Signing Off For a Couple of Weeks

I'm headed off to Egypt with my husband for a couple of weeks, so I won't have any new blog entries until I return. I'll be back with more useful tib bits about the Indianapolis real estate market after memorial day weekend.

A happy buyer is a knowledgeable buyer

Buying a home for the first time can be very intimidating; however, confidence will surely be gained if you are properly informed about the procedures up front. There are so many forms and decisions to be made…often on the spur of the moment. It is important that your agent sit down with you before you begin looking at homes to help you understand the buying process.

I find this to be a useful tool in my practice. I set aside two hours for all my new buyers in which I discuss with them the entire buying process. Together we discuss every form involved, offers, negotiations, earnest money, home warranties, new construction, FSBO’s, and inspections, as well as the closing process. After our discussion, I send my buyer home with a packet containing copies of all the forms and urge them to read over them again.

Why do I do this? The number one complaint from buyers about their agents is lack of information and confusion when making an offer.

I want my buyers to be well informed and understand that when purchasing a home time is often of the essence. Therefore, if my buyer has reviewed all the forms prior to making an offer they will feel more relaxed, knowledgeable and less stressed during the buying process. This also helps make the entire transaction smoother for all parties involved.

Buying a Newly Built Home? Buyer Beware

Recently a friend of mine decided to purchase a new home…as in a newly built home. This brings me to the subject of new home builders and the risks involved when purchasing a home without a Realtor.

It seems easy enough, drive through the new home community and find the Model home…walk in, haggle over which amenities you can afford and Viola! You have a new home.

If only it were that easy.

Let me first state that there are several quality home builders out there and this does not apply to all home builders, however, their interests are not always your interests. I cannot stress enough the value of a Realtor when purchasing a home through a builder. The builder’s job is to sell homes with the least amount of monetary loss to their company. A Realtor’s job is to protect you against over paying for a property and negotiating fair market value. Several Buyers who purchase their home directly from the builder often find themselves “upside down” in their loan. This means they owe more money than the home is actually worth.

How does this happen? When you purchase a home, the builder is charging you for everything…all the way down to the kitchen sink. Often times they will offer enticing mortgage rates, but these come at a much greater cost to you later down the road. That low interest rate is bought down and wrapped into the tail end of the mortgage. Meaning, you pay a low interest rate for approximately 5 years and after that it doubles! You can find yourself paying 9-11% interest on your home.

Since new home communities often take several years to complete, it is common for existing homes to already be on the market. In the case of my friend, I pulled up several recent sales and active listings in her new home community. By doing this, she was quick to realize the builder was charging her over $18,000 more than the same home at resale value! Therefore, it was better to place an offer on an existing home which the seller only lived in for a few months than to be upside down in the exact home through the builder.

I cannot stress enough how valuable a Realtor is when working with builders. Make sure you have your agent with you BEFORE you ever speak with the builder. Realtors cannot help buyers who have had any prior contact with a builder, unless you state that your real estate agent will be representing you.

Curb Appeal

What exactly is curb appeal?

Curb appeal refers to the exterior appeal of your home. Even if you are not planning to sell your home, its curb appeal is still important for resale purposes as well as your neighborhood value.

The exterior of your home is the first thing a person will see… and how your home will be judged. It can also make a difference as to how quickly your home may sell. Landscaping can make a huge difference to your home. Although it may not always add monetary value, it can help aid in a quicker sale. Some items that help create a desirable exterior:

• Keep your lawn mowed and edged on a weekly basis
• Mulch your garden and planters
• Plant an array of flora that blooms throughout the year. Perennials and annuals as well as some hardy staples such as hostas, peonies, mums.
• Don’t over do it! You don’t want your landscaping to look crowded. Make sure to plant symmetrically.
• Keep your driveway, walkway, and porch swept of debris, leaves, and cobwebs.
• Keep up with fertilization and weeding.
• Remove trash that may blow onto your property daily.
• Cars that no longer work, abandoned appliances, furniture, or any other item that you do not use will only decrease the value and salability of your home and others. Have them removed from the property.
• Keep garden ornaments at a tasteful minimum… (pink flamingo’s are not tasteful)

Not only is an appealing yard valuable for resale, it is valuable to your neighborhood's reputation. It shows a pride of ownership and helps in resale of other neighbor’s homes. Remember, when a buyer moves into a neighborhood they are critiquing the entire community as well as their potential neighbors.

If you weren't born with a green thumb and do not want to invest in a professional landscaper, join Lowe’s Garden Club. It is free and you can sign up at any Lowe’s store or on line at lowes.com/GardenClub. You will receive informative magazines which detail many landscaping ideas such as diagrams for planting gardens, lawn care, patios, etc.

Home Ownership - Not Just Your Credit Rating

Besides your credit score and credit record, lending companies look at the following prior to deciding on whether to give you a mortgage:

• Stability of your income
• Employment history
• Monthly debt payments (credit card bills, car loans, etc.) in relation to your income
• How you save money and how much you have saved
• The type of mortgage you are considering
• The type and value of the property you want to buy
• The amount of the down payment you plan to make
• On-time payment of rent and utilities

The key is to have a good balance between your capacity, credit and collateral, the three C's.

May’s Hot Picks

Looking for something to do this month?

If the freezing weather is keeping you out of the garden, here are some ideas that may be of interest:

May 1-8, Herron Gallery – The Herron school graduates showcases a wonderful exhibit each year. This is your last chance to take in the gallery before it moves to its new location. Admission is free. Info: 317-920-2413

May 1-8, Decorators Show House– This is the 43rd annual edition where Indianapolis designers take over a house and transform it to an elegant show piece. This is a great way to get decorating ideas for your own home! Tickets are $15. The home is located at 5425 N. Meridian St. Info: 317-767-0390

May 1-Sept 5, White River Gardens – Over 30 species of butterflies from the United States, Costa Rica, and Africa are on display at the Hilbert Conservatory in its 7th annual exhibition. Admission ranges $6-$7. Info: 317-630-2001

May 6-10, Museum of Art – The newly renovated Indianapolis Art Museum opens and is offering FREE admission. After being closed for four months, the doors reopen with a new look for the museum. Info: 317-923-1331

May 9, Maya Angelou – The talented Maya Angelou will be in town sharing her thoughts of life and human condition. She is a notable poet, writer, and speaker. Tickets range $37-$61.75 at Clowes Memorial Hall. Info: 317-239-1000

May 21-22, Broad Ripple Art Fair – This is my favorite art fair in Indianapolis…unfortunately I cannot attend this year. Over 225 artists from all over the world come to showcase their handmade crafts, jewelry, pottery, paintings, photography, and much much more. Located at the Indianapolis Art Center. Admission ranges $2-$10. Info: 317-255-2464

May 22, Indianapolis Fever – The Indianapolis Fever kick off their season opener against Charlotte. Tickets range from $10-$75 Info: 317-239-5151

May 28, 500 Festival Parade – This is one of the largest parades in the country! Children will have an especially fun time viewing all the floats, marching bands, giant balloons and all 33 Indy 500 drivers. Get there early, it starts at noon.
Info: 317-927-3378

May 28-30, Indianapolis Zoo– The Indianapolis Zoo has a new addition! The Dolphin Adventure Grand Opening which is a new Dolphin Pavilion offering an underwater viewing dome and a performance pool. Tickets range $7.00-$11.50.
Info: 317-630-2001

May 29, Indianapolis 500 – Celebrating the 89th running of the Indy 500…don’t forget to cheer on your favorite driver. The race begins at noon. Tickets range from $40-$150.
Info: 317-492-6700

How Much Mortgage Can You Afford?

You can save yourself a lot of wheel-spinning if you take a few minutes to figure out how much mortgage you can afford. A lender will determine your maximum mortgage amount by using guidelines called debt-to-income ratios. This is simply the percentage of your monthly gross income (before taxes and other paycheck deductions are taken out) that is used to pay your monthly debts. Because there are two calculations, a "front" ratio and a "back" ratio, they are generally written in the following format: 33/38.

The front ratio is the percentage of your monthly gross income (before taxes and other paycheck deductions are taken out) that is used to pay your housing costs, including principal, interest, taxes, insurance, mortgage insurance (when applicable) and homeowners association fees (when applicable). The back ratio is the same thing, only it also includes your monthly consumer debt. Consumer debt can be car payments, credit card debt, installment loans, and other related expenses.

A common debt-to-income ratio is 33/38. A borrower's housing costs should consume no more than thirty-three percent of their monthly income. Add your monthly consumer debt to the housing costs, and it should take no more than thirty-eight percent of your monthly income to meet those obligations.

The guidelines are just guidelines and they are flexible. If you make a small, or 0%, down payment, the guidelines are more rigid. If you have marginal credit, the guidelines are more rigid. If you make a larger down payment or have an exceptional credit score, the guidelines are less rigid. The guidelines also vary according to the loan program. FHA guidelines state that a 29/41 ratio is acceptable. VA guidelines do not have a front ratio at all, but the guideline for the back ratio is 41.

I can help focus your attention on homes that are realistically within your budget. Better yet, I can help you find the hottest values as they come to market, so that you get more for your money.