For Buyers

• What can I afford?
• How do I chose the right lender?
• What is Pre-Qualification?
• Do I need to be pre-qualified to look for a house?
• What is a Buyer Agency?
• What does it mean if a house is marketed with a Home Warranty?
• What is a house's life expectancy?
• Should I have my new home inspected before I buy?
• What are Contingencies and when are they used?
• What is Title and what is Title Insurance?
• Closing Costs
• What happens at the Closing?
• How Will the Realtor get paid?

For Sellers

• How much is my house worth?
• What is a CMA?
• What should I do to make my house ready for a successful open house?
  • Exterior Considerations
  • Interior Considerations
• Preparing your house for a
  Home Inspection
  • Interior
  • Exterior
  • Plumbing
  • Electrical
• How will the Realtor Be Paid?

How Do I Choose the Right Lender?

A home purchase may be the biggest single purchase you make. It should also be one of the most rewarding and worry-free purchases you make. Selecting the right professionals to work with will make your purchase enjoyable.

Even if you have just begun to entertain the idea of homeownership it is not too early to take stock of your financial out-look as it relates to having a home. Starting your home-buying search by selecting a lender first makes a lot of sense. The lenderís job is to help you determining the exact amount you can spend on a home. The lender will even be able to prequalify you for the purchase. If you are not sure you know of a good lender ask for input from your family, l friends, neighbors and co-workers. Two other primary sources for mortgage lender information are your real estate consultant and your financial planner/advisor. They can bring a large list of lenders down to a manageable size and help you better determine who would be a good fit for you.

There are many types of mortgage companies: banks, credit unions, and mortgage brokers. Interest rates will be about the same from one to the next, but some may offer more flexible hours, language interpretation or something else specific to your needs that another does not. Research the lenders you are interested in to your satisfaction. After learning about the strengths of various lenders, contact them and ask about the interest rates, points, fees commitments, escrow terms/closing requirements and loan servicing. When you meet with the lender of your choice, he or she will work out a purchase strategy with you and provide you with a prequalification letter to submit with the offer you place on the home you select.

What Can I Afford?

Before beginning a home search, take the necessary steps to determine what you can afford. The amount of house you can afford depends on how much income and how much debt you have. Typically, lenders donít want borrowers to spend more than 28 percent of their gross income per month on a mortgage payment or more than 36 percent on debts.

Before beginning your home search, select a lender and have him or her consult with you regarding your purchasing power. Most will be happy to roughly calculate what you can afford and pre-qualify you for a loan. Lenders determine the amount you can spend on a home based on the following:

• Gross income
• Outstanding debts
• Credit history
• Amount of cash you have available for the down payment, closing costs and cash reserves required by the lender
• Type of mortgage you select
• Current interest rates

The lender may also use a debt-to-income ratio to determine how much you can afford. The debt-to-income ratio evaluates your projected monthly housing expense against your income. The monthly housing expense consists of the principal and interest payment on the home loan, property taxes and hazard insurance (also referred to as PITI). Ifr there are monthly home owners association dues and/or private mortgage insurance (PMI) these will be included into the PITI calculation as well. Typically lenders like a borrowerís debt-to-income ratio to be in the 34 to 38 percent range.

Pre-Qualification

Pre-qualification is the term used to refer to the process of learning where you stand financially and what the best mortgage is for your situation. It is based on current income, debt and savings. Pre- qualifying for a mortgage loan does not guarantee a loan but does estimate the monthly house payment that you can afford.

Do I need to be pre-qualified to look for a house?

While pre-qualification is not a requirement to see a potential home, it is wise to speak to a lender about pre-qualifying for a home purchase even before you begin touring potential new homes. Being pre-qualified to buy a home makes your home search smoother because it provides direction for the search and helps you to stay on track with the financial goals you have in finding the dream you’ve waited for.

If you do not know who to see about getting pre-qualified, I am able to provide you with some suggestions.

What is Buyer Agency?

Buyer Agency is a contractual agreement in which the realtor works specifically for you, the buyer. Both your realtor and yourself will sign a contract which indicates how your realtor (referred to as your Buyer’s Agent after the contract is signed) can provide you additional guidance that (s)he would not be able to do if a buyer agency was not established. In Wisconsin, buyers can choose to work with the realtor who is working either as a Selling Agent (representative of the seller) or a Buyer’s Agent. The buyer’s agent works specifically for the interests of the buyer. Regardless of what type of agency chosen, the realtor is required by law to treat all parties to the transaction fairly.

What does it mean if a house is marketed with a Home Warranty?

On occasion, a Seller will decide to sell his/her home with a Home Warranty. Usually the warranty is for a year from the date of purchase. It is a cost that sellers may take on to provide the buyer with additional security and confidence. If you are a buyer who is interested in a home that does not carry a warranty I am able to help you obtain one.

What is a House's Life Expectancy?

Home Warranties are sometimes included in the sale of a home. If you are making a decision about whether-or-not to include a home warranty with the sale of your home or, if as a Buyer you should buy one with the purchase, the following information from the National Association of Home Builders may be of help to you. The numbers listed represent the maximum number of years you can reasonably expect various components of your home to last, as determined by a comprehensive survey of manufacturers, trade associations and researchers. Keep in mind that the life expectancy may vary greatly depending on quality of material, installation, maintenance, and environmental factors as well as use.

Should I have my new home inspected before I buy?

Your house is quite possibly the biggest purchase you will make in your lifetime. It is a very good idea to arrange for your new home to be inspected. In fact depending on the type of financing you will use (FHA or VA), more than one inspection will be performed.

Of course the first inspection is the basic inspection you do when you visit the home. Should you choose to have the home thoroughly inspected as part of the offer to purchase; it is best to hire a professional, state licensed inspector to do this for you. As previously mentioned, your lender may require another inspection to be done by one of their own inspectors to satisfy the issuance of your mortgage loan. It is always best to place the most weight on the inspection which is performed by the professional state licensed home inspector that you hire to do the job.

*You can confirm a home inspector’s registration with the Department of Regulation and Licensing online at drl.wi.gov.

What are contingencies and when are they used?

An offer to purchase can have as many or as few contingencies as the Buyer wishes. Most offers include at least two contingencies: a financing contingency, which makes the purchase dependant on the Buyerís ability to obtain a loan commitment from a lender; and an inspection contingency, which allows the Buyer to have a professional inspect the property.

The number of contingencies that can be added is limitless depending on the type of property being purchased and the Buyerís particular needs in a given transaction. Examples of additional contingencies include: radon testing, termite testing, sale of other real estate, if necessary, survey and well/sewer inspections. If you are currently renting, a contingency related to obtaining a sublet or least buy-out for your apartment may also be required.

When it comes time to make a call on the number of contingencies you will place into your offer to purchase, your Realtor will be able to guide you in selecting what is appropriate for your situation.

What is Title and what is Title Insurance?

TITLE is the evidence or right which a person has to the ownership and possession of land. A defect in the title can be any legal right held by someone other than the owner to claim property or to make demands on the owner of that property.

THE PROCESS TO A CLEAR TITLE starts with the title search. It is a detailed examination of the historical records concerning the property. The purpose of the title search is to verify the Sellerís right to transfer ownership. It is also to discover any claims, errors, assessments, debts or other burdens or restriction on the property. A title search is carried out by a lawyer, abstractor or a title insurance company.

Based on the results of the title search, the title insurance company usually issues a ëCommitment to Insureí (also called a ìbinderî).

The includes a summary of the condition of the title, including title defects, liens, etc.

• Conditions to be met in order to insure the proposed transaction
• An agreement to issue title insurance policy upon payment of the premium

The Title Commitment is issued prior to closing so that any potential problems attached to the property can be identified. The commitment will have two sections, Schedule A and Schedule B.

• Schedule A confirms all names are spelled correctly and that the correct parties and the correct sales price are shown.
• Schedule B shows anything that has to be completed prior to closing. It will state that a deed needs to be prepared and recorded between the parties, any mortgage that must be satisfied at closing as well as judgments that must be satisfied at or before closing.
• Sometimes one or more of the parties involved will need to sign a Judgment Affidavit ñ this is just to voce any potential ìcloudî in title for any judgments that are found for the same name. For instance, a judgment is found for John Doe, but in looking at it, it does not appear to be the same John Doe that is buying the property, in this case we ask that the Buyer sign a judgment affidavit verifying that the judgment found is not his. Schedule B-II will list any easements or restrictions that may affect the land.

TITLE INSURANCE
The owner of the property that you buy has strong rights to the property. Additionally, there may be others in addition to the owner who have ìrightsî in the property you are going to buy. Examples of this would be contractors who performed work on the property, governmental entities, or other individuals who have unpaid claims against the property.

A title insurance policy typically covers the following:

1. FRAUD
   False claims of ownership, forged deeds, wills signatures instruments, conveyances; false representations; illegal acts of trustees, guardians, administrators and attorneys as well as false records.
2. LIENS AND OTHER RIGHTS
   Liens are claims against the property or the Seller that become the new ownerís responsibility. Examples are unpaid mortgages, taxes, sewer and water assessments, bills owed to workers or other creditors.
3. HUMAN ERROR
   Destruction of records; incorrect information in deeds, mortgages and public records such as errors in copying, recording, indexing; errors by administrators, executors, trustees, guardians and attorneys.
4. IMPROPER DEEDS AND WILLS
   Deeds by persons of unsound mind or minors; invalid, suppressed or erroneous wills; missing heirs; unsettled estates; deeds delivered after death or without the grantorís consent.

When you buy a home, you are given a title to the property which usually means you receive full legal ownership. On occasion, however, there is a hidden mistake in a prior deed, will, or mortgage that may give someone else a valid legal claim against your property.

TITLE INSURANCE COVERS

• The Lender
  When you purchase property you are commonly required to buy title insurance. This covers the outstanding balance on the mortgage for the lender, but does not protect you.
• The Buyer
  When acquiring property it is a good idea to get your own title insurance policy. It will give you peace of mind, and maximum protection in case there is a claim against your home.

Claims are rare, but if one is made against you, your title insurance will cover the claim. You just need to notify the title insurance company in writing upon learning of the claim against you. Include with the letter a copy of All related letters and documents. The title company will:

1. Negotiate with the other party to settle the claim.
2. Defend you in court if necessary.
3. Satisfy any covered claim for which it is responsible.
4. Pay legal costs incurred in defending the title.

Title insurance protects you against almost any title problem. You get a lot of security and peace of mind!

What should the Buyer expect in Closing Costs?

Your mortgage lender should take time to answer any questions you have about closing costs. A good financing provider will walk you through the entire process and explain the required closing costs. Honestly, closing costs vary from lender to lender, but typically they include the following three categories: Out-of-Pocket Expenses, Pre-paid Items, and Mortgage Points.

Out-of Pocket Expenses
These are expenses that are usually performed by a third party and directly charged to the borrower. Examples of out-of-pocket expenses are appraisals, attorneys, credit reports, deed recording, tax services and other miscellaneous expenses. The requirements can vary from lender to lender so it is wise to ask your lender what your out-of-pocket amount will be, if any.

Pre-paid Expenses
These are items that a Buyer is required to pay upfront or set aside into an escrow account at the time of closing. Examples of pre-paid expenses include homeownerís insurance, mortgage insurance and property taxes. Often the lender will require that an initial amount be applied into an escrow account at closing to cover future payments of these items. Pre-paid expenses can vary based on the type of property and the time of the month that the closing occurs. Your lender will be able to give you accurate information about the amount of pre-paid money you will need for your situation.

Mortgage Points
Paying mortgage points is a way for Buyers to obtain a lower interest rate. This is a strategy that is not necessarily wise for everyone and discussing it with your mortgage advisor in light of your situation will give you a handle on how effective it would be for you.

A mortgage point is equal to one percent of the mortgage loan amount and reduces the interest rate of the mortgage for the life of the loan. For example, if a $100,000 mortgage can be obtained at 5.5 percent with one pointy, it might be 6 percent with no points. By paying an additional $1000.00 in points, the mortgage interest rate is reduced and the mortgage payment is roughly $32.00 a month less. Thatís $384 per year and about $11,520 over the life of a 30 year loan.

What happens at the Closing?

• Ownership of the property is transferred. Title insurance is issued and coverage begins.
• At the closing both Buyer and Seller will sign a HUD-1 Settlement Statement. The HUD-1 Settlement Statement provides and itemized list of all closing costs. Be sure to review it and ask for clarification on any items that you do not understand. Items listed on the HUD Settlement Statement include the following:

1. Title Costs
   These are fees for the title search and the lenderís title insurance. Your own title insurance is an additional fee.
2. Settlement Fees
   These are fees for the lenderís agent (usually a lawyer or a title of escrow company representative).
3. Loan Charges
   Loan charges include origination, appraisal and survey fees.
4. Taxes and Government Fees
   Included in this section are the transfer taxes, and respective Buyer and Sellerís share of yearly property taxes.

• Those present at the closing may include the Seller, Buyer, the lender or the lenders agent/representative, the REALTORS for the Buyer and Seller. If involved, an attorney for either or both parties may also be present.
• The Buyer and Seller do not need to close at the same time but it is customary for the Buyer to close first because Title Companies do not like to have the Seller sign the deed until the Buyer has completed their part.
• At the closing, the title companyís representative (also called a closer) will check the documents with you for incorrect spelling of names, confirm that the property description is accurate, legally correct and up-to-date and confirm that the figures listed on the documents are correct and as previously agreed upon. This is your chance to verify fees, check procedures and terms and ask any questions.
• If one of the principles to the transaction cannot be present for the closing, the documents may be mailed out for signatures, or a power of attorney may attend the closing instead. If a power of attorney plans to sign for a principle, he/she must be approved by the Lender and/or the Title Company in advance.

1. Usual length of closing: 1 hour
2. What to bring: Picture ID
3. Cashiers Check for the required amount
4. Social Security Number

• The Buyer will not receive the keys or any other form of entry to the property until both parties have signed their respective paperwork. If the Seller signs his/her paperwork in advance, the keys and/or garage door openers will be held by and escrow agent or the Sellerís REALTOR until the transaction in complete.
• A closing is not final until funding has cleared. This means that until the lender has authorized funding and all checks are issued, the closing will not be complete. Typically, if the closing is done early in the day (prior to 3:00 pm), funding will usually occur on the same day. On busy closing days (like the end of the month) funding can take much longer than the average 30 minutes it usually takes.

How Will the Realtor Get Paid?

When you hire a Buyer’s Agent you are contracting for professional services. You will pay for these services just as you would pay for a surveyor or professional inspector who is working in your best interest. The difference is, in many cases, the fees can be financed into the transaction. Importantly, your Buyer’s Agent can very possibly save you much more than the fee you contracted to pay in your Buyer Agency Contract.

Three basic ways a Buyer’s Agent can be paid : Bunbury & Associates can participate in the “MLS Offer if Cooperation” on listed properties. This arrangement, when offered by the listing company, is an economic adjustment only and does not create an Agency Agreement between Bunbury & Associates and the Seller. As your Agent, I still represent you, the Buyer. Payment in this fashion could cover all or part of the agreed-upon fee. As a condition of the offer to purchase, I can instruct the Seller to pay Bunbury & Associates on the Buyer’s behalf. This arrangement allows the Buyer Agency fee to be included in the transaction costs. The Buyer can pay Bunbury & Associates directly upon the close of the sale.

How much is my house worth?

As your realtor, I will visit you at your home and tour it with you. I may take photos while there as well as obtain measurements of your home. Together we will evaluate the condition, size and floor plan of your home in order to provide you with the best possible selling price.

Additionally, I will be evaluating the market and how it relates to the sale of your home. After getting details from you and evaluating your home, I will return to my office and work with tools to compose a Competitive Market Analysis (CMA). The CMA will evaluate the amount similar properties are selling for and it will consider properties that were on the market that either did or did not sell.

These factors will serve as guidance to help you arrive at a selling price that reflects the current market value.

What is a CMA?

A CMA is an estimate of the value of your property under current market conditions. Because the market is always changing , it is an exceptionally time-sensitive estimate. By definition, it is the highest price your property will bring if it is put on the open market today. A CMA requires research of other available properties in your neighborhood as well as properties that have recently sold. By comparing the list price with the sold price of similar properties along with currently available properties, I can help you decide what the best sale price for your property is.

What should I do to make my house ready for a successful open house?

Having an open house allows a chance for prospective buyers to see your home (their potential dream home) up-close. It is vital that your home look itís best for your open house event. Following is a general list that acts as a very good guideline. You will find your realtor giving you advice specific to your home about how to put your home in itís best light.

Exterior Considerations
• Perform exterior paint touch-up where needed
• Clean windows
• Remove any wasp or bee nests from the overhangs
• Brush away cobwebs and dirt from overhangs
• Keep children’s toys put away so they are not lying in the yard Keep sidewalks and driveway shoveled in the winter and free of ice build- up
• Maintain lawn mowing in the summer months.
• Avoid excessive lawn ornamentation which could give a cluttered look.
• Trim back shrubbery, especially where it blocks windows
• Remove or replace dead trees and plants
• Keep any gardens or plantings around the house weeded
• Replace cracked windowpanes and torn screens
  
  Interior Consideration
• Closets need to be cleaned out and organized
• Remove all furniture that is currently not actively used
• Thinning out personal items and furniture will make your home appear more spacious
• Repair squeaky doors and floors as well as leaking faucets and broken windows
• Take any prescription medications with you during the open house event or stow them away in a safe place
• If you choose to do some painting, try to use neutral colors that would match most furniture
• Thoroughly clean and straighten up the garage to maximize parking and storage space. This could well be a good time to consider a garage sale
• Dust off the basement mechanicals such as the furnace, water heater and softener
• Organize the basement storage areas to maximize space and allow potential buyers easy access to the mechanical and electrical considerations in your home
• Consider repairing damaged or dated flooring
• Take whatever steps are necessary to get rid of pet odors and pet hair from your furnishings
• Additionally, be cautious of smells from smoke, mildew and the babyís room

Preparing for a house for a Home Inspection

Keep in mind that pre-owned homes are rarely in perfect shape. An inspection of your home will put both the Buyer and Seller at ease to confirm that all is in proper working condition.

The following is a checklist of minor items often found in need of repair during a whole house inspection. If repairs are needed, Sellerís should plan to do them prior to a professional inspection is performed. Having these things completed beforehand or having a professional inspection done and available for Buyerís to see will ensure a smoother sale.

• INTERIOR
  1. Ceilings
     Are there any holes or cracks that need patching?
  2. Chimney
     Does the chimney need cleaning?
     Does the chimney damper open and close properly?
     Does the chimney mortar need pointing?
  3. Clutter
     Is there a distracting amount of clutter in any of the rooms that would prevent a thorough inspection?
  4. Doors
     Do the doors open and close smoothly without sticking or squeaking?
  5. Insulation
     Is there insulation present in the attic?
  6. Insects
     Is there any sign of insect infestation?
  7. Moldings
     Are there any loose or broken moldings?
  8. Stains
     Can you explain the existence or repair of old water penetration stains on ceilings, floors and walls?
  9. Stair Railings
     Are there any loose posts, rungs or finials?
  10. Tiles
      Are there cracked kitchen or bathroom tiles?
  11. Walls
      Are there any holes or cracks that need patching?
  12. Windows
      Do any of the windows have cracked panes or broken seals?
      Do any of the windows need caulking?
      Are any of the windows painted shut?
      Can all of the windows be open and closed properly?
      Do all of the windows have operable latches

• EXTERIOR
  1. Cracks
     Are there horizontal or vertical cracks in the foundation walls?
  2. Grading
     Does the grading around the house direct rainwater away from the foundation?
  3. Gutters and Downspouts
     Are the gutters and down spouts connecte4d and secured to the house?
     Are the gutters and down spouts clean and free from debris and weeds?
  4. Landscape
     Are any of the landscape timbers rotted?
  5. Railings
     Are there any loose railings at the porch, stairs or deck?
  6. Retaining Walls
     Are there any retaining walls or fences in need of repair?
  7. Roof
     Are any roof shingles missing?
  8. Siding
     Does any of the siding need repair or replacement?
     Are there any wood surfaces that are in direct contact with the soil?
  9. Sidewalks and Driveways
     Are the sidewalks and driveway in good condition?
  10. Steps
      Are the wood or concrete steps in good condition?
  11. Trim
      Is the exterior wood trim in good condition?
      Is the exterior wood trim around the front door in good condition?
      Is the exterior wood trim around the garage service door and garage door in good condition?
      Are there any wood surfaces that are in direct contact with the soil?

• PLUMBING
  1. Caulking
     Are there horizontal or vertical cracks in the foundation walls?
  2. Drains
     Are the drains clogged?
  3. Faucets
     Do any of the faucets leak at the base?
     Do the faucets shut off completely, preventing water from dripping?
     Are the faucet screens clear allowing full water flow?
  4. Insulation
     Is there insulation on the water pipes in unheated areas of the home?
  5. Main Valves
     Is there access to the main water shut-off valve?
     Is there access to the main gas shut off valve?
  6. Showerheads
     Are the shower head screens clear, allowing full water flow?
  7. Stopper Mechanisms
     Do the stopper mechanisms of sinks and bathtubs open and close properly?
  8. Toilets
     Are the toilets loose at the floor or at the tank?
     Do the toilets turn off automatically or do they “run?”

• ELECTRICAL
  1. Ceiling Fans
     Do the ceiling fans work properly?
  2. Door Bells
     Do the front and back doorbells work properly?
  3. Electrical Range
     Do all of the electrical range-top burners and ovens work?
  4. Electrical Service
     Is the main electrical service wire entering the home secured to the exterior of the house?
     Do the electrical junction boxes have covers?
     Are there any receptacles, switches or their covers broken or loose?
     Are all receptacles “hot” and switches operable?
     Do the reset buttons of GFCI receptacles pop out when the test button is pressed?
  5. Exhaust Fans
     Does the kitchen exhaust fan work?
     Do the exhaust fans in all of the bathrooms work?
  6. Lightbulbs
     Do any light bulbs, fluorescence or cosmetic lights need replacing?
  7. Microwave
     Does the built-in microwave work?
  8. Smoke Alarms
     Do smoke alarms function when the test button is pressed?

More inspection information, including a virtual home inspection tour is located at the American Society of Home Inspectors website: www.ashi.org. Additionally, the South Central Wisconsin Council of Home Inspectors provides information about preparing a home for inspection and covers the state of Wisconsinís Standards Of Practice. Their website is www.findahomeinspector.biz.

How is the Realtor Paid?

The home Seller pays a commission to their Listing Broker (the firm your agent works under) based on a percentage of the selling price. The commission is then split with the Selling Broker (the firm that finds a buyer for your home).

Some commission facts you might not know are:

• The commission paid is not due until the transaction is completed and usually takes place at the closing.
• Your sales agent is only paid for results - if and when a property transaction is complete.
• Your agent is self-employed and as a result, (s)he receives no salary or company-paid benefits whatsoever.
• The commission does not change if the buyer purchases a home listed by Bunbury & Associates or another broker.

Because your sales agent is an independent contractor, (s)he has ongoing out-of-pocket expenses much like any small businesses including:

• All Property Advertising
• Advertising and Marketing of Agent Services
• Marketing Materials and Direct Mailings
• For Sale Sign Installation
• MLS access Fees
• Computer hardware and Software
• Long distance, Cellular and/or Paging Service
• Postage and courier Fees
• Business Cards, Stationary, Office Supplies
• Business insurance, Self Employment Tax
• Health Insurance, Life Insurance