The Home Buying Process     *                                                   

Role of the Real Estate Broker
Frequently, the first person you consult about buying a home is a real estate agent or broker. The most common practice is for the seller to hire the broker to find someone who will be willing to buy the home on terms and conditions that are acceptable to the seller. Therefore, the real estate broker you are dealing with may also represent the seller. However, you can hire your own real estate broker, known as a buyer’s broker, to represent your interests. Also, in some states, agents and brokers are allowed to represent both buyer and seller.

Even if the real estate broker represents the seller, state real estate licensing laws usually require that the broker treat you fairly. If you have any questions concerning the behavior of an agent or broker, you should contact your State’s Real Estate Commission or licensing department.

Sometimes, the real estate broker will offer to help you obtain a mortgage loan. He or she may also recommend that you deal with a particular lender, title company, attorney or settlement/closing agent. You are not required to follow the real estate broker’s recommendation. You should compare the costs and services offered by other providers with those recommended by the real estate broker.

Selecting an Attorney
Before you sign an agreement of sale, you might consider asking an attorney to look it over and tell you if it protects your interests. If you have already signed your agreement of sale, you might still consider having an attorney review it. An attorney can also help you prepare for the settlement. In some areas attorneys act as settlement/closing agents or as escrow agents to handle the settlement. An attorney who does this will not solely represent your interests, since, as settlement/closing agent, he or she may also be representing the seller, the lender and others as well.

If choosing an attorney, you should shop around and ask what services will be performed for what fee. Find out whether the attorney is experienced in representing home buyers. You may wish to ask the attorney questions such as:

What is the charge for negotiating the agreement of sale, reviewing documents and giving advice concerning those documents, for being present at the settlement, or for reviewing instructions to the escrow agent or company?

Will the attorney represent anyone other than you in the transaction?

Will the attorney be paid by anyone other than you in the transaction?

Please note, in many areas of the country attorneys are not normally involved in the home sale. For example, escrow agents or escrow companies in western states handle the paperwork to transfer title without any attorney involvement.

Terms of the Agreement of Sale
Here are some important points to consider before you sign an agreement of sale. The real estate broker probably will give you a preprinted form of agreement of sale. You may make changes or additions to the form agreement, but the seller must agree to every change you make. You should also agree with the seller on when you will move in and what appliances and personal property will be sold with the home.

Sales Price. For most home purchasers, the sales price is the most important term. Recognize that other non-monetary terms of the agreement are also important.

Title. "Title" refers to the legal ownership of your new home. The seller should provide title, free and clear of all claims by others against your new home. Claims by others against your new home are sometimes known as "liens" or "encumbrances."

Mortgage Clause. The agreement of sale should provide that your deposit will be refunded if the sale has to be canceled because you are unable to get a mortgage loan. For example, your agreement of sale could allow the purchase to be canceled if you cannot obtain mortgage financing at prevailing interest rates.

Pests. Your lender may require a certificate from a qualified inspector stating that the home is free from termites and other pests and pest damage. You may want to reserve the right to cancel the agreement or seek immediate treatment and repairs by the seller if pest damage is found.

Home Inspection. It is a good idea to have the home inspected. An inspection should determine the condition of the plumbing, heating, cooling and electrical systems. The structure should also be examined to assure it is sound and to determine the condition of the roof, siding, windows and doors. The lot should be graded away from the house so that water does not drain toward the house and into the basement.

Most buyers prefer to pay for these inspections so that the inspector is working for them, not the seller. You may wish to include in your agreement of sale the right to cancel, if you are not satisfied with the inspection results. In that case, you may want to re-negotiate for a lower sale price or require the seller to make repairs.

Lead-Based Paint Hazards in Housing Built Before 1978. If you buy a home built before 1978, you have certain rights concerning lead-based paint and lead poisoning hazards. The seller or sales agent must give you the EPA pamphlet "Protect Your Family From Lead in Your Home" or other EPA-approved lead hazard information. The seller or sales agent must tell you what the seller actually knows about the home's lead-based paint or lead-based paint hazards and give you any relevant records or reports.

You have at least ten (10) days to do an inspection or risk assessment for lead-based paint or lead-based paint hazards. However, to have the right to cancel the sale based on the results of an inspection or risk assessment, you will need to negotiate this condition with the seller.

Finally, the seller must attach a disclosure form to the agreement of sale which will include a Lead Warning Statement. You, the seller, and the sales agent will sign an acknowledgment that these notification requirements have been satisfied.

Other Environmental Concerns. Your city or state may have laws requiring buyers or sellers to test for environmental hazards such as leaking underground oil tanks, the presence of radon or asbestos, lead water pipes, and other such hazards, and to take the steps to clean-up any such hazards. You may negotiate who will pay for the costs of any required testing and/or clean-up.

Sharing of Expenses. You need to agree with the seller about how expenses related to the property such as taxes, water and sewer charges, condominium fees, and utility bills, are to be divided on the date of settlement. Unless you agree otherwise, you should only be responsible for the portion of these expenses owed after the date of sale.

Settlement Agent/Escrow Agent. Depending on local practices, you may have an option to select the settlement agent or escrow agent or company. For states where an escrow agent or company will handle the settlement, the buyer, seller and lender will provide instructions.
 

9 Ways To Save Money When You Buy Your House            

1. Knowing when to buy your house
Experts would say now, if you meet the following criteria:

  ► Are not counting on price appreciation in the short term. Most experts don't expect home prices to inflate much in the next couple of years. 

  ► Can afford the monthly payments. 

  ► Plan to stay in the house long enough for the appreciation to cover your transaction costs. The costs of buying and selling a home include real estate commissions, lender fees and closing costs that can amount to more than 10% of the sales price. 

  ► Need a tax break. The mortgage interest deduction can make home ownership very appealing. 

  ► Prefer to be an owner rather than a renter. 

  ► Can handle the maintenance expenses and headaches. 

  ► Are not greatly concerned by dips in home values.

2. Knowing how to figure what you can afford to buy
Roughly, it's three times your annual income. Real estate experts strongly recommend people get pre-qualified by a lender as a way of calculating exactly how much of a home they can afford, When qualifying people for a loan, lenders look at a borrower's full financial standing. Lenders use the relationship PITI, or principal, interest. taxes and insurance payments, and their gross monthly income. Generally, lenders like to see the PITI not exceed 30% to 33% of the borrower's gross monthly income. They also consider the ratio of the borrower's monthly debt payments, including the PITI to income. Some lenders have flexibility in these qualifying ratios. 

3. Knowing if it is better to make a large or small down payment
Putting down as little as possible and taking a larger mortgage allows buyers to take full advantage of the tax benefits of homeownership. Mortgage interest (and property taxes) are fully deductible from state and federal income taxes. 

4. Knowing if you can buy a house with nothing down
Although some experts advise against it, home buyers interested in buying a house with nothing down can do so. But it's not easy finding these loans and in some cases they can be risky.  Occasionally, a builder will offer nothing-down loans to induce sales in an otherwise slow-moving project. Desperate sellers also may agree to finance the full purchase price to get out from under a property.

5. Knowing what the standard contingencies in a purchase offer are
Most real estate purchase contracts include at least two contingencies A financing contingency makes the purchase conditional on the buyers' ability to obtain a loan commitment from a lender. An inspection contingency allows the buyers to have professionals Inspect the property to their satisfaction.

6. Knowing if you can get a home loan with bad credit
A poor credit history makes it harder to qualify for a mortgage. There are numerous types of credit report problems that cause a lender to reject a loan application, says Ilyce R. Glink in "100 Questions Every First-Time Home Buyer Should Ask" (Random House): "If you've ever missed a credit card payment, or defaulted on a prior mortgage or school or car loan, it will probably show up on your credit report. If you've filed for bankruptcy within the past seven years, that will show up on your credit report. If you haven't paid your taxes, or there has been a judgment filed against you (perhaps for non-payment of spousal or child support), it will also show up. Failure to pay your landlord, doctor or hospital may turn into a black spot on your credit report."

7. Knowing how you can find out what your credit report says about you
Anyone concerned about their credit history can order a copy of their own report by calling the three main national credit reporting agencies: Equifax: 800-525-6285; Experian: 888-397-3742 or TransUnion: 800-680-7289. 

8. Knowing if sellers will consider only offers close to, or at, full price
"While a very low offer in a normal market might be rejected immediately, in a buyer's market the below-market offer will usually either be accepted or generate a counteroffer. When few offers are being made, an outright rejection of offers becomes unlikely," writes William H. Pivar, in "Real Estate Investing From A to Z:" (Probus Publishing). Plus, he said, "There are always some sellers who for some reason must sell quickly" and will consider a reduced price. There are other considerations :
-Is the offer contingent upon anything such as the sale of the buyer's current house? 
-If the offer made on the house "as is," or does the buyer want the seller to make some repairs before close of escrow? 
-Is the offer all cash? A cash offer at less than the asking price may be more attractive to the seller than a full-price offer with a financing contingency.

9. Knowing how to find a good real estate agent
Here are some tips for finding an agent suggested by author Dian Hymer: "The best sources of contacts are friends or associates who have bought or sold recently and can recommend agents. Be sure to ask your colleagues if they would use the agent again. "If personal contacts don't generate enough leads, call the managers of reputable local real estate companies and ask for recommendations of agents who specialize in your neighborhood if you're selling. Find out if the agent works full time at real estate and how much experience the agent has."
 

Shopping for a Mortgage                                                             

Your choice of lender and type of loan will influence not only your settlement costs, but also the monthly cost of your mortgage loan. There are many types of lenders and types of loans you can choose. You may be familiar with banks, savings associations, mortgage companies and credit unions, many of which provide home mortgage loans. You may find a listing of some mortgage lenders in the yellow pages or a listing of rates in your local newspaper.

Mortgage Brokers. Some companies, known as ''mortgage brokers'' offer to find you a mortgage lender willing to make you a loan. A mortgage broker may operate as an independent business and may not be operating as your ''agent'' or representative. Your mortgage broker may be paid by the lender, you as the borrower, or both. You may wish to ask about the fees that the mortgage broker will receive for its services.

Government Programs. You may be eligible for a loan insured through the Federal Housing Administration (''FHA'') or guaranteed by the Department of Veterans Affairs or similar programs operated by cities or states. These programs usually require a smaller down payment. Ask lenders about these programs. You can get more information about these programs from the agencies that run them. (See Appendix to this Booklet.)

CLOs. Computer loan origination systems, or CLOs, are computer terminals sometimes available in real estate offices or other locations to help you sort through the various types of loans offered by different lenders. The CLO operator may charge a fee for the services the CLO offers. This fee may be paid by you or by the lender that you select.

Types of Loans. Loans can have a fixed interest rate or a variable interest rate. Fixed rate loans have the same principal and interest payments during the loan term. Variable rate loans can have any one of a number of ''indexes'' and ''margins'' which determine how and when the rate and payment amount change. If you apply for a variable rate loan, also known as an adjustable rate mortgage (''ARM''), a disclosure and booklet required by the Truth in Lending Act will further describe the ARM. Most loans can be repaid over a term of 30 years or less. Most loans have equal monthly payments. The amounts can change from time to time on an ARM depending on changes in the interest rate. Some loans have short terms and a large final payment called a ''balloon.'' You should shop for the type of home mortgage loan terms that best suit your needs.

Interest Rate, ''Points'' & Other Fees. Often the price of a home mortgage loan is stated in terms of an interest rate, points, and other fees. A ''point'' is a fee that equals 1 percent of the loan amount. Points are usually paid to the lender, mortgage broker, or both, at the settlement or upon the completion of the escrow. Often, you can pay fewer points in exchange for a higher interest rate or more points for a lower rate. Ask your lender or mortgage broker about points and other fees.

A document called the Truth in Lending Disclosure Statement will show you the ''Annual Percentage Rate'' (''APR'') and other payment information for the loan you have applied for. The APR takes into account not only the interest rate, but also the points, mortgage broker fees and certain other fees that you have to pay. Ask for the APR before you apply to help you shop for the loan that is best for you. Also ask if your loan will have a charge or a fee for paying all or part of the loan before payment is due (''prepayment penalty''). You may be able to negotiate the terms of the prepayment penalty.

Lender-Required Settlement Costs. Your lender may require you to obtain certain settlement services, such as a new survey, mortgage insurance or title insurance. It may also order and charge you for other settlement-related services, such as the appraisal or credit report. A lender may also charge other fees, such as fees for loan processing, document preparation, underwriting, flood certification or an application fee. You may wish to ask for an estimate of fees and settlement costs before choosing a lender. Some lenders offer ''no cost'' or ''no point'' loans but normally cover these fees or costs by charging a higher interest rate.

Comparing Loan Costs. Comparing APRs may be an effective way to shop for a loan. However, you must compare similar loan products for the same loan amount. For example, compare two 30-year fixed rate loans for $100,000. Loan A with an APR of 8.35% is less costly than Loan B with an APR of 8.65% over the loan term. However, before you decide on a loan, you should consider the up-front cash you will be required to pay for each of the two loans as well. 

Another effective shopping technique is to compare identical loans with different up-front points and other fees. For example, if you are offered two 30-year fixed rate loans for $100,000 and at 8%, the monthly payments are the same, but the up-front costs are different:

Loan A - 2 points ($2,000) and lender required costs of $1800 = $3800 in costs.

Loan B - 2 1/4 points ($2250) and lender required costs of $1200 = $3450 in costs.

A comparison of the up-front costs shows Loan B requires $350 less in up-front cash than Loan A. However, your individual situation (how long you plan to stay in your house) and your tax situation (points can usually be deducted for the tax year that you purchase a house) may affect your choice of loans.

Lock-ins. ''Locking in'' your rate or points at the time of application or during the processing of your loan will keep the rate and/or points from changing until settlement or closing of the escrow process. Ask your lender if there is a fee to lock-in the rate and whether the fee reduces the amount you have to pay for points. Find out how long the lock-in is good, what happens if it expires, and whether the lock-in fee is refundable if your application is rejected.

Tax and Insurance Payments. Your monthly mortgage payment will be used to repay the money you borrowed plus interest. Part of your monthly payment may be deposited into an ''escrow account'' (also known as a ''reserve'' or ''impound'' account) so your lender or servicer can pay your real estate taxes, property insurance, mortgage insurance and/or flood insurance. Ask your lender or mortgage broker if you will be required to set up an escrow or impound account for taxes and insurance payments.

Transfer of Your Loan. While you may start the loan process with a lender or mortgage broker, you could find that after settlement another company may be collecting the payments on your loan. Collecting loan payments is often known as ''servicing'' the loan. Your lender or broker will disclose whether it expects to service your loan or to transfer the servicing to someone else.

Mortgage Insurance. Private mortgage insurance and government mortgage insurance protect the lender against default and enable the lender to make a loan which the lender considers a higher risk. Lenders often require mortgage insurance for loans where the down payment is less than 20% of the sales price. You may be billed monthly, annually, by an initial lump sum, or some combination of these practices for your mortgage insurance premium. Ask your lender if mortgage insurance is required and how much it will cost. Mortgage insurance should not be confused with mortgage life, credit life or disability insurance, which are designed to pay off a mortgage in the event of the borrower's death or disability.

Flood Hazard Areas. Most lenders will not lend you money to buy a home in a flood hazard area unless you pay for flood insurance. Some government loan programs will not allow you to purchase a home that is located in a flood hazard area. Your lender may charge you a fee to check for flood hazards. You should be notified if flood insurance is required. If a change in flood insurance maps brings your home within a flood hazard area after your loan is made, your lender or servicer may require you to buy flood insurance at that time.
 

You could lose your home and your money if you borrow from unscrupulous lenders who offer you a high-cost loan based on the equity you have in your home. Certain lenders target homeowners who are elderly or who have low incomes or credit problems—and then try to take advantage of them by using deceptive practices. The Federal Trade Commission cautions all homeowners to be on the lookout for:

Equity Stripping
The lender gives you a loan, based on the equity in your home, not on your ability to repay based on your income. If you can’t make the payments, you could end up losing your home.

Loan Flipping
The lender encourages you to repeatedly refinance the loan and often, to borrow more money. Each time you refinance, you pay additional fees and interest points. That only serves to increase your debt.

Credit Insurance Packing
The lender adds credit insurance to your loan, which you may not need.

Bait and Switch
The lender offers one set of loan terms when you apply, then pressures you to accept higher charges when you sign to complete the transaction.

Deceptive Loan Servicing
The lender doesn’t provide you with accurate or complete account statements and payoff figures. That makes it almost impossible for you to determine how much you have paid or how much you owe. You may pay more than you owe.

Some of these practices violate federal credit laws dealing with disclosures about loan terms, discrimination based on age, gender, marital status, race, or national origin; and debt collection.
You also may have additional rights under state law that would allow you to bring a law suit.

The FTC suggests if you’re thinking about using your home as collateral for a loan, be careful. Unless you can make the loan payments out of current income, you could lose your home as well as the equity you’ve already built up.

Some additional tips to remember:

  ► The lure of extra money or the chance to reduce monthly credit payments can be very costly in the long run. High interest rates and other credit costs could get you in over your head.

  ► Credit insurance may not be a good deal from a lender. If you want the added security of credit insurance, shop around.

  ► Don’t sign a loan agreement if the terms are not what you were given when you applied.

  ► Ask for an explanation of any dollar amount, term, or condition that you don’t understand. Federal law is very clear about what credit and loan term information must be provided in writing when you apply for a loan and before you sign any agreement.

  ► In addition, shop around for the best loan terms and interest rates. Contact lending institutions, such as banks and credit unions, and consult a legal or financial advisor, or someone you can trust before you make any loan decisions. Or contact your local Fair Housing Office, legal aid, or senior services organization for information and help.
 

7 Common Mistakes Sellers Make                                             

1. Pricing Correctly
Every seller wants to realize as much money as possible when he sells his home. But a listing price that is too high often gets the seller less than a price that is at market value. If your house is not priced competitively, people looking in your price range will reject your home in favor of other, larger homes for the same price. At the same time , the people who should be looking at your home will not see it because it is priced over their heads! Overpricing usually increases time on the market, and that adds to the carrying costs. Ultimately, many overpriced properties sell below market value.

To help avoid this, we can prepare an extensive Market Evaluation of your home.

2. Failing to "Show Case" the home.
Buyers look for homes, not houses, and they buy the home in which they would like to live. This is why we stage our listings. We assess a home starting right at the front door and recommend the necessary changes needed to get you top dollar!

3. Using the "Hard Sell" during showings.
Buying a house is an emotional decision. People like to "try on" a house and see if it is comfortable for them. It' s difficult for them to do that if you follow them around pointing out every improvement that you made., It may even have the opposite effect you want, by making them feel they are intruding on your private space. Resist the temptation to talk the entire time a buyer is there, and let them discover things on their own. Try a tasteful sign to point out some hidden amenity that they might miss.

4. Mistaking lookers for buyers.
For Sale by Owners always get more activity than homes with an agent. No questions about it. Realtors will only bring qualified buyers, and these will be fewer than if you open your front door to every one who walks down the street. A qualified buyer is one who is ready, willing, and able to buy your home. We find that most people who go looking at For sale By Owners are just starting to think about moving. They may be good buyers, but they're just 6-9 months away from being ready. They don't want to bother an agent yet, so they call the "By Owner" ads to get a feel for what's available. They may have a home to sell first, or may need to save some more, or may have credit that needs fixing. When everything is in place, that's when they go out looking with a Realtor. An agent will ask a buyer how much he can really spend for a house, how much he has to put down, how good his credit is, how much he can pay each month, how much he will realize (realistically) when he sells his present home and about a dozen other questions. But unless your Realtor finds all the facts first, you must ask all these questions before the buyer crosses your threshold, otherwise, you may have a parade of Sunday afternoon shoppers with a dream of owning a home someday.

5. Not knowing your rights and obligations.
Selling Real estate is extensive and complex; the contract for sale and purchase is a legally binding document. An improperly written contract can cause the sale to fall through, or could cost you thousands for repairs, inspections, and remedies for title defects. You must know whether the property can legally be sold "as is", and how deed restrictions and local zoning will affect the transaction. If there are defects in your title, or if your property is in conflict with local restrictions, you must remedy them before you can sell your home.

6. Limiting the marketing and exposure of the property.
The two most obvious marketing tools (open houses and classified ads) are only moderately effective, Surprisingly, less than 1% of homes are sold at an open house. Agents use them to attract future clients, not to sell the house!

Advertising studies show that less than 3% of people purchased their home because they called on an ad. And if a machine answers, most callers just hang up without leaving a message The right Realtor will employ a broad spectrum of marketing activities, emphasizing the ones he believes will work best for you and your particular property. There are dozens of more effective ways to find buyers than just open houses and advertising.

7. Choosing the wrong Realtor, or choosing him/or her for the wrong reasons.
It's likely that you don't interview people very often. And yet in order to find the Realtor who is right for you, you may interview several. The quality of your home selling experience is dependent upon your skill at selecting the person best qualified.
 

If you've decided to sell your home, chances are you're caught up in a host of emotions. You may be looking forward to moving up to a new dream house or facing the uncertainty of a major move across country. You may be reluctant to leave your memories behind or eager to start new adventures. Whatever turbulent feelings you're experiencing right now, there are plenty of practical matters that need your attention. Keep in mind the following considerations to help the whole process go more smoothly.

Time Becomes Money
It's a good idea to place your home on the market as far in advance as possible of purchasing a new one. If you find a new home first and then try to sell your present home, you may wind up with two mortgages. If this does happen, ask your real estate agent or banker about a bridge loan to help you make the double payments. Lenders use the same criteria for offering bridge loans as they use for mortgages. Should you choose to accept a bridge loan, beware of the expense; during the term of the loan you must continue to pay both mortgages. Shop around for the best terms.

Keep in mind that when people move, sell and buy, there usually is a domino effect. Closing and moving dates have to be coordinated, and the more firmly everyone commits to a window of dates and sticks to them, the better for all involved. Put all agreements about dates in writing, and protect yourself by negotiating financial penalties for failure to comply.

Check Your Curb Appeal
A home that's visually appealing and in good condition will attract potential buyers driving down the street. Use this checklist to view your property through an outsider's eyes.

  ► Are the lawn and shrubs well maintained?
  ► Are there cracks in the foundation or walkways?
  ► Does the driveway need resurfacing?
  ► Are the gutters, chimney and walls in good condition?
  ► Do the window casings, shutters, siding or doors need painting?
  ► Are garbage and debris stored out of sight?

Inside the Home
Strong curb appeal will lure potential buyers inside, where you have to live up to their expectations. Fortunately, there are plenty of easy improvements you can make to your home's interior without spending a lot of money. Cleaning is No. 1. Your windows, floors and bathroom tiles should sparkle. Make sure you have clean heating and air conditioning filters. Shampoo dirty carpets, repair dripping faucets and oil squeaky doors. It may not seem fair, but a peek in the oven may be the hallmark by which a buyer judges how well you have kept up your home.

Remove unnecessary clutter from the garage, basement, attic and closets. If your home is crowded with too much furniture, consider putting some things into storage. If a room needs a fresh coat of paint, use a neutral off-white. Think, too, about how your home smells. You may be used to the smell of a pet or cigarettes, but such odors can be a strong turn-off to others. Finally, set a mood for the buyer. Make your house homey with live flowers and fresh guest towels in the bathroom. Place scented potpourri around the house or, on the day you're expecting a potential buyer, pop a batch of frozen cinnamon rolls into the oven for a welcoming aroma.

Remember, cosmetic changes do not have to be expensive. In fact, costly home improvements do not necessarily offer a good return on your investment when you sell. It's attention to the basics -- anything that says "this home has been carefully maintained" -- that will help you get the price you want.

Go It Alone or Choose an Agent?
Some homeowners decide to sell their homes themselves in order to save the commission charged by a real estate agent. The commission rate may vary, depending on where you live or what agency you choose. However, handling your own sale means you will be responsible for placing ads, answering phones and showing your home to strangers. What's more, buyers who know you are saving on an agent's commission may offer less for your home, wiping out the financial incentive to do it all yourself.

You may decide an agent's commission is a bargain the first time that a would-be buyer shows up unannounced at dinnertime. Also, be aware that a real estate agent probably knows a lot more about the business of selling a home than you do. Here are some of the advantages professional agents offer:

  ► They will help you establish a fair asking price for your home.
  ► They will promote your home to other agents and list your property in multiple listing services. A multiple listing service is a book or computer database that all real estate agents who subscribe to the service can access. Your home will get exposure to all those agents, one of whom may have the perfect buyer.
  ► They will create, pay for and place advertising for you.
  ► They will schedule appointments to show your home to prospective buyers even when you are not there.
  ► They can weed out buyers who will not qualify for a mortgage.
  ► They can refer you to sources for insurance, inspections, legal counsel and financing.
  ► They will help you negotiate with the buyer.

Ask prospective agents how they plan to market your home. Don't sign with an agent just because he or she suggests the highest asking price.

Setting A Fair Price
Naturally, you want to get top dollar for your home. But, at the same time, you don't want to scare off potential buyers with a price tag that's too high. Setting an artificially high price may cause your property to languish on the market for months. Reducing your asking price later on may lead buyers to wonder if there is something wrong with your home. Here are some of the factors to consider in pricing your home.

  ► Your location
  ► Economic conditions
  ► Supply and demand in the local housing market
  ► Seasonal influences
  ► Local schools
  ► Average home prices in the neighborhood
  ► Your home's extras -- pool, fireplace, central air, etc.

To determine the value of your home, you probably will want the advice of a real estate agent or appraiser. Ask an agent to prepare a market analysis for you, showing the recent selling prices of three neighborhood properties comparable to your own. The agent can help you adjust for the unique features of your own property.

Either you or your agent will want to quickly weed out potential buyers who cannot really afford to purchase your home. A number of factors will help determine whether or not you are wasting your time negotiating a sale.

  ► The buyer's debt and credit history
  ► The buyer's current income and employment
  ► The buyer's cash position and availability of a down payment
  ► The length of time the buyer needs before closing on your home
  ► How interested the buyer appears to be in your home versus others
 

Thinking About a Home Improvement?                                   

If you are thinking about making improvements to your home, selecting a contractor is the first and most important step in the process. The following tips and checklist will help you along.

Don’t assume that all contractors who advertise in the "home improvement" section of the Yellow Pages are reputable. Check out contractors with the Better Business Bureau. You’ll find out if there are any unresolved consumer complaints on file. 

Ask friends, relatives and co-workers for recommendations.

Ask contractors if there’s a charge for an estimate before allowing them in your home. 

Get written estimates from at least three firms. Ask for explanations for price variations. 

Don’t automatically choose the lowest bidder. 

Be skeptical of contractors who come to your door unsolicited or offer reduced prices because they’ve just completed work nearby and have materials left over. 

Beware of contractors who ask you to pay for the entire job up front. Your down payment should not be more than one-third of the total price. 

Pay only by check or credit card, not cash. 

Be cautious about using your home as security for a home improvement loan. If you fail to repay the loan as agreed, you could lose your home. 

Have a knowledgeable friend, relative or your attorney review the contract before you sign. If you get a loan to pay for the work, consider having these documents reviewed as well.
 

12 Ways to Lower Your Homeowners Insurance Cost        

1. Be sure to shop around.
It'll take a few phone calls, but they could save you a good sum of money. Ask your friends, check the yellow pages or call your state insurance department. Also check consumer guides, insurance agents and companies. This will give you an idea of price ranges and tell you which companies or agents have the lowest prices. But don't consider price alone.

The insurer you select should offer both a fair price and excellent service. Quality service may cost a bit more, but it provides added conveniences, so talk to a number of insurers to get a feeling for the type of service they give. Ask them what they would do to lower your costs. Check the financial ratings of the companies, too. Then, when you've narrowed the field to three insurers, get price quotes.

2. Raise your deductible.
Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay according to the terms of your policy. Deductibles on homeowners policies typically start at $250. By increasing your deductible to $500, you could save up to 12 percent; $1,000, up to 24 percent; $2,500, up to 30 percent; and $5,000, up to 37 percent, depending, of course, on your insurance company. 

3. Buy your home and auto policies from the same insurer.
Some companies that sell homeowners, auto and liability coverage will take 5 to 15 percent off your premium if you buy two or more policies from them.

4. When you buy a home...
Consider how much insuring it will cost. Because a new home's electrical, heating and plumbing systems and overall structure are likely to be in better shape than those of an older house, insurers may offer you a discount of 8 to 15 percent if your house is new.

Check its construction, too. Brick, because of its resistance to wind damage is better in the East; frame, because of its resistance to earthquake damage, better in the West. Choosing wisely could cut your premium by 5 to 15 percent.

Avoiding areas that are prone to floods can save you $400 or so a year for flood insurance. Homeowners insurance does not cover flood-related damage. If you do buy a house in a flood-prone area, you'll have to buy a flood insurance policy, too.

Does your community have full-time or volunteer fire service? And is your house close to a hydrant or fire station? The closer your house is to firefighters and their equipment, the lower your premium will be.

5. Insure your house, not the land.
The land under your house isn't at risk from theft, windstorm, fire and the other perils covered in your homeowners policy. So don't include its value in deciding how much homeowners insurance to buy. If you do, you'll pay a higher premium than you should.

6. Beef up your home security.
You can usually get discounts of at least 5 percent for a smoke detector, burglar alarm, or dead-bolt locks. Some companies offer to cut your premium by as much as 15 or 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police station or other monitoring facility. These systems aren't cheap and not every system qualifies for the discount. Before you buy such a system, find out what kind your insurer recommends and how much the device would cost and how much you'd save on premiums. 

7. Stop smoking.
Smoking accounts for more than 23,000 residential fires a year. That's why some insurers offer to reduce premiums if all the residents in a house don't smoke.

8. Once you retire...
Retired people stay at home more and spot fires sooner than working people. Retired people have more time for maintaining their homes, too. If you're at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies.

9. See if you can get group coverage.
Alumni and business associations often work out an insurance package with an insurance company, which includes a discount for association members. Ask your association's director if an insurer is offering a discount on homeowners insurance to you and your fellow graduates or colleagues.

10. Stay loyal to your insurer.
If you've kept your coverage with a company for several years, you may receive special consideration. Several insurers will reduce their premiums by 5 percent if you stay with them for three to five years and by 10 percent if you remain a policyholder for six years or more.

11. Compare the limits in your policy and the value of your possessions at least once a year.
You want your policy to cover any major purchases or additions to your home. But you don't want to spend money for coverage you don't need. If your five-year-old fur coat is no longer worth the $20,000 you paid for it, you'll want to reduce your floater and pocket the difference.

12. If you're in a government plan...
If you live in a high-risk area --- say, one that is especially vulnerable to coastal storms, fires, or crime --- and have been buying your homeowners insurance through a government plan, you should check with an insurance agent or company representative. You may find that there are steps you can take that would allow you to buy insurance at a lower price in the private market.