since most title companies are required by law to have “good funds” (check has cleared) before disbursing funds from escrow. Similarly, an out of state check could cause a delay in closing due to delays in clearing the check.
- Lender’s Requirements
- Make sure you are aware of your lender’s requirements and that you have satisfied those requirements before you come to the title company to sign your papers. Your loan officer or real estate agent can assist you.
- Hazard/Fire Insurance
- If you are purchasing a single family, detached home (or in some cases, a town home), be sure to order your hazard/fire insurance once your loan has been approved. Then call your escrow officer with the insurance agents name and phone number so that he or she can make sure the policy complies with your lender’s requirements. You must have your insurance in place before the lender will send money to the title company. If you do not have an insurance agent, your real estate agent can help you.
- Please bring either your valid driver license or passport with you to the title company. This is needed so that your identity can be verified by a notary public. It’s routine, but a necessary step for your protection.
- Title to Home
- Decide how you wish to hold title to your new home. You will need to make this decision prior to your escrow appointment. We suggest you consult a lawyer, tax consultant or other qualified professional before you decide. Merely bring your decision on this matter to your escrow signoff appointment.
After the Signoff
- What’s the next step after I’ve completed my signoff?
- After you have signed all the necessary instructions and documents, the escrow officer will return them to the lender for a final review. This review usually occurs within a few days and upon completion, the lender is ready to fund your loan and advises the escrow officer.
- What is an “escrow closing”?
- It signifies legal transfer of title from the seller to the buyer. It’s the culmination of a transaction.
Usually the Grant Deed and Deed of Trust are recorded within one working day of escrow receipt of loan funds. This completes the transaction and signifies the close of escrow. Once all conditions of the escrow have been satisfied, the escrow officer advises you the date the escrow will close and takes care of the technical and financial details.
- When will I receive the deed?
- The original deed to your home will be mailed directly to you at your new home by the county recorder’s office. This usually takes several weeks, sometimes longer, depending on their volume.
Helpful Escrow Appointment Reminders
- Make sure you are aware of your lender’s requirements and that you have satisfied those requirements before you come to the title company to sign the papers.
- After confirming with your real estate agent be sure to order your hazard/fire insurance once your loan has been approved. Then call or be sure your real estate agent calls your escrow officer with your insurance agent’s name and phone number. You must have your insurance in place before your lender will send closing funds to the title company. If you do not have an insurance agent, your real estate agent can help.
- You’ll need to bring a cashier’s check or certified check to the title company for the remainder of the purchase price. Get the exact amount of the balance due from your escrow officer by telephone before your appointment before signing the papers. The check should be made payable to your title company.
- In the event that you wish to transfer funds from another escrow or wire transfer funds, arrangements must be made in advance with the escrow officer.
- In the event that you wish to use a power of attorney, arrangements must be made one or two weeks in advance with the escrow officer, and the power of attorney must be approved by your lender.
- Please bring either your valid driver’s license or passport with you to the title company. This is needed so that your identity can be identified by the notary public. It’s routine but a necessary step for your protection.
- Decide how you want to hold title to your new home. You need to make this decision prior to your escrow appointment. We suggest that you consult a lawyer, tax consultant, or other qualified professional before you decide.
What to Keep From Your Closing
- The Real Estate Settlement Procedures Act (RESPA) statement. This form, sometimes called a HUD 1 statement, itemizes all the costs associated with the closing. You’ll need this for income tax purposes and when you sell the home.
- The Truth in Lending Statement summarizes the terms of your mortgage loan.
- The mortgage and the note (two pieces of paper) spell out the legal terms of your mortgage obligation and the agreed-upon repayment terms.
- The deed transfers ownership of the property to you.
- Affidavits swearing to various statements by either party. For example, the sellers will often sign an affidavit stating that they have not incurred any liens on the property.
- Riders are amendments to the sales contract that affect your rights. For example, if you buy a condominium, you may have a rider outline the condo association’s rules and restrictions.
Insurance policies provide a record and proof of your coverage.
What Happens During Closing Outside of Escrow?
There are many things that must be accomplished before the escrow can be closed. They include the following:
- All purchase contingencies must be removed. This usually includes having you approve a disclosure statement the sellers provide, approve an inspection report you order (and pay for) as well as having you remove any other contingency you have holding up the sale.
- Any prearranged work must be finished. This includes such things as repairing a roof or repainting a portion of the home. All work agreed upon between the sellers and the you must be completed.
- All ends must be tied. Any other task required to close escrow must be accomplished.
It’s important to have someone in charge, tracking all of the things that need to be done and seeing they are accomplished in a timely fashion. You can do this, or your real estate agent can do it for you. The escrow officer cannot normally be relied upon to do all of this work.
If no one keeps track, something critical may not get done in a timely fashion and the deal could fall through.
What If There Is A Problem?
It’s rare that closing an escrow will have no problems at all. You can almost always count on at least a few things cropping up. What’s important is that you learn about the problem as soon as possible and then take appropriate steps to correct it.
For example, some repair work that they need to do involves removing moldy flooring in a bathroom. They have the work started immediately. Later it’s discovered that the damage is more extensive than originally thought and it will take longer than anticipated to complete. Because they started early, there is still time to finish it and close escrow by the agreed upon date. If they had waited, things might not have turned out as well. Moving quickly is the key to successful closings.
If you have any specific questions about our Reno and Sparks Nevada Homes and Real Estate, call us at 775-359-0909, or click here to Contact Us.