Patty Manzi's Tri-Valley Real Estate Blog

I recently heard a story about a buyer who was in contract to buy a home, had received his loan approval, then went out and bought a car using a cash down payment!  Long story short, the loan was rejected in final underwriting review because the purchase of the new car had changed the debt to income ratio and also changed the amount of the cash reserves the buyer had on hand. 

This reminded me of a list someone had given me years ago, so I dug it out of my files, and I am posting it here to share with you~

The Ten Commandments for Buyers……. Until Your House Closes

1. Thou shalt not buy a new car
2. Thou shalt not buy furniture for the new house or any other big expenditures that affect your bank accounts
3. Thou shalt not make any unexpected or unexplained large deposits that affect your bank balance (unless it is a work related bonus, or a tax return, and then keep a copy of the check/deposit)
4. Thou shalt not apply for any credit anywhere, and thou shalt tear up all of the offers for “Pre-Approved Credit Cards” that come in the mail
5. Thou shalt not run up the credit cards that you already have
6. Thou shalt not retire or voluntarily leave your present employment or change employment status
7. Thou shalt advise your agent and your lender of any unexpected changes in your life, especially if it changes your marital status.
8. Thou shalt not leave to go on vacation during the escrow process without notifying your agent or lender
9. Thou shalt not spend money you will need for your down-payment and closing costs
10. Thou shalt not be late paying any accounts during the escrow period

Here is a little information on home warranties for resale and new homes.

Resale Home Warranties-

When you purchase a resale home, you can purchase a home warranty plan that will protect you against most ordinary flaws and breakdowns for at least the first year of occupancy.  The warranty may be offered by the Seller as part of the overall package, but if it is not offered, it is well worth the investment to purchase it yourself.  A home warranty program will give you peace of mind, knowing the major covered components of your home will be repaired if necessary.  Coverage for home warranty plans start with a basic plan with an option to purchase additional coverage for specific things like appliances, pool equipment, and air-conditioning.  Your real estate agent will be able to provide you with names of local home warranty companies in your area.  I suggest contacting the companies to inquire about their pricing, coverage, and deductibles for service calls.

New Home Warranties-

When you purchase a newly built home, the builder usually offers some sort of full or limited warranty on things such as the quality of design, materials, and workmanship.  These warranties are usually for a period of one-year from the date of purchase of the home.  At closing the builder will assign to you the manufacturer’s warranties that were provided to the builder for materials, appliances, fixtures, etc.  For example, if your dishwasher were to become faulty within one year from the purchase of your newly built home, you would call the manufacturer of the dishwasher – not the builder.

If the home builder does not offer a warranty, BE SURE TO ASK WHY!

I’m often asked the question:  Why should I use a real estate agent to purchase a brand new home?

The advantages of having an agent help you purchase a newly constructed home are the same as those for purchasing a resale home…..knowledge of the market, help in finding the perfect home quickly, expertise in contract writing/negotiation, and closing assistance.  The builder has a professional representative watching our for his needs, and you need the same expert representation.

Buying a new home is a little more difficult and time-consuming that buying resale.  A real estate agent can professionally guide you through this process.  A real estate agent has experience working with builders, and can help you research loan programs that will best suit you.  A real estate agent  can also guide you through the  new home warranties and builders purchase contracts. 

It is very important that your interests be professionally represented when you are entering into a contract for a semi-custom, or build-to-suit home.  These transactions are complex and the contract details must be exact in order to protect you and to ensure you get exactly the home you want!

Is there any advantage to not using an Agent to purchase an brand new home?  NO!

Think of planning a trip around the world without the help of a travel agent, or buying insurance for your car without an insurance agent.  What if you were the  executive of a major corporation involved in a legal dispute, would you represent yourself in court?  If you depend on people in the service industry for travel needs, insurance claims for a car accident, or handling legal affairs, then why would you want to represent yourself in the most expensive and probably the most important purchase of your lifetime – your new home?

It is a common misconception that buying a home directly from the builder, without the help of an Agent, will save you money.  There is no financial advantage for you to buy directly from the builder.  Builders, for the most part, have a ’single-price’ policy, meaning you will be charged the same price whether your interests are represented by an Agent or not.  Just as in resale, the Seller pays your Agent’s fee.

REMEMBER though, the Builder requires that your Agent accompany you on your first visit to the Builder’s sales office, or they will NOT PAY your representative’s fee.

When you are considering purchasing a brand new home, there are several questions you should ask before you commit to the purchase:

• Is this a good builder?
• Does this builder have a solid reputation?
• How many years has this builder been in business?
• How does the quality of this builders product compare to that of other builders?
• What are the existing inventories of the various builders?
• How do the builders models meet your needs (floor plan, square footage, location)?
• If I should sell in a few years, what upgrades are available now that I can include to be competitive?

Your Agent will be able to help you research many of these question and it is well worth the time to do so.  Taking these precautions will help to assure you the best service and expertise in making this important decision.

Choosing the right neighborhood is almost as important as choosing the right house!  There are many factors to consider when selecting a neighborhood that is right for you.  Below are just a few of the many factors – You may think of others that are important to you.  Please write them on your ‘requirements’ list so they are not forgotten.

Neighborhoods have characteristic personalities.  Investigate to determine that the neighborhood in which you choose to look for a home matches your lifestyle and personality.

Scout out the Neighborhood! 

It is important that you scout the neighborhood in person.  You live in more than your house.  Talk to people who live in the area.  Drive through the entire area at different times of the day, morning, afternoon, evening, and late at night, go during the week as well as weekends.  Look carefully at how well other homes in the area are being maintained; are they painted, are the yards well cared for; are parked cars in good condition; etc.

Neighborhood Factors to Consider

Look for things like access to major thoroughfares, highways, and shopping.  Listen for noise created by commerce, roads, railways, public areas, schools, etc.  Smell the air for adjacent commerce or agriculture.  Check with local, civic, police, fire, and school officials to find information about the area.  Research things like soil and water.  Look at traffic patterns around the area during different times of the day and drive from the area to your place of business.  Is the neighborhood near parks, churches, recreation centers, shopping, theaters, restaurants, public transportation, schools, etc.?  Does the neighborhood belong to a Homeowners Association?

Taking the time to investigate these things before you commit to buying a home can save you some surprises and potentially some disappointments later on down the road.

When you start looking for a home you will find that there are many beautiful homes on the market.  There are a few things I suggest you do before you start looking at homes.  If you do these two simple things, it will make your home touring a more productive process.  You will not waste time looking at things you cannot afford, or that don’t suit your needs.

1. Meet with a lender and find out how much you qualify to spend on a home, and get a pre-approval!  It is very easy to get excited about features found in homes out of your price range.  Before you get your heart set on that big, tree shaded colonial on the hill, your need to pin down how much you can afford.
2. Make a list of “Required Features” vs. “Extra Features”.  For example:  Required features for you might be location, number of bedrooms, eating space, architectural style, garage, school district.  Extra features for you might be a fireplace, walk-in closet, wet bar, pool, siding, vaulted ceilings, deck, landscaping.  There are many different features in homes that range from necessary to luxury. It is easy to get caught up in the excitement of a beautiful home loaded with amenities.  It is important that you select a home that truly meets all of your requirements first and foremost!  Providing this list to your agent can help narrow down the prospective homes that you will tour.  If you are not interested in having a home with a pool, then dont waste time touring homes that do.

Some of the features to note when touring homes:

• Address
• Subdivision name (gated community, HOA)
• What is the home near? (mall, freeway, parks, schools)
• Garage (number of spaces, attached, detached)
• Lot (size, shape, slope, ease of access)
• Style of home
• Bedrooms & Bathrooms
• Living Room
• Fireplace (wood burning, gas, stove insert)
• Kitchen (size, condition, appliances)
• Dining Area
• Laundry area (garage, laundry room)
• Additional rooms (bonus rooms, theater rooms, sun rooms, office/den)
• Additional features (air conditioning, ceiling fans, pool, stairs, french doors, etc)
• Square footage

As you tour homes, check back to this list to make sure the home meets your requirements.  The extras should only come into play when you make your final decision between homes that meet all or most of your requirements.