Old House or New House: Which is Right for You?

Old House or New House

The following is an excerpt from Local Real Estate News.

My fiancé and I are searching for our new dream home in a central metropolitan area. Over the past few months, we have been struggling with the decision of whether or not we should purchase an old house or new house. I love the charm of the older homes in the area, but I’m not sure if they hold as much value as a new home would. From your experience, would you say that an older home could be worth as much as a home that was recently built?

Sandy Q.

Dear Sandy,

This is often a question we hear when buyers, like yourself, are interested in centralized properties. So, let’s jump straight into the new house or old house debate.

Pros of Buying an Old House

If you’re looking for beautiful architecture, mature landscaping, lower upfront costs, and a more centralized location, an older house just might be for you. Let’s take a look.

Architecture

Many older homes offer a certain charm and elegance that newer builds lack. Turn-of-the-century homes, Victorians, Colonials, and Tudors are just a few of the architectural styles that today’s home builders hesitate to replicate. It’s far more time and cost-efficient for builders to construct cookie-cutter homes. If the architectural character is near the top of your must-have list then an older home might be right for you.

Mature Landscaping

Land used to be more affordable in ye old olden days so older homes often come with larger yards than new builds. It’s common to find that many years, much effort, and 10’s of thousands of dollars have already been put into the landscaping of an older home by previous owners. A beautiful yard that you didn’t have to do: what more could you want?

Centralized Location

Older homes tend to be bigger, more centrally located, closer to downtown, and in stronger communities making them less likely to undergo zoning changes.

It makes sense when you think about it. Families used to only have one car and before the time of cars, people used their own two feet to get around (or a horse’s four hooves!). Everyone built as close to town as possible to keep close to amenities like the post office or corner store. As the population grew, people had no choice but to build farther away.

Lower Cost

You may pay for the charm and elegance but these old, unique homes cost much less than new builds on average and offer homeownership opportunities to those who can’t afford new builds with the skyrocketing lumber prices.

Cons of Buying an Old House

Buying an older house isn’t all roses though. An older home is more likely to have big-ticket maintenance expenses sooner than a new build, as well as increased utility costs, and an outdated interior style.

Maintenance Costs

With older homes come older materials, so expect to budget for a few maintenance costs. Be sure to have a home inspection done that checks out the big-ticket maintenance expenses like windows, roof, siding, and HVAC so you aren’t surprised with a massive bill a month after you bought the home.

Utility Costs

Speaking of windows, a lot of the materials used during home construction have improved. Double-paned windows and increased insulation allow a home to better retain heat or air depending on the season. If your old build home has single-paned windows expect a higher heating bill come this winter.

Style

In an aged home, you rely largely on the previous resident’s tastes and technological whims, unless you plan to farm thousands into a remodeling. A new build often has an open floor plan while older homes reflect the needs of the time it was built by offering smaller, more separate spaces.

Pros of Buying a New House

Many people consider a new build more valuable because there should be no major expenses in the first few years of ownership and the utilities should be lower thanks to energy-efficient building materials.

Delayed Major Maintenance Costs

New homes mean new water heater, new roof, new windows, new appliances, new everything. Which, hopefully, means that the homeowner can avoid those hefty maintenance expenses for a while those who purchase older homes can usually expect to fork out some serious coin for, say, a new roof.

Energy Efficiency

Homes are better insulated than they’ve ever been and that’s resulted in lower utility bills for heating in the winter and cooling in the summer. Double-paned windows help prevent the escape of air as well leaving new build homeowners sighing in relief.

Larger Living Spaces

In a new house, modern features like media rooms, large closets, and extra-large bathrooms are more attainable. More electric outlets are built into a new home in more convenient locations as society becomes increasingly dependent on electrical energy.

Cons of Buying a New House

Smaller Outdoor Space

As the price of land increases, the outdoor space that comes with a home decreases. If you’re looking for a big backyard for your pup to run around in, a new build may not be for you.

Less Centralized

Newer builds are often much less centralized than older homes. As more homes are built, there is less space to build on in town. There is no choice but to build farther and farther out.

Higher Upfront Costs

A new house means higher upfront costs. You won’t have to replace that new roof for a few years but you will have to pay for that privilege. Major maintenance costs are delayed for now because you’re buying everything new.

The Bottom Line of New House or Old House: Value is in the Eye of the Beholder.

The truth of the matter is that the value is in the eye of the beholder. We recommend making your must-have list and your wants list then matching them to the homes you’re looking at and your budget. An older home that needs a little TLC might be more attainable than a newer home, or a new build might be the move-in ready place you need. Your housing needs are unique and only you can pick the home that is right for you.

If you have any additional questions about the values of your home, we are always happy to have a chat free from obligation. Just give us a call at 614-888-6100.

What You Need to Know About an Appraisal Gap

Appraisal Gap

Let’s start with the one thing everyone knows about real estate at the moment. It is a sellers’ market. Whenever you take a mortgage out to buy property; all mortgage lenders require an appraisal. An appraisal is an unbiased estimate of the fair market value of the property. This is so lenders can ensure that the borrower is requesting an appropriate amount for the purchase.

With the real estate market today, buyers are purchasing homes above the market value. This leads to an Appraisal Gap which means you’ve agreed to pay more than the house is worth according to the appraiser. This seemingly unimportant term results in complications, delays, & sometimes losing out on your dream home.

So, what can you do when you find yourself with an Appraisal Gap?

Pay the Difference in Cash

You’ve put an offer in on the house but your mortgage lender won’t lend you more than the house is worth. Your first option is to pay the difference in cash. This means your down payment will be bigger than expected. You’ll have to cover the difference between the appraised value and the price, or risk having others buy the property you want, when you can’t or won’t go through with the sale.

Walk Away

This option is the least risky, but you’ll find yourself back in the same place as you were before. Needing a house, fast.

Renegotiate

You could ask the seller to cut the price to the appraised value or to split the difference with you. Unfortunately, in this seller’s market, you’re more likely to be told to take a hike than to be invited to the negotiation table.

Request a Review

If you think you’ve found errors in the appraiser’s report, you can request a review of the appraisal. Your agent can help with the research and paperwork but anything that drags out the buying process may lose you the house. After all, this seller most likely has offers from other buyers that can happen immediately and under more favorable terms.

Apply with Another Lender

You could also apply with another lender in the hopes of receiving a more favorable appraisal, but like requesting a review, this takes time, and you might get the exact same answer.

Or, you could eliminate the issue before it starts with Appraisal Gap Coverage.

But wait, you say, I already have an appraisal contingency in my home purchase contract. An appraisal contingency is not the same as appraisal gap coverage. A contingency says that the buyer or seller can call off the deal if the property is appraised for lower than the buyer offered. No problem, you’re covered, right?

Not exactly. In hot real estate markets, like we’re currently in, buyers will waive the appraisal contingency to make themselves more appealing to sellers.

Appraisal gap coverage is different. It is custom wording in the purchase contract that guarantees that you will pay the difference between the appraised value and the contract price, up to a certain amount, if an appraisal gap becomes an issue.

From the seller’s perspective, this lowers the risk of a financing-contingent deal falling through by guaranteeing an acceptable appraisal gap amount that can occur without giving the buyer a way out of the deal.

For the buyer, it makes their offer more compelling and allows them to walk away if the appraisal gap is bigger than the agreed-upon amount, which is clearly stated and outlined in the contract.

Buying a home in this market is complicated. Be sure to discuss all your options with The Columbus Team before submitting or accepting an offer and definitely before signing a contract! 

There you have it. Everything you need to know about Appraisal Gaps and how to use them to your advantage. Happy House Hunting!

Questions to ask at an Open House or Showing

By Maddie Ogden

Open houses and house showings can be overwhelming, especially for first-time buyers. It is the first opportunity for you to see your potential new home. While these events are exciting, it is also the perfect time for you to ask important questions about the house.

You may be wondering, what sort of questions should I be asking? That is exactly what we are here for! Here are some questions you should ask both before and during an open house.

Questions to ask before the Open House or Showing

  1. How long has the house been on the market?
  2. Have there been any price reductions?
  3. Is it vacant? If so, how long has it been vacant?

Go over the following questions with your chosen real estate agent since they can be indicators of how desirable the property is.

  1. Why are the owners selling?
  2. Have there been any offers?
  3. When does the seller want to move?

Questions about the sellers expectations are also important to go over with your chosen real estate agent before an open house or showing. The answers to these questions hint at what the negotiation process will be like and how quickly the seller wants to close.

Questions to Ask During the Open House or Showing

  1. What are the house’s biggest problems?
  2. Has the house been tested for mold, radon, lead, and/or asbestos?
  3. When was the last time the roof was replaced?
  4. Is the house in a flood zone?
  5. How much do the utilities cost?

If you are seriously interested in purchasing the property, here is additional information about the community you may want to know. The answers to these questions will help finalize your decision to make an offer.

  1. What is the neighborhood like?
  2. What’s within walking and driving distance?
  3. Is there a Homeowner’s Association?
  4. What is the crime rate in the neighborhood?
  5. Where can I get information on the local schools?

Knowing information about the neighborhood is just as important as knowing information about the house.  If you don’t like the neighborhood the house is in, then chances are you will not be satisfied with the house.

Questions to Ask Yourself Before Making Your Offer

  1. Will my furniture fit here?
  2. What’s the cell signal like?
  3. What updates would I make, if any?
  4. Can I picture this house becoming my home?

Open houses and showings are an excellent way to gather information about a particular home that has caught your interest. Ultimately, you are the only one who can decide whether a house is right for you, or not.  We are here to help you find a home that is a perfect match for you!

Mortgages and Credit Repair

Mortgages and Credit Repair

Buying a home is a major purchase and having bad credit is an obstacle. Your ability to obtain a mortgage is contingent on your credit score, employment, and overall financial picture, often heavily influenced by your FICO score. Your FICO score will influence your interest rate and subsequently your loan payments. However, if your credit isn’t perfect at this time, don’t let this deter your goal of buying a home. Instead, the desire to purchase a home can be a motivator to attend to your credit repair.

In a competitive Real Estate market, home sellers and REALTORS®, will be unlikely to consider your offer if it doesn’t include a pre-approval letter from your Mortgage Lender. Before you make your offer, improving your credit score can greatly affect the interest rate of your mortgage loan and ultimately the cost of your new home. We recommend embarking on a credit repair at least one year before you are ready to make an offer on a property. Talk with your REALTOR® to help you locate a great Lender that will work with you to repair your credit history.

Likely you will want to consider a twofold approach:

1) Dispute any negative information on your report; and

2) Rebuild positive credit and good financial habits moving forward. 

The following are tips for improving your credit score:

  • Pay your bills on time. Set up payment reminders to ensure you pay all your bills on time. Missing credit payments is one of the biggest contributors to bad credit. 
  • Reduce your debt. Come up with a realistic plan to reduce any debt you have, whether it’s credit card debt, student loans, etc. Even if you close an account, the debt will still show up on your credit report. If your debt is significant, consider meeting with a financial planner. 
  • Manage your credit cards responsibly. Credit cards can actually improve your credit as long as you pay your bill on time and keep your balance below 30%.
  • Pay off debt instead of moving it around. It’s better to pay your debt on each credit card you have open rather than lumping it into one payment. Paying your debt and managing your debt ratio can actually lower your credit score.

We have many excellent lenders in the Columbus area and The Columbus Team REALTORS® will be happy to help you choose a Lender to help you obtain a mortgage. A lender will take an in-depth look at your household income and expenses, and they can tell you what mortgage payment would be best based on your current debt-to-income ratio. 

What Does a REALTOR Do When I’m Buying a Home?

What Does a REALTOR Do When I'm Buying a Home?

You know your Buyer’s Agent searches homes for sale on the internet, schedules appointment to see them, and drives over to the viewing, right? So, aside from that, what does a REALTOR do?  Why should you engage one?

REALTORS do so much more for you than simply searching for homes based on your criteria and driving you over to see them!

Here’s some of the many hats your REALTOR will wear during your real estate journey:

Location expert. As your Real Estate Agent, we will listen closely to your needs and desires when it comes to your dream home and your ideal neighborhood. The Columbus Team knows Central Ohio, and we can help you identify neighborhoods that meet your expectations, and we have tools that allow us to search for homes that match your list of must-haves.

Market expert. We’ve spent years getting to know the Central Ohio real estate market. Using comparable home sales in the neighborhood you desire, we can tell you if a home is priced accurately, and give you advice on sales in that area. You can buy and sell with confidence, knowing you’re getting the right price.

Network connections. As an experienced team, we often know about homes coming up for sale which haven’t been listed, plus, once you’ve identified your dream home we can put you in touch with trusted service professionals from inspectors to contractors.

Advocate. As your agent, we represent your best interests in every transaction.  We are your long-term advocates.

Negotiator. In negotiations, we listen to what you have told us is important to you and represent your interests in the process. We help take the emotional component out of negotiations over price and repairs, so that you can simply get the best deal possible without making it a personal conflict.

Guide. We know the selling and buying process. We keep you and your home sale or purchase on schedule and moving forward.  We manage the contract process, from start to finish. From inspections to paperwork, whether buying or selling, REALTORS manage the details so you don’t have to. Experienced, we can also tell you where the pitfalls are and help you avoid them.

If you’re looking for an professional to guide you through a real estate purchase, an expert on the market, an expert on Central Ohio neighborhoods, and a large network of expert and reliable contractors, professionals, and real estate agents, contact The Columbus Team today!