Q & A with Dottie Herman

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Q1 - My husband and I have been looking for houses for about 8 months. We have put in a number of bids, and haven't had any accepted offers yet. What are we doing wrong? We thought we could get a deal- but when we put in low offers it seems like no one counters our offer.

A - Everyone is looking for a 'deal.'  There is no foul in attempting low bids, however after 8 months of trying the market is telling you something.  There is a disconnect between what you perceive as low and what is low in your local market.  If this wasn't the case, you would have had an offer accepted by now.  I would recommend you go back and see the sale price of homes you have been bidding on for the past 8 months.  Compare the percent difference between what you offered and what was accepted.  It would be interesting to see if the number is consistent.  If so, you know how much higher you will need to bid if you want to make a purchase.  Best of luck!

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Q2 - My husband and I are looking to purchase our first apartment in NYC. We rented in Midtown for the past 5 years and finally are ready to enter this great market for first time buyers. We are trying to decide if a coop or condo is the right fit for us, but are unsure of the difference. Can you explain the difference between a coop and condo?

A - When you buy a co-op, you are purchasing shares of a co-op corporation that owns the building. Your purchase is of personal property instead of real property.  Each month you pay a maintenance fee which covers building expenses such as heat, hot water, insurance, staff salaries, real estate taxes and any underlying mortgages on the building. In a coop, the board of directors has the right to reject a purchase and financing.  Buyers must go through a process that typically culminates with an interview in front of the board.
Condo purchasers acquire real property instead of personal property.  There is no interview process with purchasing a condo, however you must submit your financials and any other information the board requires.  Each unit in a building has its own deed and as such pays its own tax bill.

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Q3 - My wife and I are trying to sell our house. We recently bought another house in a surrounding area but we are renovating that home in preparation for the birth of our 4th child. We are currently still living in the home for sale, and are wondering if it would be more desirable if we moved out. We have a lot of clutter and toys and it is hard to always keep the home neat. It seems that potential buyers come and like the home but we don't get any offers. What should we do?

A - Congratulations on the coming birth of your 4th child.  That is wonderful!  In terms of your house, clutter is a distraction to buyers.  I would think there is a way for you to live in the home and show it.  Moving out sounds like a real inconvenience for you. It is best if your home can be viewed when it is neat and clean.  Try only showing it during certain hours of the day when you know it will be clean. Also, if you are having multiple showings and no offers it may not be the clutter that is holding back buyers - it might be the price.  You may want to consider a price reduction to get offers on your home.

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Q4 - What is a FICO score, and how is it calculated?

A - A FICO score is a numeric rating that the credit agencies associate with your credit performance and profile. The score is based upon a number of factors. Length of credit (good credit is made up of active credit for at least 24 months), balance of credit (a healthy credit profile is credit that is made up of a combination of your mortgage, installment and revolving credit). The revolving credit (credit cards) should not carry balances over 10 to 30% of their credit limits, as the more you carry forward that heads towards your limit, the lower your score will get. This is referred to as "maxing out" your credit. It is extremely important that you make your payments of all credit debt in a timely fashion.

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Q5 - My husband and I are first time home buyers--we have been looking to purchase a home for about 7 months but haven't found anything yet that we fell in love with. We were pre-approved for a mortgage and since our pre-approval I took a severe pay cut at work. Will this impact our pre-approval? What new steps do we need to take to ensure we can still get a loan?

A - With the ever changing bank guidelines for mortgages, pre-approvals are only good for 90 days as that is the timeline on credit reports for the bank. After that time, you will need to get your pre-approval updated.  In your case, this decrease in pay can have an impact on your ability to qualify for the mortgage you are seeking. You need to advise your loan officer who did your pre-approval of this change so that they can re-calculate your qualifications. You don't want to go thru the whole process of concealing this information, signing a contract and going thru the whole mortgage process only to be disappointed when the file is reviewed in underwriting.

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Q6 - My wife and I are looking to sell our home and are both fairly clueless as to home prices in our area and the general real estate market. We live in a suburb outside of NYC, and we are currently seeking a realtor. How do we know if the price she comes up with to list our home is a fair price? Some of our friends told us they got in trouble because they pushed the realtor for a higher price because they priced with their heart, and we want to ensure we don't make that same error.

A - In real estate, price with the head and not the heart.  It's the best way to ensure you don't end up heart broken!  Feel free to meet with 2, 3 or even 4 agents.  See how they each price your home.  Just like you go to a doctor for a second opinion on a major decision, you can consult multiple real estate professionals for this decision.  Examine what range of prices you get.  Don't go with the agent that gives you the highest price, but rather for the agent that gives you a price that makes sense and who you feel you can work best with.

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If you have a real estate question for Dottie, please send it to; Dottie@RealEstateChannel.com.
 
NOTE: Due to high volume of questions, not everyone can be answered, but she'll do her best.

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