10 Steps to Choosing and Purchasing Your Home (PART 1)

So you are ready to buy a home.  It’s a big decision and there’s a lot to learn.  But with these 10 quick steps, choosing and purchasing your home will be easier and more seamless than ever before. This guide provides 10 key steps, information and tools in order for you to find, purchase and finance a home that meets your needs and preferences. 

Below are the first 5 steps to get you started.  Stay tuned for PART 2 where I will unveil the next 5 steps to keep in mind when choosing and purchasing a home! 

STEP 1:  Find a Qualified Buyer’s Representative

How often do you purchase real estate?  Once, twice, three times in your lifetime?  So you can hardly be expected to know all the ins and outs of such a major transaction complicated by so many details.  That’s when a qualified buyer’s representative comes in handy.

What is a buyer’s representative?  A buyer’s representative (also known as a buyer’s agent) is an advocate for the buyer--not the seller--in a real estate transaction. 

Why should you use a buyer’s representative?  A buyer’s representative can provide the expertise you need throughout the entire transaction, greatly improving your buying experience and potential results.  Plus, retaining a buyer’s representative seldom adds any expense to your transaction! 

Why choose an Accredited Buyer’s Representative?  A REALTOR with the ABR designation has completed Accredited Buyer’s Representative training, specialized education offered by the Real Estate Buyer’s Agent Council (REBAC).  REALTORS with the ABR designation understand the special needs of buyers.  They have additional knowledge and experience that takes them a step beyond an agent who only concentrates on listing property for sellers. 

What issues should you discuss?  After narrowing down your favorite ABR agents, be sure to ask some questions.  This will help you make your final decision.  Topic questions include experience and credentials, references, knowledge, representation, services provided, compensation, finding properties, personal support, negotiating, financing and related service providers. 

 Once you’ve found your ABR, you can discuss compensation (usually commission to the buyer’s agent) and then you may begin working as a team! 

STEP 2:  Assess Your Credit and Finances

Financial considerations and preparations are central to any home purchase.  In addition to helping you make better decisions about what you can afford in a home, a buyer who already has financing in place is in a better negotiating position when it’s time to make an offer. 

Assessing your credit card and finances can be broken down into 6 steps.  Be sure to check off each step before you purchase a home:

• Determine credit status
• Select a lender
• Determine interest rates and duration
• Pre-qualify for a mortgage and get pre-approved before you find your home
• Determine how much you can affordOffer down payment and mortgage insurance

STEP 3:  Asses Your Wants and Needs in a Home

Deciding what you truly want, need and can afford in a home can be challenging.  But your ABR can play a key role in helping you sort out your options.  The following preferences should be discussed with your ABR before you purchase a home:

• Basic criteria (i.e. ideal price, total square footage, type of home, number of bedrooms, number of garages, number of bathrooms, etc.)
• Other home preferences (i.e. age of home, style of home, energy efficiency, floor plans, high priority home features, specialty rooms, storage needs, etc.)
• Location (preferred areas/communities, commuting considerations, proximity to desirable features, views, etc.)
• Lot characteristics (size and shape, landscaping considerations, home orientation)
• Life at home: Take children, pets, live-in parents and others into consideration  
• Trade-offs: If you can’t find what you want, how much are you willing to invest to pay for improvements? Are you willing to consider other neighborhoods that offer better affordability?
• Resale: How long do you plan to live in this home?

STEP 4:  Search for Your Home

Your ABR can direct you to helpful sources of information for evaluating neighborhoods (although due to Federal Fair Housing Laws, they can’t tell you everything you want to know).  When evaluating a neighborhood, keep the following in mind:

• Neighborhood Profile: Research population density and level of commercial development
• Household Data: Family type, average household income and homeowner education level/occupation
• Crime Rate
• Quality of Schools
• Amenities (i.e. shopping, transportation, parks and recreation, restaurants, nightlife, etc.)

After selecting a neighborhood, it’s time to view houses!  You can view homes on your own (at Open Houses, for example) or with help.  Remember that your ABR will help you refine your search if you can’t find what you’re looking for.  To get started, I suggest searching my website on the Home Search page to find your next home.  Another great resource is REALTOR.com.  This site provides online information on millions of properties, neighborhoods and other topics.

STEP 5:  Negotiate Terms

You found your home.  Now it’s time to make an offer.  Lucky for you, your ABR can provide valuable assistance on this regard--counseling you on market conditions, price ranges and negotiation strategies.  

How do I start to negotiate?  First, your ABR will perform a comparative market analysis (CMA) on the property. This will give you a better sense of whether the seller’s listing price is higher or lower compared to other properties.  Other negotiation considerations include if you’re an all-cash buyer, if you are pre-approved for a mortgage and if you do not have to sell your current home before you can complete the purchase.

How do I make an offer?  An offer must be a written contract.  Your ABR will help you use a standard form that is up-to-date with changing real estate laws.  Your ABR will also help you structure your offer and negotiation strategy.  Purchasing offers contain a lot of information.  Keep in mind that the more you demand, the less favorably the sellers may look on your offer.

What about contingencies?  A contingency is a term that must be met for an offer to become a binding contract.  They always weaken the offer, but some are considered normal.  Common purchase offer contingencies include approval of agreed-upon third-party inspections, obtaining specific financing terms, securing a specific job or selling your current home.

What about earnest money?  Earnest money is a cash deposit you make when submitting your written offer on a property to show your “good faith”. 

What are seller disclosures?  Many areas require sellers to disclose any known material defects.  Be sure to ask just in case.  Read and understand all documents.

What if there are multiple offers?  Don’t panic and immediately withdraw your offer.  It is quite possible that you have submitted the winning bid.  Stay involved for at least one round of negotiations, but also establish your maximum price.

What can a seller’s response be?  A seller’s response will either be:

• Accept:  You will have a binding contract as soon as you are notified of the offer’s acceptance.
• Reject:  You are released of any obligation.  The sellers cannot change their minds.
• Counteroffer:  A seller may present a written counteroffer that includes the changes they want to make.  You are free to accept, reject or make a counteroffer to their counteroffer. 
• These 5 steps will help you choose and buy your new home.  But wait!  There are 5 more steps to the home-buying process coming up next in PART 2 of this blog series.  Stay tuned for the next 5 steps including obtaining a mortgage, preparing for closing day, closing, moving and (of course) celebrating!

To receive your own home buyer’s toolkit or to schedule a private consultation to begin your search, visit www.toddohlde.com and click on the Contact Me page.  I look forward to hearing from you! 

Kansas City Radon Levels on the Rise—What Should You Do?

There’s no denying it—the weather in Kansas City has been out of control.  One week we’re boasting 80 degree weather and the next, there’s a blizzard.  But something that we may not have noted is the severe drought that the KC metro region is currently experiencing.  As a matter of fact, we are about to enter month 21 of a large Midwestern drought.  What does that mean for you?  Radon problems.

What is radon?

Radon is a silent (and odorless) gas that can leak into homes from the natural decay of uranium present in all different types of soil.  Radon contains cancer-causing alpha particles that are drawn from parched soil through drought-driven cracks in home foundations.  The US Environmental Protection Agency has linked indoor radon to 20,000 lung-cancer deaths annually. 

Is radon in my home?

You are breathing in radon right now.  And we’ve all been breathing it in since we were born.  It’s a natural process that our bodies have learned to cope with.  It’s when we breathe in too much radon over a long period of time that we need to be weary of.  The homes with the highest levels of radon:

• Have fractures in the foundation, which allows gases to travel through underground channels
• Leave windows open often
• Utilize attic fans
• Have high traffic in and out of the home
• Are geographically located where droughts are prevalent 

Other factors that could affect the circulation of radon gas include:

• Soils and basement footings that shift
• New furnace
• New air conditioning system
• Altered plumbing
• Improved insulation
• Structural additions to a home 

Kansas City radon levels

So if radon levels rise when a drought occurs, why is Kansas City experiencing such high levels?  After all, there’s plenty of wet snow on the ground!  As a matter of fact, despite the snow piles that have taken over the city, no handful of wet-weather events can cancel scientists’ predictions on the drought and radon levels in Kansas City. 

According to the Kansas City Star, KC is one of the nation’s hottest spots for indoor radon levels above what federal authorities consider safe.  Between 33% and 45% of Kansas City homes show radon levels higher than 4 picocuries per liter (the average home tests at a safe 1.3 pCi/L). 

Preventing & testing radon levels

How can you prevent high levels of radon in your home?  It’s actually quite simple!  First and foremost, it’s important to note that you should test your home approximately every 2 years.  The best time to test for radon is in the winter, when a home is sealed up and the furnaces are churning (so why not do it today?). 

In addition to bi-annual testing, the Kansas and Missouri governments are taking action to fight off the chances of radon sickness.  A bill introduced this year in the Kansas Legislature will make radon testing mandatory for every home sale.  This bill will also allow the state to compare the reported levels to health problems diagnosed in residents.  Currently, Missouri is not introducing a bill to require radon testing. 

So how much is this going to cost me?

A DIY radon testing kit can be purchased for less than $10 at your local home improvement store.  Once you have purchased a kit, you may need an additional $10-$30 for lab tests.  If you’d like professional advice, most services cost around $100-$200 in the Kansas City area.  If you decide to hire a professional, look for companies certified by the state of Kansas for radon inspection (Missouri does not have this requirement). 

If you find that your home has over 4 pCi/L, it is time to shop for a mitigation piping system.  These pipes, including installation, will run at about $700-$1,400.  Always remember—it’s better to be safe than sorry!

Your Home Should Go Green with an Energy Audit this St. Patrick’s Day

With St. Patrick’s Day right around the corner, it’s the perfect time to celebrate everything green in your community (and no, I’m not talking about shamrocks and green beer).  I am talking about all of the green initiatives—such as energy efficient buildings and homes.

Is your home “going green” this St. Patrick’s Day?  If so, there is a process you should be aware of—it’s known as the energy audit process.

What is an energy audit? 

An energy audit is the correlation between how much energy your home is currently using and how much it should be using.  Energy audits, which can be provided by certified energy auditors, provide the best cost/benefit analysis for every savings opportunity identified.  At the end of the energy audit process, you will receive a report that highlights any problems or opportunities for you to start saving energy.  From there, you can check out recommendations and further actions in order to turn your home into the green machine it needs to be! 

What does an energy audit solve? 

An energy audit is the only way to make sure that if you spend money on home improvements that you spend it in areas that will truly give you back value on your dollar.  The entire energy audit process answers important questions such as:

• What is causing the energy loss? 
• Is there anything dangerous or unhealthy in the home?
• Where are the potential health issues?
• What are the long-term building performance and durability issues?
• What times will be the most cost-effective to improve the home?

What types of problems will an energy audit find?

Energy audits find many different problems in the home such as:

• High energy bills
• Air leaks
• Inefficient windows
• Missing insulation
• Inefficient cooling/heating equipment
• Poorly insulated ducts
• Mold and mildew
• High humidity and water damage
• Dust
• Hot/cold rooms
• Insulation
• Air leaks
• Medical costs by reducing:
• Indoor allergens
• Dust
• Mold
• Mildew
• Pests
• Reduce reliance on foreign natural gas and other fuels

The future of energy efficiency

Team Ohlde recently spoke with Barry Dicker of Decent Energy, an energy auditor in Kansas.  According to Barry, the real estate industry may change due to process like energy audits.  A new appendix has been written in regards to the appraisal process.  Appraisers now have the ability to value the energy efficiency of homes.  Unfortunately, only 5% of appraisers are actually trained to apply this appendix.  The team at Decent Energy, however, has experienced higher values in homes that have gone through the energy audit process. 

Finding an energy auditor near you

So you’re ready for the energy audit process.  Who should you contact?  Lucky for you, I have three local KS and MO contacts that would provide a great starting point to bring your home the energy efficiency it needs:

1.  Home Green Home Energy Audits (EnergyAuditsKC.com)

Home Green Home Energy Audits is a premier energy auditor for the Greater Kansas City metropolitan area including Raytown, Lee’s Summit, Independence, Blue Springs, Belton and Raymore in both Missouri and Kansas.  Home Green Home Energy Audits provides guaranteed prices complete with insulating services, weatherization, door and window replacement, plumbing, heating and air, remodeling and more.  Home Green Home Energy Audits charges about $400 for homes under 4000 square feet and approximately $600 for homes over 4000 square feet. 

2.  The Hayes Company

The Hayes Company, located at 1000 East 11^th Street in Kansas City, MO provides insulation and home performance solutions throughout the greater KC metro area.  A home energy evaluation from The Hayes Company ranges from a free estimate to a $150 walkthrough (with a blower-door test) to a full-on $400 energy assessment.  The $400 assessment includes a pre-test and computer analysis that calculates the savings in dollar amounts for each improvement recommended. 

3.  Decent Energy

Decent Energy, based out of Leawood, Kansas, serves both eastern Kansas and western Missouri commercial and residential energy audits.  Decent Energy works as an independent auditor and therefore, works with the homeowner to find the best contractors after the audit has been conducted.  The Decent Energy service includes a 13-month process of discussing homeowner comfort issues, visual inspection, measurements, assessment of safety zone issues and air leakage analysis with a blower-door tool.  In addition, the team at Decent Energy retests the home after the improvements have been made.  Decent Energy starts its service with a $550 baseline and then upcharges for additional furnaces (rather than pricing by square foot).  

The Top 10 Remodeling Projects with the Highest Cost Recouped in Kansas City

If you’ve got a fixer-upper or just want to make some improvements on your home, there are some areas that you should focus on first.  Always take into consideration which remodeling projects will get you the highest rate of return.  The higher the cost recouped, the better your remodeling investment was!

So which remodeling projects tend to have the highest cost recouped here in Kansas City?  We took at look at the Remodeling 2013 Cost vs. Value Report which gave us an in-depth look at what homeowners from KC should focus on when it comes to remodeling. 

The top 10 remodeling projects with the highest cost recouped in Kansas City are:

1.  Entry Door Replacement (steel):  This remodeling project includes removing existing 3-0/6-8 entry door and jambs and replacing them with a new 2-gauge steel unit, including clear dual-pane half glass panel, jambs, and aluminum threshold with composite stop.  It also includes replacing the existing locket with a new bored-lock.

• Cost: $1,201
• Resale value: $913
• Cost recouped: 76.0%

2.  Deck Addition (wood):  Adding a deck to a home includes adding a 16-by-20 foot deck using pressure-treated joists supported by 4x4 posts anchored to concrete piers.  This remodeling project includes installation of pressure-treated deck boards in a linear pattern, built-in benches and planters, stairs (3), and a complete railing system to include wood posts, railings and balusters. 

• Cost: $10,152
• Resale value: $7,231
• Cost recouped: 71.2%

3.  Deck Addition (Composite): Add a 16-by-20-foot deck using pressure-treated joists supported by 4x4 posts anchored to concrete piers. Install composite deck material in a simple linear pattern. Include a built-in bench and planter of the same decking material. Include stairs, assuming three steps to grade. Provide a complete railing using a matching system made of the same composite as the decking material. 

• Cost: $16,026
• Resale value: $11,356
• Cost recouped: 70.9%

4.  Garage Door Replacement:  A garage door replacement includes removing and disposing the existing 16x17 foot garage door and tracks.  Then, install a new 4-section garage door on a heavy-duty galvanized steel track (but reuse the existing motorized opener).  The new door is usually high tensile strength steel and foam insulated to minimum R-12 with thermal seals between pinch-resistant panels.  Windows in top panel are ½ inch insulated glass.  Hardware includes galvanized steel hinges and ball-bearing urethane rollers.  

• Cost: $1,551
• Resale value: $1,048
• Cost recouped: 67.6%

5.   Entry Door Replacement (fiberglass): For this project, remove existing 3-0/6-8 entry door and jambs and replace with new fiberglass unit with simulated wood grain, stained same color both sides; dual-pane, decorative halfglass panel with zinc caming; PVC-wrapped exterior trim in color to match existing trim; 2.5-inch interior colonial or ranch casings in hardwood stained to match door. Replace existing lockset with mortise lock with lever handle and integrated deadbolt in oil-rubbed bronze or satin-nickel finish.

• Cost: $2,834
• Resale value: $1,853
• Cost recouped: 65.4%

6.  Window Replacement (vinyl): In this project, replace 10 existing 3x5 foot double-hung windows with insulated vinyl replacement windows. 

• Cost: $10,299
• Resale value: $6,718
• Cost recouped: 65.2%

7.  Window Replacement (wood): Replace 10 existing 3x5 foot double-hung windows with insulated vinyl replacement windows. 

• Cost: $11,193
• Resale value: $7,225
• Cost recouped: 64.6%

8.  Minor Kitchen Remodel: A minor kitchen remodel includes a 200-square-foot kitchen with 30 linear feet of cabinetry and countertops.  Replace front of cabinet boxes with new raised-panel wood doors and drawers, including new hardware.  Replace wall oven and cooktop with new energy-efficient models.  Replace laminate countertops and install mid-priced sink and faucet.  Repaint all trim, add wall covering and remove and replace resilient flooring. 

• Cost: $19,539
• Resale value: $12,474
• Cost recouped: 63.8%

9.  Siding Replacement (vinyl):  This project includes replacing 1,250 square feet of existing siding with new vinyl siding.  Include all 4/4 and 5/4 trim using either fiber-cement boards or cellular PVC.

• Cost: $12,142
• Resale value: $7,378
• Cost recouped: 60.8% 

10.   Attic Bedroom Remodel:  This project includes converting unfinished attic space into a 15-by-15 foot bedroom and a 5-by-7-foot bathroom with shower. It includes a 15-foot shed dormer, four new windows, and closet space under the eaves. Insulate and finish ceiling and walls along with carpeting the floor.  Extend existing HVAC to new space; provide electrical wiring and lighting to code, retain existing stairs, and add a rail and baluster around stairwell.

• Cost: $51,932
• Resale value: $31,314
• Cost recouped: 60.3%

Top 4 Things Homeowners Need to Know About The Fiscal Cliff

The fiscal cliff.  You may have heard of it and you may know what it is.  But how does the fiscal cliff affect homeowners and the real estate industry?  I have narrowed down the top 4 things homeowners need to know about the fiscal cliff in 2013:

1.  It’s all about the dates. 
There are some important dates that will affect you as a homeowner.  But what day is important and what day isn’t?  Here’s what you really need to remember:

• The bill was signed into law by President Obama on January 2, 2013. 
• Mortgage Cancellation Relief is extended for one year to January 1, 2014.
• Deduction for Mortgage Insurance Premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012.  
• 15-year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012.
• 10 percent tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012.

2.  Pease Limitations
Pease Limitations reduce the value of itemized deductions and are permanently repealed for most taxpayers.  These will, however, be reinstituted for high income filers (individuals earning more than $250,000 and joint filers earning above $300,000).  The amount of adjusted gross income above the threshold is multiplied by 3 percent, however, the total amount of reduction cannot exceed 80% of the filer’s itemized deductions.

3.  Capital Gains
Capital Gains rate stays at 15% for those in the top rate of $400,000 (individual) and $450,000 (joint) return.  After that, any gains above those amounts will be taxed at 20%.  The $250,000/$500,000 exclusion for sale of principal residence remains in place.

4.  Estate Tax
The first $5 million dollars in individual estates and $10 million for family estates are now exempted from the estate tax.  After that the rate will be 40 percent, up from 35 percent.  The exemption amounts are indexed for inflation.

To learn more about the fiscal cliff, be sure to visit the following resources:

• Realtor.org
• Bonds.About.com
• Forbes.com  

Win a $200.00 or $50.00 Amex Gift Card from Team Ohlde!

During the holiday season, we all could use a little extra cash.  Lucky for you, that extra cash could be in the palm of your hand...just by visiting Team Ohlde on Facebook!

On December 14, 2012, Team Ohlde will be giving away both a $200.00 and a $50.00 American Express gift card—just in time for the holidays! 

How can you win? Simply “Like” Team Ohlde on Facebook before December 14, 2012 to enter to win!  Two lucky Facebook fans will be drawn on December 14^th and will win either a $200.00 or a $50.00 retail card from AMEX!  It’s that simple!!

So what do you say?  Want to do a little extra fun shopping this holiday season? Like Team Ohlde on Facebook and start your holidays off on the right foot!  Good luck!

Visit Team Ohlde: http://www.facebook.com/teamohlde?fref=ts &  @ToddOhlde 

The Impact of Natural Disasters on the Real Estate Market

The United States, and more specifically the Northeast states, are experiencing one of the largest hurricanes of all time.  At about the same size as the state of Texas, Hurricane Sandy has blown through the Northeast coast, leaving many New Yorkers in complete tragedy throughout the last few days of October 2012.  Sandy has threatened an estimated 284,000 homes and has caused approximately $87 billion in damages, according to CoreLogic.  Massapequa, located on the South Shore or Long Island, has more than $4.6 billion in total structure value at risk alone.

The impact of what is now being referred to as “Superstorm Sandy” does not only affect many families in the New York area, but Inman News has also reported that natural disasters, much like this one, can have a “chilling” effect on the real estate market. 

How so?

When natural disasters occur in certain areas, home buyer confidence greatly decreases.  In addition, these catastrophes have been proven to stall mortgage operations, hurt home sales and have even more dire consequences when combined with the current economic factors that our nation is experiencing. 

Take one of the nation’s most famous hurricanes of all time, for example—Hurricane Katrina.  Hurricane Katrina did more than kill more than 1,800 people and displace 750,000 households.  In addition, the number of homes sold in New Orleans dropped approximately 23% in just one year (May 2008-May 2009). 

The same exact outcome was reported in the real estate market after the 1989 and 1994 earthquakes in San Francisco.  Even after the massive oil spill on the Gulf Coast (although it was a man-made catastrophe rather than a natural disaster), the market crashed.  In fact, the Gulf Coast oil spill impacted the real estate industry so much that $60 million of BP’s $20 billion Claims Fund was set aside for real estate professionals. 

But that’s not to say that all catastrophes have a negative impact on the real estate market.  One of the biggest surges in the New York market happened immediately after 9/11.  After the terrorist attack, many home buyers took a stand against terrorism by purchasing even more homes in the beginning of 2002. 

Our homes mean everything to us—not only do they keep us safe and provide us with shelter, but they also hold a some of our favorite memories.  However, if you or your home ever undergoes a natural disaster, there are a few steps to take to alleviate the problem:

• First and foremost, take safety precautions.  Keep in mind that the water flowing into your home may be contaminated and should not be used until advised so.  Be mindful of trees and other structures that could be unstable around your house.
• Secondly, seek medical attention if needed.  Make sure that emergency services are able to get to your house or provide them with a safe alternate route in order to get there.  Always keep in mind where power lines and bridges are located. 
• Next, safeguard your property.  Assemble your most prized possessions and find a safe place for them.
• Contact your insurance company.  Take the time to fully understand what your homeowners or renters insurance policy does and does not cover. 
• Next, contact your creditors.  Make sure that your creditors are fully aware of what has happened and provide them with a temporary address if possible. 
• Finally, it’s time to do one of two things—repair or relocate. 

Natural disasters are an absolute tragedy and cannot be avoided.  From hurricanes to tornadoes, floods to fires, earthquakes to eruptions, we never know what to expect from Mother Nature.  The best thing to do during a time of natural disaster is to remain calm and stay safe. 

Team Ohlde would personally send our condolences to those affected by Hurricane Sandy.  We know that your home is an important part of your life and that the uncontrollability of natural disasters can weigh heavy on our hearts.  Thinking and praying for all of those on the Northeast coast.