Resources 2017-05-19T21:16:56+00:00


Buying or selling a home is the biggest transaction of most people’s lives. It can be emotional, exciting, and even a little scary. Guidance and straight talk help. The tips below can explain a few things, put your mind at ease, and get you started.
It’s vital to understand how to choose a Realtor. Like selecting any service professional – from an accountant to your family doctor – it’s important to do your homework before deciding on a real estate agent. Your home purchase or sale likely represents one of the most significant financial transactions of your life, and you definitely want to find the right person for you.
Upon beginning your search, you’ll find that many agents specialize in areas beyond general residential properties. You’ll find specialists in luxury homes, distressed properties, international transactions and more. Before you dive in, it’s important to determine whether you’re dealing with a specific property type and/or a certain market segment – high-end homes, retirement communities, etc. This will help you from the start.
It’s equally important to find an agent who can get the job done. Although your uncle’s friend may dabble in real estate, ask yourself if he’s really the person most qualified to help you buy or sell your home. Personal referrals are great, but only if they’re based on relevant criteria.
Abilities matter. And production matters. You want someone with experience, education and a proven track record of successful closings. On all counts, RVA REALTY RESOURCE is a solid place to start your search. Nobody in the world sells more real estate than RVA REALTY RESOURCE, and RVA REALTY RESOURCE agents collectively hold more professional designations than agents at any other national real estate brand.
You can search for a RVA REALTY RESOURCE agent in your area – drilling down into aspects such as years of experience, production level, specialization, education and more.
Once you find an agent, communicate your price range from the start, along with the types of properties and neighborhoods you’d like to look at (and what you’d like to avoid). This will help your agent select properties that most closely match your preferences.
If you’re a buyer, you’re looking for someone who knows the market inside and out; someone who can help you find the right house and help you make it yours. Whether you create your list of candidates through referrals, online searching or other means, you’ll want to meet at least three candidates to see if they fit your needs. Let them tell you about themselves, and find out what skills and abilities they’ll bring to the table on your behalf.
Here are just a few questions to consider asking:
1. Can you tell me about your real estate experience?
2. How familiar are you with the area where I want to live?
3. Do you work part-time or full-time as an agent?
4. Do you have additional training or advanced real estate education?
5. What should I expect when working with you?
6. What kind of information will you provide me on the homes and neighborhoods I’ll be looking at?
7. Can you provide references from at least three buyers you’ve worked with in the past six months?
8. How will current market conditions affect my home sale?
9. What resources will you use to help me find the right home?
10. How will you communicate with me throughout the process?
Before you sign a listing contract with an agent, interview at least two or three candidates and ask the following questions:
1. Can you tell me about your real estate sales experience?
2. How do you plan to market my property?
3. Do you work part-time or full-time as an agent?
4. What is the right price for this house? And how did you arrive at that figure?
5. How long will it take to sell at this price? What are the average days on market for a house like mine?
6. How will current market conditions affect my home sale?
7. How much should I expect to pay in commission?
8. What kind of communication and/or updates can I expect from you?
9. Can you provide references from three sellers you’ve worked with in the past six months?
10. What happens if my house doesn’t sell in the time we contract for?
Like professionals in other sales-based industries, the Realtor pay structure is based largely on commissions derived from successful transactions. Here’s how it works:
Seller’s agent (or listing agent)
The sellers and their agent agree to a commission percentage, in which the agent’s payment is based on the final sale price. The amount will vary depending on the area and the agent.
Buyer’s agent
At the close of the transaction, the seller’s agent splits the predetermined commission with the buyer’s agent as compensation for delivering a buyer. This split is usually about half of the total commission


The most common type of foreclosure property you’ll encounter in your home search is a Real Estate Owned, or REO, property. REOs are properties that have been foreclosed and are now owned by the bank.
REOs may be vacant or in need of repair. But often they look and feel just like other homes for sale, and they’re listed by a real estate agent. Although they’re typically sold as-is, it’s not uncommon for an REO to be in move-in condition. But the process of buying an REO is different than other home purchases.
With the help of a qualified real estate agent who knows the terrain of the REO market, your REO transaction will run more smoothly – and you’ll likely get a great deal in the process.
RVA REALTY RESOURCE agents lead the industry in distressed property expertise. Working with an agent experienced in REO transactions will make the difference between a successful purchase and a frustrating, confusing experience.
An REO property is one that’s been foreclosed on and is now owned by the bank.
REO properties fall into two categories:
Move-in condition: The home is in acceptable condition and not in need of rehabilitation. You could buy this property and move in quickly.
Damaged: A damaged REO generally needs repairs and rehabilitation before you can move in. These types of REOs are attractive to investors and some buyers who aren’t daunted by the work involved in rehabbing a property. Often, you will get a bigger discount on damaged REO properties, but you have to consider refurbishing costs.
Where can you find REOs for sale?
Banks are eager to sell and get these properties off their books. In most cases, they’ll enlist an agent to clean up the property and list it for sale in the MLS, which means you’ll find these properties listed alongside homes in the neighborhood that are being sold traditionally.
If you’re looking to buy an REO, it’s important to work with an agent who has experience with foreclosures. Many times the bank will insist on an “as-is” sale, and an experienced agent can help you work through your decision whether to move forward with the purchase based on the property’s refurbishing needs.
Pros of buying REOs:
• Often, you’ll pay a below-market price for the property.
• The process is similar to a “normal” home purchase in that you can secure financing using a traditional mortgage. (Buying an REO property is nothing like buying a foreclosure property at auction with cash.)
• You’ll be able to do inspections, purchase title insurance and secure financing before completing the purchase.
Cons of buying REOs:
• Many banks will require an “as-is” purchase, and if there are problems or necessary repairs, paying for them is your responsibility.
• Banks rarely accept anything less than the asking price. They’ve already done a lot of research to come to a price that makes sense for them. (Keep in mind that if most sales in your market are selling above asking price anyway, this point isn’t necessarily a con for buying an REO property.)
• The process can take longer than a regular home sale.
Foreclosure proceedings and laws vary by state. Never make assumptions. Work with an agent who understands REOs and can explain the process in the state where the property is located.
Here’s something you might be wondering: What’s the difference between an REO property and a short sale?
An REO property is one that has already gone through foreclosure and is currently owned by the bank, which is trying to sell it to a buyer.
A short sale is a real estate transaction that takes place when an owner owes more on the mortgage than the house is currently worth and the bank agrees to a sale for less than the full mortgage balance in order to avoid foreclosure. A property involved in a short sale is not bank owned.
The number of short sale transactions has increased in recent years, and you’re likely to run into homes like this on the market as you view properties. As with REOs, short sales can be complicated, so it’s extremely important to find a real estate agent who is experienced and specifically trained.
Despite what you may hear on TV, buying foreclosures is not a get-rich-quick scenario. REOs can offer a way to buy property at below-market prices, but the process is different than an average home sale. Having a solid agent who is trained and educated in local REO transactions is the best approach for success.
Working with a real estate agent who is educated and experienced in REO transactions is an important step toward a successful purchase.
Ask any agent you’re thinking of working with the following questions:
1. What kind of training or education have you had in REOs and foreclosures?
2. How many REO properties have you successfully helped clients purchase?
3. Were the REO properties you’ve helped clients buy in the local area?
Do not venture into REO territory alone. Many RVA REALTY RESOURCE agents are thoroughly trained in REOs and have a solid reputation for success. Choose your agent wisely.
Increase your chances of a successful REO purchase by avoiding these mistakes:
1. Hiring an inexperienced agent: Work with a Realtor who is well versed in foreclosures in the area you’re searching. Look for someone with advanced training and a great deal of experience in distressed properties.
2. Not knowing the law: Foreclosure laws vary by state. What your neighbor’s cousin did in Florida won’t necessarily play the same in California. Consult a Realtor familiar with your state’s laws who has facilitated REO purchases in your area in particular.
Get preapproved for a mortgage. This is a good idea whether you intend to buy an REO or a traditional property. Not only will preapproval help you set your price range, but it will also help speed up the closing process after your offer is accepted.
3. Aiming too low: It’s true that banks want foreclosures off their books, but that doesn’t mean they’ll accept a lowball offer. When making an offer, your agent should justify it with comparable data. An extremely low offer can derail negotiations. An experienced agent can coach you through the offer process.
4. Considering price only: There’s more to an REO property than price. Some properties have extreme damage, and the cost of repairs could easily eat up any discount you’re getting. Have the property inspected and see it for yourself. Objectively assess its value based on physical condition, location and your ability to improve the property.
5. Thinking short-term: Understand local market conditions – your agent can explain them in detail – before jumping in. Consider not just what’s happening now, but also where the market may be headed as you define your goals for your REO purchase. It’s common to buy an REO to live in long-term, or to keep as an investment property for rent.

Forms and Contracts

Here is a line-by-line explanation of the Universal Residential Loan Application:

1. Intro Paragraph
The two checkboxes in this paragraph are for borrowers who have a co-borrower who will either help pay for the home or who won’t help pay for the home but has debts that will need to be considered in the loan application process. When using a co-borrower, be sure to have that person fill out all the relevant boxes throughout this form.
2. Type of Loan
Loans come in many different types. FHA, VA and USDA are all backed by government guarantees that protect the lender. Conventional loans are not.
3. Loan Amount
This is the total amount you’ll need to borrow to buy the home.
4. Interest Rate
You probably won’t know the interest rate on your loan when you first apply. Your mortgage broker or lender will help with this section.
5. Number of Months
This is the time it will take to pay off the loan. For example, a 30-year loan will take 360 months to pay off.
6. Amortization Type
This explains how the interest will be charged on your loan. A fixed-rate loan will have the same interest rate forever, while an adjustable-rate mortgage (ARM) will have an interest rate that periodically adjusts. A GPM is a graduated payment mortgage, which starts with a smaller payment that gradually increases over time. Be sure to discuss this with your lender and fully understand how much interest and principal is being covered under each situation.
7. Legal Description
If you’re not sure of the property’s legal description, the lender can get this information from the title report.
8. Purpose of Loan
For most people filling out this application, the purpose will be “purchase” or “refinance.” Construction loans cover situations where a new home is being built. If you are applying for a construction loan, your lender can explain which one best suits your situation.
9. Property will be…
A home is a primary residence if it’s the home you will live in the majority of the time. A secondary residence could be a vacation home or other home you own in addition to your primary residence. An investment property is one that is rented out or resold for the purpose of making money.
10. Construction Loan
If you are purchasing a home that is already built, you can leave this line blank. This is for people who are borrowing money to build a home.
11. Refinance Loan
Unless you are refinancing an existing loan, you can leave this line blank.
12. Title Held in What Name
This is the name of the buyer or buyers.
13. Manner in Which Title Will Be Held
There are many ways to hold title when you have more than one buyer.
Married couples or domestic partners usually hold title as Joint Tenancy, which generally gives each partner equal ownership and a right of survivorship – so if one owner dies, the property immediately belongs to the surviving owner, rather than the deceased owner’s interest counting as part of his or her estate and going to his or her heirs.
On the other hand, Tenants in Common pass their interests to their heirs and can, if it comes down to it, force a division of the property or a sale to extract their share. Ask a real estate attorney if you have questions about title and ownership so you can be sure you understand all the rights involved, which may vary somewhat by state.
14. Estate Will Be Held In
Almost all homebuyers will check “Fee Simple” here, which gives them complete rights to the property. Leasehold ownership is a rare case when the borrower has rights to the property only for a specified period of time.
15. Source of Down Payment, Settlement Charges and/or Subordinate Financing
Write a short description of where you will get the funds for your down payment and closing. You need to briefly explain whether you’ll take money from savings, sell stocks or receive a gift from relatives, for example.
Subordinate financing means taking a loan from a third party to cover these expenses.
16. Borrower Information
This is where the borrower gives personal information such as Social Security number, date of birth, current address, etc.
17. Co-Borrower Information
This is where the co-borrower gives personal information such as Social Security number, date of birth, current address, etc.
18. Borrower Employment Information
The lender needs to understand your employment situation because it’s an indicator of your ability to repay.
19. Co-Borrower Employment Information
The lender needs to understand your co-borrower’s employment situation as it’s also an indicator of ability to repay.
20. Additional Employment Info
If you’ve been with your current employer for less than two years or are currently working more than one job, you’ll need to provide additional information in the boxes at the top of page 2.
21. Additional Employment Info
If you’ve been employed at your current job for less than two years, fill out this section. Or if you’re currently working more than one job, fill out this section about your other job(s).
22. Monthly Income
In this section, you’ll provide information about your monthly income, as well as your co-borrower’s.
23. Monthly Housing Expenses
In this section, you’ll provide information about your current housing expenses, as well as your estimated expenses on the home you want to purchase. This will help the lender determine whether your income can handle the purchase.
24. Description of Other Income
This space is for any income you included in the “other” category above. Note that you don’t need to include alimony, child support or separate maintenance income if either borrower doesn’t choose to have it considered for repaying the loan.
25. Assets and Liabilities
Use this section to list assets and liabilities of all borrowers and co-borrowers. If some of these items are shared – as is common for married couples – they can be listed as one.
26. Description of Assets
Use the sections below to list your assets and their values. Assets may be held in cash, stocks, bonds, real estate, retirement funds, businesses owned, etc. There is additional space to list assets on page 3.
27. Cash or Market Value
Use the spaces below to list the cash or market value of each asset described.
28. Cash Deposit Held By
Enter the name of the company or individual holding your cash deposit for this home purchase. This might be your title company, escrow company, real estate brokerage or attorney.
29. Dollar Amount of Deposit
This is the total dollar amount of your cash deposit, not the dollar value of assets.
30. Checking and Savings Account Info
You’ll also include information for you and your co-borrower’s savings and checking accounts in the section below.
31. Liabilities
Use this section to list any debts or liabilities on which you and/or your co-borrower owe money. Include credit cards, car loans, student loans, mortgages, alimony, child support, etc. If you need more space, use page 5 of the loan application to list additional liabilities.
32. Assets (continued)
Use this column to continue listing assets from page 2.
33. Liabilities (continued)
Use this column to continue listing liabilities from page 2.
34. Subtotal for Liquid Assets
Liquid assets are cash or those assets that can easily be converted to cash. Add up the total of these assets here. Lenders care especially about liquid assets, because they are what you’d likely use to pay off debt.
35. Total Assets
This is the total for all your assets, including liquid (cash or easily converted to cash) and non-liquid, which require more time and effort to convert to cash.
36. Total Monthly Payments
This is the total of your monthly debts paid each month, including credit cards, loans, family support and work-related expenses.
37. Total Liabilities
This is the total outstanding balance of your debts (not monthly), including credit cards, loans, existing mortgages or lines of credit. It doesn’t include family support or job-related expenses, because there’s no way to calculate a balance for those.
38. Net Worth
You can see your net worth by subtracting your total liabilities (b) from your total assets (a).
39. Schedule of Real Estate Owned
First-time buyers can skip this section. If you already own a home, you’ll need to fill out the columns for each property you own.
40. Type of Property
Is it a condo, single-family home, duplex, town home or something else?
41. Present Market Value
To get an estimated market value, use either a recent appraisal or a comparative market analysis.
42. Amount of Mortgages and Liens
Enter the total amount of outstanding loans or liens on the property.
43. Gross Rental Income
If this is a rental property, enter the monthly rental income before taxes, maintenance and other expenses.
44. Mortgage Payments
Enter your total monthly mortgage payment for the property (or if there is more than one mortgage, enter the total of all mortgages together).
45. Insurance, Maintenance, Taxes and Misc.
Enter recurring monthly expenses here such as insurance, taxes, and maintenance, but don’t include utilities like electricity and water.
46. Net Rental Income
If this is a rental property, figure out the net rental income by subtracting your total for mortgage, insurance, maintenance, taxes and other expenses from your gross rental income.
47. Alternate Names
List any alternate names under which you had a credit card, loan or line of credit, and include the creditor’s name and your account number. This may include a maiden name or any names used prior to a name change.
48. Purchase Price
Enter the purchase price of the home you are trying to buy.
49. Alterations, Improvements, Repairs
If any of the loan is being used to make alterations, repairs or improvements to the property, list the total for those costs.
50. Land (if acquired separately)
If any of the loan is being used to purchase land that is separate from the property price, enter the total cost for the land.
51. Refinance (including debt to be paid off)
If any of the loan is being used to refinance existing debt, include those costs.
52. Estimated Prepaid Items
Enter the total estimated costs for any prepaid items such as insurance and taxes. If you’re not sure what will be prepaid, talk to your lender about anticipated costs.
53. Estimated Closing Costs
Closing costs can run between 1% and 4% of the purchase price. They include fees you must pay to your lender or broker for funding the loan, title searches and insurance, appraisals, etc. Your lender can give you guidelines about how they calculate closing costs.
54. PMI, MIP, Funding Fee
You’ll be required to purchase PMI (private mortgage insurance) if you put down less than 20% on your home purchase. This is to protect the lender in case you default. MIP (mortgage insurance premium) is a similar policy that borrowers of FHA loans must purchase. Funding fees are charged on VA (Veteran’s Affairs) loans.
55. Discount (If borrower will pay)
Many borrowers pay discount “points” upfront in exchange for a lower interest rate on their loan. Each discount point costs 1% of the loan amount. Each discount point will lower the interest rate between 1/8 and 1/4 of a percentage point.
56. Total Costs
Add the items in this column for an estimate of the total cost of the loan.
57. Declarations
This section addresses questions about debts, lawsuits, foreclosures and bankruptcies that might impact your ability to repay your mortgage.
58. Subordinate Financing
This is any loan or loans aside from the loan you’re applying for that will be used to finance your home purchase.
59. Borrower’s Closing Costs Paid by Seller
In some cases, a seller may agree to pay for some of the buyer’s closing costs. If you have such an agreement with the seller, enter the amount to be paid.
60. Other Credits
This space is for any other credits you may be receiving for your home purchase.
61. Loan Amount (exclude PMI, MIP, Funding Fee financed)
This should be the same amount as stated on page 1 in section 1. If you’re planning to finance your PMI, MIP or Funding Fee, you will include that in the next line.
62. PMI, MIP, Funding Fee Financed
In some cases, you can choose to finance your PMI, MIP and funding fee. This means that these costs would be added to your loan balance, and you’d pay it off with interest throughout the life of the loan. If you’re financing these costs, use the amount from line G on page 3 here. Make sure you understand the pros and cons of doing this. You may end up paying much more than you’d expect by financing.
63. Loan Amount
This is the total of lines M and N.
64. Cash from Borrower
This is the total amount of cash that you’ll need to bring to the closing table in order to finalize your home purchase. You’ll need to deposit this money with the escrow company, title company, or attorney overseeing the transaction before the actual closing date.
65. Debt Declarations
In this section, you’ll answer questions about your current debt situation. If you answer yes to any of these questions, you’ll need to provide an explanation in the space provided on page 5.
66. Citizenship and Residency Declarations
This section asks questions about your current citizenship and whether this home will be your primary residence.
The purpose of this section is to gather information about your race, ethnicity and gender that the government uses to ensure that lenders comply with federal fair housing guidelines.
This section will be filled out by your lender.
69. Continuation Sheet
Use this section to include any information that could not fit on previous pages of the loan application.

Home Buying

Buying a home is a big decision. The financial and emotional stakes are high, but the rewards can make it all worth it. This material can help you prepare to start your home-buying journey.
The Benefits of Home Ownership
Plain and simple, owning a home can improve your quality of life, provide stability and give you a sense of control you just can’t get from renting. You have a place to live when you rent, but buying is something much deeper – and better.
The intangibles are tough to measure, but there are other benefits you can quantify:
Financial investment:
Your monthly mortgage payment creates equity for you, not your landlord.
The interest on your mortgage is a tax deduction:
While this isn’t a reason in itself to buy a home, it’s nice to get a break at tax time.
Fixed monthly housing payment:
If you opt for a fixed-rate mortgage, the monthly rate of your mortgage won’t change for the length of the term.
Look for a house you can stay in long-term; one that will “grow” with your family and needs. The financial benefits of owning increase over time.
Look for an agent who understands your lifestyle. Make sure the agent knows the neighborhoods you’re interested in, and can answer questions you’ll have about the location.
Tax-free gain:
When it’s time to sell your home, you don’t pay taxes on the proceeds of the sale that are above what you paid (with some restrictions – see information on capital gains).
A real estate transaction is a complex process involving stacks of paperwork and a number of outside service providers and contractors.
An experienced buyer’s agent can guide you through the process, answering your questions and serving as your advocate. Your agent will help you find the property that fits your needs, submit offers and counteroffers, suggest a good property inspector and other professionals, and provide all sorts of relevant advice.
With a buyer’s agent, you’ll have someone on your side, looking out for your interests every step of the way.
When seeking out a buyer’s agent, look for factors such as productivity, education and experience.
Look for an agent who understands your lifestyle. Make sure the agent knows the neighborhoods you’re interested in, and can answer questions you’ll have about the location.
As a buyer, you don’t pay your agent directly. Instead, the agent receives an agreed-upon portion of the listing agent’s sales commission (usually about half), which is paid by the seller.
If you’re thinking this structure works against you by giving your buyer’s agent an incentive to let you pay more than you need to, consider this:
The increase in a buyer’s agent commission on, say, a $5,000 to $10,000 jump in price would be only $125 to $250. Good buyer’s agents – those who are productive and engaged in the business full time – aren’t going to risk their reputations. Your satisfaction – which can generate referrals to your friends and family – is the lifeblood of their careers.
Talk to at least one neighbor before you make an offer. Ask what they like best and least about living there
Use the RVA REALTY RESOURCE mobile app for your Smartphone and to find and share appealing listings with your agent as you hone in on the types of neighborhoods and homes you’re interested in.
In many cases, it’s better to buy the smallest house on the most desirable block than the biggest house on the least desirable one. Buy location over house.
If you’re unfamiliar with the area where you’re moving, your buyer’s agent is an invaluable resource. He or she can offer insider knowledge on neighborhoods, schools, access to recreation and shopping districts, and the many other details on local neighborhoods and subdivisions.
It’s important to have a clear picture on the features that matter most to you in a home or location. Creating a list of “must haves” and flexible “nice-to-haves” from the start will make things a lot easier for you.
Factors to consider:
1. Size of home – square footage, number of bathrooms, rooms, etc.
2. Home features – updated fixtures/appliances, property size, garage, storage, etc.
3. Location – proximity to schools, open space, entertainment, work, etc.
4. Neighborhood – older or newer homes? Families, retirees or singles?
5. Room to grow – planning to have more children?
6. Condition – move-in ready or a less expensive home in need of improvements?
Your buyer’s agent can offer advice on the countless items you should consider according to your lifestyle, budget and particulars.
For most people, finding the right home begins with a house-hunting strategy combining personal preferences, guidance from others (including an agent) and a mix of neighborhood exploring and online search.
For some, the search takes a while; others find what they want right away. In either case, your real estate agent can be a huge resource of insight and guidance, working through issues or complications that arise along the way.
Here’s a general outline of what to expect during a home purchase, from the buyer’s perspective.
Buyers make a purchase offer.
This is it! You’ve found the home of your dreams, looked over disclosure documents, reviewed comparable sales data, talked it over with your agent and submitted an offer. The sellers may accept your first offer, but more often will return a counteroffer. In fact, additional negotiations are common, and your agent will help you through this generally stressful stage.
The sellers accept.
Once everyone is happy with the terms, the parties have reached what is known as mutual acceptance and enter into a purchase and sale agreement.
Buyers put up earnest money.
To solidify your intent to buy, you’ll place a deposit, or earnest money, on the property. The amount varies, but is generally at least 1 percent of the purchase price. You’ll write the check to the escrow company, not the seller. Note: This money counts toward your down payment later.
Escrow opens.
The earnest money deposit goes into an escrow account, where all funds will be held until closing, when they are then distributed to the right people (lender, mortgage broker, title insurer, real estate agents, etc.).
Buyers apply for a mortgage.
This step is streamlined if you’ve already been preapproved for a loan (which is a smart thing to do). If not, you’ll begin the loan application process now.
The lender inspects title history and orders a property appraisal.
The lender needs key information about the property before granting a loan. This is when potential problems can come to light. For example, the appraisal could show a lower value than the purchase price, or the lender could have trouble finding comparable homes. Also, the title search could turn up liens or other problems.
A home inspection takes place.
You’ll hire an inspector – generally, your agent will suggest one, or provide several options – to check the home and point out minor and major problems that should be fixed before closing. At this point, you still have the option of backing out of the deal. Through your agent, you’ll submit a list of requested work, and the sellers have the option to complete the tasks, do some of them but not others, or reject the request. The sides will negotiate until reaching an agreement.
Removing contingencies.
If the house passes inspection, appraisal and title search, and everything is good to go, then all contingencies can be removed, paving the way to a closing.
Closing time arrives.
Once contingencies are removed and financing is set, all parties sign a seemingly endless stack of documents, and the transaction closes.
Packing begins!
When the final signatures are in place, it’s time to put down the pens, shake hands, exchange smiles and start packing for the move!
Knowing how much you can afford to pay is a crucial step in your search. Nailing down your budget early will make the overall process more focused and less stressful.
Here’s a good way to figure out how much you can afford:
The 28/36 Rule
The 28/36 rule is an established benchmark used by many lenders to determine how much credit to offer you. Here’s how it works:
Get preapproved for a mortgage. Your lender can approve you for a certain to loan amount prior to your home search. This gives you a solid number against which you can assess the affordability of the houses you visit.
The “28″ refers to the notion that no more than 28 percent of your gross monthly household income should go toward housing costs, which include mortgage principal, interest, taxes and insurance.
To calculate, simply multiply your gross monthly income (amount before taxes) by .28. Use this amount as a guide for how much house you can afford.
Example: You earn an annual salary of $70,000. Divide 70,000 by 12, giving you a monthly gross income of $5,833. Multiply that by .28, and you’ll find you should spend no more than $1,633 each month on total housing costs.
The “36″ part of the 28/36 rule refers to your overall debt, which shouldn’t exceed 36 percent of your income. This is important to consider because other high monthly debt loads – such as car and credit card payments – impact the amount you can afford to spend on housing.
For first-time home buyers, the tricky part is knowing how much to budget for taxes and insurance. An experienced real estate professional can assist you with this.

Home Inspection Advice

Your home purchase is one of the biggest investments of your life, and it’s important to know exactly what you’re buying. The best way to ensure this is through a professional, thorough home inspection.
(NOTE: While this material speaks primarily to buyers, it’s also a good idea for sellers to do an inspection prior to listing their home.)
Why You Need a Home Inspection
In your excitement to buy a home, it’s easy to miss a small crack in the foundation, some leaky pipes under the house, or a roof that needs to be replaced.
The sellers worked hard to make the home look as desirable as possible, but looks don’t tell the whole story. That’s where your home inspection comes in.
What about inspections for sellers?
For sellers, a home inspection is also a good idea prior to listing the home for sale. An inspection can help you turn up issues ahead of time so there will be no surprises when serious buyers start inquiring. Knowing in advance means you’ll be able to consider all your options – either making repairs before listing or pricing your home to account for anything you’re not going to fix.
What does a home inspection include?
A general home inspection will evaluate the house and adjoining structures from top to bottom, inside and out, including but not limited to:
Roof, porches, driveways, garage, drainage, retaining walls, grading, and plants or vegetation that may impact the home’s condition
Electrical and plumbing systems; foundation; heating, ventilation and air conditioning systems; water heater, septic system, electrical system, windows, doors, floors, ceilings and walls
What a home inspection doesn’t cover
The home inspector can’t make any alterations in the course of inspecting a home – so there’s no digging up the ground, lifting carpets, knocking out walls, etc.
Also consider that a home comprises tens of thousands of parts, pieces, nooks and crannies. An inspector will look at a representative sampling, but there’s simply no way to check every single element.
RVA REALTY RESOURCE Home Inspection Tip: Many home inspectors know about major appliance recalls, but do your own research by noting model numbers and then checking for trouble online.
RVA REALTY RESOURCE Home Inspection Tip: If an area of the house is not accessible because of barricades, such as boxes piled in front of a door, request that the seller remove these to allow for a thorough inspection.
Some states and cities require additional inspections on top of a general inspection. Beyond that, you may just want a specialized inspection due to a special circumstance or particular concern you or your general inspector may have.
Examples of specialized inspections:
• Sewer inspection
• Chimney inspection
• Mold inspection
• Lead inspection
• Asbestos inspection
• Pest inspection
• Inspection of a special feature such as swimming pool or hot tub
RVA REALTY RESOURCE Home Inspection Tip: Check with your agent to see which inspections are required in your area and which may not be required, but are standard.
RVA REALTY RESOURCE Home Inspection Tip: If a home inspector tells you not to attend the inspection, find someone else. This is a classic red flag.
Here are 10 common problems that general home inspections bring to light.
1. Plumbing:
• Leaking around exposed pipes, particularly with washing machines.
• Outdated pipes. It’s common to find old Polybutylene pipes, which your inspector will recommend replacing.
2. Electrical:
• Ungrounded outlets. You can recognize these by their two-slot configuration versus the three-slot configuration of a grounded outlet. Most inspectors will recommend that you upgrade to grounded outlets.
• Improperly wired breaker boxes. Common hazards include two circuits on a single-pole breaker, oversized breakers, double-pole breakers that supply two single circuits, and wires that cross over the panel’s center.
3. Heating:
• Leaks in piping or heating unit; air ducts that need cleaning.
• Not enough insulation. Insulation requirements vary by location, but an improperly insulated home will always lead to high energy bills.
4. Drainage:
• A wet basement is a problem because it indicates that water isn’t properly draining away from the home.
• Mold in the air. When water isn’t draining properly, it can result in mold in the air. Mold can also be a byproduct of dry rot.
5. Roof:
• Torn and cracked shingles, or flashing that’s not properly installed. Each of these can cause roof leakage.
6. Dry rot:
• This occurs when fungus grows in your home’s wood due to high condensation. The affected wood will have to be replaced.
• Another main concern is figuring out why the condensation is occurring in the first place.
Home Inspection Myth: You don’t need a home inspection for a newly constructed home. Not so. Property defects come up on new construction all the time. Just because the house is new doesn’t mean it was built properly.
Home Inspection Myth: You don’t need a home inspection if you’re buying a home warranty. Home warranties rarely cover everything. You’ll want to know of any potential problems before your closing so that you the seller can take care of them.
Easily fixed pipes or a few outdated electrical outlets are no reason to back out of a deal. However, other issues that come up during a home inspection should give you pause to think about whether or not to proceed.
Here are some red flags that warrant closer attention.
1. Water intrusion and grading problems Water in the basement, condensation on the walls and mold in the air indicate moisture and drainage problems that could cost a lot of money to fix. These issues often suggest improper grading.
2. Structural damage Cracks in walls, ill-fitting windows and doors, and visibly shifted bricks on the exterior are all signs of structural damage. Your cost to fix these types of problems? Anywhere from $20,000 to $200,000.
3. Roof repairs Old shingles, water stains on the ceiling or rotting rafters are all signs that the roof may need to be replaced. This is another extremely expensive undertaking, so pay close attention during the roof inspection.
4. Window replacement Windows that don’t work, fit the frame poorly or show condensation between the panes may need to be replaced. Depending on the number of windows, this could easily run between $5,000 and $8,000.
5. Insect infestation A general inspection should show you whether the home has a pest problem, which may prompt a need for a more detailed report from a specialist. This is a serious issue because some pests can cause structural damage.
RVA REALTY RESOURCE Home Inspection Tip: Condo or co-op boards pay for many repairs, but remember that the costs will get passed on to you eventually – so it’s good to know the building’s overall condition from the start.
Attend your home inspection to see first-hand what the inspector notes, and learn some important details about the house — like how to use the water, sprinklers, heater, electricity, etc.
When attending your inspection:
• Wear casual clothes and comfortable shoes. You may find yourself crawling under and behind things to see what the inspector is pointing out.
• Plan for the inspection to take two or three hours.
• Bring pen and paper, copies of any inspection reports provided by the seller, and any disclosure reports that identified past problems so the inspector can follow up.
• Feel free to ask questions, but give the inspector time and space to work.

Home Selling

Selling a house can be stressful. Making the decision, preparing the house for sale, keeping it clean, waiting for a buyer, dealing with offers, and advancing to the closing table – all of these steps can involve discomfort. This is a huge financial transaction with many emotional aspects. But you can get it done – and it may even be easier than you anticipate.
One thing to keep in mind is that you’re not alone. An experienced, professional real estate agent can guide you through the process, help resolve any issues that come up, and ensure that your home sells for the optimal price in a timely manner.
Here are a few things to keep in mind when putting your home on the market and learning how to sell your house:
Plain and simple, owning a home can improve your quality of life, provide stability and give you a sense of control you just can’t get from renting. You have a place to live when you rent, but buying is something much deeper – and better.
A skilled, qualified real estate agent brings tremendous value to the process. You’re relying on this agent on many different levels, so be careful to select someone with the right combination of education, experience, performance and local insight. Look for a proven expert who can cast a wide marketing net and attract as many potential buyers as possible.
Be sure to let your agent know the particulars of your situation. Perhaps you need to sell within a certain time frame, are relocating out of state, or are facing foreclosure. Keeping your agent informed helps set the path for the best way to proceed, ensures that your needs are met, and ultimately contributes to a successful transaction.
Tips on Choosing and Working with a Realtor offers additional details on finding an agent to suit your needs.
Experienced agents understand how to accurately price your home and make it stand out in the market. They also have access to a vast referral network, enabling them to connect with potential buyers across town or around the world.
Here are a few avenues RVA REALTY RESOURCE agents may use to market your home, both online and off.
Multiple photos: Studies show that buyers are more likely to visit a home that includes multiple photos of the listing. Well-lit, wide-angled photos highlight your home’s best features and important rooms.
Designated website: A customized website for your home is an effective online marketing strategy. It can showcase your home with photos, virtual tours or videos, and details about the property and surrounding neighborhood.
Virtual tours: Video tours can be posted with or without a designated property website. Giving buyers an inside look at your property online can get them interested enough to schedule a showing.
Home search websites: More than 75 percent of buyers start their home search online. It’s important that your listing receives full exposure in the MLS and in search engine results. Posting your listing on Craigslist, Facebook, newspaper websites and elsewhere can also be effective in reaching potential buyers. All RVA REALTY RESOURCE listings (as well as listings from other companies) appear on, where millions of buyers browse for homes and see listings with multiple photos, property descriptions and other details.
Design Center: RVA REALTY RESOURCE agents have access to a proprietary design center that enables them to create professional marketing materials of your home for print and/or online exposure.
The RVA REALTY RESOURCE network: Another advantage of choosing RVA REALTY RESOURCE is direct access to a network of nearly 90,000 RVA REALTY RESOURCE agents around the world, many of them working with motivated buyers.
The RVA REALTY RESOURCE yard sign: The RVA REALTY RESOURCE Balloon is among the most recognized logos across all industries, not just real estate. A RVA REALTY RESOURCE yard sign in front of your house makes an immediate, positive connection with potential buyers who already know the brand.
Your RVA REALTY RESOURCE agent likely has other techniques that will attract qualified buyers in your specific market.
Smart, competitive pricing is essential. When you price too high, your home stays on the market longer, prolonging the process and increasing your expenses along the way.
Home Seller Mistake No. 1: Pricing Too High
“I can always lower the price later if I don’t get any offers.”
That statement costs home sellers millions of dollars every year.
Yes, you can always lower your asking price, but that’s not a good strategy. Time and time again, experience shows that sellers who list competitively from the start get a better price than sellers who list high and then go lower and lower.
Why? Psychology.
When you price too high, here’s what buyers think:
“Wow, three price cuts in the last four months… There must be something wrong with that house.”
“With all the price cuts on this house, the sellers must be desperate. Let’s offer them far below what they’re asking and see if they bite.”
Sound Pricing Strategies
A far smarter approach is to find a knowledgeable agent who understands the local market and then work together on setting the right price. A good agent can help you avoid the overpricing trap.
An experienced agent will help set the right price for your home by considering the following:
Similar homes, via a Comparative Market Analysis (CMA): Your agent will provide a professional analysis that goes deep into stats about recent sales and current listings similar to your home in size, age, condition and features. Sales within the past six months are especially relevant.
General market conditions: Is it a seller’s market or a buyer’s market in your community? It’s important to note that what’s happening nationally may not reflect local conditions. Your agent can explain the difference and clear up any misconceptions you may have.
Potential buyers get an impression of your home – either positive or negative – within 30 seconds of walking through the door. Having them see your home in tip-top selling shape is an absolute must.
There are countless ways to put the freshest face on your home, many of them costing little more than a bit of your time. Here are a few pointers for the most significant impact:
Outside: The Power of Curb Appeal
• Clear any clutter and keep lawn decorations to a minimum.
• Mow your lawn and trim shrubs.
• Add bushes and/or colorful flowers.
• Sweep sidewalks, porch and driveway.
• Remove or update any dated or personalized fixtures.
• Put all toys away.
• Fix damaged gutters, shutters, siding or roof shingles.
• Add a tasteful welcome mat to the front door.
• Clean all windows inside and out.
Leave your house while it’s being shown to potential buyers. Your presence can make them feel anxious and awkward.
Write a letter about your neighborhood that your real estate agent can share with potential buyers. Include information on local events, neighborhood amenities and other factors that define the community.
Inside: Leave No Trace
Clean everything! Check for cobwebs on ceilings, dust on baseboards – everything.
De-clutter. Then de-clutter again. Rent a storage locker if you need to. This is very important for increasing your home’s appeal.
• Add a fresh coat of paint to the walls.
• Remove family photos and excessive wall decorations.
• Remove personal items, such as DVD collections and trophies.
• Replace worn carpets, and shampoo carpets that are dirty but still in good shape.
• Polish wood floors.
• Add fresh flowers or plants, but don’t overdo it.
• Maximize your home’s natural light by opening blinds and shades.
• Do a smell check and address any odors.
• Pet owners: Take Fido or Fluffy with you while your home is being shown.
Your agent can provide additional advice on prepping your home, and also give you insights into the preferences of local buyers.
A home inspection isn’t just for buyers. It’s also something sellers should seriously consider before putting their house on the market.
Why? Quite simply, you don’t know what you don’t know. Imagine getting a great offer on your home only to discover, during the middle of the process, that it needs considerable repairs.
This is the kind of surprise that can lead to buyers pulling out, costing you time and money on a number of fronts. It’s better to know problems from the start, and either deal with them before listing or price the home accordingly.
A seller’s inspection also provides a reference point from which to compare the findings of the buyer’s inspector. In particular, having a different professional opinion can work to your advantage in price negotiations.
Your home inspection is a sales tool
Having your home inspected before listing can also be an effective sales tool. You can confidently say that your home has been pre-inspected and is in tip-top shape, making that much more attractive to buyers.
Don’t wait too long for a home inspection. You want plenty of notice for repairs before you start marketing your home for sale.
Attending your home inspection
Attend your home inspection to see first-hand what the inspector notes, and to learn some important details about the house that may assist you in selling.
When attending your inspection:
Wear casual clothes and comfortable shoes. You may find yourself crawling under and behind things to see what the inspector is pointing out.
Plan for the inspection to take two or three hours.
Feel free to ask questions, but give the inspector time and space to work.
Home Inspection Checklist for Sellers:
Remove clutter that may get in the way of key inspection areas, such as water heater, furnace and main valves.
Clean up! A clean house shows you care and that you’ve maintained the property properly.
Provide full access to attic, basement, crawl space and garage. Leave the keys if they’re needed to enter these areas.
Provide repair documents. If you’ve done any remodeling or replaced the roof, furnace or electrical system, provide the paperwork. Also, display any paperwork about new appliances that may be included in the sale.
Leave utilities connected if your house is vacant.


The concept of a mortgage is quite simple. It’s basically a loan for a home wherein the property itself is used as collateral.
Securing a mortgage, however, can be complex. The process may take more than a month, as several parties – from the escrow officer to the loan underwriter – work behind the scenes to put it all together.
A trusted real estate agent can recommend a reputable mortgage professional and help you navigate through the process.
Finding the Right Mortgage Professional
A RVA REALTY RESOURCE agent can help you find a solid lender or broker. You might also ask friends, family members and colleagues for references.
When interviewing lenders and mortgage brokers, consider asking the following questions:
• What fees are involved?
• What types of mortgages might I qualify for?
• What interest rates are available for different types of mortgages?
• Can I lock in an interest rate? Will it cost me anything to do that?
• What are the closing costs? Can I wrap these costs into the mortgage?
• How much cash will I have to bring to closing?
• How long will it take to process my loan?
• Are there special programs I might be eligible for?
• Can I get references of customers you’ve worked with in the last two years?
• How many lenders do you work with? (For mortgage brokers only.)
• How are you paid? How do you make money on my loan? (For mortgage brokers only.)
Your RVA REALTY RESOURCE agent can assist with your mortgage research, help you locate reputable loan professionals, and answer questions you may have about the process.
Getting Preapproved
Don’t open new credit card accounts or take on any new debt for at least six months (and even up to a year) before shopping for a mortgage
Getting approved for a loan prior to your home search is a smart move that offers several advantages. It gives you a benchmark for how much you can afford, helping you narrow down your home search from the start. It also allows you to be taken more seriously in the bidding stage, which can help tremendously in your negotiations, especially when dealing with distressed properties.
Getting preapproved is simply a matter of your lender checking your financial situation and writing a letter stating that it would be willing to lend you a certain amount of money.
You’ll need to assemble several documents to start the preapproval process:
• Federal tax returns for the last two years.
• W2s (or 1099 statements) for the last two years.
• Bank statements for the last two months.
• Recent pay stubs and proof of any other income.
• Proof of assets (stocks, mutual funds).
• Information about your current debts.
• Information about the source of your down payment, including gifts.
Figuring out how much you can afford is a crucial first step in the home-buying process. Knowing the answer to this question early will make your home search more focused and less stressful.
The 28/36 rule is an established benchmark used by many lenders to determine how much credit to offer you. Here’s how it works:
The “28″ refers to the notion that no more than 28 percent of your gross monthly household income should go toward housing costs, which include mortgage principal, interest, taxes and insurance.
To calculate, simply multiply your gross monthly income (amount before taxes) by .28. Use this amount as a guide for how much house you can afford.
Example: You earn an annual salary of $70,000. Divide 70,000 by 12, giving you a monthly gross income of $5,833. Multiply that by .28, and you’ll find that you should spend no more than $1,633 each month on total housing costs.
The “36″ part of the 28/36 rule refers to your overall debt, which should not exceed 36 percent of your income. This is important to consider because other high monthly debt – such as car and credit card payments – impact the amount you can afford to spend on housing.
For first-time buyers, the tricky part is knowing how much to budget for taxes and insurance. An experienced real estate professional can assist you with this.
Down payments for homes can range from 5 to 20 percent of the purchase price, depending on the type of product you are eligible for.
If a low credit score is making it hard for you to get a loan, take action to improve your situation. Your RVA REALTY RESOURCE agent is a great resource for advice, and you can also check out the tips on improving your credit score on
Several websites can help you check your credit score. Visit for a free annual credit report from each of the major reporting agencies. For just your FICO score, which is most often used by lenders to gauge your risk level, you can visit
Fixed-rate mortgages
With a fixed-rate mortgage, your interest rate – and your monthly payment of principal and interest – will stay the same for the entire term of the loan. This type of mortgage tends to be the most popular because it protects homeowners from the possibility of future monthly payment increases (a situation faced by borrowers who select an adjustable-rate mortgage) and is very straightforward.
Fixed-period Adjustable-Rate Mortgage (ARM) or hybrid ARM
Most lenders today offer a fixed-period or “hybrid” ARM, which is an adjustable-rate mortgage featuring an initial fixed interest rate period, typically of 3, 5, 7, or 10 years. After the fixed-rate period expires, the interest rate becomes adjustable for the remainder of the loan term. Fixed-period ARMs are often named by the length of time the interest rate remains fixed.
Example: In a 5/1 ARM, the “5” stands for the five-year introductory period during which the interest rate remains fixed. The “1” indicates that the interest rate is subject to adjustment once per year after the introductory period, and for the remainder of the loan term.
Government loans (FHA and VA)
If you’re qualified, you may consider an FHA (Federal Housing Administration) or a VA (Department of Veterans Affairs) loan. These programs allow a lower down payment and credit score when compared to conventional loans.
FHA loans
FHA loans are helpful for applicants who don’t have a 20% down payment saved or who need more flexible income or credit requirements.
There are some differences between FHA loans and conventional loans. For example, there’s a maximum loan amount, which varies depending on where the home is located.
Also, FHA loan programs typically require you to pay mortgage insurance, similar to private mortgage insurance, or PMI. Under FHA, this is called a “mortgage insurance premium,” or MIP. Typically, you will pay an upfront mortgage insurance premium (UFMIP). Keep in mind that the UFMIP must be entirely financed into the mortgage or paid in cash; it cannot be partially financed. You will also pay an annual insurance premium, which you will pay monthly with your mortgage payment. You’ll need to factor that amount in when you set your budget.
VA loans
VA loans are offered by VA-approved lenders and are insured by the Department of Veterans Affairs. To qualify, you must be a current or former member of the U.S. armed forces or the current or surviving spouse of one. These loans can help reduce your down payment requirement, sometimes to zero. They may also help you get a lower interest rate on your loan. However, there are limits on the available loan amount. If you believe you may qualify for a VA loan, be sure to tell your lender, so you can explore your options together.
Jumbo loans
When you start to explore your mortgage options, you may hear the term “jumbo loan” come up. If you do, this may be because you live in a high-priced real estate market or are looking at properties that are more expensive than average. If you are considering homes requiring a mortgage that exceeds $417,000, it’s a good idea to find out more about jumbo loans and discuss them with your lender.
The 203(k) program, available through HUD, provides benefits for buyers of homes in need of major renovation and repair. If you’re looking for a fixer-upper, the 203(k) program enables you to obtain just one mortgage to finance both the purchase and rehabilitation of the property.
RVA REALTY RESOURCE Buyer Tip: Don’t fudge the truth. A white lie on your mortgage application is considered mortgage fraud. It may not be a big deal now, but it could come up later and haunt you.
If you notice other fees popping up in your loan process, ask for an explanation. You have a right to know what each fee is and why it’s being charged.
Not all home loans come with the option of paying points. If this option is available, it’s worth investigating, as it could save you money in the long run.
When does it make sense to pay points on a mortgage? Although it greatly depends on your situation, paying points can make sense when you have cash on hand, plan to stay in your home for a while, and don’t intend to refinance in the near-term.
To figure out whether points will equal savings for you, simply divide the total you paid for your points by your monthly savings. This gives you the number of months it will take for you to recoup the money you paid for the points.
Example: Let’s say that paying $5,000 in points up front saves you $85 per month. That means it would take 59 months for your points to really start saving you money. That’s almost five years.

Short Sales

With the number of short sales steadily increasing in many housing markets over the past few years, chances are high that you’ll encounter this type of sale in your home search. Short sales are now common in many markets.
Or, you may be one of the many homeowners considering the short sale option for your home.
While at one time short sales were viewed as too complex and burdensome to deal with from a buyer’s perspective, this isn’t necessarily the case today.
With the help of an educated and experienced real estate agent, a short sale is not only manageable, but can result in a great deal on the home of your dreams. And for a seller who’s facing foreclosure, a short sale can be the best outcome in a bad situation.
This material here covers the basics. But if you’re going down this route as a buyer or seller, it’s absolutely critical to work with an agent who understands short sales.
RVA REALTY RESOURCE agents lead the market in experience and education, so you’ve come to the right place.
What is a Short Sale?
A short sale is a real estate transaction in which the bank or lender agrees to let the homeowners sell their home for less than their loan balance. In some cases, the sellers don’t need to pay back the difference between what they owe and the proceeds of the sale.
Recent changes in the industry have streamlined the short sale process, making this sort of transaction a popular alternative for both buyers and sellers. Additionally, banks are much more interested in facilitating short sales and avoiding foreclosures that result in placing the properties back on their books.
Who benefits in a short sale?
In many cases, short sales present a proverbial “win-win” situation. Here’s how:
Sellers avoid foreclosure and protect their credit from the harder hit of foreclosure.
Buyers receive a good price on the home.
Lenders avoid a costly foreclosure. The potential loss from a foreclosure is typically higher than a loss from a short sale.
If you’re serious about saving money with a short sale property, it’s best to work with an agent who knows how to execute short sales. RVA REALTY RESOURCE agents lead the industry in short sale transactions because many have that training and experience.
How it works
Say you owe $200,000 on your home and can no longer make the mortgage payments. One option is to refinance your home and secure a lower payment based on a longer term or better interest rates. But if your property has lost value due to local market conditions (say it would sell for only $150,000), refinancing isn’t feasible. If the bank agrees to a sale at $150,000, it’s called a short sale.
Although short sales have become more common in recent years, banks don’t always grant them. In general, they approve short sales in these situations:
Seller has a hardship (such as divorce, bankruptcy, unemployment, job relocation).
Seller owes more on the mortgage than the home’s current market value.
Mortgage is in or near default status.
Seller has no assets.
However, different banks and lenders have different requirements. So sellers should discuss the short sale option with their lender.
Short sales can present a great deal for buyers. But the process is a bit more complicated than a normal home purchase, and it will take patience and help from an experienced agent.
Short sales often look like other listings in the MLS, except they may have a lower asking price than comparable properties.
The term “short sale” is a bit of a misnomer, though, as this type of transaction can take much longer to complete than a standard home sale.
The buying process is similar to a standard purchase. You still apply for financing the same way, and order inspections the same way, for instance. But complications in the selling process aren’t uncommon, and you’ll need patience and a solid real estate agent to deal with them.
The good news, though, is that times have changed. Many banks have streamlined their processes for short sales, making it much simpler and less time consuming for buyers and sellers. Market data shows that the time it takes to close a short sale has steadily decreased over the past few years.
Why you need an experienced agent
For many reasons, choosing a real estate agent who has experience with short sales makes a tremendous difference. An experienced agent may already have the right contacts within the lender’s local office, and most likely has already helped buyers through the process.
Possible short sale hurdles an agent can help you navigate:
Second mortgages: These can pose problems because a second lender may not agree to the terms set between the primary lender and the seller.
Mortgage insurance: If the seller has mortgage insurance on their loan, the mortgage insurance company will need to approve the short sale.
Other liens on the property: A lien is a claim by an outside person or company on a property for money owed. Liens pose hurdles whether the transaction is a short sale or not, and will have to be addressed before the property can be transferred to a new owner.
Government-backed loans: If the home seller’s loan was a government-backed loan, such as an FHA loan, this can cause delays and hurdles because the government will need to be involved in approvals.
HOAs: HOAs can present complications because the lender might not pay fees associated with the HOA transfer from the seller to the new owner. Your real estate agent can help put a plan in place for paying HOA transfer fees, document costs and any unpaid dues.
Working with an agent who understands the short sale process saves you stress and time spent dealing with obstacles that often come up along the way.
Using an agent is important in any real estate transaction, and even more so in a short sale. A skilled agent will be able to prepare for obstacles and move through them as quickly as possible.
When choosing an agent, it’s important to:
1. Look for training and education specific to short sales, such as Certified Distressed Property Expert (CDPE), Short Sales & Foreclosure Resource (SFR) or Five Star credentials.
2. Look for experience helping buyers purchase short sales in your area
It’s equally important to be comfortable with your agent.
Ultimately, your agent can mean the difference between a successful short sale and a huge, frustrating disappointment.
The Short Sale Buyer’s Checklist
Hire an agent with experience closing short sales.
Get prequalified for a mortgage.
Get a home inspection, but understand that most lenders will sell only “as is.” The inspection can help you decide whether the short sale price is reasonable, given the cost of repairs needed.
Understand who is paying the agent’s commission and whether you have to make up any differences to your agent.
Submit documentation to the lender.
Have plenty of patience, but balance it with persistence. Keep in mind that banks have grown much better at processing short sales, which is good news for you.
A short sale often presents a good option for homeowners who are in danger of foreclosure or in default because of documented financial hardship.
The benefits of a short sale include:
1. A less severe hit to your credit history than what you’d experience with a foreclosure.
2. You continue to live in your house until the sale takes place.
3. In some cases, banks are offering homeowners cash incentives to do a short sale (to help with sales and moving expenses).
Because your credit history won’t take as long to recover with a short sale as it would with a foreclosure – an average of two years versus seven years – the short sale option is great for sellers who want to own a home again in the near future.
Has your bank already contacted you?
Some banks have launched programs to prequalify homeowners for short sales. Through their records and housing data, they identify borrowers on their books who are in negative-equity situations. In this case, some are reaching out to borrowers in an attempt to further streamline the short sale process.
This makes it much easier for you, the seller, to proceed with a short sale.
Compiling your short sale package
Short sales require different paperwork than a normal home sale. In some instances, as mentioned above, your bank may have already qualified you for a short sale. In other cases, you and your agent will need to submit certain paperwork to your lender.
Your lender then decides whether or not to approve your request for a short sale.
Just what goes in a short sale package? Each lender is different, but in general, you will need:
HUD-1 or preliminary net sheet
Completed financial statement
Letter of authorization to let your agent speak to the bank
Letter that explains your financial hardship
Two years of tax returns
Two years of W-2s
Last two months of bank statements
Recent payroll stubs or other proof of income
Comparative market analysis or list of recent comparable sales
Keep in mind that banks’ processes vary, and the above list is a general representation of what many will want to see.
Finding an experienced real estate agent to guide you through your short sale is extremely important. When interviewing potential agents, ask about experience specific to the short sale process in your area.
In the past, the notoriously long waiting game for short sales deterred many buyers from attempting them.
But times have changed. Many banks have streamlined the process and removed the barriers that have hamstrung short sales in the past. Some are even prequalifying borrowers to get the ball rolling faster.
In addition, federal guidelines have helped shorten the wait for mortgages owned by Fannie Mae and Freddie Mac. These are great changes for buyers and sellers, because it means there are regulations in place to help shorten the process.
A short sale may be a great option for you. The key is to find an experienced agent who can help you pursue the purchase or sale with confidence.

Title and Escrow

Although it’s not the most talked-about aspect of buying a home, escrow is nonetheless a vital component of a successful transaction.
Your RVA REALTY RESOURCE agent can answer your questions on escrow and help you through the process. Here’s a brief overview on what escrow is, and how it works into the overall scheme of things.
What is Escrow?
So, what is escrow, exactly?
Escrow is an arrangement in which a neutral third party holds onto funds and key documents involved in a home sale, and then distributes them according to the agreement between the buyers and sellers. The escrow period begins when a seller accepts a buyer’s offer, and ends at the closing table.
Have your earnest deposit money in an easily accessible account when home shopping. This will enable you to move fast on an offer if you find your perfect place.
Purchasing a house isn’t like buying shoes; there’s a lot of money involved, a lot of steps to manage, and a lot at stake. So the buyers and sellers don’t exchange money and documents directly with one another. They do it through the escrow account.
Escrow ensures accountability. Buyers want to be sure all contingencies are met (inspection, title report, secured mortgage, etc.) before the sellers cash any checks. Sellers want to make sure they receive funds before they hand over the deed.
An escrow account opens up when buyers put down earnest money to show the sellers that they’re serious about buying the home. An escrow officer – usually someone within a title company – is assigned to the account.
An escrow officer, or settlement agent, does the following:
• Holds funds and documents.
• Processes and facilitates the flow of documents and funds.
• Keeps all parties informed of progress.
• Responds to the lender’s requirements.
• Secures a title insurance policy.
• Obtains approval of reports and documents from all parties.
• Prorates and adjusts insurance, taxes, rents, fees, etc.
• Records the deed and loan documents.
• Keeps track of and holds onto money owed and money deposited.
Escrow closes when all the tasks, documents and funds are performed or secured by the escrow officer.
Both buyers and sellers have responsibilities during the escrow process, and must do their respective parts to keep the transaction moving.
The Sellers:
• Carry out all escrow instructions.
• Provide the deed, via the escrow officer.
• Submit all other required paperwork as outlined in the Purchase and Sale agreement, such as insurance policies, home warranties, tax receipts, etc. (The escrow officer will provide clear instructions on what is needed.)
The Buyers:
• Submit a down payment, plus any other funds required.
• Carry out all escrow instructions.
• Approve inspection reports, preliminary title reports and other items detailed in the Purchase and Sale agreement.
• Execute a Deed of Trust to secure the loan.
Title insurance is a policy that protects against financial loss stemming from problems found in a property’s title, or legal ownership.
Think of it this way: As the buyer, how do you know the seller really owns the property? How can you be sure there are no liens, such as from unpaid taxes and lawsuits, or undisclosed heirs who might claim ownership? The answer lies in the title search.
A good title search generally turns up these types of issues. And a good title insurance policy will protect you should they arise during your ownership.
A real estate agent can answer your questions on title insurance and direct you to a title company. But at the same time, it’s good to understand some of the basics.
Although you have the right to shop around for title insurance, most people follow the recommendation of their loan officer or real estate agent. One note: Because insurers generally follow the same pricing guidelines within each state, discounts can be elusive.
There are two policies for title insurance – one protects the lender, and the other protects you, the homeowner.
Lender’s title insurance
This insurance protects the lender, who technically owns the home until you pay off your mortgage. You’ll pay a one-time premium at closing, which protects the lender for up to the full amount of the loan as long as you have the mortgage.
Owner’s title insurance
This policy protects you. You’re probably thinking: “I bought title insurance for the lender, and a search showed the property title was free and clear of any problems. Why do I need an owner’s policy? It seems like a waste of money.”
The answer is that no title search is perfect. Without an owner’s policy, someone could show up on your doorstep one day and say, “Hey, this is my house. The person who sold it to you never got the proper signatures from my now-dead relative, and according to his estate, I own this place.”
Your owner’s policy covers you for any losses in this case. Although a lender’s policy is required for closing, the owner’s policy is not – and you may not be asked if you want it. Speak to your agent about buying one during the escrow process.
You can always back out of the deal if issues come to light in the title report. Just be sure that there’s a contingency written into the Purchase and Sale agreement to cover this.
What time frame does title insurance cover?
It’s important to understand that insurance covers the buyer and lender only for events that occurred before the purchase date. It does not cover future events, or any clouds or defects that arise after the purchase date.
In other words: If the buyer does something that causes a lien to be put on the house, the title policy will not cover the loss.
What kinds of claims are covered?
Standard policies differ by provider, but most cover:
• Undisclosed prior mortgages or liens
• Improperly recorded deeds
• Forgeries or impersonations
• Undisclosed easements or use restrictions
• Errors in legal paperwork
You will need to buy a new lender’s policy if you refinance your mortgage. The lender will want to make sure no new claims have come up since you purchased the home.
What should I look for in the preliminary title report?
Generally, keep an eye out for the following:
Liens: A lien is a legal claim of ownership. Anyone the homeowner owes money to – such as unpaid contractors or tax authorities – can put a lien on the home. The most common type of lien is the one your lender will have on your home for as long as you have a mortgage.
Encroachments: An encroachment is something that crosses the neighboring property line. The best example would be a fence that has been placed improperly.
Easements: An easement is a legal right to use another person’s land for a specific use. For example, you might have an easement to run your sewer line through part of your neighbor’s property. An easement doesn’t give right of possession; just the right of access.
Time is of the essence with your preliminary title report. Go over it with your agent immediately, as you have only a few days to address any concerns.
An easement isn’t always cause for alarm, but if you discover one, be sure to investigate it with your agent.
How do I address problems that arise in the title report?
Your agent can help. Some issues, like easements, can be worked out, while others may be enough reason to walk away. The key is in understanding the issues and talking them through with your real estate agent.