The Smart Home

This month, I will close on a home sale with a Wi-Fi CERTIFIED™ Home Design. Candidly, while showing this home to my buyer client, I was caught a little off guard. This certification was unknown to me. As with any other unfamiliar topic, I decided that I needed to dig in and learn more.

One thing is clear, the smart home revolution is here, and today’s consumers are demanding that realtors be the authority in all things “home” which now includes smart home technology.

Smart home technology is more than just a buzzword. With our lives increasingly transformed by technology,  everything from our light bulbs to our thermostat is becoming connected. For consumers, this means that almost every new product boasts some kind of smart technology that promises to make our lives faster, simpler, and better with home automation.

Why all the frenzy?

The motivation to move toward smart home automation converges around four main themes: savings, safety, convenience, and control.

The perceived benefit of boosted home value is lower on the list but increasing rapidly. As recently as 5 years ago perceived boost in home value through home automation was not even on the scale. It is predicted that in the next five years in will move toward the top. As a realtor, this is a significant trend to not ignore.


What is a Smart Home?

What exactly are we talking about? I have a digital thermostat. Doesn’t that mean I have a smart home?

A smart device is a state-of-the-art device that connects to your smartphone, tablet or computer to give you more information and control than ever before. Your smart appliance can send you alerts, for example, so you’ll know exactly when the laundry is clean or the cookies are ready.

CNET, the world’s largest and most trusted online source of consumer technology news and reviews defines a “Smart Home” as a home that is equipped with network-connected products (i.e., “smart products,” connected via Wi-Fi, Bluetooth or similar protocols) for controlling, automating and optimizing functions such as temperature, lighting, security, safety or entertainment, either remotely by a phone, tablet, computer or a separate system within the home itself.

“Smart home automation is the era of smartphones and AI communicating to automate your home to be interconnected.”

CNET goes further to say that in order to be categorized as a smart home, in addition to a reliable Internet connection, the property must have one or both of these features:

  1. a smart security feature that either controls access or monitors the property,
  2. a smart temperature feature.

It must also include at least two additional features from this list:

  • Appliances (smart refrigerators and smart washer / dryers)
  • Entertainment (smart TVs and TV streaming services)
  • Heating / Cooling (smart HVAC system, smart fans or vents)
  • Lighting (smart light bulbs and lighting systems)
  • Outdoors (smart-plant sensors and watering systems)
  • Safety (smart fire / carbon monoxide detectors and nightlights)
  • Security (smart locks, smart alarm systems or cameras)
  • Temperature (smart thermostats)

First things first, a robust Wi-Fi infrastructure, without dead spots, is essential and works as the foundation to any smart home technology.

Lennar, one of the nation’s largest builders, announced the world’s first Wi-Fi CERTIFIED™ home designs featuring integrated automation and voice control with Amazon Alexa – all a part of Lennar’s signature Everything’s Included® approach to homebuilding.

Lennar is the first to embrace the new Wi-Fi CERTIFIED Home Design™ program announced by Wi-Fi Alliance®, the worldwide network of companies that drives the interoperability, adoption, and evolution of Wi-Fi® globally. Lennar’s Wi-Fi CERTIFIED home designs are guaranteed to provide coverage in every room with no dead spots. This allows buyers to control their lights, front door lock and thermostat simply by talking to Amazon Alexa or any similar smart hub.

Wi-Fi CERTIFIED home designs enable today’s best smart and streaming products to operate at peak performance and are ready for the future as new technologies come to market.

How do you boost your Wi-Fi to get the most out of your internet?

If your internet isn’t as fast as the internet speeds you pay for and you’re plagued by slow speeds, bad reception, and other Wi-Fi issues , your wireless internet router signal is probably the reason. Here are 8 ways you can power up the Wi-Fi performance in your home:

  1. Don’t stuff your router in a cupboard – place your router in a central location
  2. Reset your router
  3. Cut off bandwidth leeches by updating security
  4. Optimize your router’s settings
  5. Choose a new Wi-Fi channel
  6. Purchase a newer, high-end router
  7. Consider a wifi mesh system
  8. Turn an old router into a new, dumb access point

Secondly, you’ll need to choose a “Voice Assistant.” Virtual voice-controlled assistants like Apple’s (Siri), Google’s Assistant, Cortana, and Amazon’s Alexa make it easy to control smart home products by speaking simple commands like “Alexa, turn on the lights.” A wireless smart speaker is the absolute first investment you should make when transforming your digs into a smart dwelling. Each of these assistants has its strengths and weaknesses, so choose the one that will be more likely to work for your needs.

“Hey, Siri, move me onto the step three in building a smart home.”


Thirdly, there needs to be some type of smart home controller.  This is where you use your iPhone or Android to remotely control and change the settings in your house through a home automation app. Smart Home and Home Automation are virtually interchangeable, in fact, if you Google what is a smart home most of the same results will appear. What is home automation? Home automation is part of “The Internet of Things,” also known as IoT.

A smart home usually runs off a hub connected to the internet, and sends waves of communication to other devices. Home automation apps allow a smartphone interface to control devices wherever there’s connection. A few smart home applications are Insteon, Nest, Honeywell, Ring, Philips Hue, WeMo, IFTTT, and SmartThings.

You can control all your connected devices including locks, lights, outlets, and thermostats, with the SmartThings Hub and the SmartThings app by simple voice commands using Amazon Alexa or Google Home. Use your phone to remotely monitor and control your home’s security, energy usage, lighting, and more.

Smart home technology is based on the idea that communication signals can be sent between devices to make something happen. Although it is not necessary to understand how these signals work, it might help to have a basic understanding of the various technologies used to make this happen.

  • Insteon is considered the most-reliable home control and automation technology. Using both the existing wires (power line) in the home and radio-frequency communication.
  • Z-Wave & Zigbee are the two most popular wireless technologies, using radio frequency (RF) to communicate between devices.
  • Wi-Fi technology can be really fast and super simple to set up.
  • Some using a combination of these. The most common communication technologies are Wi-Fi and Insteon.

 


Smart Home Device Categories

Beyond the hub of a smart speaker (voice assistant), in the tech world of endless possibilities; you can automate lamps, wifi thermostats, light switches, light bulbs, locks, home security sensors, life safety sensors, video cameras, doorbells, speakers, and more. Between this year and 2022, experts estimate the global smart home device market to grow by as much as 11% annually. Creating a smart home is, arguably, no longer a pipe dream for most households due to lower costs and compatibility with voice-based assistants.

Entertainment: smart TVs, media adapters, and streaming boxes

A streaming media player is what connects your television or home theater to the Internet and allows you to stream video and music from online services. They’re typically very basic devices with only a few connections, such as video (HDMI and/or composite), audio (RCA and/or digital), and Ethernet networking jacks. This devices can include home theater components and products that allow consumers control all audio and video functions from virtually anywhere in the home. For example, consumers no longer need to spend time looking for remotes to activate home theater components. With the touch of a single button, the television, audio and surround sound automatically activates.

The best rated streaming device for 2018 is Amazon Fire TV Cube.  With Alexa on Fire TV Cube, you can control compatible TVs, sound bars, and A/V receivers from top brands like Samsung, Sony, LG, Vizio, and more. Plus, tune to live TV channels with cable or satellite boxes from providers like Comcast, DISH, DIRECTV/AT&T U-verse, and more. You cannot use your voice to change channels through an over-the-air HD antenna.

Home Monitoring/Security

A smart home monitoring system connects to your Wi-Fi network so you can monitor and control your security devices using your smartphone and an app. Entry-level systems usually include some door and window sensors, a motion detector, and a hub that communicates with these devices using one or more wireless protocols such as Wi-Fi, Z-Wave, Zigbee, or a proprietary mesh network. You can add extra door, motion, and window sensors to provide coverage for your entire house and build a comprehensive system that includes door locks, garage door openers, indoor and outdoor surveillance cameras, lights, sirens, smoke/CO detectors, water sensors, and more.

SimpliSafe is the highest rated and best selling system on the market. Other manufacturers to consider are Homeboy, SkyBell, and Netgear Arlo.

Security and locking devices allow the front door to be unlocked or the garage door to be closed through the Internet or phone.  Lock and unlock your door from anywhere and give secure digital keys to guests, all from your phone. Smart Locks attach to your existing deadbolt, on the inside of your door so you can still use your keys. The device automatically unlocks when you arrive and locks when you leave. Control your lock with your voice using Amazon Alexa or the Google Assistant. The August Smart Lock Third Generation is the best device on the market today. Others to consider are Kwikset, Schlage, and Yale.

 

Lighting

When you begin investing in your smart home, it’s the little things that make all the difference. These products enable you to control the amount of light in your home automation directly at the source. You can even transform your home lighting with the color-changing bulbs. The Wi-Fi-enabled LIFX Mini Color Smart Light sets the mood of your space with a rainbow of hues that adjust at the tap of your phone. Delivering over 800 lumens from just 9 watts, the Smart Light is designed to save energy while being environmentally friendly. Other makers of lighting products worth noting are Casetta by Lutron, Phil

Thermostat

Smart thermostats are devices that can be used with home automation and are responsible for controlling a home’s heating and/or air conditioning. They perform the same functions as a programmable thermostat as they allow the user to control the temperature of their home throughout the day using a schedule, such as setting a different temperature at night.

One example is the Nest Learning Thermostat. This device learns what temperature you like and builds a schedule around yours. Turn it down before you go to bed, up when you wake up, and down again before you leave for work. Within a week, the Nest will automatically do all that for you. Independent studies showed that it saved people an average of 10% to 12% on heating bills and 15% on cooling bills. So in under two years, it can pay for itself.

Notable other thermostat makers are Ecobee, Honeywell, Schneider, and Sensi.

Smart Plugs

This is an easy upgrade for someone who doesn’t want to overhaul their home’s hardware, but still wants to add smart wireless functionality. What is it? A smart plug plugs into your regular old wall outlet but usually comes with a corresponding app, so that you can control whatever you plug into it remotely. You plug the smart plug directly into an outlet, then plug any device into the smart plug. You will then be able to control whatever device you plugged in even when you’re not in the room or even the house. Using an app, you’ll be able to do things like turn off your living room floor lamp even from across town. You’ll also be able to get the coffee maker started without leaving the comfort of your bed, or check that the slow-cooker is on while you’re still at work.

This will be one of the hottest Christmas stocking stuffers for 2018.

Miscellaneous

There is a plethora of amazing home automation products to make your life more safe, comfortable, and convenient. Many of these are not featured here. This year’s Consumer Electronics Show (CES) featured the latest innovations in appliances including vacuums, ranges, washing machines, and refrigerators. For instance, you could be working in your home office when you realized you didn’t hit start on your washing machine. Instead of breaking your concentration, you can ask Amazon’s Alexa to set your washing machine to your selected cycle, set the water temperature, and start it – all from your desk chair. Check out this list of additional smart devices.


The Smart Green Home

Smart green homes make sustainability easy. More and more people are becoming aware of the ability to make their homes truly smart  they can move toward making them green too!  By utilizing home controllers integrated with all home sub-systems, homeowners can increase savings by controlling lighting, window coverings, HVAC, irrigation and by monitoring usage. Many home controllers have built-in monitoring systems whereby they calculate and log usage by all connected devices, giving the home owner heightened awareness and the knowledge to make changes as necessary.

With a larger percentage of home buyers being made up of millennials than ever before, high-tech and green homes seem to be on everyone’s list these days. “Smart” home features frequently pair well with eco-friendly and green building designs, because many smart features offer you greater control over areas of your home that consume energy.

Both smart home technology and green building design are on the top of many homeowners’ must-have lists these days. As companies strive to make improvements in both fields, the options keep getting better and better. Check


Smart Home automation is not reserved for new home construction. Remodels offer you a chance to transform the look and functionality of your home. Smart home technology is increasingly becoming part of that equation.

A smart home system can make your house and your life safer, simpler and more comfortable. Trying to get things started with home automation can be intimidating, but a smart home doesn’t have to be filled with crazy gadgets and robot devices. It’s as simple as swapping out everyday products with devices that fulfill the same role, but are connected to each other in order to improve home automation. By setting up a system of triggers and responses that accomplish smalls tasks, you can save yourself time, energy, effort, and even increase home security.

Black Friday season is around the corner. Now is the time to make your move to the Smart Home.


Read more:

  • https://www.smarthome.com/sc-what-is-home-automation
  • https://www.digitaltrends.com/dtdeals/smart-home-automation-for-beginners/
  • https://www.allconnect.com/blog/boost-your-wi-fi-signal-to-get-the-most-out-of-your-high-speed-internet-connection/
  • https://lifehacker.com/the-10-best-ways-to-boost-your-home-wifi-5931743
  • https://www.hellotech.com/blog/5-fastest-growing-smart-home-device-categories/
  • https://medium.com/iotforall/who-is-buying-into-iot-8f65c701b1ef
  • https://www.houzz.com/ideabooks/114138952?utm_source=Houzz&utm_campaign=u9325&utm_medium=email&utm_content=gallery1_s&newsletterId=9325
  • https://www.pcmag.com/article2/0,2817,2498510,00.asp
  • https://www.usgbc.org/articles/smart-green-homes-make-sustainability-easy

A Matter of Trust

A recent JD Power survey reported a trend in the real estate industry showing more homebuyers and sellers increasingly going without agents. It would seem that people are looking for cheap, convenient, and paperless transactions through non-conventional means.

However, sit-in at any closing table and you will find a room full of trusted people doing specialized jobs: the seller’s agent, the buyer’s agent, the buyer’s closer, the seller’s closer, attorneys, paralegals, etc. The priority of a cheap, paperless, and stress-free close seems 1,000 miles away.

Why? Because closing the sale of a home is such a major deal involving a large lump sum of money and a huge asset, the participants at either end are likely to want to look each other in the eye and verify one another as real, upstanding people. It comes back to trust. People will always pick trust over thrift and convenience when it comes to home sales.

But what if you could combine trust with convenience? Do you now have a complete and satisfying transaction? The future of the real estate industry (and human agents) belongs to those agents (and teams) that are most successful at serving both important attributes.

Why does it matter? Trust is the foundation of all relationships.

What exactly do you mean when you say you don’t trust someone? Do you mean you don’t think they are honest? Or, do you mean you don’t trust they have your best interest in mind? Or, do you mean you don’t think they can do the job? These are all different dimensions of realtor trust.

In a recent indictment of a local Minneapolis realtor husband and wife team, we sadly see another example of a violation of trust. It is alleged that these realtors devised a scheme requiring repair contractors to pay them kickbacks. In return, the couple used their position as realtors for the victim companies to steer housing repair contracts to contractors who paid the kickbacks. The indictment further alleges that they procured and submitted sham bids as part of the scheme to defraud the victim companies. The defendants created a scheme to siphon as much money as they could from these properties, no matter the method, no matter the victim. These scams victimize all of us. Trust is essential. These dishonest and untrustworthy criminals clearly broke the trust covenant that good realtors work hard to earn.

This concept is so important that an entire business model was developed by a popular radio/TV host to address the issues he had experienced in a real estate transaction. He developed a referral process to determine who you can trust and who you can’t…built on a proprietary vetting system. Trust is essential. But how do you define trust in real estate?

The Dimensions of Realtor Trust

Four dimensions of a trusted realtor

Integrity: Are they honest and ethical? The quality of honesty is the most important element and is the foundation of trust. Liars are not trusted. In fact, without integrity, the other dimensions of trust don’t matter.

Is there yes a YES and there no a NO? When your agent tells you something or promises something, do they follow through on those statements? Anyone can promise something, but people with integrity deliver on those promises.

When your agent tells you something and later you learn that it’s not true, how does that make you feel? Trust is like a bank account. You start with a certain amount of trust, and then over time, you add to that account by delivering on promises. And like a bank account, it can be emptied overnight if you’re caught under delivering and lying. Lying is a sure sign of someone who is in it for the paycheck and does not have your best interests in mind.

Does your agent demonstrate an awareness of other people? Are they respectful and courteous to others that are involved in a transaction? Integrity is also the quality of having strong moral principles and moral uprightness in how you treat people.

You can learn about a realtor’s integrity and reputation in several different ways. Start by checking online reviews. There are dozens of websites that allow users to leave reviews about realtors, so you should take the time to read some of their reviews prior to working together. If there is a single bad review and a handful of glowing recommendations, you shouldn’t put too much weight on that review. However, if there are reviews from multiple people that all say basically the same thing, you may see a pattern. With that being said, sometimes online reviews may not be complete or entirely accurate.

You can also ask for references. Better yet, ask people who work with your agent, their peers, or the vendors they associate with. Online reviews are helpful, but you won’t have the opportunity to ask the person who posted them any questions about their experience. If you want to engage in conversation with a former client to learn more about your agent ask him for references.

Competence: Do they know what they’re doing? If you hire someone to represent you, you want to be assured they know what they’re doing and can do the job well. What is their track record of success?

In other industries, a person’s level of success does not always correlate with his trustworthiness, but in real estate, it typically does. Trustworthy realtors have clearly won the trust of other clients and helped them successfully either buy or sell a home.

It’s also important to find a realtor who stays up-to-date with industry news. Does your realtor know what trends buyers are looking for this year? Does he know anything about the current interest rates on home loans? Are home values in your area expected to rise or fall in the next six months? These are areas that he should be familiar with, so if he doesn’t have the answers to these questions, he may not be as trustworthy as he claims to be.

Reliability: Can they be counted on to follow through on their commitments? Will they be there when they’re needed? If they agree to do something, are they dependable? Can they be counted on to complete things on time? Timelines and deadlines are absolutely critical in a real estate transaction. Missing important deadlines can cost you money and/or the possibility of losing your dream home!

Can you depend on your agent? Will they show up when they’re supposed to? Realtors who take a long time to respond to your emails or who say they will follow up with you on a matter but never do are not being professional. Likewise, realtors who are late for appointments or constantly reschedule with you at the last minute are not behaving in a professional manner. This is a sign of an unreliable realtor.

Concern: Are they genuinely concerned for your well-being? When we believe someone genuinely cares about our well-being, we are willing to open our hearts and become vulnerable. This is the deepest level of trust and is not to be taken lightly.

Part of showing concern for clients is having great listening skills. Trustworthy realtors are dedicated to finding you the home of your dreams. How do they know what your dreams are? During the first meeting with your realtor, he should ask you to describe some of the must-haves in your new home. If you mention that you absolutely must have a fenced yard for your three large dogs, but the realtor continues to send you listings for homes without a fence, he was clearly not paying attention during your conversation. This indicates he is more concerned with making a sale than he is with finding you a home that meets your needs. You shouldn’t trust a realtor who cannot demonstrate that he is able to listen to you and put your needs first.


Conclusion; does your realtor have your best interest in mind? Do they see you as an individual, and do they really care about your well-being? If they don’t, they may need to evaluate their mission statement or rethink their career choice. When you start to wonder whether you can trust someone or not, that is when you already know you don’t. Move on. Find a trustworthy realtor.
The sale of a home is a major deal. Don’t take shortcuts. Choose individuals with character, who are capable, and that you can depend on. It’s a matter of trust.

Get Financing

What’s a mortgage?

A mortgage is a loan that is used to finance the purchase of your home. It consists of 5 parts: collateral, principal, interest, taxes, and insurance. As a lender, we offer a wide range of loan products, so make sure to ask which product can work best for you.

It’s always important to keep an eye on interest rates. Mortgage rates matter. Just one-eighth of a point in interest percentage could end up costing you thousands of dollars over time. As mortgages rates rise, purchasing power falls. In fact, just a 1% rise in rates cuts 10.75% from your purchasing power.

What about my credit score?

When you’re serious about buying a home—and looking to qualify for a mortgage—credit matters. Lenders take a long look at your credit scores, and those numbers determine the options available to you. If your credit score is below 680, or you have credit blemishes or little equity, it can drive up the cost of a mortgage. Boosting your credit score before you apply for a loan can help you get a better rate, and we’ll cover ways to pull that off. We look for good credit scores and the absence of bad credit marks.

Payment history is the greatest factor in your FICO credit score, accounting for 35%. The other factors are amounts owed (30%), length of credit (15%), new credit (10%), and types of credit (10%). Maintaining good credit isn’t always easy, but there are steps you can take to keep a healthy score. I am happy to work with clients to guide them on a sound path to better credit. If needed, we can recommend credit repair services that specialize in helping you repair your not so good credit.

What can I afford?

I had a first-time buyer who wanted to purchase a home in Brooklyn Park in a specific price range. He had a lot of questions as we talked on the phone. The most common question from clients is “what can I really afford?” I enjoy teaching Learn about programs that can help. I said the first step is that we need to meet face to face since this is one of the biggest decisions in your life. Once we established needs and wants we set up a step by step plan to achieve homeownership. He closed on his house in March 2018.

How much do I need for a down payment?

For many home buyers, the thought of coming up with a large sum of money for a down payment is daunting. Fortunately, we offer a wide range of down payment choices that include options for 5, 10, 15, or 20 percent down. And for many first-time buyers, a government-backed FHA loan can be obtained for as little as 3.5 percent down. If you are a military member or veteran, there are even more options available to you.

What is the mortgage process?

When I work with clients who are looking to get pre-approved here are the steps to follow:

1. Meet with a loan officer with a reputable mortgage company who can discuss the different loan programs that are best suited for you.

2. Provide proof of your income and assets. Have your loan officer run a credit check so you know what price home you would be pre-approved for.

3. Get an estimate for several loan options at various home prices so you know what your maximum monthly payment would be.

4. Once your loan officer lets you know what those numbers are then you are ready to start looking at houses with a realtor. It’s very important to have an agent represent you since the seller will have their own agent representing them. You do not have to pay your realtor any commission for the transaction. It is all built into the sales price of the home you are buying.

5. Once you have found a property, made an offer, and it’s been accepted the full financing approval process begins. It’s important to remember that once you have a purchase agreement accepted by a seller you must continue to pay your bills on time and not take out any new debt. If you do it could jeopardize the closing on your new home.

>> It is also very important to have these documents available when you meet with your loan officer for the first time:

  • 2 years federal tax returns- all pages
  • 2 years w-2s
  • Last 3 paystubs
  • 2 months bank statements- all pages
  • Driver’s license

Options for first time home buyers

First-time home buyers typically have less money in savings which is why low and no down payment home loans are so popular. You may have heard the term “first-time homebuyer money.” What is that all about?
First-time homebuyer money is also known as down payment assistance program. Under these programs, you can do FHA, VA, or Conventional type loans. The beauty of the program is that it helps low-income first-time homebuyers purchase single-family homes. It uses federal money given to states to use for people buying homes. For Minnesota, it is administered through the Minnesota Housing Finance Agency (MHFA).

Under the program, you can receive up to $12,000 for down payment assistance. However, there are some income limits with the program. If the down payment assistance is $8,000 or less than it may be deferred until you resell the house. If the assistance is more than $8,000 than you will have a monthly payment to pay it off in 10 years. It will be considered a 2nd mortgage.

Another bonus of the program is that the mortgage insurance for conventional loans is less than if you were to go with a regular conventional loan. The MHFA program is great for those who have good jobs, good credit but just need some help with down payment and closing costs. MHFA just says you need to have $1,000 of your own money into the transaction.

It’s good to remember that each home buyer is unique and needs a loan option that fits his or her needs. So be sure to review your options thoroughly with a lending professional. I am happy to help!


Doug Hunt is a lending officer with Mortgages Unlimited in Maple Grove. He and his wife Carol live in Golden Valley and have two adult children. Doug can be reached at (612) 940-0780 or by email at dhunt@muihomeloans.com.

 


How credit inquiries may (or may not) affect your credit score

If you’ve applied for credit recently – maybe for a store card  – you may have come across the term “inquiry.” Even if you’re not familiar with credit inquiries, it’s critical to understand what they are, how different ones work, and what they mean. Fortunately, we have answers to your credit-inquiry questions here.

What’s a credit inquiry?

A credit inquiry is a credit check. It’s a request to view your credit by lenders — retailers, financial institutions and others who are legally allowed to see your credit report.

Types of inquiries: hard and soft.

A hard inquiry happens when a potential lender looks at your credit report and uses that information to decide whether to offer you credit and what the terms of the offer might be. Think of hard inquiries as the types of credit checks that happen when you apply for credit, whether it be a credit card, mortgage, car loan or other type of financing. Hard inquiries must be made with your permission and in connection with specific transactions.

A soft inquiry, on the other hand, is more of a routine credit check that doesn’t need to be done with your permission. Importantly, soft inquiries won’t show up on the credit reports potential lenders request to evaluate your creditworthiness. Soft inquiries can happen for a variety of reasons. One example is when potential lenders check your credit report to determine whether to make you eligible for any pre-approved offers. Another happens when one of your existing creditors checks your credit to make sure you’re still creditworthy. A soft inquiry is also triggered every time you check your credit.

One other thing to note: if you would like to see credit reports listing all your inquiries, soft and hard, check your free annual credit reports at AnnualCreditReport.com.

Why inquiries matter.

The first thing you should know is the kinds of credit reports potential lenders see will only list hard inquiries, not soft ones. In that sense, hard inquiries are the ones that “count.” That’s because credit scoring models usually factor in the number of hard inquiries you have when they’re calculating your credit score. Generally, credit scoring models tend to associate a high number of hard inquiries, especially if they’re made within a relatively short period of time, with a high credit risk. It’s important to watch the number of hard inquiries you make because too many of them may affect your ability to get credit at the lowest-available rates.

Do inquiries remain on your credit report forever?

In short, no. They are automatically removed 2 years from the date they first show up on your credit report. As with other aspects of credit, the more time that passes, the less effect hard inquiries may have.

Loan shopping and inquiries.

Let’s say you’re shopping for a mortgage or car loan and want to find one with a good rate and other terms that work best for you. After all, especially with big purchases, you want to make sure you get the best financing you can. But every time you apply for credit, a hard inquiry happens. Does that mean you shouldn’t shop around for a loan?

Fortunately, no. Credit scoring models tend to account for this kind of activity. Generally, credit scoring will count several inquiries made over a relatively short period of time, like 45 days, as one single inquiry. That way, you won’t necessarily get penalized for causing several hard inquiries while shopping for one loan.

Bottom line.

Inquiries are a key, and often misunderstood, part of credit. But they aren’t everything. While you want to pay attention to how frequently you apply for credit, credit health encompasses much more than just hard inquiries. Keep an eye on your hard inquiries, but don’t lose sleep over them, especially if you’re paying your bills on time, not using too much of your available credit, and otherwise practicing healthy credit habits. In other words, keeping your hard inquiries in check should be just part of a healthy-credit habits!


This article is courtesy of TransUnion. TransUnion is a consumer credit reporting agency. TransUnion collects and aggregates information on over one billion individual consumers in over thirty countries including 200 million files profiling nearly every credit-active consumer in the United States.

Hire an Agent

After asking yourself, “are you are ready” to buy a home, step number one on The Home Buyer’s Road Map is to hire an agent. Finding a good real estate agent/broker is essential to enjoying a successful real estate transaction.  The question is, how do you find a good real estate agent? The best agent for you doesn’t necessarily work at the largest brokerage, close the most transactions or make the most money. The best agent for you is an experienced professional who will:

Listen to you

Ethically conduct themselves

Knows your market

Beyond these seemingly obvious fundamentals, there are a few more attributes your next realtor should have. When a real estate agent or broker is acting in an agency capacity for a buyer or seller client in a transaction, they have certain legally mandated duties that are called fiduciary duties.

“A fiduciary duty is the highest standard of care. The person who has a fiduciary duty is called the fiduciary, and the person to whom he owes the duty, is typically referred to as the principal or the beneficiary. If an individual breaches the fiduciary duties, he or she would need to account for the ill-gotten profit.”

The position of the agent or broker is a fiduciary capacity, acting in the best interests of the client. The specific fiduciary duties in a real estate transaction are as follows:

  • Loyalty – a broker/salesperson will act only in the client’s best interest.
  • Obedience – a broker/salesperson will carry out all the client’s lawful instructions.
  • Disclosure – a broker/salesperson will disclose to the client all material facts of which broker/salesperson has knowledge which might reasonably affect the client’s use and enjoyment of the property.
  • Confidentiality – a broker/salesperson will keep the client’s confidences unless required by law to disclose specific information (such as disclosure of material facts to buyers).
  • Reasonable Care – a broker/salesperson will use reasonable care in performing duties as an agent.
  • Accounting – a broker/salesperson will account to client for all client’s money and property received as agent.


What value to realtors provide? What do they actually do?

With so much information readily available online, people sometimes ask me, “Why should we hire a real estate agent?” They wonder, and rightfully so, if they couldn’t buy or sell a home through the Internet or regular marketing and advertising channels without representation, without a real estate agent.

Consumers hate agents because the business seems easy on the surface. To sell a home, some people think it means just stick a sign in the yard and post photographs online. Those two actions might bring a buyer but they don’t necessarily sell a home. A lot can happen between signing the contract and closing. A smart agent knows how to negotiate and how to handle problems that can pop up such as appraisal issues, home inspection repairs, buyer’s lender requirements, price guidance, buying and selling concurrently, contingency releases and more. In fact, there is quite a bit that realtors do. Here is a list of some of the common responsibilities:

 

 

  • Schedule showings
  • Schedule listing appointments
  • Maintain required continuing education
  • Deliver earnest money on time
  • Coordinate property inspections
  • Keep up with mortgage company progress
  • Verify buyer’s new homeowner’s insurance
  • Coordinate home warranty company
  • Negotiate counteroffers
  • Schedule closings
  • Attend closings
  • Get all disclosures delivered & signed
  • Keep the transaction on track
  • Provide educational materials to consumers
  • Keep your blog active
  • Maintain active social media profiles
  • Answer the phone all day & night
  • Return missed phone calls
  • Return emails asap
  • Follow up with website inquiries
  • Keep up with changing laws
  • Run comparables for buyers & sellers
  • Determine accurate pricing
  • Help stage & present properties
  • Meet the appraiser at property
  • Meet the inspector(s) at property
  • Show hundreds-thousands of homes each year
  • Get signed contract to title company
  • Negotiate repairs
  • Keep clients updated with each step
  • Provide comps for the appraiser
  • Coordinate closing
  • Make sure there is a clear title
  • Explain the contract to clients
  • Provide advice on offer price
  • Explain the current real estate market
  • Explain pros & cons of each neighborhood
  • Verify completion of repairs
  • Make sure the loan funds
  • Schedule & attend the walkthrough
  • Dispute low appraisals
  • Verify delivery of title commitment
  • Remind clients to schedule utilities
  • Manage your online reputation
  • Compete with 1,000’s of realtors® for business
  • Deal with vendors
  • Keep mls listing data current
  • Attend real estate conferences
  • Network with local home builders
  • Coordinate open houses
  • Check up on past clients
  • Still have a life after you’re done!

“Finding a Realtor is not hard, but finding one that is best-suited for you and your purchase is a challenge.” – Mark Moffatt, McEnearney Associates


So, where do I find someone who holds and demonstrates the values I care about?

Tips for Finding the Best Agent:

Get Referrals

Most real estate agents stay in business because satisfied clients refer them to friends, family, neighbors, and coworkers. Ask the people around you who they have used and ask them to describe their experiences with this real estate agent. Successful agents make customer satisfaction their number one priority and put their customers’ needs before their own.

Seek Advice and Information from Known Professionals

Use the mortgage  guy you know as a resource for agent referrals as many brokers have first-hand knowledge of exceptional agents. Ask your plumber. Ask your lawyer. Professionals tend to refer other professionals like themselves

Google!

It seems simple, but this is one the most effective methods of researching someone. Creep a little. Browse social media profiles. You can learn a lot about someone by what image they present online – especially by what they post and share! You will be working with this person for anywhere from one to six months. You’ll want to make sure you know as much as you can about them.


Now that I’ve found someone, what do I ask before I hire them? Do I really need to interview them?

Yes! Smart consumers interview potential real estate agents before deciding which agent to hire. Just as you are sizing up the potential for a good fit, rest assured that the real estate agent will likely be interviewing you, too. It won’t take long before you can get a good feel for who you might be hiring. In fact, studies have shown that you can size someone up with 5-10 seconds of meeting them.

It’s not necessary to act like a corporate hiring manager implementing a full-fledged professional behavioral employee interview. However, you should ask questions that satisfy your requirements. Here are a few examples:

What are the top three things that make you better than the other guy? It’s a simple question. A good realtor won’t hesitate to answer and should be able to clearly and concisely articulate why you should work with them. Everyone has their own standards, but most consumers say they are looking for agents who are: honest and trustworthy, friendly, available, good communicators, excellent negotiators, assertive, and analytical.

What is your marketing plan or strategy for my needs? As a buyer, you will need to know: How will you search for my new home? How many homes will I likely see before I find a home I want to buy? Will I be competing against other buyers? How do you handle multiple offers? Do you present offers yourself? Your agent should have a game plan ready to show you.

How long have you been in the business?  Keep in mind that longevity does not automatically equal quality. There is an ocean of licensed realtors in Minnesota. Yet, it is astounding to me the number of low quality individuals I come across posing as realtors that have been in the business for decades that are disengaged, entitled, lazy, and frankly, ineffective.


Buying or selling a home is statistically one of the most stressful events in a person’s life. Just like driving a car from point A to point B there will be bumps in the road and unexpected hazards along the way. However, with the professional assistance of a skilled realtor, if you are prepared, organized, have reasonable expectations, and are willing to adapt and “flex” on the path toward home ownership, the buying process can be a satisfying experience!

If you want to be sure that you are working with an agent who understands you, listens to you, and truly puts your best interests first please get in touch with me!

The Home Buyer’s Road Map

A major priority in my business is to be organized. I view this discipline as being essential to not only serving existing and attracting new clients, but it essential to maintaining control of my time and having any sense of work-life balance. Structure and process are part of my brand and I believe it serves my clients well.

To that end, I find it useful to make task lists and outlines while conducting my business. Not only will this keep me on track, it will help guide clients to stay focused and be obedient to timelines. This type of transparency helps clients understand and anticipate what happens next and ultimately enjoy a satisfying purchase experience.

I have developed methods and processes for working with clients that are organized in such a way that it will truly benefit anyone who is seeking to find and purchase a new home.

I call this process The Home Buyer’s Road Map. I will be unpacking each of the 12 STEPS toward buying a home in greater detail in a series of future articles. For now, I want to provide an overview of how it all flows.

Buying your first home can be an exciting time, and it’s likely the biggest purchase you’ll ever make. Don’t jump into it without being ready and doing your homework. Ask yourself, “What happens next? Do I understand the process? Am I prepared for each step along the way?”

What’s the FIRST thing you should do before you even start looking? Before you begin, first and foremost, you need to ask yourself, “am I ready to buy? Read more about this process in the article, “Are Your Ready to Buy?

Now that you’ve determined that you’re ready. Let’s begin.

1. Hire an agent. Selecting the correct real estate agent may be the most important decision you make in this process.

2. Get financing. Obtain financial pre-approval. Get in touch with a lender. I’d be happy to connect you with the right individual.

3. Game plan. Allow your agent to analyze the specific needs of you and your family with an in-depth buyer consultation. Where do we want to live? What style of house do we like? How many bedrooms, bathrooms, garage stalls, etc?  What style of house do we like? What school district do we want our kids enrolled?

4. Start shopping. After getting a full understanding of your wants and needs, let your agent get to work and start identifying an inventory of properties on the market.

5. Tour. Work with your agent to schedule showings.

6. Make an offer. You’ve found a house you like. Now it’s time to go after it by writing an intelligent, competitive, and winning offer to purchase.

7. Negotiate. The seller may or may not accept your offer as you have presented it. Have you agent negotiate terms that are satisfactory to you and the seller.

8. Acceptance. Accept the negotiated contract, begin the pre-closing process.

10. Contingencies. If your agent has structured your offer correctly, you will have certain protections to allow you to cancel the agreement if certain conditions aren’t met. The seller is obligated to remove contingencies that you have established. The common contingencies are financing, homeowner association covenants, and home inspections.

11. Close. After you have been guided through each step of the buying process it’s time to close on the property. All parties meet and sign the final paperwork.

12. Move in! Take possession of the home.

Buying or selling a home is statistically one of the most stressful events in a person’s life. This is the roadmap to buying a home. Just like driving a car from point A to point B there will be bumps in the road and unexpected hazards along the way. However, with the professional assistance of a skilled realtor, if you are prepared, organized, have reasonable expectations, and are willing to adapt and “flex” on the path toward home ownership, the buying process can be a satisfying experience!

If you want to be sure that you are working with an agent who understands you, listens to you, and truly puts your best interests first please get in touch with me!

Are you ready to buy?

Sure, all your friends are doing it. Geez, even your parents did it! Why can’t you? You watch HGTV. You’ve browsed Zillow.com. It’s easy. You’re ready. Let’s do this! Let’s buy a house!

Not so fast, professor.

Just because you THINK you can doesn’t mean you should. Buying your first home can be an exciting time, and it’s likely the biggest purchase you’ll ever make. Don’t jump into it without being ready and doing your homework. So, you want to buy a house? What’s the FIRST thing you should do before you even start looking? Let’s examine the important topics and questions you should ask yourself to find out if you’re ready to take the plunge into home ownership.


Examine your money situation. The single most important factor with home ownership is your budget. Having a household budget is your top priority. You need to know where you are financially to know exactly how much you can afford to spend on a new home. It’s important to have ALL your financial ducks in a row. Lenders look at your debt-to-income ratio. Generally, they want to make sure your monthly housing costs — including principal, interest, taxes, and insurance — will consume no more than one-third of your monthly gross income.

 

When you’re applying for a mortgage, what do lenders care about most?

• Income
• Down payment
• Credit score

Income. Is Your Job Secure? Financial stability is one of the biggest motivating factors when it comes to purchasing your first home. If you’ve had a stable income for two or more years, have achieved success in your career and expect more growth in your future, purchasing a home is also a wise decision.

Evaluating how long you plan to live in the house to make it financially worthwhile is wise. In overheated markets, you may have been able to flip a house for profit in less time. But with the upfront costs you’ll have to pay to buy a home, it’s smarter to put stick to the 5-to-7-year rule of thumb, especially in uncertain times. Consider any imminent life changes — such as switching careers, going back to school, or getting married — that could throw a wrench into your plan.

Does your current city feel like home? Ask yourself if you love your hometown and have no desire to live anywhere else. If you’re uncertain whether you’ll be in the same city for more than a year or two it might not be in your best interest to buy something in that market. However, if you love your city, purchasing a home there is a great idea!

Down Payment. Do you have enough money for a down payment? What is generally considered a reasonable monthly payment for a house? Your housing costs shouldn’t eat up too large of a slice of your income.

The 20%-down-payment rule of thumb is outdated. Putting that much down is excessive and unnecessary. A 10% down payment is the minimum smart buyers should aim for, but 20% is even better — and not at all excessive. That will save you the $50 to $100 per month you would otherwise pay for private mortgage insurance. It’ll also help you get a lower interest rate on your mortgage. Plus, in a slow housing market, putting down 20% will give you some equity in case you have to move sooner than expected. That equity also serves as an extra cushion of cash in an emergency.

What about closing costs? You’ll need to budget an extra 3% to 6% of the purchase price to cover costs at settlement. We all like to get paid for our work. Real estate professionals are no different. The professionals who are involved with the home purchase transaction need to be paid. These usually include the loan origination fee, any loan discounts or “points,” title insurance, attorney’s fees, property taxes as well as survey, state recording and transfer taxes, and other costs.

Credit Score. Do you know your credit score? What’s the minimum FICO credit score you need to get the best rate on a mortgage? You should be able to snag the best rates with a score of 760 or higher. Making sure your score is in good shape will not only help you get a loan, but also it could save you a lot of money. There are specific things you can do right now to affect your score in a positive way. Talk to your lender or give me a call. I’d be glad to guide you.

Home Improvement Projects. Ahh, yes! A place of your own. Home ownership will make your life so much easier. Owning a home takes a lot of time and energy. If something breaks, you must fix it, or pay someone else to fix it. You’re also responsible for upkeep, including yard work and shoveling snow (unless, of course, you buy a condominium without a yard). Will you have emergency cash if something goes wrong? You’ll need that cushion available for home-related emergencies, such as hiring the occasional plumber.

Do you get excited at the prospect of home improvement projects? One of the best parts about being a homeowner is getting to take the blank canvas of an empty house and make it your home. If you have an abundance of ideas for your future space and the energy to bring them to fruition, then you should get excited about the opportunity to own your first home. After all, home improvement only exists when you have a home of your own!

Rent vs. Purchase. Are you tired of renting? Most people start renting because they don’t have any savings, don’t have a steady job, don’t know how long they’ll be in a city, or don’t know which area they want to live in. For whatever reason they haven’t had their “moment” yet, time goes on, months to turn to years and life just gets too busy to worry about purchasing a home. If you looked back and calculated the amount of rent you had spent and put it into a mortgage calculator you would soon realize you could be sitting on thousands of dollars in equity in a home instead of just handing money over to the landlord. Living under rental conditions can be exhausting and expensive or liberating and time-freeing. Which is it for you?


Even if you can afford a house, don’t buy simply because you can. You’ve got to be prepared to live the lifestyle. Talk to friends and family about your options. Get advice from professionals. Connect with me. I am happy to help you examine your situation to see if home ownership is a wise decision for you.