4 Financial Goals to Hit Before You Start Your NJ Home Search

While owning a home is an integral part of the traditional “American Dream,” getting your finances in that sweet spot that allows you to comfortably purchase a home can take years. It can be tempting as you inch closer to your goal to start your house search before you are truly ready. But you likely won’t be able to snag your dream home—or be able to pay for it—if you miss the mark on your financial planning. Here are some financial goals you should accomplish before you even begin your home search.

1. Curb Excessive Spending 

Avoid extravagant purchases in the year or so leading up to when you want to start your house search. Buying a car or going on an expensive vacation can cause you to accumulate a large amount of debt quickly, which will negatively impact your debt-to-income ratio. This ratio is an important part of your credit score and can cause your score to decrease a lot in a short time frame. Even after you are preapproved for a mortgage, you will need to keep your debt-to-income ratio relatively steady throughout the home buying process.

2. Build (and Uphold) a Respectable Credit Score

All lenders will take a look at your credit score before pre-approving you for a loan. A positive credit score means you are less of a risk since you have a proven record of paying off your debts on time. So if you do not have good credit—or if you don’t have any credit at all—you should start working on that post-haste. Sign up for a free credit monitoring service and check your score regularly to confirm your number is increasing over time. This will also help safeguard against fraudulent activity that can impede your home buying plans.

3. Maintain Steady Employment

Job hopping can be just as detrimental to your mortgage prospects as bad credit. Lenders want to be able to forecast your income. Steady paychecks from a salaried job is the preference of most lenders. While a career change does not automatically mean you will not be approved for a mortgage, you will likely have to provide extra documentation to prove you have a stable income.

4. Limit Extra Monthly Expenses

Cut down on monthly expenses outside of your basic needs. Subscription services, from grocery delivery to extra channels added to your cable plan, are convenient. But the price you pay for this convenience can cut into your plans for home ownership. Go grocery shopping instead of eating or ordering out. Monitor your utility usage. Even small changes in your month to month expenses can add up big time to help you reach your real estate (and other financial) goals.

If you think you are finally ready to start looking for your dream home in New Jersey, Veitengruber Law can help. We can connect you with experienced real estate experts and provide legal advice throughout the home buying process.

Thinking of Downsizing? Steer Clear of these Common Mistakes.

The bigger the house, the more work (and money) required for upkeep and regular maintenance. You might decide to downsize your home if you are retiring, looking to spend more time traveling, or simply want to decrease your overall living expenses. In order to reap the benefits of downsizing, you need to have a solid plan in place. If you want your move toward downsizing to be a success, here are some things you should figure out ahead of time.

1. Budget Your Move

Even when downsizing, moving can be expensive. Besides the closing costs and out of pocket fees associated with buying a home, you will likely need to pay for movers or a moving van to transport your belongings to your new home. Something that people don’t think about when downsizing is that many of their belongings simply won’t fit in a smaller home. This means you will need to pay to store anything worth keeping that’s just too big for your new place.

2. Set Clear Goals

Why are you downsizing? Moving from a bigger home to a smaller home will reduce your mortgage payment and give you more time and money to focus on other things. The money you get from selling your bigger home can pay off the mortgage for the new house or to put toward other outstanding debts. You could use the money to invest in your retirement fund. Finding a smaller home that requires less upkeep can be an asset as you get older. Figure out what specific aspects of downsizing appeal to you and make sure these goals are at the front of your mind as you look for a new home.

3. Don’t Pay for What You Don’t Need

The whole point of downsizing is to figure out precisely how much space you need to live comfortably. If you don’t use a dining room, don’t buy a home that has one. Extra bedrooms, bathrooms, a study, or a second story are all things you might decide you no longer need. Be specific about what you are looking for in a home. This way, you won’t find yourself paying for rooms you don’t actually need or use.

4. Organize

A disorganized move can be disastrous for anyone, but especially for those who are downsizing. Before you move, sort through all of your possessions to determine what will come with you to the new house, what needs to go to storage, and what can be thrown away or sold. You may be inclined to hold onto items that you do not actually need, but you should only bring what you use every day or on a very regular basis.

Are you ready to downsize? Veitengruber Law can connect you with a trusted New Jersey realtor in your town so that you can achieve all of your real estate goals.

Understanding the Legalities of Buying a Home in NJ

Buying a home is a huge responsibility! Accordingly, there are a myriad of rules and regulations that guide the real estate purchase process. Understanding the legal details can save you major stress and headaches, which is why it is a good idea to hire a real estate attorney to help you through unscathed. Here are some legalities to keep in mind if you are thinking of buying a home in NJ.

1. Attorney Review

New Jersey is an attorney review state. This allows a 72 hour review period starting when an offer is made official. Both buyer and seller are encouraged to have their attorney review the offer and provide their legal opinion on the terms of the sales contract. During this period, the sales contract can be amended or terminated entirely without penalty.

2. Deposit of Funds

After the contract has been accepted and signed by both parties, the buyer is required to pay a good faith deposit to the seller. This deposit can be made through the seller’s attorney or an entrusted broker.

3. Disclosures

New Jersey real estate laws do not require sellers to disclose specific information. However, in order to protect the buyer, courts can compel sellers to disclose hidden defects of the property. If the seller is aware of any defects and fails to disclose them to the buyer, the buyer can sue the seller to be rightfully compensated.

4. Inspections

The best way to protect yourself from having to take future legal action resulting from a real estate purchase is to have all suggested inspections performed. This is doubly important if you are being financed by a mortgage lender. Most NJ real estate attorneys suggest the following inspections: radon, termite, lead paint and asbestos, as well as a general inspection to determine the overall condition and safety of the house.

5. Legal Documentation

The seller is legally required to provide specific certifications to the buyer. These documents include a certificate of occupancy, flood search, septic certification, well certification, and buried oil tank certification. These certifications verify the functionality of these systems and disclose important information to the buyer.

6. The Closing Process

Your attorney is responsible for ensuring that the title of the house includes no legal encumbrances by conducting a title search. The settlement date (aka “Closing“) will be scheduled once the title search has been completed. At settlement, the title of the home and its insurance will be legally changed to the buyer’s name and the final cash amount is calculated and paid by the seller. Your attorney will record the transaction and keep record of the title deed for you.

Buying a home is likely to be the biggest investment you’ll make in your life. Veitengruber Law can offer sound legal advice allowing you to make your big investment with peace of mind. Don’t hesitate to reach out if you’re thinking of making an offer on a NJ real estate property in the near future.

Surprising Factors that Influence the Value of Your NJ Home

nj home value

Many things impact a home’s value: the square footage, the lot size, the location, and the neighborhood, among many other things. But while these are the most common factors to influence home value, there are also some quite surprising factors that go into assessing the true value of a property. Here are seven unconventional factors that can impact your home’s value.

1. Privacy

In general, most homeowners desire a certain level of privacy, but not all homes offer the same level of seclusion. Neighborhood home density, proximity to neighbors, and backyard exposure all influence the perception of a home’s privacy factor. A home that is a significant distance from other properties or has a backyard that cannot be viewed by neighbors will be valued higher than a similar home located close to neighbors.

2. Frontage Length

They always say that size doesn’t matter, but when it comes to real estate, it definitely plays a part. Specifically when it comes to frontage length – the length of a home’s lot that faces the street. Not only does frontage length directly figure into the dimensions of a property, it also determines how much parking will be available to the residents. This tends to influence home values more in rural areas than suburbs.

3. Renters in the Area

There is a correlation between the number of rentals in the area and the value of a property. General opinion holds that renters don’t tend to care for a property as well as a homeowner would, thereby making the neighborhood less desirable. Because of this, lenders want to make sure there are not too many renters in the area of a property they are considering buying.

4. Proximity to Train Tracks or Airports

This one isn’t too surprising when you put it in simpler terms. It comes down to one thing: noise. Trains and planes are loud and can cause quite a disturbance throughout the day and night. Realtors know this and will often list a home at a lower price because selling near these travel hubs can be challenging.

5. Corner Lots

While this isn’t the case for all buyers, corner lots can be a turn off for some people. A property that borders two roads means there is a potential for increased (noisy) traffic, impacting the level of privacy and solitude the occupants will have. Corner lots also tend to have unusual or odd configurations that diverge from the typical square property lines.

6. History of Death in the Home

You often hear about this on tv and in movies, but the truth is that a home that has been the site of a traumatic event like a murder, suicide, or even accidental death can be negatively impacted when it comes to valuation. In fact, studies have shown that potential buyers are so turned off by these factors that a home’s value may be reduced up to 10-25%.

7. Low Scoring School Districts

Parents will relocate based entirely on the quality of a school district, so this is a very important factor. A home located in a school district with low test scores will not be valued as highly as a similar home in a district with higher test scores. The quality of the school districts in the area can also impact property taxes.

These factors don’t just influence the value of a house when you are looking to buy, but they can also affect how the value of your home changes over time. If you are looking to purchase a home, Veitengruber Law can help you connect with a realtor that knows the true value of homes in your area.

 

 

 

 

 

 

 

 

 

 

 

 

 

The Biggest Mistake You Can Make While Saving to Buy a Home

money mistakes

When you are in the market to buy a home, the more savings you have, the better. Between closing costs, your down payment, and other home buying expenses, the out of pocket cost of buying a house can add up. It can be tempting to use your hard earned savings, a retirement fund, or even your emergency funds in order to have sufficient funds for a down payment. But cleaning out your savings to buy a home is a very bad idea—and here are three reasons why.

1. Unexpected Expenses

After you buy a home, you will need a strong emergency fund more than ever before. Your emergency fund should include at least three months of expenses saved in the event you lose employment. For a homeowner, that’s at least three months of mortgage payments, homeowner’s insurance, home maintenance, utilities, and all the little expenses that add up when you own a house. If you use your emergency savings to buy the house, you may not be able to absorb the costs of any unexpected repairs that pop up down the road. Tapping into your emergency fund to pay for your down payment or closing costs could leave you high and dry.

2. Continuing to Save, Even After Becoming a Homeowner

If you have to clean out your savings accounts in order to purchase a home, chances are you can’t actually afford the home in the first place. As soon as you sign your name on the closing paperwork, you’ll be responsible for a whole heft of new expenses, including your monthly mortgage payment, homeowners insurance, property taxes, indoor home maintenance expenses, exterior maintenance (ranging from lawn care to snow removal and SO MUCH in between), and utilities. Will you still be able to contribute to your savings account on top of these new expenses? While you may be able to afford the out of pocket expenses to buy a home on paper, if buying the home means you cannot afford to keep saving in the future, it isn’t a good financial choice. You are better off waiting to buy a home until you are in a position to purchase a home without touching your emergency savings AND keep saving.

3. Becoming “House Poor”

If you’re like most Americans, your savings fund isn’t just for emergencies—it’s also where you build up enough money for vacations, to travel to visit family, or to refresh your spring wardrobe. A house might seem worth the sacrifice now, but know that the excitement of a new home will wear off just like everything else. You don’t want to be scraping by to survive and lose the ability to enjoy other aspects of your life. Roughing it out in an affordable rental for a few more years while you save more money can allow you to continue living your preferred lifestyle while still working towards the eventual goal of homeownership.

Buying a home is exciting and it can be tempting to go for broke to finally have your own place. We recommend that you keep building your savings until you are truly ready to purchase a home. Not sure if you’re ready? Reach out to Veitengruber Law and we can tell you straight up if you should go for it now, or if you’re truly better off waiting.

New Jersey Real Estate Negotiating Mistakes

new jersey real estateEvery buyer hopes their initial offer on a home will garner an immediate “yes” from the seller. While this does occasionally happen, the reality is an initial offer is just the first step in a sometimes long (and sometimes nail-biting) process between buyer and seller. If you want a leg up in the negotiating process, here are some common mistakes to avoid.

1. Showing Your Hand Too Soon

When you are negotiating the sales price of a home, you’ll want to have a pre-approval letter showing sellers that you have financial credibility and can afford the houses you are looking to buy. But be sure that you do not provide sellers or their agents with a pre-approval letter that lists a price for more than the list price of the home you are looking at. If your current pre-approval lists a higher price, ask your lender to adjust the letter to match the amount you intend to offer on the home.

2. Making an Offer That is Too Low

You might be in the market for a deal, but coming in too low has the potential to offend a seller and cause them to reject your offer outright. A good first offer might not always receive an immediate yes, but it should at least open the door for negotiation. Your agent will be able to show you a comparative market analysis to help inform your offer. If you really want the house, it is advisable not to make an offer less than 10% below asking price.

3. Insulting the Home

A seller often has an emotional attachment to the property that’s up for sale. This may be the place they raised a family, their first home with their spouse, or even a childhood home. So if you think you can insult the property in order to justify a lowball offer, think again. Most sellers don’t want to hear about how the aesthetics of the property aren’t to your taste. If there are some legitimate concerns with a property, be sure to balance these points with things you love about the property. If the seller knows you see the value of their property, they will be more willing to negotiate.

4. Getting Stuck on the Sales Price

Many buyers tend to focus on the list price to save some money, but there are many other different ways to get a great real estate deal. If a seller isn’t willing to budge on sales price, see if they will pay for all or part of your closing costs, speed up closing, or agree to a rent-back agreement that will allow them to stay in the house past closing if they haven’t yet found a new home. All of these things can be attractive to a seller and could push them to accept your offer.

5. Ignoring How Long the Home Has Been Listed

If a house has been on the market for less than a month, you should make a competitive initial offer to open the door for negotiations. If the home has been on the market for over 90 days, you have a little bit more power in presenting a lower offer.

An experienced real estate agent will know the market and be able to lead you in the negotiating process. Once you are through the negotiating process, Veitengruber Law will be there to look over your contract and make sure the terms you have negotiated are legally presented.

NJ Real Estate: How to Make a Successful Lowball Offer

When it comes to purchasing a home, buyers always want to know: How low is too low for an initial offer? Money conscious buyers are looking to save, but they also don’t want to risk offending a seller with an offer than is too low. So how much below asking price can you really offer? Here are some examples of when it would be acceptable to put in a low ball offer.

Offering even 1% to 4% below asking price can save you thousands of dollars depending on the price of the home. While this might not seem like a lot in the grand scheme of things, it could impact your mortgage payment by a couple of hundred dollars every month. Offering below list price in this range is a good idea if there are multiple offers on the table.

If you are thinking of offering 5% to 10% below asking price, you should have comparable sales as negotiation tools to justify your lowball offer. If other homes in the area have additional features but are priced the same or lower, that’s a great argument for offering less. You could also offer 5% to 10% less if the house has been on the market for several weeks without much interest or if it is a buyer’s market.

When you ask for 11% to 19% off the price of a home, you could save tens of thousands of dollars. This offer is reasonable when some aesthetic updates need to be made, but the house is otherwise in good shape. If the house is straight out of the 70s or needs new flooring in a few rooms, this is a great negotiation tool. If you know the seller is desperate to sell due to financial or personal circumstances, you could throw out an offer in this range and see what happens.

An offer that is 20% or more below the asking price, must be justifiable with some good, solid reasons. A multitude of factors will go into negotiating this offer. A strong buyer’s market and a house that has been on the market for six months or more are good indications a seller will accept a significantly lower offer. If the home is in bad shape and needs extensive repairs, you have a lot of room for negotiating a listing price down. Significant repairs would include a roof that needs to be replaced, foundation issues, or if the electrical, plumbing, or heating systems are not up to code.

A skilled NJ real estate agent will be able to guide you as you determine what is a reasonable offer below asking price. It is possible to get the home of your dreams while still getting the best deal possible.

As always, if you need guidance in this area, Veitengruber Law can direct you to one of the many NJ realtors within our professional network. Once you have made an offer, we will review all paperwork and contracts to ensure that you truly are getting the best deal possible!

Top 5 Factors That Impact NJ Real Estate Prices

new jersey real estate

Currently, the median home value in New Jersey is $342,527. If you are selling or buying a home, it is important to understand what factors go into determining a home’s value and how these factors impact list price. Here are some tips that can help you ascertain the value of your home.

1. The Big Three: Location, Product, and Timing

How well a home has been maintained and where it is located impacts the value of the home as a product. The right home in the right neighborhood can go a long way to drive up home value. Timing is harder to control. If you are selling, you want to list when the market is in your favor—but the market can change quickly.

2. Structural Integrity

Appraisers will perform a detailed physical inspection of the entire house – floor to ceiling and wall to wall. An appraisal inspection is meant to note not just superficial imperfections but also serious structural issues.

How well the home was originally constructed (and updated, if applicable), as well as the quality of the materials used, will impact an appraiser’s assessment of a home’s value. Even small details are given consideration. They will compare these details to homes in the area and adjust pricing according to specific similarities and differences.

3. Market-Driven Features

Every localized real estate market is going to have specific home features that impact the value of a home. Marble counter tops were a luxury ten years ago—they are the norm now. Consumer preferences drive expectations of required home features. If sold homes in your area boast open floor plans, gray scale interior colors, and hardwood flooring, this will set the bar for how your home will be valued.

4. Condition of the Home

Take care of any maintenance or small projects you have been avoiding. Fresh paint, manicured landscaping, and clean spaces will go a long way to showing off the full potential of your home. Make sure all the appliances you are selling with the house work and can pass inspection. You want to make sure your home looks like the most appealing home on the block.

5. Size and Appeal

Traditional layouts are big draws right now. Open floor plans and neutral color schemes are too. In matters of real estate, at least, size matters. Price per square foot is a popular search filter used by a multitude of potential buyers.

If you are a buyer, you can keep all of these factors in mind as you look for your future home. When you are trying to figure out how much you are willing to spend on a specific home, be realistic. It is common for buyers (and sellers) to think with their stomach and not with their head when it comes to estimating the value of a home. Remember that if a home appraises for under the contracted sale price, the sale could fall through. No matter how much value you personally put on a home, that value has to be backed up by the market.

If you’re ready to make a move, Veitengruber Law is ready to help you achieve your next real estate goal.

5 Important Things to do Before Buying a House

For most homeowners, buying a house is the purchase of a lifetime. Before you sign on for your dream home—and potentially all the debt that will come with it—you need to take an honest look at your finances. If you are thinking of buying a house, these tips will help you align your personal budget with your house goals.

1. Know Your Household Budget

Setting up your household budget should start with having a firm grasp on how much money you have coming in (after taxes) every month. Next, you’ll need to determine your monthly expenses, from bills, utilities, and insurance to groceries and entertainment. The amount of money remaining after you subtract your monthly expenses is your expendable income. Are there areas you can improve on? Is the expendable income you have enough to cover the added expenses of a mortgage, insurance, and home ownership? Make adjustments where necessary.

2. Pay Down Debt

Of course, it is possible to buy a house even if you currently have existing debt, but you are putting yourself in a much better position to be approved for a mortgage if you can pay off most or all of your debt first. Paying off debt will also improve your credit score, which is also an important factor in getting the best terms for your mortgage.

3. Save for a Down Payment

Lenders have been increasingly cautious about who they lend money to and how much money they lend. Because of this, lenders often require a 20% deposit on a home. Depending on the price of a home, this deposit can get pricey. Focus your personal budget on saving towards this deposit. It will improve your chances of getting approved for a loan and give you a head start in paying off your home.

4. Know How Much House You Can Afford

Feel out what kind of loan you can get pre-approved for. Typically, your actual “new home” budget will be less than the amount you are pre-approved for, but this is a good jumping off point. Next, seek out homes that could realistically fit into your budget. Most lenders suggest a house that is about 2.5 time your annual salary.

5. Research and Inspect

If you find a home you can afford that you want to buy, don’t jump to sign the first contract of sale laid before you. Take the time to hire a home inspector. A home inspector is different from an appraiser and you will have to hire them each separately. However, a home inspector could save you money in the long run by uncovering any big issues with a home before you own it. Take some time to research the real estate market you are buying into. Is this home priced fairly compared to similar homes in the area? If not, you could use this data to argue for a lower price.

Finding a home you will love with your budget is possible. By modifying your spending, you can save money, get the best mortgage possible, and land your dream home.

Should You Sell Your NJ Home During a Recession?

sell your NJ home

If you had been considering selling your home during the typically busy spring market, no doubt the coronavirus crisis has given you pause. With fears of a looming recession and most people stuck at home, the idea of entering the real estate market can be daunting. Is now a good time to try to sell your home? The answer isn’t black and white. Today, we bring you four questions to ask yourself if you are preparing to sell your NJ home in the near future.

1. Are You Prepared for a Price Drop?

In a recession, homes will likely sell for less than they would in a healthy economy. Decreased demand coupled with a soft market means you will likely have to list your home at a lower asking price than you ordinarily would. You may end up selling for less than you paid for the home. Your net profit can easily end up being, well — non-existent.

If your house isn’t selling during a recession, an inflated price is normally the culprit. As a seller, you need to be realistic on the value of your home and list the property accordingly, which may mean being willing to lose money in order to close the deal.

2. Do You Need to Sell?

If it’s not absolutely essential that you sell your home during a recession, it’s in your best interest to wait awhile for the economy to improve. Naturally, however, there are situations that make moving a MUST. A new job, the need to be closer to an ailing loved one, and downsizing your budget are all reasons that justify selling no matter what the market looks like. If it is the right time for you to sell for personal reasons, don’t focus as much on the state of the market. Hone in on your own goals and take concrete steps toward achieve them.

3. Are you Buying and Selling?

If you’re buying a new home while simultaneously selling your old home, it’s possible that the financial gains/losses of these transactions will mean that you’ll break even. While you might have to sell for a lower price when the market is in a slump, the good news is that you’ll also likely be able to snag a deal on your new digs as well.

In fact, if you are selling a secondary property during a recession, it might be worth considering investing any money you make from the sale into purchasing a new property to turn into rental income when the market turns around. Real estate tends to be a steady investment even during times of economic turmoil.

4. Is Your Home Move-In Ready?

During an economic downturn, buyers are less likely to purchase a fixer-upper or a property that needs a lot of updates. Money-conscious buyers will be looking for a home that requires minimal renovations up front.

IMPORTANT: This doesn’t mean you need to fully renovate in order to be competitive on the market. Fresh paint, landscaping, and small repairs can go a long way toward improving the value of your property. Also, invest time and energy into generating buyer interest to help drive up the sales price.

Buying or selling a home during the 2020 quarantine/COVID-19 pandemic? Veitengruber Law is a real estate firm in Central NJ working full steam ahead all the way through the crisis. We can help you navigate the real estate market – whether virtually or in person following all of the recommended social distancing rules. Visit our website and follow us on social media to learn more about how we help NJ real estate clients every day.