5 Common Real Estate Closing Day Surprises and How to Deal

SOURCE: Realtor.com

Areal estate closing is an anxiety-inducing time, even if it goes smoothly. Add something unexpected, and it will throw you for a loop.

I was thrilled when the sellers accepted my offer on a tear-down lot in McLean, VA, the perfect place to build my own “Downton Abbey”–style manor. And the deal went forward without a hitch—that is, until closing day.

Soon after I arrived at the title company’s office on the big day, my real estate agent sheepishly handed me a set of 40-year-old covenants that restricted what I could build on the site. Looking back, I know that I should have smiled politely at the six people gathered and suggested we reconvene later after I’d studied this giant wrench in my plans. But I didn’t want to inconvenience everyone, so I closed the deal.

It was an agita-inducing mistake. Even though those covenants didn’t derail my dream home’s construction, they caused me constant anxiety.

This is not just a concern for those building a home from scratch: For many home buyers, closing day is daunting, and coping with last-minute surprises can be tricky. Some problems are minor and easy to solve; others can wreck a deal. So which are which? Let’s take a look.

Ugly walk-through revelations

The dreaded walk-through is the top reason for surprises on closing day, and for good reason: This final inspection of the home happens the day before your settlement—or even the morning of—so there’s little time to prepare for whatever problems might pop up.

Who knows? A sudden storm could have poured water into the basement, or now that the furniture is all gone, cracks in walls or other flaws may be exposed.

How bad is it? If the problem is serious, like flooding, you should definitely proceed with caution. To avoid this snafu, make sure to inspect a home as thoroughly as possible before your final walk-through to avoid last-minute surprises.

Don’t be shy about asking for another look-see after a big storm to vet for dampness or flooding. But a last-minute discovery of a problem is not necessarily a deal breaker. Just ask the seller to cover the cost of those repairs, and put the funds in escrow. Be sure to come with estimates from professionals on how much those fix-its will cost.

What stays, what goes

Another common issue that crops up during the walk-through is misunderstandings about which items get transferred with the sale. For instance, maybe you loved the seller’s antique stove, ceiling fan, or other household item and assumed it would stay—but you find out the sellers took it with them.

How bad is it? Unless you’re really attached to the item, you may want to let this one slide if you want this deal to go through. The easiest way to avoid these misunderstandings is to delineate in a contract what remains in the house or must be moved out, says Ben Niernberg, executive vice president of business development at Northbrook, IL–based Proper Title, LLC.

“Be very detailed on what’s staying and going,” he says. “Washer, dryer, ceiling fans, fixtures, appliances—be diligent during your initial inspection.” Also, make sure the contract reflects your expectations.

Credit challenges

Even though you were probably approved for a mortgage a month or so earlier, even small changes in your financial picture since then can affect your credit score and create problems up to the moment you close on the property. Changing jobs, applying for a credit card, falling behind in paying bills, even sudden infusions of cash can red-flag your deal.

How bad is it? Pretty bad. If a lender withdraws the offer, you won’t be able to close until you secure another mortgage, which could take weeks. Or, if the lender wants to increase your interest rate, as it usually does in these situations, then you’ll have to decide if you can still afford the purchase.

To head this issue off at the pass, contact your lender the day before closing to discuss and solve any issues that may have turned up. Also, try to avoid making any sudden financial moves in the weeks leading up to the close, like quitting your job or receiving a $10,000 “gift” from a family member to help out with home buying—that could, ironically, throw a wrench into the process.

Real estate closing money transfer misunderstandings

On a real estate closing day, the chief order of business is to transfer funds. Some financial institutions and title companies prefer cashier’s or certified checks; others want funds to be transferred electronically. Show up with the wrong paperwork or account numbers, and you’ll be left scrambling.

How bad is it? This misunderstanding should be nothing more than a speed bump. To avoid it, ask your agent and lender before closing what form of payment is required. Also bring your checkbook to pay for small items that might crop up, like an unpaid electric bill.

Title trouble

A title company—which confirms details about your property such as past ownership, liens, and the aforementioned covenants—could bring up issues on closing day. If that happens to you, don’t be afraid to step back and insist on taking time to digest any details, problems, or stipulations attached to the property.

How bad is it? It depends on what the search turns up. Some problems, like tax liens or a claim on the property from a relative or co-owner, can postpone a real estate closing. Other things, like the covenants I mentioned above, or unpaid HOA dues, may be surprises but not deal breakers. But any and all title defects must be fixed before you can close on the property. It may be frustrating, but when you leap into homeownership, it’s always better to be safe than sorry.

SOURCE: Realtor.com

3 Key Factors Affecting Home Affordability

SOURCE: Keeping Current Matters

Over the past year, a lot of people have been talking about housing affordability and how tight it’s gotten. But just recently, there’s been a little bit of relief on that front. Mortgage rates have gone down since their most recent peak in October. But there’s more to being able to afford a home than just mortgage rates.

To really understand home affordability, you need to look at the combination of three important factors: mortgage rates, home prices, and wages. Let’s dive into the latest data on each one to see why affordability is improving.

1. Mortgage Rates

Mortgage rates have come down in recent months. And looking forward, most experts expect them to decline further over the course of the year. Jiayi Xu, an economist at Realtor.com, explains:

“While there could be some fluctuations in the path forward … the general expectation is that mortgage rates will continue to trend downward, as long as the economy continues to see progress on inflation.”

And even a small change in mortgage rates can have a big impact on your purchasing power, making it easier for you to afford the home you want by reducing your monthly mortgage payment.

2. Home Prices

The second important factor is home prices. After going up at a relatively normal pace last year, they’re expected to continue rising moderately in 2024. That’s because even with inventory projected to grow slightly this year, there still aren’t enough homes for sale for all the people who want to buy them. According to Lisa Sturtevant, Chief Economist at Bright MLS:

“More inventory will be generally offset by more buyers in the market. As a result, it is expected that, overall, the median home price in the U.S. will grow modestly . . .”

That’s great news for you because it means prices aren’t likely to skyrocket like they did during the pandemic. But it also means it’ll probably cost you more to wait. So, if you’re ready, willing, and able to buy, and you can find the right home, purchasing before more buyers enter the market and prices rise further might be in your best interest.

3. Wages

Another positive factor in affordability right now is rising income. The graph below uses data from the Federal Reserve to show how wages have grown over time: 

SEE GRAPH HERE

If you look at the blue dotted trendline, you can see the rate at which wages typically rise. But on the right side of the graph, wages are above the trend line today, meaning they’re going up at a higher rate than normal.

Higher wages improve affordability because they reduce the percentage of your income it takes to pay your mortgage. That’s because you don’t have to put as much of your paycheck toward your monthly housing cost.

What This Means for You

Home affordability depends on three things: mortgage rates, home prices, and wages. The good news is, they’re moving in a positive direction for buyers overall.

Bottom Line

If you're thinking about buying a home, it's important to know the main factors impacting affordability are improving. To get the latest updates on each, give me a call or send me a message.

SOURCE: Keeping Current Matters

12 Ways to Promote Wellness in Your Home

SOURCE: Houzz

Experts share tips for enhancing physical and mental health at home

Designing for wellness at home means creating spaces that are good for physical and mental health. It incorporates everything from improving air quality to using textures, materials, colors, shapes and furniture layouts that ease anxiety and make us feel closer to nature. Here experts weigh in, offering advice on how people can promote wellness at home. While there are many elements to take into account when building a new home, from the foundation through the roof, this list focuses on small, doable adjustments you can make.

1. Eliminate Tripping Hazards

Jamie Gold is a certified kitchen designer, a Mayo Clinic-certified wellness coach and author of the book Wellness by Design: A Room-by-Room Guide to Optimizing Your Home for Health, Fitness and Happiness. In her book, safety is an important aspect of staying well at home. This includes making sure contractors are licensed and that they build up to code, choosing nontoxic materials and minimizing the chances of an at-home injury.

“Eliminating the possibilities for falls at home is crucial,” Gold says. Some of the biggest tripping hazards around the house include loose area rugs, cords, shoes, bags and pet bowls.

2. Create a Landing Zone

To minimize tripping hazards, Gold recommends creating a spot where everyone in the household has a specified place to put their outside-world things away before entering the rest of the home. She prefers to take her shoes off and put on house shoes. This prevents tracking germs inside. In addition to a designated place for shoes and a place where people can sit and put them on, she also recommends having a spot for everything you need to grab before heading out of the house, including coats, bags, phones, sunglasses and keys.

“We are always time-pressured to find things like a backpack, sports equipment or keys before leaving the house,” she says. Staying well-organized means not only not tripping over these things, but also saving time and preventing the frustration and stress that come from frantic last-minute searches when you’re trying to get out the door.

3. Declutter

Another way to stay organized is by getting rid of things you don’t need or that don’t bring you joy. “Start by focusing on what’s needed for the space for functionality, and by looking at what’s getting in your way,” Gold says.

This doesn’t mean you have to clear out all of your favorite objects. It means editing them down to the things that make you happy and having designated display spots for them. In this living room by CAVdesign, wall-hung shelves and drawers keep books, sculptures, photos and other objects neatly corralled.

4. Set Up Your Kitchen for Healthy Meal Prep

Gold is also a big advocate of promoting preparation of healthy foods in the kitchen. This means an uncluttered and hygenic space that functions well for meal preparation. Some of her suggestions include maintaining clean and clear countertops; creating designated zones for prep, cooking and cleanup; incorporating a steam oven or combi oven into your kitchen to help keep the nutrients in your food; and keeping small appliances you’ll need for healthy meal prep, like a blender for smoothies, close at hand.

Another way to promote healthful eating at home is to keep your food well-organized and easy to access. Use clear glass containers to organize food in the fridge, and make sure everything in your pantry or food cabinets is easy to see and access. The easier it is to see and reach the healthy food, the easier it is to grab it for a snack or for it to inspire a menu.

5. Create Connections to the Outdoors

Promoting wellness at home has brought about a relatively new standard for buildings and designers. The International Well Building Institute offers the WELL Building Standard, which focuses on “features of the built environment that impact human health and well-being,” as well as a WELL-accredited professional certification for designers.

Laura Britt is a WELL-certified interior designer who helped the owners of the Dallas home seen here create a healthy home. She forged strong connections to nature throughout the house. These glass doors off the kitchen allow the couple who live here to enjoy views of their backyard while working at their kitchen island. The room also includes a window seat that looks out on the garden. And the glass doors provide direct access to a deck as well as an edible garden. This makes it easy to gather fresh ingredients for garden-to-table meals.

6. Replace Bathroom Fans

Interior designer Laura Freeman of Merits Design Group has always focused on designing for wellness and is a WELL accredited professional. She gave the bathroom seen here a light remodel but says the most important move she made was replacing the fan. “This house was 24 years old, and so was its bathroom fan. Older fans are ineffective and don’t extract allergens and moisture like they should,” she says. “It’s so easy for mold to build up. Even a subtle amount can create poor indoor air quality.”

In general, Freeman recommends fans that are Energy Star-rated and have a CFM (the amount of air movement measured in cubic feet per minute) of 80 or higher.

7. Incorporate Biophilic Design

Interior designer Shannon Ggem thoroughly studied how design can affect health in health care-related settings. Then she worked on two self-contained room types for immunocompromised children undergoing lifesaving treatment, and for their accompanying family members, for the Los Angeles Ronald McDonald House. She is also a speaker on biophilic design for the National Kitchen and Bath Association.

Biophilic design is based on the idea that people have an innate tendency to seek connections to nature. Because we spend so much time indoors, bringing organic materials, shapes and colors that remind us of nature to interiors helps us feel connected to the natural world. In the bedroom seen here, Ggem used natural colors and fibers to promote wellness. For example, the cotton velvet settee is a deep leafy green.

A fiddlehead fig adds a natural element to the corner of the room and helps with air filtration. The homeowners also wanted wall-to-wall carpeting in the bedroom for sensory purposes — softness under their feet and sound control. “This carpeting is 100% wool, which is natural and which humans have figured out how to keep clean for many years,” Ggem says.

8. Design a Bedroom for Relaxation and Peace

A good night’s sleep is so important to maintain good health, so make your bedroom a relaxing sanctuary. Gold recommends mitigating any light in the bedroom that can affect sleep. Whether the illumination comes from a streetlight, a floodlight or passing cars, she suggests using blackout shades or blackout-fabric-lined drapes to help ensure a good night’s sleep.

Ggem emphasizes the importance of maintaining natural circadian rhythms, which can be interrupted by indicator lights. These are the small lights on things like surge protectors, air filters and clocks. She recommends covering them with electrical tape to keep them from affecting sleep patterns.

9. Replace Fake Plants With Real Plants (or Nothing at All)

While fake plants can provide some of the good feelings of biophilia, Freeman advises her clients to get rid of them. “Fake plants harbor so much dust and allergens. Unless you’re constantly cleaning them, it’s impossible to keep the air quality clean with them around,” she says. While she’s all for real plants and the air filtration they can provide, she knows some people just can’t keep up with maintaining them. “Getting rid of fake plants still improves the current air quality by eliminating of all that dust,” she says.

10. Use Nontoxic Fabrics and Foams

When buying new pieces of furniture or accessories like rugs, do your research on materials. Part of creating a home that promotes wellness is choosing nontoxic furnishings. For the home seen here, the owners both worked in the health care field and were very aware of how many toxins could be brought into a home through furniture and finishes. They hired Britt to outfit the home to the WELL Building Standard.

“We were extremely diligent in designing with nontoxic materials to lessen the toxic load in the space. All furnishings were carefully vetted to ensure they were healthy and didn’t bring toxins into the home,” she says. Toxins include heavy metals, formaldehyde, PVC and volatile organic compounds.

For example, all the rugs in the house are woven from organic materials, including jute, cotton, wool and silk. And not only are the upholstery fabrics organic and free of carcinogens, but the cushions they cover are made of formaldehyde-free foam and down.

11. Set Up a Clean, Safe and Comfortable Workspace

In the last few years, more people than ever have found out what it’s like to work from home. And many have learned that the spaces they had to haphazardly set up are giving them aches and pains.

“The ergonomic aspects of an office include an adjustable chair, setting the keyboard position and having a phone that functions well on speaker or headphones,” Gold says. “If you’re working with paper, you’ll need good light. Lighting includes natural, task and ambient light.” She also notes that while natural light is wonderful to have in a workspace, you’ll need to place your screen out of the way of any annoying glare, or add window coverings to eliminate it.

Also, an office can tend have a tangle of hazardous cords. Plan accordingly with furniture placement or outlets in the floor to avoid tripping hazards.

Because sitting all day has been declared the new smoking, Gold recommends preventing sedentary days. A yoga ball in lieu of a desk chair or an adjustable standing desk like the one seen here can help. “I also recommend ‘dancing between drafts.’ After I finish a task, I like to turn the music up and dance like nobody’s watching and hope that no one is,” Gold says with a laugh. “I also like to walk around the room when I’m on the phone.”

12. Create Calm Spaces

Calm spaces provide balance. This includes balance between colors and elements and mirroring two sides of the room to create symmetry.

“Bilateral symmetry is familiar to us because so much of nature has bilateral symmetry. For example, think of how you can fold certain leaves in half and they are the same on both sides,” Ggem says. “Human beings respond positively to bilateral symmetry because of nature.” Bringing this kind of familiar and neatly organized balance to a room’s layout helps make it calming.

SOURCE: Houzz

How to Get Started in Real Estate Investing (6 Actionable Steps)

SOURCE: Bigger Pockets

Many people dream of investing in real estate, but most never take the first step. If you want to get started in real estate investing, there are six actionable steps you can take today.

Step 1: Define Your Goals

No two real estate investors have the same goals. While one investor has an interest in flipping homes, another wants to invest heavily in rental properties. 

Define your goals based on your financial situation, risk tolerance, and long-term investment strategy.

Step 2: Educate Yourself on Real Estate Investing

There’s no such thing as having too much knowledge of real estate investing. The more you learn, the more confidence you’ll have in getting started. 

As you educate yourself, pay extra attention to market trends, successful investment strategies employed by experienced investors, and how to best use your knowledge and money to your advantage.

Step 3: Network With Experienced Real Estate Investors

You can read as much as you want about real estate investing, but there’s no replacement for networking with experienced real estate investors.  There are many benefits of doing so, including but not limited to:

• Gain practical insights: Learn from the real-life experiences and challenges faced by seasoned investors.

• Expand your professional network: Build connections that can lead to partnerships, mentorship, and investment opportunities.

• Stay updated on market trends: Keep abreast of the latest market developments and investment strategies.

• Access to resources and opportunities: Discover new resources, tools, and potential investment deals through your network.

• Receive support and advice: Benefit from the guidance and advice of experienced investors.

Step 4: Choose a Specific Real Estate Investing Strategy

It’s one thing to say that you want to invest in real estate. It’s another thing entirely to do so with a purpose. Your success is based largely on your ability to choose the right investing strategy.

Some of the most commonly used real estate investing strategies include:

• House hacking

• The BRRRR strategy

• The PRR strategy

• House flipping

• Live and flip

• Real estate wholesaling

Learn as much as you can about each specific strategy to determine which one is best for you as a beginner. 

Step 5: Market Research

There’s no replacement for in-depth market research. It’s a risk to invest before you know the ins and outs of your market. At a minimum, your research should include the following:

• Local economic trends: Understanding the economic health and growth prospects of the area.

• Property values and trends: Tracking the changes in property values over time.

• Rental market dynamics: Assessing the demand for rentals, average rents, and occupancy rates.

• Local laws and regulations: Being aware of zoning laws, rental regulations, and tax implications.

• Neighborhood characteristics: Evaluating factors like safety, amenities, schools, and future development plans.

Step 6: Assemble Your Team

You’re only as good as the team you build around you. Here are the types of professionals you need on your side:

• Real estate agents: They provide valuable market insights and help in finding the best investment properties.

• Lenders: Crucial for securing financing options tailored to your investment strategy and financial situation.

• Tax and financial service professionals: Offer guidance on tax implications and financial planning to maximize your investment’s profitability.

• Property managers: Essential for managing the day-to-day operations of rental properties, ensuring tenant satisfaction and property maintenance.

• Contractors: Their expertise is vital for property renovations and repairs, impacting the value and appeal of your investments.

• Professional services: Includes experts like appraisers and surveyors, who provide information for informed investment decisions.

• Legal team: Important for navigating real estate laws, contracts, and legal disputes, thus protecting your investments legally.

• Wholesalers: Provide access to off-market deals and potential investment opportunities at lower prices.

• Insurance: Protects your investment properties against risks and unforeseen events, which secures your financial interests.

Your Journey Begins

Now that you know the basics of how to get started in real estate investing, you’re no longer lost and looking for answers. When you’re ready, take the first step on your journey—you won’t regret it!

SOURCE: Bigger Pockets

The Perfect Home Could Be the One You Perfect After Buying

SOURCE: Keeping Current Matters

There’s no denying mortgage rates and home prices are higher now than they were last year and that’s impacting what you can afford. At the same time, there are still fewer homes available for sale than the norm. These are two of the biggest hurdles buyers are facing today. But there are ways to overcome these things and still make your dream of homeownership a reality.

As you set out to make a purchase this season, you’ll want to be strategic. This includes taking a close look at your wish list and considering what features you really need in your next home versus which ones are nice-to-have. This will help you avoid overextending your budget or limiting your pool of options too much because you’re searching for that perfect home.

Danielle Hale, Chief Economist at Realtor.com, explains:

“The key to making a good decision in this challenging housing market is to be laser focused on what you need now and in the years ahead, . . . Another key point is to avoid stretching your budget, as tempting as it may be . . .”

To help identify what you truly need, make a list of all the features you’ll want to see. From there, work to break those features into categories. Here’s a great way to organize your list:

• Must-Haves – If a house doesn’t have these features, it won’t work for you and your lifestyle (examples: distance from work or loved ones, number of bedrooms/bathrooms, etc.).

• Nice-To-Haves – These are features you’d love to have but can live without. Nice-to-haves aren’t dealbreakers, but if you find a home that hits all the must-haves and some of these, it’s a contender (examples: a second home office, a garage, etc.).

• Dream State – This is where you can really think big. Again, these aren’t features you’ll need, but if you find a home in your budget that has all the must-haves, most of the nice-to-haves, and any of these, it’s a clear winner (examples: a pool, multiple walk-in closets, etc.).

If you’re only willing to tour homes that have all of your dream features, you may be cutting down your options too much and making it harder on yourself (and your budget) than necessary.

While you’d love to have granite countertops or a pool in the backyard, those are both things you could potentially add after you move. Instead, it may be best to focus on finding the things that you can’t change (like location or a certain number of rooms). Then, you can upgrade or add some of the other features or finishes you want later on.

Sometimes the perfect home is the one you perfect after buying it.

Once you’ve categorized your list in a way that works for you, discuss your top priorities with your real estate agent. They’ll be able to help you refine the list further, coach you through the best way to stick to it, and find a home in your area that meets your top needs.

Bottom Line

With the current affordability challenges and limited housing supply, you’ll want to be strategic so you can find a home that meets your needs while staying within your budget.