When you’re shopping for a home, it can feel like you’re hemorrhaging money. You’ve got all sorts of things to pay for, from loan application fees to home inspections, so when the issue of earnest money comes up unexpectedly, it can be a “slam on the brakes” moment. Now that the days of low to no down payments are largely past and markets everywhere seem to be running thin on inventory, earnest money may well be the most important negotiating tool you’ve never heard of.
What Is Earnest Money?
When you make an offer on a home, part of that offer can include a little show of good faith on your part, in the form of cold, hard cash. Generally, one to three percent of the offer price is pretty normal for an earnest money deposit, but this can vary pretty widely based on market conditions. And the more you put up, the better. But what happens to that money?
Earnest money is literally just a show of faith. When you go to the closing table, it becomes part of your cash to close equation, which includes other line items like your down payment, your closing costs, and your prepaid items. It’s not a bribe or an extra fee to convince a seller to sell to you. It will simply be applied in full as a credit in your closing documents, reducing the amount of money you need to bring with you on the big day.
Here’s the one kicker. If you were to decide to back out of the contract with no real cause, the seller may be entitled to some or all of that earnest money. However, plenty of situations exist where you may not be able to close, but your earnest money will be refunded, such as:
What Is an Earnest Money Note?In some markets, you may have an additional option for earnest money, known as an earnest money promissory note. This is essentially an IOU that accompanies the offer. On the note, you’ll specify exactly when you’ll either turn the paper into actual cash or forfeit the offer entirely. Though these were once very common, they’re far less so today. If you choose to use an earnest money promissory note, be sure to describe in great detail why you’re not able to provide earnest money on the spot and how you will remedy this.
For example, if you have some stocks you were going to cash out for your down payment, but didn’t want to touch until you were really ready, you may need time to sell enough to cover the earnest money. In that case, specify this as the reason and say that you’ll initiate a sale on a certain day, then convert the note on that day. Make sure to leave yourself a little leeway, because if you fail to perform, you can suffer serious consequences.
Generally speaking, earnest money promissory notes can be considered a sign of a weak offer, but this varies from offer to offer and market to market and you should inquire before taking that leap.
Whether you want to buy or sell a home locally or globally, I can help you finding or selling your home so you can create the life you love! ☎️ 706.530.1114 or email us.
Have a great day!
If you're thinking about buying a house right now, you're probably wondering how best to go about it. The truth is, you can still do in-person tours in some places, depending on the local regulations, but many people are buying homes right now without stepping foot inside until the deal is done.
Sight unseen deals are nothing new, but up until recently they were used mostly for foreign buyers, investors, or long-distance home shoppers. These types of remote deals have become more mainstream in the wake of the COVID-19 pandemic, and there's evidence to suggest they're more than a passing trend.
A survey from 2018 showed that about 20% of homebuyers had made an offer on a home without seeing it first. A more recent, COVID-19-influenced survey, found that 45% of homebuyers in the last year had made an offer without seeing the property in person. In April of this year, Realtor.com found that "24% of 1,300 consumers surveyed said they'd be willing to buy a home without first seeing it in person."
If you're considering purchasing a home sight unseen, keep these tips in mind:
Work with the right agent
If you're buying a house without touring it first, you have to depend on your agent to be your eyes and ears. It's crucial that you go with a local expert, especially if you aren't super familiar with the area.
Take advantage of technology
Online listings with 3D home tours are up by more than 600% since the pandemic hit. Listings that have this functionality are likely to rise to the top because they give you a better feel for the home. Remember, whether you're looking at a carousel of images or a 3D tour, don't forget to ask your agent to go a step further.
"Once you know which homes you're most interested in, have your agent book some showings and take you along on the tour using FaceTime," said HomeLight. Being able to view the property with someone in real-time will allow you to ask questions while getting an understanding of the "flow" of the home.
Then, ask for a floorplan
Today, you're more likely to find home listings that include a floorplan image. If you don't see one, make sure to ask. While video tours offer an understanding of how a home feels, a detailed floorplan helps you ensure it measures up to your needs.
Knowing the full layout of a home will give you some insight on what day-to-day life will be like. For example, watching a video tour might not reveal the fact that the new home office you're excited about shares a wall with a noisy laundry room. Also, being able to quickly reference dimensions will allow you to imagine how you and your furniture will fit into the new space.
Order an appraisal and a home inspection
Even in cases where they're not required, you don't want to skip these steps. Especially when you can't or don't want to tour a home yourself, having expert and objective documentation regarding the value and condition of the home is more important than ever.
Whether you want to buy or sell a home locally or globally, I can help you finding or selling your home so you can create the life you love! ☎️ 706.530.1114 or email us.
Have a great day!
Barbados is a small island in the Caribbean with well-developed infrastructure and a stable political and economic system. It has some of the most beautiful beaches in the world, not to mention the epic diving, shopping, delicious local cuisine, and all the fun and flavor of island life.
But there's one more important, and brand-new, reason to love Barbados. You can now get a 12-month visa to work there remotely.
"Even as the pandemic continues to rage, the government of Barbados, a country in the eastern Caribbean, is sending a very different message: Come here, not just for a holiday, but for up to a year. Bring your laptop," said the Washington Post."
Prime Minister Mia Amor Mottley introduced the 12-month Barbados Welcome Stamp "to allow visitors the option to work remotely from Barbados for a year at a time," according to Barbados Government Information Service. The program is designed to attract remote workers earning more than $50,000 a year in an effort to boost the country's tourist-dependent economy.
The program has, unsurprisingly, sparked global interest. A tropical island is, after all, SLIGHTLY more inviting than your hastily-thrown-together home office, even to those who know little about Barbados.
Though the coronavirus has disrupted many aspects of our work lives, it may end up accelerating some trends--like working remotely. Gallup polling of Americans conducted this spring found that 62 percent said they had worked remotely at some point by April, an increase from 31 percent in mid-March.
That big spike might seem temporary, but according to that same poll, in 2015, 3.9 million U.S. workers were working remotely. Today that number is at 4.7 million, or 3.4% of the population. Remote work is trending up, and as more workers get accustomed to the flexibility, it may end up being a trend that sticks around.
Whether you want to buy or sell a home locally or globally, I can help you finding or selling your home so you can create the life you love! ☎️ 706.530.1114
Mortgage rates are near all-time lows right now, but that doesn’t mean they’ll stay that way forever.
That’s where a rate lock can come in. Rate locks guarantee you a certain mortgage rate for an extended period, protecting you from the possibility of rising interest rates while you complete the homebuying process.
Are you shopping for a home? Here’s what you need to know about mortgage rate locks:
Q: What is a rate lock?
A: A rate lock guarantees your initially quoted mortgage rate for an extended period of time. Your rate can’t rise at any point during your lock period (even if market rates rise), giving you plenty of time to close the loan.
Q: How long does it last?
A: The length of a rate lock depends, though it’s usually 30, 60 or 90 days. In some cases, you may be able to pay for a longer lock period if you need more time.
Q: Why would you want to lock your rate?
A: Rate locks are smart if interest rates are very low or fluctuating. They’re also a good move if you have a unique situation — like being self-employed — and it could take a bit longer to close your loan.
Q: Are there any risks?
A: In the event market rates drop, there’s a chance your locked-in rate could be higher than what newer applicants are being quoted. You can pay for a “float down” option when you lock, which essentially means you’d get the lower market rate if they do fall.
Do you have more questions about rates or the home buying process? Are you ready to sort out your home financing? Get in touch so we can discuss your options. I can help!
Iveth Caruso, your REALTOR in the North Atlanta Area
Whether you're planning to sell or refinance, a home appraisal is a necessary step in determining the true value of your home. This means your home should be in the best possible condition, so it will be appraised at the highest potential value. While it may be tempting to swing for the fences with big-ticket renovations, there are smaller things you can do to efficiently raise the market value of your home.
Start Small with a Little Spackle
If you've lived in your home for any length of time, you've probably hung things on the walls, put up shelves, or simply had accidents that resulted in minor damage. Now is the time to repair those blemishes. Filling these holes and crevices with a little spackle and painting over the area will leave your walls looking like new. While this may not boost the value of your home, it will keep the appraiser from deducting for the damage.
As Long as You're Painting...
After you've touched up your walls, you might want to consider freshening up the paint. Repainting worn trim and moldings around the home can give it a fresh look. Venture outside and touch up the trim around the windows and doors too. This will boost curb appeal and help you add value to the home. Any area where the paint is peeling, chipping, or simply has lost its luster should be retouched with a fresh coat.
Update Your Crawl Spaces
An upgrade that's growing in popularity (and will grow your home value) is crawl space encapsulation. Crawl spaces are essential for providing homeowners and contractors with access to important systems of the home. However, these spaces are vulnerable to moisture and water damage caused by humidity and harsh weather conditions. In drier climates, dust and insects can interfere with HVAC systems. To protect crawl spaces, homeowners have started sealing these spaces with polyethylene barriers to keep out moisture, dust, and pests.
Do a Deep Clean
This is also the time to really clean your home from top to bottom. If you have young children and pets, there may be odors and damage that might not be noticeable to you, but strong odors and scuffed hardwood floors will be the first things your appraiser notices. Consider hiring professionals to wax the floors, shampoo the carpets, and conduct an intensive cleaning of the entire home.
Conduct Other Repairs
At some point, you should tour your home with the mindset of a home buyer. This will help you identify problems that you live with every day but just don't notice anymore. Look for things that need to be repaired, such as a loose handrail, a leaky faucet, or a shorted electrical outlet. Repairing these problems ahead of time will ensure you won't lose money on the appraisal.
By taking the time to spruce up the home ahead of the appraisal, you may be able to increase the value by thousands of dollars. The suggestions offered here should give you a head start, but if you have additional questions on how to add more value to your home, don't hesitate to reach out me.
Real Estate Alert: Home Flipping Hits 14-Year High
While the real estate market in general is adapting to new challenges and market conditions, one segment of the market is going strong. Home flipping is boasting its best numbers in 14 years.
The newly released first-quarter 2020 U.S. Home Flipping Report from ATTOM Data Solutions shows that "53,705 single-family homes and condominiums in the United States were flipped in the first quarter. That number represented 7.5 percent of all home sales in the nation during the quarter, up from 6.3 percent in the fourth quarter of 2019 and from 7.3 percent in the first quarter of last year." Those are the highest numbers since the second quarter of 2006.
The gross profit for home flips across the country also rose over the same time period, to $62,300. "That was up slightly from $62,000 in the fourth quarter of 2019 and from $60,675 in the first quarter of last year," the report said.
If you're looking to get in on the flipping trend, here are a few insights:
Do you have any questions? I can help!
📞Iveth Caruso, your REALTOR in the North Atlanta Area
A lot has changed in just a few months, and for many that includes the idea of what a 'dream home' looks like. Not long ago, buyers were showing preference toward smaller homes and open concept spaces conducive to gathering. After a few months cooped up inside, those features don't seem so appealing - and developers have taken note.
"While the coronavirus still rages on, it's hard to predict what post-pandemic abodes might look like," according to Barrons. "Yet, developers around the U.S. are already rethinking projects, anticipating residents' needs and preferences that Covid-19 would spur. In doing so, they are re-evaluating current in-unit aesthetics and in-demand amenities."
Here are just a few areas of home design where trends may shift in the coming years:
Homes had been trending smaller, but that may be over. With so many families spending (way) more time around the home lately, there's never been more need for personal space. Expect homes to grow in size accordingly.
Prioritizing the home office
As more and more businesses relax work-from-home policies, or shift to full-time remote work entirely, the home office will become a near-essential for many buyers. A space that was once an after-thought now will need to offer privacy, good lighting and be pre-wired for telecommuting.
Return to the closed-floor plan
For some buyers, the appeal of the open-floor plan was already trending down prior to 2020, and the past few months have only made the reasons why more evident. Sharing more time and space at home demands privacy for school work, hobbies, and entertainment. With more meals being cooked at home, an open concept kitchen becomes noisy epicenter practically all day long. Builders expect a rise in demand for closed floor plans, where rooms are partitioned for purpose.
This is already one of the fastest growing trends in home design, but smart home technology will soon move from a 'plus' to a 'must'. Temperature and lighting control can now be voice or motion-activated. Touchless faucets, once thought superfluous, are now an inexpensive and health-conscious upgrade. Systems that filter air and monitor air quality will become more common and affordable.
Summer is here! The sun is blazing, the temperatures are soaring and the rain is pounding. It’s important that you take the time to maintain your biggest investment this summer and prepare it for the extreme heat.
If you are experiencing difficulty making on-time mortgage payments due to the national Coronavirus emergency, forbearance may be an option for you.Forbearance is when your mortgage servicer, that’s the company that sends your mortgage statement and manages your loan, or lender allows you to pause or reduce your payments for a limited period of time.
Forbearance does not erase what you owe. You’ll have to repay any missed or reduced payments in the future. So, if you’re able to keep up with your payments, keep making them. The types of forbearance available vary by loan type.
These are some universal steps that will help you stay on track if a homeownership program is part of your home financing plan, Follow these steps to get the most of using a homeownership program:
With social distancing being an important part of life at the moment and so many parts of the economy suffering the effects of state lockdowns, some are worried about how all of this will affect the housing market. This is especially a concern for those who were hoping to buy a new home and have seen their plans potentially derailed by the pandemic. Is this a good time to consider buying a new home, assuming that it’s even safe to do so?
The answer may be surprising.
It’s a Buyer’s Market
With the current state of the world, the demand for real estate has dropped significantly. This has left those who have already listed homes for sale or who were planning to list over the summer in a position where there are far fewer people looking at their properties. For some sellers, this isn’t much of an issue; they can simply wait it out and stick to their previous plans. A lot of sellers don’t have that luxury, though. This creates a buyer’s market where a lot of sellers are willing to consider offers that they wouldn’t have in the past, giving potential buyers a lot more control in the home-buying process.
As the name suggests, it’s always good to buy in a buyer’s market. It isn’t necessarily a great time to list a home for sale, of course, since you’d likely have to settle for a lower offer than you were expecting if you want to move the property. This usually helps to balance out the market, with listing rates slowing down to meet demand until things pick back up again. This particular buyer’s market is a bit different than a lot of past ones, though.
Demand Is Staying Low
Most of the time, a buyer’s market is caused by shifts in the economy that have people trying to save money; an example of this would be a recession. These economic shifts temporarily reduce the number of people who are willing to take on large debts, creating a glut of sellers trying to entice a smaller pool of buyers. The buyer’s market typically fizzles out once the number of sellers shrinks or the economy stabilizes.
In the current buyer’s market, the economy certainly plays a factor. There is an external factor at play here as well, however: The physical distancing that COVID-19 requires has added additional worry about open houses and other forms of interpersonal contact that are traditional when buying or selling a house. There’s still a lot of uncertainty surrounding the pandemic, including how long it will last, so with this external factor and the currently stunted economy we could see demand stay low for longer than you would expect in a buyer’s market situation.
This isn’t to say that the market won’t recover, of course. Some states have already started reopening non-essential businesses and other parts of the economy, and other states have plans to start reopening soon. The economy will likely stay sluggish for a while, but reopening is the first part of recovery. Even the pandemic is becoming something less of a factor as people continue to practice social caution and science continues to work toward treatment and vaccine options. While market recovery may take longer than in the past, a recovery will happen, and the good deals that buyers can find now will become less common as things move forward.
If you do decide to shop for a home in the current market, make sure that you’re smart about it and stay safe. Maintain all physical distancing practices while looking at homes, even if there is only a seller or agent present. Ask whether no-contact options such as virtual tours or virtual closing with digital signage are options, and if touring the property request that any doors or other barriers be opened before you arrive to reduce contact. Wear a mask, bring hand sanitizer and take the same precautions that you would in any other social situation. This may seem excessive for viewing a home, but keep in mind that these practices not only protect you, but also protect the seller and agent as well.
The information on this site is intended to be a free resource to provide general information to the public. The information is intended to supplement instruction from your legal, financial or real estate adviser. The information contained on this site should never be taken as a substitute for legal or financial advice from a licensed professional.