Homeowners Insurance When Buying or Selling Real Estate

Did you know that when buying a home you should have your homeowners insurance coverage begin AT LEAST the day before closing? The last thing a Buyer wants is to be signing to buy a home without homeowners insurance coverage. What if the home burned down while you were at the title company closing? A scary thought, and rare I know, but it has happened. Did you know that when selling a home you should keep your homeowners insurance in place until AT LEAST a day after closing AND FUNDING. It sometimes takes a day (or longer) for the Buyer's loan to fund after all of the paperwork has been signed... and ownership/title does not transfer until then. The last thing a Seller wants is to be signing to sell their home without homeowners insurance coverage. What if the home you were selling was vandalized as you were leaving the title company from your closing? Even after you've signed the paperwork, you still own (and are responsible for) the home until the Buyer's loan funds (and that may be the next day, or longer). Long story short, whether buying or selling, you want an extra day or two of insurance coverage. It will only cost a few dollars but could save you hundreds of thousands. Ideally, good real estate agents would like the Buyer and Seller to have overlapping insurance coverage so that, should something happen to the home during the "grey area" of property ownership/title transfer, the two insurance companies can argue over who's going to pay for it (instead of trying to pin the costs on the Buyer or Seller).

Important note: Most insurance companies require you to notify them if your home becomes vacant (i.e. you move out to head to your new home). It's usually in your policy if you read the fine print (or ask your agent). Without notifying them that you have moved out (and obtaining what some call a "vacancy rider") you run the risk that they could deny claims on your home and leave you, in essence, without coverage.

I'm happy to help answer any general questions about closing, funding, insurance, etc. For any insurance questions specific to your policy, it's best to check with your insurance agent.

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com

LOST CREEK RANCH FALL FESTIVAL PLANNED FOR OCTOBER 7, 2007

Residents of Lost Creek Ranch: Be sure to mark October 7th on your calendars for the Lost Creek Ranch Fall Festival from 2pm-5pm at the park on Charleston Dr. and Xavier Dr. You and your family won't want to miss it as there will be bounce houses, trackless train rides, a canned food drive/prize raffel, a Halloween costume contest, a cake/cookie walk, vendor booths and a Chili Cook off with a great prize for first place (open to all residents). There will be fun for all ages so plan to attend! If you would like to set up a vendor booth (Lost Creek residents only), volunteer to help, or just get general information (or more on the Chili Cook off) you can call Ryan Cave, The "Caveman" at 214-789-9366.
If rained out, the rain date is October 14th, same time, same location.

*** We need more chili cookoff teams step up and cook/compete for the big prize! ***

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com

As stated previously: When you buy a pre-owned home in Texas, you'll generally find yourself writing two checks along with your purchase contract: One for "Option Money" (made payable to the Seller) and one for "Earnest Money" (made payable to the closing Title Company). Today's topic is almost always the larger of the two, Earnest Money:

"Earnest Money" is exactly that: money that the Buyer of a home puts up (generally in escrow with a title company) to show the Seller that they are serious about buying the home. The amount of Earnest Money can vary widely, and is dependent on the terms of the contract (i.e. a longer time before closing may mean more Earnest Money) but it is often between .5% and 1.25% of the sales price. So, $1,500 would not be unusual as Earnest Money on the purchase of a $200,000 home. If the sale goes through, it is almost always credited towards the closing costs or down payment of the Buyer. So, think of it as a deposit to hold the house. There are generally two opportunities for a Buyer to get out of a deal (contract) and retain their Earnest Money:

1. During the "Option Period" (generally the first 7-10 days of a contract) a Buyer may terminate a contract for any reason and receive their full Earnest Money back... if they had an Option Period and their Option Fee was receipted within 2 days of contract execution (see the previous post about Option Fees).
2. During the "Third Party Finance Period" (generally the first 10-20 days of a contract) a Buyer may terminate a contract if they can prove that they cannot obtain the financing specified in the Third Party Finance Addenda of their contract.

After these two "outs" a Buyer cannot generally get out of a contract without being considered in default of contract. If a Buyer defaults (i.e. doesn't close) on a contract to purchase a home in Texas, the contract gives the Seller three remedies:

1. Specific Performance (i.e. the Seller may sue to make the Buyer buy the home)
2. Damages (i.e. the Seller may sue the Buyer for any/all damages that Seller suffered due to the default. This can get VERY expensive for a Buyer as it may involve moving costs, a second mortgage and more).
3. Accept the Buyer's Earnest Money as liquidated damages (i.e. in lieu of a lawsuit).

So, while many Buyers don't want to put up a lot of Earnest Money, it is actually in a Buyer's best interest to write a decent sized check when it comes to Earnest Money. Not only does this show the Seller that the Buyer is sincere and plans to go forward with the purchase, but they will be credited with the money at closing anyway... and should they Buyer not close on the home, they will either get the money back, or if in default, most Buyers would much prefer that the Seller feel comfortable with the amount of Earnest Money that they could keep than decide to sue (i.e. if the amount of Earnest money is too small to satisfy them).

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com

When you buy a pre-owned home in Texas, you'll generally find yourself writing two checks along with your purchase contract: One for "Option Money" (made payable to the Seller) and one for "Earnest Money" (made payable to the closing Title Company). Let's talk about the first of those here:

"Option Money" (or the "Option Fee") is what you, as a buyer, pay the Seller for the unrestricted right to terminate your contract for a set period of time (sometimes know as the "Option Period"). The Option Fee can range widely depending on the price of the home and terms of the contract, but generally $75-$100 for every $100,000 worth of home will buy you a normal Option Period. Generally, these last the first 7-10 days of a contract from the day it was executed, or agreed upon, by all parties. During this time, property inspections are usually performed and quotes are sometimes gathered by Buyers and/or Sellers for any repairs that the Buyer deems necessary. Generally speaking, the Buyer is paying the Seller to take the property off the market while they check it out more thoroughly and negotiate any repairs of previously unknown problems. Real Estate Agents may still show the home, and even write a back-up contract(s) with another Buyer, but the Seller cannot usually back out of the primary contract for sale; only a buyer, who paid his Option Fee, can do this. Reasons for a Buyer terminating a contract during the Option Period may range from a property needing too many repairs (or a Seller not agreeing to repair enough to satisfy the Buyer) to the Buyers finding a better deal or just changing his mind. I could write a whole page (in fact I probably will) on negotiating repairs. Just know that once both parties have agreed on any/all repairs, you can move on out of the Option Period and one step closer to the sale of the home. The Option Period can also be extended, with both Buyer and Seller consent, by paying an additional "Option Fee". Sometimes a few more days may be needed (especially if major repairs are found to be needed) for both parties to get quotes. The Option Fee belongs to the Seller once a contract is executed and will generally be credited back to the Buyer at closing (if all parties have agreed to this in the contract). So, in summary, most Buyers are not to upset if they have to lose their Option Fee. In these cases, the home generally had more problems than they expected, or the Seller was not willing to fix enough to please them. Option Money also allows sellers to rest assured that they are not wasting their time. Once they have a contract, the Buyer is on the hook for the Option Fee plus any Buyer inspection costs.

*Important note: The Option Fee must be receipted (by the Seller or their Agent) within two days of the contract being executed (agreed upon by all parties & dated) or the Buyer may waive his/her right to their Option Period. This means that as a Buyer, your Agent better really stay on top of things or it could adversely affect you/your contract.

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com

A community yard sale can be a great way to clear out our garage, and home, of unwanted clutter. Get rid of that old desk, that extra coffee maker, or that exercise equipment that is serving as a clothes rack. The advantages of a community yard sale vs. going it alone:

• Many homeowners can pool together and buy an ad or two local newspapers.
• Only one set of signs is generally needed around the exterior of the neighborhood.
• Homeowner Associations will sometimes help advertise.
• More yard sale participants usually means more shoppers.

Lost Creek Ranch is having our annual community yard sale 9/15/07 at 8am. We try not to use garages unless they are front-entry to avoid traffic jams in the alleys. So what are you waiting for? Pick a date and get organizing (while the weather is still nice)!

There are lots of questions recently surrounding real estate and mortgage markets. So, I thought I would post a recent article I read that addresses some of them. Keep in mind that these are just one person's opinions, based on observations of the markets, but I tend to agree with most all of what is said below.

~The "Caveman"

Clients need the hard facts about the mortgage market

The current upheaval in the market has given rise to significant opportunities to help your clients make informed decisions. Tom Sherman, President of Mortgage Services Unlimited in Dallas, emphasizes the importance of educating clients.

For your sellers, the following points are key:

• Home values will stay stagnant or potentially decrease.
• Qualified borrowers are looking for deals.
• Fewer borrowers are qualifying for home loans.
• Rising foreclosures tend to negatively affect home values.
• Increased "days on the market" (DOMs) increases the likelihood that buyers will aggressively negotiate prices down.
• Continued stress in the financial markets will affect consumer confidence.
• Loans may take longer to close.
• Appraisals are becoming more difficult to obtain.
• Properties should be funded before contract contingencies are removed.

It's critical to encourage sellers to price homes to sell -- and sell quickly -- decreasing the need for price reductions.

Sherman notes that buyers also need to be armed with specific tips on how to navigate most effectively in the current market:

• Make decisions to buy sooner than later - loan guidelines are changing so quickly that an approval today may not be an approval in the future.
• Diligently protect your credit.
• Make sure that lenders are placing loans with financial institutions that can close on them.
• If someone is saying that something that is too good to be true, it probably is!
• A down payment on a property not only strengthens the case - it may be a necessity in the very near future.
• Fly-by-night lenders will say anything to get the deal. Verify anything being offered through a reputable lender.
• Rate locks and product locks can be subject to change when a market is shifting.
• Loans take much longer to close in the current market.
• Pre-approval is critical.

This uncertain market provides a huge and unique opportunity for skilled agents to educate clients, gain their confidence and loyalty and build lasting relationships.

If you have a question about anything real estate related, have something to contribute, or just need some information... let me know. I'll do my best to get right back to you. If the answer/information is not private, I'll post it here on my blog for all to read and comment on. Chances are, others have similar questions and will appreciate your inquiry or information.

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com
 

In case you haven't heard, the City of Allen recently announced a joint venture with Global Entertainment Corporation (AMEX:GEE) and The MGHerring Group to build a $50-million event center. This is exciting news as the event center will offer a venue for concerts, top touring shows, family entertainment and professional sports upon its opening (set for fall 2009). The Allen Event Center is set to include 7,500 fixed seats and 26 luxury suites. It will be part of The Village at Allen, a 181-acre mixed-use development of The MGHerring Group, located on the southeast corner of US 75 and Stacy Road. In addition to the event center and a full service hotel, the development features over 1.5 million square feet of retail, restaurant, and office space. The shopping center is scheduled to open October 2008. "A regional event center has been on the Allen City Council's strategic plan for many years," said Allen Mayor Stephen Terrell. "This multi-purpose facility will have a significant ripple effect through our local economy. The public-private partnership of the project will create a first-class entertainment and sports venue without creating an impact to local taxes. " Global Entertainment, an integrated events and entertainment company, has subsidiaries in sports management, arena and related real estate development, facility and venue management and marketing, venue ticketing and branded licensing. It operates the 17-team Central Hockey League from its headquarters in Phoenix. Global Entertainment anticipates approximately 150 revenue generating events in the center each year, with more than 600,000 visitors annually. The facility will also be used for trade shows, community ceremonies, festivals, open rink ice skating, and high school sporting events and activities. Each facility managed by Global Entertainment caters to specific interests of the regional market.

Read more here: http://villageatallen.com/

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com

The Village at Fairview has been selected as the location for the first Village Roadshow Gold Class Cinema in the Dallas-Fort Worth Metroplex. The Village at Fairview will feature a 38,000-square-foot, eight-screen Gold Class Cinema located above the retail portion of the development. Targeting the sophisticated movie-goer, Gold Class Cinemas are a luxurious cinema destination, offering the ultimate cinema experience. The theater will feature an intimate setting with plush recliners, designed exclusively for Gold Class Cinemas and state-of-the-art, digital sound and projection technology. Each individual seat will be equipped with a call button for personal wait service, and patrons will be able to choose from a gourmet menu and premium wine selection. Additional amenities include valet parking, concierge service and a lounge area where patrons can relax with a cocktail before viewing their film.The Village at Fairview is scheduled to open in Fall 2008. Plans for The Village at Fairview include a 1 million-square-foot retail component anchored by Dillard's, Macy's, JCPenney, The Container Store and Barnes & Noble. Other plans include 500,000 square feet of specialty shops and restaurants; a 200,000-square-foot class-A office building; more than 1,000 multi-family residential units; and the 280-room Embassy Suites Hotel Fairview with an adjoining 80,000-square-foot conference center.The site for The Village at Fairview is located on 200 acres at the northeast corner of Stacy Road and U.S. 75 in Collin County. The Village at Fairview will be one component of a 400-acre, regional, mixed-use development located in both Fairview and Allen, Texas. The Village at Fairview and The Village at Allen will be separated by Stacy Road but designed and developed as one project. Once completed, the mixed-use development will include more than 2 million square feet of retail and 1 million square feet of office, residential and hotel space.

Read more here: http://villageatfairview.com/

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com

LCR HOA ANNUAL YARD SALE SEPTEMBER 15, 2007

It is time to start cleaning out your garage again! Our Neighborhood, Annual Yard sale will be held Saturday, September 15, 2007 starting at 8 am. The Lost Creek Ranch HOA will provide all signage and advertising We advertise in the Dallas Morning News, Collin County Community pages (Allen American), and Allen Online. They will follow all city guidelines and put up signs in and around the neighborhood. Unless you have a front entry garage, they request that you hold your sale in your front yard. The traffic to our sale grows each year and the congestion in the alleys would be horrendous if the sales were held in the back. Thank You for your cooperation and participation.

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com