Buying a Home in Raleigh NC

Raleigh Teaches How to Buy a Home

Classes on Mortgages, Home Buying, Making Good Decisions

I just found out that there are some great classes available through RADA, the Raleigh Area Development Authority!

There are 10 classes altogether, with about 12 hours worth of great learning time.

Potential homebuyers can learn about

- Qualifying for a mortgage

- Shopping for a home

- Applying for a loan

- Closing on a home

There are also other programs for employer-assisted homebuyer education, mortgage assistance, senior computer literacy, and financial literacy. 

One of RADA's primary goals is to help turn renters (especially those in low-income areas of Raleigh) into homeowners.  Another goal is to cooperate with lenders to find affordable loans for qualifying homebuyers. 

Credit counseling can become part of the process, and homebuyers with good credit can move quickly towards other phases of homebuying. 

RADA works with local employers like WakeMed, the Raleigh Police Department, Gregory Poole Equipment Co and Harris Wholesalers to offer these kinds of homebuyer education classes.

Find out more at www.rada-nc.com, or call 919-807-8400.  It's important to make good decisions when purchasing a home, so if your employer doesn't offer these kinds of classes, let them know you're interested!

You may also be interested in:

Jobs in the Raleigh Area

Triangle Area Market Reports - How's The Real Estate Market in Raleigh?

Shopping in the Raleigh Area - What Kind of Shopping Is There?

Raleigh Relocation Package - All About the Raleigh Area!

Which Part of the Triangle is Cheapest to Live?  Property Tax Guide

New Homes Raleigh NC

If it sounds too good to be true, it probably is! 

Check carefully into any "free money" offers for new homes - and it sure doesn't hurt to get a second opinion before you sign on the dotted line.  The newspaper and internet ads seem to leave off the fact that you're still paying, just in a different way!

The cost of a barrel of oil has been increasing steadily, particularly over the past few months.  It's easy to see how this affects us in the short term - the ticker at the gas station clicks faster and faster, and the total gets higher. 

But the cost of home construction, among other things, is starting to be affected by the rising price of a barrel of oil.

Diesel fuel costs roughly 70-80% more per gallon than it did at this time last year.   As a builder, we're anticipating that, if the price of oil does not hold steady or decrease, that this could cause the price tag of a new home to increase by as much as 10-20% over the next 6 months. 

Here are just a few of the ways that oil prices influence the cost of construction.

Fuel is needed for vehicles that:

Clear trees from a homesite.

Move dirt.

Clear a foundation.

Remove trees and take them to logging areas.

Ship lumber to lumberyards.

Ship building materials from factories to supply depots.

Ship materials from supply depots to job sites.

Run generators to power construction. 

Carry subcontractors and employees to job sites.

Oil products or by products are used in the manufacture of:

Vinyl siding products

Windows

Paint

Shutters

Vinyl railings

We have also seen cost increases due to fuel expenses for:

Granite countertops (must be shipped from quarries worldwide)

Tile

Lumber

This is just a partial list. 

Bottom line - prices of many if not all products are driven by the cost of oil.  

We hope sincerely that the cost will not continue to rise, and that measures will be taken. 

We believe in offering Energy Star homes, along with other options that will save energy and help protect the environment.   Our employees carpool whenever possible, and we plan routes that save as much fuel as possible.  We'll do whatever we can - but we can't control the cost of materials and fuel.  If you're considering purchasing a new home, you may want to work with your builder to lock in the cost soon. 

So the next time you see a story on the news about the rising price of a barrel of oil, remember that it's not just the bill at the gas station you need to think about - you may also need to wonder about the price tag on your next home. 

We were recently asked this question:  "We want to build a new home.  What is a standard construction time?"

To answer this question, your builder will have to ask you some questions first:

• Have you chosen a floor plan? 
• Do you own a lot, or have you made a final decision on which lot or piece of land you want to purchase?
• Have you decided on any changes to be made to the floor plan?
• Have you made a final decision on which builder you will use?

Construction times can vary greatly by price point and by builder.  

In our case, if a lot has been purchased, home plan has been selected, all options and changes determined ahead of time, and permits applied for and approved, the building time can then be as short as four months for a typical home in the $250-350K price range. 

That time can increase if multiple changes are requested during the process.  

In general, the more expensive the home, the longer the build time.  Custom built luxury homes do not have a standard build time - however, in most cases 8-18 months should be sufficient, and the build time can be heavily determined by the number of changes requested. 

Once you've approved the big decisions like floor plan, type of financing, and location, here are some of the basic steps in the building process.  The order can change slightly, and in some cases the steps are also overlapping.

1.   Apply for permits.

2.   Clear and grade the lot in preparation for foundation. 

3.    Build foundation (may be slab on grade, crawlspace, or basement - add more time for a basement).

4.    Frame the home and install windows and doors.

5.    Install the initial HVAC, plumbing, and electrical lines and fixtures. 

6.    Add siding and some of the exterior details.

7.    Paint the home - if using Hardiboard or other sidings, paint the exterior too.

8.    Pour concrete: the driveway, garage floor, patio, front porch and walkway are most common. 

9.    Install cabinets.

10.   Finish the HVAC, plumbing, and electrical.

11.   Install floor coverings:  Carpet, hardwood, and tile are the most common choices. 

12.   Finish all the interior and exterior details - often called working a "punch list".

13.   Install septic system and well, or hook up to local sources (this step can happen early or late in the process). 

14.   Finish landscaping and clean up.

Ask your builder what the build time will be.  Take them the floor plan you're considering, and discuss your budget, lot, and the interior and exterior finishes you'd like, as well as the number of changes you're planning to make.  The more changes you make at planning stage, the less expensive and easier they will be.

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You've just found the deal of a lifetime - and can increase your net worth in one easy step.   Quick, honey, grab the checkbook - we've just hit the jackpot!  But have you really?

A home builder advertises they're knocking $38,499 off their price!  Wow - that's amazing!   "Originally" $389,900, this home is now "on sale" for $351,401 - $38,499 instant equity, right?  Be careful - like any slash-rate bargain, you might want to check it out before you go for that deal.

Ask for Comps

If this builder is cutting prices locally to recoup losses in other, more stagnant markets like Florida, Nevada, and California, they may have been running these kinds of promotions for a while, which could be reducing the value of the neighborhood.  Ask the selling agent in the model home how the neighborhood is doing, and they may say "Great!"   Ask them to pull comps. If they give you generalizations or change the subject, call up your friendly neighborhood real estate agent (which won't cost you anything - the builder will be required to share their "selling commission" with them - just let the builder know you're working with an agent) and ask the agent for the comps. 

If comparable homes in the neighborhood, on similar promotions, have been selling for an average of $355,450, that $38,499 "discount" on that home that's originally $389,900 isn't as good a deal as it seems.  Any bank or real estate agent, when valuing the home, will not go to the builder and ask how much that home is worth.  They'll pull the past six months of sales in that neighborhood, and compare.  If the average home with similar features and size sold for $355,450, that's what the house is worth.  Your home is valued at $4,049 more than you paid for it. That's something to consider. But it's not $38,499.

While you're at it, ask your agent to find out if the home you're looking at was ever even listed at $389,900 - and if not, what the actual original list price was.     

Read the Fine Print

Read carefully - way down the page on the other end of that 72 point font headline that's screaming "buy now" is the small disclaimer that narrows down the possibility you'll actually get that discount.

Extra-Quick Closing Dates

An advertisement boasts of several homes available at bargain prices. IF you close by three weeks from today.  Are you ready to buy the house and close in less than three weeks? Is your bank?

Large Down Payments

Some of these incentives require down payments of 5-10%, or require that the loan amount be no greater than $417,000 - the maximum amount for a non-jumbo loan (which has fewer qualification requirements).   Do you have that kind of money on hand?

Mandatory Lenders

What is this going to cost - long term? Many builders have their own lending divisions.  They offer reduced prices on homes - as long as you use their lender.  They may even be able to get it closed in 20 days. But what kind of interest rates are they charging? How fast will that profit be eaten away? Ask about the interest rate. If they tell you, "Everyone goes with our lender - it's so easy and of course they're competitive," ask for details.  Then shop around with at least three other lenders.   On a $349,900 home, even a quarter point difference in interest rate will save you $20,596 over the life of the 30 year loan - which may be several times the amount you think you're saving with their bargain price.  If there is a half point difference between their lender and yours, the difference doubles to a $41,192 savings over the life of the loan! Compare this to what you've saved up front, on that bargain price.  

If you're required to use their lender, check on the overall health of the homebuilder. If something should happen to the company, what happens to your loan?  Is that rate guaranteed?  Is there anything in the contract to ensure that your interest rate won't increase by 1, 2 or even more points?  Is massive home discounting a sign that this builder is struggling to stay in business?   You may want to check out their holdings in other areas - and make sure the incentives that they are offering aren't to shore up a shaky position elsewhere. 

Available Inventory - those "Quick Delivery" Homes

What if you want to choose your own floor plan? Check that fine print - the biggest discounts apply only to completed or nearly-there production homes.  You're stuck with somebody else's upgrades - and the bill for that stuff you may not even want. When a builder says, "select homes, only" what they're really saying is that you don't have any say in the selections - or how much those add-ons cost. Be sure to ask a lot of questions, like: "What's the base price of the home?"  "Can I get a detailed list of the options that have already been added?"  

You may find that the "base price" of the home, in that neighborhood, is $309,290.  To get to the "original" price of $389,900, the builder may start with a "lot premium", of anywhere from $4K to $20K.  Ask which lots don't have "premiums" - you may be surprised to find that every lot has a premium - making it impossible to actually buy a home for the base price!  

Is that $389,900 home really worth more than $80,000 over the base price for that model?  Or are you looking at true market value?  Ask for a pricing addendum - on which you can find a line by line detail of each option added to the base price of the home, and the amount charged for each one.  If you've ever done any remodeling, you may be surprised to find, for instance, that "adding" a microwave costs an extra $449. That upgraded carpet is an extra $7921. Hardwood floors cost an extra $8149.   And then there's a lot of little stuff you wouldn't even notice. You may find that even with all those upgrades, you still have linoleum, basic countertops, and very little trim - a typical tract home.  But you're paying for a whole lot more. Was that list of upgrades really worth the extra $70K, on top of the base price and the lot premium?   Are those upgrades going to recoup their value at resale time?  If you've got more upgrades than the rest of the neighborhood, chances are you won't get that money back when you resell.  You'll probably find that the biggest discounts apply to the homes with the most upgrades - which may be nice, but don't count on the overall value of the home being that much higher. 

Ask plenty of questions

Here's a handy list you can take to the builder, when you're ready to have an incentive's chat.

•1.       Can you give me a list of comps for this neighborhood for the past 6-12 months?

•2.       Do I have to use your lender?

•3.       What is your lender's interest rate? 

•4.       How much will I save over the life of the loan by going with my lender, who can offer a lower interest rate?

•5.       What is the minimum and maximum lot premium?

•6.       What is the base price of the home being promoted?

•7.       Can I have a pricing addendum showing all the options in this home?

•8.       Can I make any further changes to the home?

•9.       What if I don't want to make a 10% down payment?

•10.   How healthy is national home builder XYZ?  Are you at risk due to overbuilding in other markets?  Why are you doing so much discounting?

Serious about buying? Think about taking along a real estate agent. The seller pays their commission - not you - that's the way home sales work.  But the agent will work for YOU and watch out for your interests.  They'll run comps for the neighborhood, as well as let you know about other homes in the same price range.

Remember, there's more to a home than its price. Looking for more space, on acreage? Is the neighborhood in the right location, with the right schools?  Need someone to negotiate closing costs?  Want a second opinion regarding that bargain price? A good agent will work to get you the best home for your money. 

You may also be interested in:

Jobs in the Raleigh Area

Triangle Area Market Reports - How's The Real Estate Market in Raleigh?

Shopping in the Raleigh Area - What Kind of Shopping Is There?

Raleigh Relocation Package - All About the Raleigh Area!

Which Part of the Triangle is Cheapest to Live?  Property Tax Guide

Looking for a new home under $400K in the Triangle?

Far from the "slump" apparent in other areas of the country, The Triangle housing market remains strong - especially in new homes under $400K.

Home prices are still appreciating at a slow, steady pace - the average sales price in October was 5.6% higher than a year ago - and homes are selling at 97% of list price.  A home in the Triangle remains a safe, sound investment - and Stanton Homes CEO Stan Williams has been answering some oft-asked questions about supply and demand.

"While changing standards for jumbo loans have slowed the pace of steadily climbing gains for homes priced above $400K, inventory of lower priced homes is still moving well and is actually in short supply," said Williams.

"While it's true that there's been some adjustment from the extremely brisk sales of 2006 and 2005, it's obvious that this region continues to be a huge draw for buyers," said Williams.  "Buyers expecting prices to drop in the $200-$400K supply may be in for a surprise.  These homes continue to sell at 97 percent of value or better - as they always have. We're building as fast as we can but we're anticipating that by Spring, there won't be enough new homes available in that price point to meet demand."

Although the past two years showed higher overall totals, Williams said that this year's trends - even in higher priced homes - remain solidly aligned with big picture averages.

The first three quarters of 2007 saw 6444 closings in Wake County.  This is down compared to the record 2006 and 2005 years, but up 18% from 2004's 5455 closings, up 37% from 2003's 4702 closings, up 91% from 2002's 3382 closings, and up 100% from 2001's 3226 closings, in first three quarter comparisons according to public records. 

"Clearly, the overall trend reflects a much healthier direction than many areas of the country," said Williams.

The overall Triangle market has a 5 month supply of homes - squarely in the middle of the five-to-six month supply that the industry considers to be the best balance for buyers and sellers, according to the TARR Report (Cary/Apex/Morrisville Markets.) 

According to the various recent TARR reports, the overall Wake and Chatham County supply of new homes in the $200K - $400K price range varies from 6 to 2 months, with the lowest inventory in the most desirable areas and the most desired price point of $200-299K.  

Total jobs in the area have increased 2.3% in the past year. 21,000 new potential home owners are moving into the area. Those already living here will continue to trade up or trade down as their family needs change.

"The Triangle market is exceptionally well balanced right now for both buyers and sellers," said Williams. "It's an exciting time."

You may also be interested in:

Jobs in the Raleigh Area

Triangle Area Market Reports - How's The Real Estate Market in Raleigh?

Shopping in the Raleigh Area - What Kind of Shopping Is There?

Raleigh Relocation Package - All About the Raleigh Area!

Which Part of the Triangle is Cheapest to Live?  Property Tax Guide