Lehigh Valley Real Estate Blog, Home Buying & Selling Information

Is this a good neighborhood?

This is a common question and when moving to the Lehigh Valley from out of the area a good question. As a licensed Realtor, I can not steer home buyers away from a neighborhood or into a neighborhood. It is against the law. I must treat each neighborhood equally.

That said, although I can't tell you whether or not a neighborhood is good or bad, what I can do is provide you with a specialized report about any neighborhood if you request it.

Another source of information is the Police Department. If you find a house in a neighborhood and call the local Police Department they must truthfully tell you about the area.

Happy Halloween

Ready for some Friday fun? It's time to get spooked with some classic ghost stories: 

Halloween Ghost Stories

What Do You Mean I Can't Finish the Basement?

It's awesome! We have to buy this. I can finish the basement exactly as I want.

Beware! In almost every city/township in the Valley, if not all, an emergency egress (exit) is required to finish the basement. The little windows, typically high up on the walls, do not count as an emergeny exit. You may have to have a large window or bilco doors installed to get the permit to finish the basement.

If the basement is going to include a bedroom, some municipalities require an egress directly in the bedroom regardless of other exits out of the basement.

Older houses, that already have finished basements, are typically grand-fathered and do not have to have the egress as long as the basement was finished based on the zoning rules at the time.

When viewing the house, your agent should know the answers to these questions or have the ability to get the answers for you.

I Need to Sell My House to Buy Another

So, you need to sell your house in order to purchase another one. This is very common. Most people can not afford to pay two mortgages.

The correct way to do this is to list your house for sale and while waiting to get a buyer you go looking at possible houses to purchase. You keep a list of possible houses you are interested in and once you get a buyer on your house you make an offer on the new house. Possible downfalls to this are that if the closing dates don't line up you can end up homeless or maybe you can't find a house that matches your needs. Even so, this is considered the correct way (from a financial perspective) to do it.

If you go looking at houses and find one you want but your house is not on the market you now have a problem. You need to get the seller of the house to accept an offer from you contingent upon the sale and settlement of your own house. This is a risk for the home seller so you lose your negotiating power. The seller has to put faith in you selling your house.

If the new home seller does accept the offer, now you are under pressure to sell your current house. As a result, you may have to drop the price in order to sell it fast. You can lose on both ends. Offer more for the house you want and take less for the house you are selling.

There are some ways to reduce the risk on the seller to give you some negotiation power but they typically involve allowing the seller to continue marketing his house while you attempt to sell yours. It may all fall apart in the end if someone else wants your new house.

Fun Friday

Could you pass the third grade?

This is a test given to third graders at the end of their school year. I still haven't passed it.

Click on the link, and take a timed test.  How fast can you put the names of the states where they belong?

Do Open Houses Sell Houses?

According to the NAR (National Association of Realtors), only 3% of homes are sold in which that sale can be directly attributed to happening because the buyer walked into an Open House. A small percentage considering the seller typically has to get the house in tip-top shape and pretty much leave for the day.

That said...why bother having an Open House. Well, you never know, if the Open House is marketed correctly and generates a lot of traffic the right person may walk through the door. 3% isn't large but it may sell your house if other tactics haven't worked.

Some home owners prefer to skip doing Open Houses. They don't want a bunch of possibly unqualified strangers walking through their house. The decision whether to have them or not should be discussed with the agent during signing of the listing contract.

Closing Costs - How Much Is Needed to Purchase a House

In order to purchase a house, several thousands of dollars are needed to cover closing costs. In Pennsylvania, the majority of the expenses are:

• Title Insurance (based on purchase price)
• 1% Sales Tax (based on purchase price)
• Credit to Seller for Prepaid Property Taxes
• Interest on Mortgage (from day of close until end of month)
• Mortgage (Origination Fees, Points, Escrows and Broker Fees)

The breakdown of all of these expenses is typically given in a GFE (Good Faith Estimate). If your mortgage provider is given the purchase price, taxes due per year, your income and credit/debt ratio they should provide you with a GFE which shows full disclosure of all costs and the breakdown for each major expense.

If short on funds, some, if not all of the closing costs can possibly be put into the mortgage. This is available through various loan programs (VA, FHA) or Sellers Assist. With Sellers Assist, the seller allows the buyer to pay more for the house then the seller will receive. The difference in price is given to the buyer at closing to help pay the closing costs.

Certificates of Occupancy (AKA Fire/Safety Inspection)

A Certificate of Occupancy (CO) may also be called a Fire or Safety Inspection and is an inspection required by most municipalities upon the sale of a house. The inspection typically concentrates on electrical problems which may result in a fire or electrocution hence the name.

Some common items that are checked:

• Smoke detectors in bedrooms
• GFI outlets near water sources
• Properly grounded outlets
• Railings on staircases (w/spindles if open)
• Emergency egress in basement finished areas

Not all municalities require a CO. Some only require it with new construction while others require it for every resale of a house.

The difference between a CO and a Property Inspection is that a CO requires the repairs be made within a certain time-frame and it is contractual. A Property Inspection should identify the same problems but leaves it up to the seller or buyer to decide whether or not to make any repairs. 

Mortgage Providers - Fees

Mortage companies, by law, are required to fully disclose all fees but it is up to you as the client to make sure they do so. Mortgages and rates are not rocket science, you just need to know what questions to ask.

Examples:

Can you provide me with a GFE (Good Faith Estimate) which discloses all fees including broker fees, origination fees, points, and application fees?

What is the interest rate and how long do I have to lock this rate?

Does this interest rate include any buydown monies? (should be disclosed on GFE)

Beware that the company with the best rate may not be the best company to use. It is essential to determine whether or not you will be paying for this rate at the closing table.

Pennsylvania is a state where "Time is of the Essence". The Agreement of Sale contains timelines for the mortgage company that must be met. It is essential that an out-of-state lender is aware of these timelines and will abide by them. Agents and the home sellers are typically looking for a local mortgage company/bank or at least a familiar name. In a multi-bid situation, this can be the deciding factor when a home seller is comparing similar contracts.

Property/Home Inspection - Budget For It

The other day, I was talking to a couple that moved into their new house recently. It turns out that after they moved in the water pipe for the washer had a major leak that needed emergency repairing and their dog had gotten through the wooden fence and was lost. This all occurred within the first 3 days. When the couple made the agreement to purchase the house, they decided to skip the Property Inspection to save some money.

The township did not require a Certificate of Occupancy so without the Property Inspection the house ended up getting sold as-is.

A Property Inspection runs from $200 - $400 dollars but will help protect you from possibly thousands of dollars in repairs to the house and the property after you move in. Even if on a tight budget, this is a cost that should be worked into your finances.