If you’re earnest about buying a home, you submit a “down payment” with your offer to the seller - or pay earnest money.  The amount buyers put down is essentially up to the buyer and the amount recommended varies across the country.

Where I live, we like to see between $500 and $1000 (at least), though three to four short years ago people were getting away with just $200.

Today a $200 earnest money check would signal the buyer is unable to come up with more money, so may be unable to gain financing.  When I work with a seller and a buyer tries to put down a minimal amount, I encourage the seller to counter the offer and ask for a more realistic earnest money amount.

Earnest money checks may be made payable to the listing broker, although it can also go to the title company or the selling broker. It is reimbursable to the buyer under several circumstances, but specifically if contingencies are not met.  For example, if a buyer is unable to get loan approval, if the house does not appraise, or if a major find is discovered during the inspection the buyer can cancel the contract and have their money refunded.

When can a buyer “lose” the earnest money?  If they get cold feet and walk away from a contract for a reason other than a contingency written in the contract.  In this event, not only can a seller keep the earnest money but they can also seek legal advice to sue for breach of contract.

When the contract goes through to closing, what happens to the earnest money in the transaction?  Many contracts are written so that the money is applied to the purchase price on behalf of the buyer (it is their money after all).  The money could also be applied to the closing costs or the down payment.  Finally, the earnest money could be refunded to the buyer at the closing - depending on how the mortgage lender structured the loan.

The earnest money can be just as important to the buyer in the end as it is to the seller in the beginning.

When a price point for real estate is fairly low, choices in what to purchase may become fairly limited.  For the last two days, I’ve been touring homes with buyers who are relocating from out-of-state and we are very careful to keep a low price point in mind so that monthly payments will remain low.

This has resulted in two distinct kinds of houses:  the handyman special or mobile homes.

The plus of the handyman special is they have been site-built so living in tornado alley, they should be a little safer.  In addition, they’ll likely be sturdier in the long-term when faced with weathering the elements.  The downside?  Oh my… the bad smells, the foundation issues, close neighbors, overgrown yards (one where we actually saw a mouse run from one side of the yard, across the driveway, and into the tall grass on the other side of the yard), the holes in the wall, the additions clearly built without permits and codes inspectors, the missing appliances, adn the list goes on.

The plus of mobile homes?  They have in general been in excellent condition.  They typically come with several acres of land.  And they’re usually thousands of dollars less than the site-built homes.  The downside is even with a permanent foundation, a strong wind could tear them apart.  Insurance will be higher - especially because the acreage is located outside of city limits, therefore farther from fire stations.

What would you pick?  Me?  I’d be all about the mobile homes with lots of land and trees for added privacy.

About five years ago, real estate was selling at a very fast clip.  Housing prices were growing by about 4 percent every year and it took but a little wheedling with an appraiser to make the contract value stick.  But five years before that, housing was fairly steady.  Values did increase, but at a more moderate rate of 1 to 2 percent per year.

Given that values grew by about 20 percent in a five year stretch - what would’ve taken 10 years to do previously - and given that values have dropped by about 20 percent across the nation (30 to 40 percent in some places), I expect the housing recovery to take about 10 years in all.  This is not based on any economic studies or actual hard numbers.

The bottom line is that the old way of selling homes - absent a run on houses by buyers because of easy loans - is the new way.  Buyers must save a down payment, they might expect to again pay closing costs (depending upon the seller), and they’ll have to verify they have job security before being approved for a loan.

Through the next five to eight years, I anticipate the housing market to be like it was in the 1990’s.  If sellers were able to sell then, they can do it now.  If real estate agents were able to make a living then, they can do it now.  And if buyers could save then, they can do it now.

To save, buyers may need to take on a second job for a year or two.  To sell, home owners may need to be realistic about their pricing.  To keep clients happy, real estate agents will need to pay attention to the details, respond to all aspects of a contract in a timely manner, and remember to stay in touch with their customers.

Everyone must find a way to walk the path of the new way - the old way.

One of my real estate instructors once said that people love agents to drive them around showing houses.  I heard that when I took all of my real estate classes learning the law, marketing, and salesmanship.   I was convinced that eventually people *would* buy so you might as well stay on their good side and show them a house or two.

Almost seven years and thousands of miles later, I don’t just drive anyone around anymore.  Unless they talk to a lender first (or have proof of funds if cash buyers), they stay with their feet firmly planted on Terra until I learn more.  I want to know exactly how much the lender says they can afford rather than learning they have champagne taste on a beer budget.

A buyer called earlier today to say that a house in her Mom’s neighborhood has come on the market listed at $175,000.  Another neighbor told her that the seller just wants to get rid of it and would take $80,000 for it.  Naturally I doubted the truth to this, but promised to look into it and call her back.  I learned that the “new” owner bought it for $157,000 just 10 months before and remodeled it.  I knew there would be no way they’d give the home away for $80,000.

If it sounds too good to be true, then it’s too good to be true.

Another agent told me she has been working with buyers today who want to buy, but only if the seller will come off the price $40,000 to $50,000 dollars.  That just doesn’t happen, either.  You have to put yourself in the position of the seller and ask, “Would I do that?”

Would you?  Probably not, so don’t expect a hand-out from the seller.

I have the very excellent privilege of spending a week in Savannah, Georgia for a baton twirling event in which my daughter is competing.  We came a couple of days early to have a little vacation getaway and today we drove to Tybee Island.

Tybee Island is absolutely lovely.  Although the day was hot (92-degree high), the beach was cooler because of the ocean wind.  Things are a bit more expensive here - well… for tourists.  We saw lots of t-shirts for $24.00.  My favorite was one of an eye, a heart, a tie, and an bee.  I *heart* Tybee.

My favorite site was the lighthouse.  My favorite drink was at the pavilion.  My favorite photo was this.

Now I have seen houses on stilts before… particularly in the beach areas of our nation.  But never a mobile home.  When the FHA inspector comes around to approve this loan, you can be sure he or she will be able to quickly verify how my “pins” there are.

The least expensive single-family home currently for sale on Tybee Island is listed at $197,000.  The next closest one $249,000 for a three bedroom, two and a half bath, 1400 square foot house overlook a marsh.  It could use a little updating, but all appliances are included: refrigerator, washer, dryer, stove, dishwasher.

If you have a load of money, homes on average go for between $500,000 and $700,000.  You definitely pay for the location!

Happy surfing!

A couple of weeks ago, I wrote about the importance of getting a second opinion when it comes to home repairs.  In that situation, my buyer’s water heater had stopped working and the warranty plumber ran out of the house screaming and tearing at his clothes.

Unfortunately, the second plumber did the same thing only he talked about carbon monoxide poisoning rather than a flash fire.  My buyer called the city codes department and the water heater failed the inspection.  She was then put on notice that she had X number of days to make the repair or she’d receive a citation for the bad install.

Apparently the sellers hired a family member to put in a new gas water heater and they got the wrong kind. Instead of it being a “side” vented heater, they installed a “ceiling” vented.  Only there was no ceiling vent to be found anywhere.  My buyer really was in danger - as was her adorable three-year old daughter.

If this case study had gone to court, the seller and the home inspector would have been responsible but as an agent I would have also been involved.  Instead, my broker negotiated a settlement so that every party involved chipped in to replace the dangerous heater.  The seller and the home inspector had to pay the most, but in the spirit of cooperation I also agreed to chip in (as did the seller’s agent).  She should have the new PROPER water heater by the end of the week.

Sometimes it’s not just the cost of doing business, it’s also the right thing to do… especially since she’s been boiling water for two weeks to give her daughter a bath.

Photo from Zimbabwe News Online.

In the stifling heat of the summer, buyers are still searching for their perfect home.  Some may be devastatingly hot as soon as you open the door - particularly vacant homes or bank-owned properties.  And getting in and out of cars parked in the sun could also cause rapid changes in body temperature, so plan ahead to stay cool!

If you’re showing properties or simply touring them with your agent, pack refreshing snacks for the road.

• Fill your iced cooler with bottled water or juice.
• Get some fresh fruit to include in the cooler - apples, pears, oranges.
• Have some mints or candy handy should someone’s sugar drop because it’s too hot to eat and maintain a good blood sugar level.
• Bring an extra pair of non-prescription sunglasses to help protect your eyes.
• Park in the shade whenever possible.
• If possible, remember to crack your car windows to help vent out the ~~hot~~.

Try to stay cool this weekend as you go from house to house!

When I read earlier today about an agent who was showing real estate on Sunday in the unprecedented heat we’re experiencing in the Southeast, I began sweating just reading his words.  He said, “I don’t know which is worse the outside temp or the temp in a house with no electricity……”   I felt his pain.

When a buyer is interested in purchasing a new home, they want to feel comfortable inside.  They don’t like to see bugs, they don’t like to smell animal odors, and they want to be able to visualize themselves living there.  If they can’t do that, they won’t buy.  For a buyer to take the time to visualize where the couch will go or what color they might paint the upstairs bonus room, they’ll need to hang around long enough for the mental process to begin.  In the heat, if the air conditioner is turned off - or if the temperature is over 78* - they may not stay long enough to bother.

I’ve walked into hot houses with buyers and the first thing we do is turn around and leave.  When the house is too warm, it’s just uncomfortable AND it leaves the mental picture that perhaps the heat/AC unit is not working.

If you’re selling your house (even if it’s vacant), try to make the temperature comfortable for those who are considering making a purchase!

*78 degrees is just a random number. 72 would be better, but over 78 (to me) is just miserable!

When the desire to achieve the American dream of home ownership is so strong and overpowering and just within your reach, it’s so very easy to make mistakes.  You get excited over a house that’s just a little over your budget, you don’t have all the inspections done that should be done, or you buy a fixer-upper without a clue about where to start.

The Wisdom Journal outlines 10 Mistakes by First Time Home Buyers.  The one that hits close to home for me was refinancing during the credit craze. I didn’t do this, though:

I fell for the refinancing craze … again. This time I didn’t re-finance, but I probably obliterated my credit in a furious attempt to get an even better interest rate just 18 months later. I thought I would “pull out more equity” and get a better payment. I theorized that I could “lock in” my profits from the appreciation of the home’s value.

There are plenty of other mistakes people make when buying (or after they’ve purchased) real estate.  Two words:  Caveat Emptor.

Until I hear the words, “We are clear to close” I remain guarded with jubilation over someone’s real estate purchase.  I have two closings tomorrow - one we got the clear about six days ago for a HUD purchase (which require five days before they can close) and the other… we’re waiting.

The chief underwriter threw a wrench in the machine today when they need the soon-to-be-ex-husband to send just one more hand-written, signed letter.  Then we’ll get our clear to close.  Meanwhile because this is somehow a pivotal time for closings (no one wants to risk waiting until the end of the month and subsequent danger of missing that June 30th closing deadline for the first-time homebuyers tax credit), we have 46 other closings occurring from one lender’s underwriter.

So our fingers are crossed that - somehow - we’ll have a miracle and can close tomorrow afternoon.  Normally it wouldn’t seem like such a big deal, but when a single Mom and her three-year-old daughter have to be out of the apartment by Sunday, it’s a huge deal.

Cross your fingers!