Archive for January, 2008
Earnest Money Depost – Why? Who? How Much?
January 29th, 2008 Categories: Alexandria Dirt, Arlington Dirt, First Time Buyers Club, Home Buying, McLean Dirt, Real Estate 101, Reston Dirt
You’ve heard the term “good faith deposit” or “earnest money deposit” but what does it mean exactly? Who keeps it? What’s the purpose? Why does it matter? How much should it be? Let’s see if I can address all of these issues, bringing clarity to the importance of understanding the earnest money deposit.
What is it?
Here in Northern Virginia, when a buyer writes an offer on a property, our contract 
calls for it to be accompanied by an earnest money deposit of some amount – typically in the form of a personal check. This amount is usually a percent or two of the sales price… as a general rule of thumb. I’ve seen more – the higher the amount, the more seriously your offer is taken. This money belongs to the buyer, but it gets deposited prior to settlement usually with the real estate brokerage that is representing the buyer. However it is applied at settlement towards your closing costs or down payment.
Why do I need it?
The purpose of it is to show the seller that the buyer is serious about the purchase. It is the money that they are risking to lose should they default on the contract. Remember, I said “default.” If the buyer finds something with the home inspection or the association documents that they are unhappy about and can’t work out a solution, they can walk away under most circumstances and they will receive that earnest money back from the broker. However, if they walk away with no cause, or with no “out” from the contract — it’s default and they stand to lose that earnest money deposit and sometimes more. So it’s the money they’re putting forward in good faith indicating their intent to follow through on the contract.
Does it really matter how much I write it for?
From the seller’s perspective, if they received 2 contracts, one with a deposit of a few hundred dollars vs. another with one that was $10,000 – which do you think they’d consider to be stronger? Right, the one that’s higher indicating a higher degree of seriousness.
Now, it’s not all about earnest money - there are plenty of other factors that go into writing a good solid contract – but it is certainly a consideration that everyone should understand in order to be aware of the implications.
For professional guidance through the home buying process, give me a jingle! I’d be more than happy to help educate you on all of the ins and outs of good contract writing. Then, when you’re ready to move forward with your offer, you’ll be knowledgeable about the process and the process can move along smoothly!
Happy Tuesday!
Jennifer Klaussen
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation! Spring is right around the corner!
| Discussion: 1 Comment »
Homeowners Insurance – the Ins and Outs
January 28th, 2008 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, First Time Buyers Club, Home Buying, Home Selling, McLean Dirt, Real Estate 101, Reston Dirt
One of the necessary things to plan for when making a real estate purchase is insurance. But what do you need? Well, I’m not an insurance agent (read: insurance expert), but I can tell you from a property ownership perspective the minimums that you should have… read on.
Condominium Insurance Needs
When purchasing a condominium, the association carries a master insurance policy on the entire building structure. This is one of the costs that your condo fee covers. However, you’re not off the hook. You should have insurance to cover your personal belongings, as well as personal liability, so if anyone ever injures themselves on your property, you’re covered.
Single Family and Townhome Insurance Needs
When purchasing any other type of property with fee simple ownership (when you own the ground and air above – exterior walls, fireplaces, roofs, etc…) then you need a full featured home-owners policy, sometimes called a hazard policy, covering the structure, contents, liability, etc. There are specialty riders as well. For example, here in Northern Virginia, we don’t worry too much about earthquake policies and not too many properties are affected by the 100 year flood plain (although there are some) and require special flood insurance.
What to do?
One of your first jobs once you have a ratified contract will be to contact an insurance agent or two, get quotes and make application for insurance.
You’ll need to know such things as:
Wiring type
age of roof
# of layers on the roof (sometimes a new layer of shingles is nailed right onto the old layer)
distance to nearest fire hydrant
etc…
They will also run a C.L.U.E. report. The C.L.U.E. report (Comprehensive Loss Underwriting Exchange) will provide a 5 year history of losses associated with an individual and his/her property.
The home insurance policy will be paid for in full for the first year at the settlement table. Your lender will then begin to escrow 1/12 of your annual policy amount so that the beginning of year 2, they will have collected enough money from you to cover the premium that will come due at that point. IF for some reason you don’t go to settlement – say the contract gets voided because of an inspection item, or an appraisal issue – you’re not on the hook at all — after all, no service has been rendered. You simply call the insurance company and tell them the deal isn’t going through. They can sit tight until the next time!
Additionally, something many don’t realize, if you move to your new residence and have to leave a property vacant, communicating that to your insurance agent is very important. Since it’s obviously vacant, you won’t need to continue to insure the contents, but you will need to carry at a minimum a basic fire policy AND a comprehensive liability policy.
The key to good insurance is communicating with your agent. There are many great insurance companies out there – find one you’re comfortable with that offers competitive rates and you should be set. As always, if you want to talk further, don’t hesitate to give me a call or email.
Happy Monday!
Jennifer
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation! Spring is right around the corner!
| Discussion: 1 Comment »
Keller Who?
January 25th, 2008 Categories: Alexandria Dirt, Arlington Dirt, Home Buying, Home Selling, McLean Dirt, Reston Dirt
Keller Williams – the BEST real estate company in the world, just my humble opinion. Many people in the DC area are not familiar with Keller Williams – so let me introduce you.
Gary Keller and Joe Williams began Keller Williams in Austin Texas in 1983 – yes, 1983. Today, Keller Williams is the 4th Largest residential real estate franchise in the country with nearly 75,000 agents worldwide with a sales volume of over $94 BILLION dollars.
Keller Williams encourages agents to see their business AS A BUSINESS – not a job. We are uniquely innovative in our approach! There are many systems and programs in place to help the agents become successful business people, thus raising the standards that we can provide to our clients. We’re committed to education, training, and quality of life. Never before have I felt my real estate brokerage was so vested in my personal success as I do now.
I am so very proud to be a part of this organization! So the next time you think real estate, think Jennifer Klaussen – I bring the knowledge, expertise and personality to the table to ensure that you have a successful transaction. I happen to have a great brokerage firm behind me and that means a lot!
Happy Friday!
Jennifer Klaussen, Keller Williams Arlington
Proudly serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer consultation! Spring is right around the corner and I have all of the tools to help you buy and sell successfully in this market!
| Discussion: 1 Comment »
Buyer Agency – The Good, The Bad and the UGLY
January 24th, 2008 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, First Time Buyers Club, Home Buying, McLean Dirt, Reston Dirt
Today’s topic is sometimes a sticky one – sometimes misunderstood – sometimes abused – but most of the time, it works out wonderfully for all parties involved.
Today I came across some information that really surprised me. I received a referral from another real estate agent this past winter and worked with
this particular client for 2 1/2 months to help them find their dream home under a buyer agency representation agreement. During that time, we wrote one contract that didn’t go through due to the presence of a better offer. In my estimation, we looked at somewhere between 50 and 60 homes together. That’s A LOT!!! At the end of those months together, they seemed exhausted and frustrated and decided to take a break – they told me they were renewing their lease for another 6 months and would resume their search thereafter. They thanked me for my diligence, my patience with their schedule and my hard work to date, promising to get in touch when it was time to resume the search.
I found out today that 11 days after they told me this, they SETTLED on another property in a neighborhood we’d been looking in. When I contacted them today to ask them what happened, they were surprised to hear that I felt that compensation was due, not to mention that the buyer agency agreement that they signed said it was due. Imagine – they felt that they found the property and consummated the deal without my assistance so therefore I was not due any compensation. What about the 2 months that we worked together? 2 or sometimes 3 days/week – 5 and 6 houses at a time? Missing family events, running out on short notice, quickly previewing new listings and actively chasing down possibilities that weren’t even on the market in their “dream” neighborhood? Hmmmmmm
Obviously feelings are involved, at least on my part – I worked hard, put their needs first, helped educate them, both on the housing market and on lending options, helped them explore different neighborhoods, communities, home styles, etc… my feelings are hurt that all of this effort was not rewarded with compensation. Their feeling is that it’s the nature of the business and I should just deal with it and move on.
Signing a buyer agency agreement is putting in place a contract hiring a qualified, competent real estate agent to work for you. That agent is putting in the time with an agreement that at the end, compensation will be earned. What other business can you think of where someone works for free on the hopes that it all works out? This is very much of a relationship built on trust. The beauty of buyer agency is that the SELLER PAYS THE COMMISSION!!! This is the way I put food on my table for my family – it’s not something I do recreationally for the pleasure of serving others. Don’t get me wrong, for the most part I enjoy each and every one of my clients and we have built long lasting, solid relationships because it’s a mutually 
rewarding and respectful relationship. But it’s how I earn a living.
I’d love to work with you – but please respect me and my time. I will give tirelessly in the pursuit of the perfect place for you to purchase – but I look for mutual commitment. Like I said in the beginning of this post, 99% of the time, buyer agency is a beautiful thing!
Happy Thursday
Jennifer
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation! Spring is right around the corner!
| Discussion: 4 Comments »
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