Should buying a home be a team sport?

The co-buying trend has become a popular way for people to purchase a home instead of renting.

Over the last several years, home prices and interest rates both rose to the point that home affordability has kept many people out of the game.

So, the question being asked by more and more people is…

Can Buying A Home Be A Team Sport?

In our opinion, the answer is yes. BUT, there are many factors that should be considered before you buy a home with a friend or relative.

There is a lot to unpack here, so let’s look at some of the reasons why many friends are pooling their money to become homeowners together.

Affordability and lifestyle are the two primary considerations.

Affordability: When prices continued to rise during our unprecedented run of low interest rates, people seemed to take that in stride. Once rates began to rise along with prices, more people started getting priced out of the market. For many, something had to give.

Combining funds to purchase a home is becoming much more popular today than it has been in the past.

Friends or relatives who have traditionally been roommates are deciding, in growing numbers, to purchase a home together.

Lifestyle: Some people are finding that pooling their funds allows them to have more space, or they can afford a more desireable neighborhood.

I am a firm believer in buying a home in an area that fits your lifestyle, if at all possible. To me, things like easy freeway access, great restaurants, quality schools, and recreation are very important.

Sharing expenses as homeowners:

When making a plan to become co-homeowners, it is a REALLY good idea to think it through before pulling the trigger. Consider your expenses including:

Mortgage payment
Property taxes
Homeowners insurance

Other categories include:

Home repairs
Home upgrades

Other monthly expenses:

Utilities – Does everyone pay equally? Even if someone likes it really warm or really cool in the home?
Household Food Items – Do you share everything? Should you have your own shelf in the fridge?

Are there more legal considerations when buying a home with a friend?

Will everyone be equal partners?

What happens if one party dies? Yeah, that isn’t always fun to think about. Does your interest convey to your “roommate” or do you want it to go to a family member?

Some of the terms you will come across will include Joint tenancy and tenancy in common. The type of ownership will need to be determined prior to taking title to a home with someone. For married couples, a very common way to take title to a home is “joint tenancy with rights of survivorship.” The typical thought there is for the home to automatically pass to the surviving spouse upon the death of the husband or wife.

For people purchasing a home with an unrelated party, it is relatively common to have their ownership interest go to a relative if they pass away. BUT, do you create an agreement that gives you the right to purchase that interest so that you don’t have some random new roommate?

You should obviously talk with a financial advisor and/or tax professional for guidance.

Should you have a joint bank account for repairs, expenses, etc?

Benefits and challenges can arise from co-homeownership. Have a plan. Please.

My Personal Experiences With Co-Buying A Home:

With the help of our father, my brother and I bought our first home on 8/8/88. We were 19 and 20 years old and purchased a small 2 bedroom, 1 bathroom home. We added another bedroom and bathroom on to the home and always had 1-2 additional roommates.

Purchasing that first home with my brother may have been one of the best financial decisions of my life. It was a GREAT experience that taught us a lot.

Just a few short years later, I purchased a 4-plex with a friend. Fortunately, we made some good decisions with that property and were able to turn it in to owning dozens of other properties before the age of 30. (homes, condos, multi-unit apartments)

I have been very fortunate to have had my experiences in co-ownership be positive personal and financial decisions.

While I can personally recommend purchasing a home with a friend, relative or business partner, I will also strongly caution against it in some circumstances.

Who Is Buying Homes With Friends?

These articles give some insight as to different types of people buying homes together.

These two best friends bought a home together in Austin. It seems that college roommates are a rapidly growing segment, for sure.

Owning my own home was always a dream of mine, and I feel so grateful that I’ve not only been able to accomplish that early in life, but also to have been able to do it with my very best friend – Madison White, Austin TX

Six friends in Toronto decided to pool their money.

But it started with one radical idea: that the benefits of cohabitating, combining their resources and skills, would lead to a far better standard of living than they could ever achieve on their own.

CNBC article about co-buying makes some good points, pro and con, illustrating multiple examples of people with different scenarios.

Co-buying is a trend that is here to stay and will continue to be a way for people to achieve the American dream of homeownership, Pendleton says.

So many scenarios. It is really interesting to see the types of people purchasing homes together.

Co-Purchasing A Home – So Many Decisions:

Please note: I don’t think it is always a good idea for everyone to buy a home with a friend. If done incorrectly or if unforseen circumstances arise, it could possibly end up being a nightmare.

So, are you ready to “swing for the fences” and make home ownership a team sport? Give us a call, we’d be glad to help coach you through it.

Why? Because the display of information is something that is authorized when a listing is entered into our MLS system.

The average homeowner and many real estate agents do not understand what IDX (Internet Data eXchange) is.

Because of that, we often get emails from agents or homeowners who wonder why their listing is on our web site. Typically, a homeowner or an agent will be searching for a home address in a Google search, and they will be taken to a page on our website.

Shortly after they discover their home on our website, they fire off an email that reads something like this.

I am the current owner of this residence. Please remove the photos of the inside of the home. Thank you

Of course, not all of the emails are that cordial. None the less, we respond with a link to this web page that you are currently reading.

So, What is IDX?

IDX allows agents and brokers to share real estate listings on IDX enabled websites. There are thousands of Broker/Agent Websites that display ARMLS IDX listings on the Internet.  Those websites display photos of homes after automatically receiving them from an IDX feed.

So you see, not only is your listing displayed on our website, it is also displayed on thousands of sites. They are syndicated locally, and they are automatically sent to national listing sites, as well.

What if I don’t want my listing shown on your website?

Unfortunately, it is too late for that:

In our MLS system (ARMLS), agreeing to display your listings via IDX is a default setting. If people don’t want their listings displayed on other IDX enabled real estate sites, then they would need to opt out at the time the home is originally listed into the MLS system.

For individual listings, an agent or broker can opt out of IDX by UNchecking a box when the listing is entered into the MLS. The screen shot above is from a listing entry page in our MLS system: THIS is the time when someone can uncheck any of the boxes they choose.

See where it says, “IDX Program Sharing”? And under that is a checked box labeled “IDX”? Unless that box is unchecked before the home is listed, that listing, and any photos associated with the home, will be sent out in the IDX data feed to thousands of local and national web sites.

Removing listings from an IDX feed Is Done BEFORE The Listing Is Active:

Unfortunately, I can not remove your listing from my website. The previous listing agent authorized it to be displayed and there is nothing I can do to have it removed from the data feed that put it there.

Please Know: The IDX providers that we utilize on our websites are authorized, approved and fully compliant with all IDX rules and regulations. We can not change their IDX feeds in any way.

Further Clarification:
If you still have questions, please read the following web page and document. ARMLS Web Page on IDX: That page contains a ton of info on how an IDX feed works. Please feel free to contact ARMLS to learn more about IDX if you’d like to know their policy or more about their rules. You can reach them at 480-921-7777. You can read this document about the ARMLS IDX policy, as well.

**Please Note: YOU might be able to remove photos from SOME of the sites your home can be found on. It’s just not something we can do for anyone who is not a client of ours.

Thanks for understanding, and thank you for visiting our website.

Please bookmark this site for future reference. As you can see, our marketing systems work well. Afterall, an online search brought you to this website. We’d love to talk to you about other effective ways to SELL a home!

Buying Your First Home

Your first time buying a home can be like a roller coaster ride with many ups and downs. Setting proper expectations with yourself is critical to maintaining an even keel during the process. You’ll need to make decisions along the way, and making them from an emotional frame of mind is rarely your best option.

Many of the myths you’re going to encounter are far from the truth, but they shouldn’t hold you back. 

Here’s a list of 5 myths about home buying to help you in buying your next home:

1. You Don’t Need a REALTOR

Many people will tell you that you can save so much more when you buy the house on your own, but that’s not true. REALTORs can be an essential and valuable part in purchasing a home, especially when it’s your first time. Just make sure to find an experienced expert who will work on your behalf. That’s VERY important!

Realtors are familiar with the neighborhoods, towns, and cities you want to live in, and they have connections with reliable people who can make the entire process easier for you. 

2. You Need a 20% Down Payment to Purchase a Home

Some private mortgages will require a 20% down payment, but that’s rarely your only option. There are many other types of mortgages you can apply for that will require a much lower down payment. 

Programs are available offering home loans with down payments as low as 3.5%, and if you’re a veteran, you can buy a home with nothing down. Your local REALTOR, like us, will have many lenders they can refer.

3. You Need Great Credit to Buy a Home

Bad credit can hinder you from doing many things, but buying a home isn’t one of them. You don’t need a perfect credit score to be able to secure a home. But the better your credit score, the less risk you become to lenders. The better your score, the lower your interest rate will be.

There are ways to get a better credit score with a credit repair service. The process is doesn’t usually take that long and even a small increase in your score could save you a lot of money.

4. You Should Offer the Seller the Listed Price

It isn’t unusual for a home to have multiple offers in our current market. The inventory of homes for sale is historically low, and so are mortgage interest rates. Multiple offers create competition between buyers for homes, and offering the listing price may get you ignored entirely by the seller.

Knowing about homes that have sold around the house you want will help you understand what to offer. Offering more than the list price is a common reality in our current market.

5. You Can Skip Inspections

No matter what people tell you, it would be best if you did not skip inspections when buying any home. If you choose to buy the home as-is and forgo inspections, it may cost you a lot in repairs. 

Inspections are vital to the home buying process. It may cost a little bit more at the moment, but it can save you a lot in the long run. In our current market, it’s not unusual for buyers to waive inspections as a contingency of sale. That said, you want to do your inspections anyway. You want to know the condition of what you’re buying. It’s just smart.

You’ll want to make sure to do a walkthrough, as well!

Ready to buy your new home? 

There are many other myths you may hear about buying a home, and that’s what we can help you. We will guide you through the home buying process and help you make sure that you’re properly represented. 

Schedule a call today, and let’s talk about how we can help you find the perfect home!

We’re always happy to help! Just call The Nick Bastian Team at 602-803-6425 when you’re ready to buy or sell a home.

Have questions or just want to talk about real estate? Give us a call at 602-803-6425. We’re always happy to help.

We get that question from time to time. My answer is always the same.

“Yes. I believe you should do a walkthrough of your home before closing.”

We see people say Buyer walkthrough, walk through and Buyer walk thru… No matter how you spell it, the answer is still the same. Just do it.

Our current residential real estate purchase contract is pretty clear on why a buyer would want to do a walkthrough.

Section 6l lines 298-301 of the current Arizona residential real estate resale purchase contract states the following:

Yes, a buyer can do more than one walkthrough, if necessary. Talk to your agent / broker for specific reasons and timing, etc. They should be able to help you through the process.

You’ll notice a few things that might bring up more questions.

1. Can multiple walkthroughs be done? (yes)

2. When should a buyer perform a walkthrough of the property? (1-3 days, typically)

3. Is a buyer required to do a walkthrough of the home before closing? (no but “Just do it”)

When Should A Buyer Do A Walkthrough?

Typically, the buyer will conduct their pre-closing walkthrough at least three days prior to the scheduled close of escrow date. This applies to the majority of our purchase contracts that involve any repairs being done by the Seller. If no repairs are being made, I believe it is good to walk just 1-2 days before closing.

A buyer is not “required” to perform a walkthrough, but it is very common and seems kind of foolish NOT to do one.

Here in Arizona, we have a specific form that is called a BUYER PRE-CLOSING WALKTHROUGH form. That particular form is used to let all parties know one of three things.

1. 1. That the Buyer finds the home to be in “substantially the same condition as of the date of Contract acceptance.” It also says that “any corrections or repairs agreed to by Seller have been completed.”
2. 2. If the Buyer finds that any of the repairs have not been done properly or if the condition of the property has changed, the items will be listed in section 2. If that is the case, the form acts as a CURE PERIOD NOTICE  which puts the Seller on notice to remedy the items prior to close of escrow. The Buyer does have the option to close escrow without the repairs being done. Of course, this scenario brings up more options. We are happy to discuss those options with you.
3. 3. The Buyer can choose, in writing, to waive the right to view the property before closing. That seems foolish and risky to me. Again, we are happy to discuss this option.

Please note: As your REALTOR®, I can NOT do the final walkthrough for you. I am happy to be with you, but if you are not in the state or if you “do not have time” to visit the property prior to closing, you’ll want to get a personal representative, a family member or a friend to take your place.

Here’s a good FAQ page from the Arizona Association of REALTORS® that talks about the “Buyer Pre-Closing Walkthrough.” It is helpful and informative.

This article is NOT intended to provide legal advise. Nick Bastian is NOT an attorney. Some of the statements on this page are my opinion and some are taken from the current Arizona Association of REALTOR’S® residential real estate purchase contract.

As always, please feel free to call to discuss any aspect of buying or selling a home.

Wire fraud is an unfortunate and growing problem in the real estate industry and it doesn’t look like this threat to our transactions will be going away any time soon. I’m glad that our industry has taken a proactive approach to educating the public and the real estate industry about the potential for buyers and sellers to lose a lot of money due to cyber criminals.

The Federal Trade Commission (FTC) and the National Association of REALTORS have both been issuing warnings to consumers to help explain how these scams work.

From a NAR article, we learn more about how this process tends to work.

Hackers break into the email account of a consumer or real estate professional to determine the date of an upcoming closing. They then use that information to send a fraudulent email to the buyer, posing as one of the professionals involved in the transaction.

The email contains wiring instructions that are allegedly tied to the closing, but which actually rout directly to the scammer’s account. If a buyer is fooled, they may see their bank account wiped out. National Association of REALTORS.

Is wire fraud common in a real estate transaction?

Unfortunately, there have been many phishing scams where thieves hack into the email systems of people who are buying or selling a home and send ficticious emails telling buyers or sellers to wire their money to fake accounts.  As you can imagine, things can get ugly very quickly.

Here’s part of what the FTC had to say in a recent blog post:

• “Don’t email financial information. It’s not secure.”
• “If you’re giving your financial information on the web, make sure the site is secure. Look for a URL that begins with https (the “s” stands for secure). And, instead of clicking a link in an email to go to an organization’s site, look up the real URL and type in the web address yourself.”
• “Be cautious about opening attachments and downloading files from emails, regardless of who sent them. These files can contain malware that can weaken your computer’s security.”
• “Keep your operating system, browser, and security software up to date.”

Our state and local associations have been very involved in trying to get the word out, as well.

Take a look at the “Stop Wire Fraud” website for more details, as well! Thay have some great information!

Criminals are smart. They know buying a home can be confusing and comes with a lot of paperwork. So, they’ll pose as a real estate agent, title agent or lawyer and send you fake account details to scam you. – stopwirefraud.org

This video shows the Arizona Department of Real Estate Commissioner talking about wire fraud. Take a look at what Judy Lowe has to say about this unfortunate problem.

Here’s another educational video about wire fraud. This one is from our friend Scott Drucker who is General Counsel for the Arizona Department of Real Estate. In this video, Scott talks more about the wire fraud problems we are seeing in the local Arizona real estate market.  I’m pretty sure he’s seen more cases of wire fraud than he’d like to say.

Wire Fraud – Kind of a Big Deal:

As you can imagine, these kinds of crimes are taken very seriously by the authorities. If you have been scammed or if you think someone may be trying to steal your money or identity, you should let the FTC know!

Victim of Wire Fraud?

Here’s some tips to take immediately if you have been a victim of wire fraud.

1. Contact the financialinstitution wiring the funds with instructions to stop or rescind the transfer and place a freeze on remaining funds.
2. Contact your local FBI field office: AZ 623-466-1999. Click to look up your local field office
3. File a complaint with the FBI’s Internet Crime Complaint Center.  https://www.ic3.gov/default.aspx
4. Notify all other parties to the transaction that may have been exposed to the attack. Real estate agents should contact their broker.
5. Change all usernames and passwords associated with any account that you believe to have been compromised.

What can you do to protect yourself from wire fraud in your transaction? That’s a GREAT question! Here’s some helpful tips.

10 tips to protect your financial information:

1. Never wire money to an escrow account without verifying the wiring instructions.
2. It is NOT common for wiring instructions to change during a transactoion.
3. Pay VERY close attention to who you are dealing with.
4. Do not ASSume that “everything is fine.”
5. It is ok to call and speak to your escrow officer.
6. If you are not 100% sure, don’t send your money!
7. A 3rd party company should not be asking you for money. Only your escrow company.
8. A cashier’s check given to the title company is safer than wiring your funds.
9. I can not handle your wiring instructions. Please don’t ask.
10. Verify, verify, verify. We work with some awesome professionals who are happy to help!
11. Bonus tip. Beware of SWIFT codes!

In the beginning of your transaction, your escrow officer should always be in contact with you. They will need your contact information and they can provide wiring instructions for their company.

The email/wire fraud scammers are out in full force and are getting more clever by the minute. If you are someone that will be sending or receiving money via a wire transfer, be absolutely certain that the person/company/entity you are communicating with is legitimate and that you have personally verified the sending/receiving wire transfer information, verbally, either in person or at a phone number that you are sure is legitimate.

DO NOT EVER RELY on relayed wire transfer information from a 3rd party, which means anyone that isn’t the sending or receiving party.

*This page includes links to sources where you can get a LOT of information about wire fraud and your real estate transaction. Please feel free to follow those links and read the articles.

*Image used with permission by the Arizona Association of REALTORS.

For many, the a/c has been cranking for weeks, but for some, they hold out as long as possible. I can tell you one thing, if you are selling a home right now, don’t try to “cheap out” and turn the a/c up to 85 or 90 when you leave for work in the morning. Try to keep it cool, it could help.

Last week, I was looking at homes in Tempe with a friend / client and was glad that many of them were occupied. As you know, there are many parts of town and a few price ranges where the majority of the homes are vacant. Not only are these homes vacant, they have no power on. No power means, no a/c. Ever step out of a car into the hot sun only to find the inside of a home to be hotter? Believe me, it’s not cool.

If a buyer needs to rush back to an air conditioned car with sweat dripping off of their forehead, he / she probably isn’t going to have a real fond memory of that home. Same thing when the sellers leave all of the blinds shut and the a/c up to barely bearable – it just doesn’t show as well.

From SRP we get this information that probably doesn’t have a home seller in mind:

“Q: Is it better to set the thermostat to a high temperature (85° to 90°) while at work all day and cool the house (two-story, approximately 3,200 square feet) when you get home to a comfortable temperature (approximately 80°), or to keep the thermostat just a degree or two higher during the day so that the cooling unit doesn’t have to work as hard during peak hours to cool the house?

A: You will save money anytime you can increase the temperature on your thermostat and cause the unit not to run. The old myth that says you will spend more energy bringing the temperature back down than you would have spent just leaving the thermostat alone is just that, a myth.”

So, you might save a few bucks by turning the a/c up to 90 when you leave for work, right? Well, if you are trying to sell a home, it could cost ya’ even more. If your home shows well and is priced correctly, leaving the a/c in a comfortable range during the day might just be money well spent…

The most confusing document in the entire loan package is the
Truth-In-Lending Disclosure Statement. I’ve heard more than
one escrow officer refer to it as the “Confusion-In-Lending” and simply
ask the borrower to sign with a cursory explanation usually saying it’s
the loan costs rolled into the interest rate or something similar.
While not entirely inaccurate, it doesn’t really explain the
“TIL” as it’s referred to in the biz.

With so many engineers in the Valley of the Sun, it’s tough to fudge on
numbers during a signing. They were the impetus for me to
know the TIL, and to be able to explain it if a borrower required me to
do so… Here’s what I learned:

The Annual Percentage Rate or APR, is not the interest rate.
It is a number expressed in terms of an interest rate created
by the government to enable consumers to comparison shop lenders.
The APR does factor in the fees paid by the borrower.
This is accomplished by creating a new number called the
Amount Financed. The formula for the amount financed is:

Actual Loan Amount – Prepaid Finance Charges = Amount Financed

Prepaid Finance Charges are defined by the government as follows:

Prepaid Finance Charges are
certain charges in connection with the loan and which must be paid upon
the close of the loan. These charges are defined by the
Federal Reserve Board in Regulation Z
defines these charges and the borrower must pay the charges.
Non-Inclusive examples of such charges are: Loan origination
fee, “Points” or Discount, Private Mortgage Insurance or FHA Mortgage
Insurance, Tax Service Fee. Some loan charges are
specifically excluded from the Prepaid Finance Charge such as appraisal and credit
report fees.

So if a borrower had zero Prepaid Finance Charges, the Amount Financed
would equal the Actual Loan Amount. The APR would also be the
same as the actual interest rate. This scenario is extremely
rare. We all pay fees to the lender and title company, so the
Amount Financed will always be less than the Actual Loan amount.

So how does this affect the APR? Amount financed has a direct
impact on the APR. Here’s where the fun starts.

Let’s assume a loan of $100,000 at 5.25% interest on a 30 year note.
The principal and interest would be $552.50 These
are fixed figures that will not change.

Let’s also assume Prepaid Finance Charges of $2,000. Since
the TIL requires knowing the Amount Financed, we see that $100,000 –
$2000 = $98,000 (our Amount Financed). What the TIL
does now is take the Amount Financed and assume for the purposes of the
TIL that it is the loan amount. So if the monthly payment
remained at $552.50, but the loan amount was $98,0000, what would the
interest rate be for a 30 year loan? The answer is 5.427% and
this is also the APR!

The most important takeaway from this post is the more you pay
in fees, the bigger the difference between the actual interest rate and
the APR. It really is basic math, once you decipher the
definitions provided by the government, and as we all know, sometimes
that isn’t easy…

Nearly everyone has heard of ChicagoTitle Insurance Company.  But just what does the title and escrow company do in the purchase of your new home? My intent with this post is to explain the escrow side of the transaction.  We’ll discuss title insurance in depth in a
future post.

An escrow is an arrangement in which a disinterested third party, called an escrow holder, holds legal documents and funds on behalf of a buyer and seller, and distributes them according to the buyer’s and seller’s instructions. 

People buying and selling real estate often open an escrow for their protection and convenience. The buyer can instruct the escrow holder to disburse the purchase price only upon the satisfaction of certain prerequisites and conditions. The seller can instruct the escrow holder to retain possession of the deed to the buyer until the seller’s requirements, including receipt of the purchase price, are met. Both rely on the escrow holder to carry out
faithfully their mutually consistent instructions relating to the transaction and to advise them if any of their instructions are not mutually consistent or cannot be carried out.

An escrow is convenient for the buyer and seller because both can move forward separately but simultaneously in providing inspections, reports, loan commitments and funds, deeds and many other items, using the escrow holder as the central depositing point. If the instructions from all parties to an escrow are clearly drafted, fully detailed and mutually consistent, the escrow holder can take many actions on their behalf without further consultation. This saves time and facilitates the closing of the transaction.

The escrow process was developed to help facilitate the sale or purchase of your home. The escrow holder accomplishes this by:

• Acting as the impartial “stake-holder,” or
  depository of documents and funds
• Processing and coordinating the flow of
  documents and funds
• Keeping all parties informed of progress on the
  escrow
• Responding to the lender’s requirements
• Securing a title insurance policy
• Obtaining approvals of reports and documents
  from the parties as required
• Prorating and adjusting insurance, taxes,
  rents, etc.
• Recording the deed and loan documents
• Maintaining security and accountability of
  monies owed and owing.

When my son was much younger, he asked me what “escrow” was. My explanation to a 6 year old was this: One person has keys to the house being sold.  Another person has a bag
full of money to buy the house.  Each takes a hold of  the keys and the money together, but neither will let go. Each is afraid the other will run off with both the keys and the money if they let go first.  That’s where escrow comes in.  The keys and the money are given to escrow, and when all the terms of the contract are satisfied, escrow hands over keys to the buyer and the money to the seller!  He immediately understood, and then proceeded to tell me that it sounded boring. 

Gotta love kids!