Home Buyer Tips

You may be an expert in something, but it probably isn’t real estate. Here at Bozeman Brokers, we want you to have the best home buying experience possible, after all it is the biggest investment you will likely ever make! We believe that having individual real estate representation in the buying process helps you to get the most out of the experience. This list is here to help you through some of the ambiguities when deciding whether or not to use a Realtor for a buyers agent.

 

The reasons you should probably use a buyers agent- 

Negotiation experience

The average years of experience for the Brokers in our office is over 25 years. This means our Brokers have been through over 25 years worth of negotiations. Our past experiences allow us to thoughtfully anticipate and understand our client’s needs and wants while applying our knowledge of the market to satisfy your goals. 

First to know about new listings

Professional buyers agents are in the know about new listings and other properties before they come on the market. This gives you an advantage over unrepresented buyers, and could be the difference between an accepted offer or waiting for the next property. 

Network of trusted vendors, inspectors, lenders, and appraisers

Good Realtors have professional relationships with quality vendors, inspectors, lenders, and appraisers that all help the process move along without a hitch. 

Lending knowledge

Although Realtors don’t have the ability to provide loans, experienced agents have trusted professional relationships with mortgage lenders and can refer you to the lender who will best suit your needs.

Full disclosure

The largest majority of lawsuits that occur in real estate transactions occur because of disclosure issues. Any transaction involving Realtors in the state of Montana requires an Owner’s Property Disclosure Statement. This document’s intention is to inform the buyer about potential issues and relevant information regarding the property. 

Interest Advocacy

An experienced real estate agent utilizes open communication to best suit the individual buyer. There are many variables associated with the purchase of a home. An agent can accurately navigate the variables of a contract, inspection, negotiation, etc. and represent the buyer’s best interest.

Broker Partner, Dan Porter, says “A seller or buyer needs to know they can trust their Realtor to represent their interest with honesty and fairness at all times and maintain their confidence throughout the process.”

Peace of mind

Real estate documents are contractual. Experienced Realtors can fully explain your rights and liabilities pertaining to each document in layman’s terms. The representation of a Broker or Realtor gives you access to a database of trusted and accurate knowledge enabling a greater understanding of the real estate transaction.

 

The reasons you may think you don’t need a buyers agent but actually do- 

“Realtors cost a lot”

On a typical listed property, buyer’s do not directly pay for the services of the Realtor they work with. The buyer’s agent is paid by the seller’s negotiated commission.

“Middlemen are unnecessary”

This notion may be a common belief amongst many. But, in the case of real estate having an expert on your side can make all the difference. 

Broker Partner, Patrick Resop, says “We have outside sources that either buyers and sellers may not be aware of, from lenders to inspectors, to appraisers and so on.  We are a terrific source of information to assist them in ending up with the end result that helps them achieve their goals.” 

“I’m not their only client, they won’t have time for me”

Good Brokers and Realtors are exceptionally talented at juggling multiple clients. In fact, the busiest agents are generally some of the best agents to work with. Our agents are full-time active Brokers in the local real estate market. So yes, we are in the know and we do have time for you.

“They will only show me their listings”

If you are experiencing this, get a different agent. Every Realtor has access to the Multiple Listings Service, so every listing is able to be shown by every agent. Professional and experienced buyers agents listen to their clients. They show the houses that best fit the client’s needs even if it isn’t their company’s listing. 

 

Hopefully this has helped you come to the conclusion best for you, if you are still unsure contact us at the Bozeman Brokers office – 406-587-5900 – or shoot us an email – info@bozemanbrokers.com –  and we can walk you through the next steps to get you in the home you want to be in.

 

By: Michaela Sherritt

When you first start talking to a mortgage lender, they will likely provide you with a list of the specific documents they need to issue a pre-approval. This list can vary from one mortgage company to the next, but here are some of the most common items you will need to become a pre-qualified home buyer.

 

Social security number 

Social security numbers will be needed for all borrowers who are listed on the mortgage loan. This information can be verified through a Social Security card, tax documents, or anything else that shows the SSN. The lender needs this to verify your identity, to request tax returns from the IRS, and to pull your credit reports.

Proof of employment

Your mortgage lender will need proof of employment.  Employer’s name, mailing address and phone number. They want to verify your employment, because it relates to your ability to repay the loan.

Proof of income

This will validate your income for pre-approval and underwriting. It might come in several forms. Usually, it’s your two most recent pay stubs, or the electronic equivalent, that show your year-to-date earnings. It’s your average annual income the lender wants to know about. The lender might also use tax records to verify your earnings.

Tax documents

This is a standard document for mortgage pre-approval. Most lenders want to see your W-2 statements and tax returns for the last two years. Among other things, your W-2s show how much money you earned over the previous year.  

Place of residence

This one is self-explanatory. For pre-approval and underwriting purposes, the lender wants to know where you’ve lived for the last couple of years.

Bank account information

The lender will want to know how much money you have in the bank. They need to ensure you have enough funds for your closing costs, down payment, and cash reserves. So, they will probably ask you for account statements and balances for any checking, savings, or money market accounts. This is another standard mortgage document for pre-approval.

Credit information

Do you have other outstanding loans that you’re currently repaying? If so, the lender may ask for documents related to those accounts. They need this information to measure your debt-to-income ratio, among other things.

Gift letters

Are your family members going to provide funds to help you cover your down payment expense? If so, you’ll need to provide a gift letter along with your other mortgage documents. The lender needs to verify that the money is truly a gift, and that your relatives don’t expect any form of repayment.

Self-employment documents

Do you run your own business? If so, you might have to provide some additional documents during the mortgage pre-approval process. This might include balance sheets, a profit-and-loss statement, or federal tax statements for the last two years.

 

Wow your mortgage lender and real estate agent by coming prepared with these documents. They want to make you a pre-qualified buyer and get you into your dream home! Want more tips about buying a home? Visit our Buyer Tips page to learn more or contact an agent to get started today.

The pros of investing in a multi-family property

Building your investment portfolio with a real estate purchase is a wise choice for those who are willing to stay with their investment over a period of time. Most experts recommend that you hold onto your property for 5 years or more to maximize its’ return. While there are few types of investment property types to consider for residential real estate, small and large multi-family units are the most common real estate investment options.

This article will focus on why you would want to consider purchasing a multi-family property as part of your investment portfolio.

Are multi-family properties a good investment in every market?

Multi-family property investments work well in most markets because of strong housing demand and rental income potential. It comes down to a mathematical formula – multi-unit properties allow you to capitalize on additional rental income that you wouldn’t have access to in a single-family unit. Most small multi-family dwellings include two to four units. Anything above four rental units starts to fall into the categorization of a commercial property which leads to a more complex set of rules for financing. Commercial real estate loans focus more on the experience of the buyer and the earning potential of the property making the acquisition process somewhat more difficult. Some additional reasons why a multi-family property can be a good investment in most markets include:

• Bigger cash flows
• A larger pool of tenants (less risk for the owner)
• Scalability of your real estate portfolio

Education opportunities factor in where to buy your investment property

Purchasing an investment property in a community that has educational opportunities like cities with a university are typically a good choice because of the high demand for rental housing. And, communities with college populations typically have a younger demographic, often with 75% of the residents under the age of 55  that commonly stay around after graduation to start their own business which brings in new jobs and further contributes to the health of the economy. These markets are ideal when considering where to purchase your small, multi-family property.

Tax Benefits to Investing

If you own an investment property, you have the opportunity to deduct certain costs when filing your annual income taxes. These can include:

• Mortgage Interests
• Business Expenses
• Improvements/Repairs

Depreciation is also something you can benefit from as an investment property owner. The IRS assumes wear-and-tear on every building as time passes (depreciation of an asset). As a rental property owner, you have the opportunity to use this depreciation as an annual write off reducing your tax liability.

Living in your multi-family property

Are you looking to bring your own housing expenses down? You should consider purchasing a multi-family property and reside in part of the property and rent the other unit(s) out. This is an obvious benefit to you directly bringing down your mortgage payment. Depending on the market , you can even eliminate your payment completely by having your renters cover your mortgage payments. In this scenario you could also pay extra on the mortgage each month, allowing you to build your equity faster.

When purchased at the right time with low borrowing rates, multi-family properties can produce substantial cash flow. It can also reduce your mortgage while providing you with long-term tax benefits. Multi-family properties are a proven income-generating investment choice in most markets. Towns with colleges or low vacant rates offer larger pools of potential tenants.

1. Get in the know. Like any good budget or savings plan, the first place to start is to determine where you are NOW in relation to your credit score, your monthly bills and assets. Contact a trusted mortgage professional to see how much home you qualify for and how much you’ll need to save to purchase your home. They can help you take a look at things like credit scores, loan requirements and interest rates now so you can be simultaneously doing ALL the things right during this savings period to ensure the most favorable rate and terms.
2. Set a deadline. I know deadlines seem ominous to some, but they can be powerful motivators to accomplish great goals. (And buying a home is a pretty big goal!) Again, once you know where you are – it will make setting a timeline easier. For some, step one of the savings plan may be paying down or even off some past debt with high interest – which could back up your time table.

View our PDF detailing 5 more tips on saving for a downpayment!

It’s a great time to buy! Buyers who pay all cash for a home or investment property have a powerful advantage in today’s market. Cash buying eliminates the hassle of a mortgage and therefore simplifies the real estate transaction. Cash buyers are not subject to the same rules and regulations required from mortgage lenders. However, cash buyers shouldn’t sign on just any dotted line. To protect your rights and best financial interests – consult with a real estate professional and follow this checklist:

View 11 must-check boxes as a cash home buyer!

1. How much will a second home cost? Besides sale price, you should factor in mortgage, property taxes, insurance, utilities and maintenance fees-and some of those expenses are probably higher than you think-plus up to 1.25 percent of the purchase price to cover annual maintenance and unexpected repairs. You’ll also need to budget 20 percent more for insurance than you pay for your primary residence; if you rent out your second home, you’ll also need medical and liability coverage.
2. Can you truly afford a second home? You should only buy a second home after the rest of your finances are in tip-top shape. All of your mortgage payments-including the second home and remaining debt should consume no more than 36 percent of your monthly gross income. If you can’t make those numbers work, this probably isn’t the right time to spring for second home.

View the PDF that details 6 more important questions!

The type of wiring in residential homes generally depends on when the home was built, where it was built and if it has been updated. In the older homes, knob and tube type wiring was the norm, replaced later by encased plastic-sheathed wiring.

In most cases the newer plastic-sheathed wiring is copper, insulated with plastic and then wrapped with insulation and another layer of plastic for protection. Breaker boxes are another story; sometimes a well-meaning home owner can inadvertently make things unsafe.

It is always wise to consult a reputable home inspector and even an electrician before you buy. A little homework today can save you a lot of money down the road. more on home wiring is available here.

Single pane, double pane, thermo pane, triple pane windows, plain glass, leaded glass, low “e” glass, wired glass, and tempered glass, too. WOW – There’s a lot to know!

Some children have been known to shatter a window or two. Tempered glass can prevent this. Fogged thermal pane windows might need to be replaced if their seals are broken. New argon gas filled windows work well to insulate, while low-e coatings reduce the heat transfer for south facing rooms.

There is a lot of information available on the web, but this site seems to be one of the best ones out there. We will be happy to show you the different types of windows and glass as we show you around homes, so be sure to ask us.

Many newer homes are now being sided with artificial stucco siding, or EIFS (Exterior Insulation Finishing Systems). This is essentially polystyrene foam with a base coat, reinforcement mesh, then another base coat and then a finishing coat of stucco over the top. This is a terrific product, as it adds insulation value to the home, not to mention classy looks. However, it can also be a serious and very expensive repair if it isn’t installed correctly and/or water gets behind it.

There are several manufacturers of artificial stucco, and many builders installing it. Having it inspected allows you to know if there is a problem, and even if there isn’t, you will be aware of the areas you need to keep caulked, and what to look for in case of trouble. Get more information on improperly installed EIFS by clicking here.

When you are checking out homes, there are several items in our market you need to be aware of – including man-made siding. A lot has been said about L.P.( Louisiana Pacific) OSB (Oriented Strand Board) products, and they have borne most of the bad press.

But did you know that there can be issues not just with LP, but with Omni Board (made by Masonite) Stimson Fortestex, Weyerhauser and others? You need to know, Siding replacement can cost tens of thousands of dollars!

When the time is right, ask us about ASHI home inspectors and the benefits of making your offer contingent upon YOUR approval of a home / siding inspection where necessary.

You will spot several different types of plumbing systems in any housing market, including our own. Copper, galvanized, rigid plastic, polybutylene, and soft plastic are but a few. Certain systems are more prone to having certain problems.

Galvanized water pipe is most prone to rusting on the horizontal surfaces (such as under a floor) versus vertical surfaces (running up a wall) and it corrodes from the inside out. Some rigid plastic systems have been recalled, while others have fared very well.

The most reliable types seem to be made of copper, but again there can be issues to check: are the hangers plastic lined? Are there any lead solder joints? A good home inspector can help you identify any problem areas before you buy. There are several reputable inspectors in our area that I would be happy to refer.

All sellers with homes built prior to 1978 are required to fill out a lead-based paint disclosure form and provide you, the buyer, with a lead-based paint educational booklet in any sale. Lead is a highly toxic metal that was used for many years in products found in and around our homes.

Lead may cause a range of health effects, from behavioral problems and learning disabilities, to seizures and death. Children 6 years old and under are most at risk, because their bodies are growing quickly.

On the other hand, there are millions of homes with lead paint out there, and many have been painted and repainted several times so the lead paint is well covered up. If in doubt, have the paint tested and evaluated either at a local laboratory, or with one of the home test kits available at your local hardware store.

When purchasing a home, you will need to acquire homeowners insurance. In fact, all lenders will require a policy be in force prior to funding the loan. Make sure you have enough coverage, should anything happen. Policies refer to “replacement costs” that may not cover everything.

You should ask your insurance agent a lot of “what if” questions. The deductible amount also plays a big part in setting your premium. Higher deductibles lower the number of claims, and reduce your insurance costs.

Check with your insurance agent for more information on these issues, and any others. If you don’t have an insurance agent, we have access to several top-notch agents we can refer you to with confidence. A great online resource can be found right here.

The most important thing to be aware of with insulation, other than the safety issues of urea formaldehyde and asbestos (covered elsewhere), is the R value, or the insulating factor. The higher the number, the better the insulator.

Don’t be too shocked if the insulation in the 15 year old home you are considering isn’t near the R value of a brand new home. While there is no question you could save on heating bills by adding more insulation, sometimes it can take many, many years to recoup the costs.

Often, gas or power companies have financial assistance programs including low interest loans or even grants available if you boost your insulation. Talk to your home inspector about any upgrade recommendations before purchasing your next home. More on insulation is available here.

Heating and cooling systems are some of the most important investments you’ll ever make in your home. Heating and cooling accounts for 44% of your home’s energy use. Various systems include electric, gas, propane, oil, and even wood-fired.

The method of distribution can be forced air, under floor boilers and pipes, baseboard, zonal, gravity, heat pumps, ceiling wires and, of course, wood stove and fireplace. Some have higher purchase prices, while others cost more to maintain or operate.

The more energy efficient an appliance is, the less it costs to run and the lower your utility bills. Use this knowledge to evaluate the asking price of any home. You’ll be money ahead as you factor its heat source into any offer! More information on heating is available right here.

Many sales agreements mention asbestos by saying “the buyer is aware asbestos may be used in the construction of this home.” This can be a little unsettling. Asbestos is a known carcinogen, and when exposed, tiny particles can be released into the air you breathe.

Asbestos is a common insulator used in many homes, and was used for everything from siding to tape wrapping for furnace air ducts and even sometimes in “popcorn” ceilings. There are several remedies that range from the simple to the complex.

Your home inspector can tell you if asbestos is present in easily visible places such as siding, taping, and insulation, and recommend remedies if necessary. More information on asbestos can be found right here.