About Real Estate…. BEFORE YOU LEAVE THE APARTMENT!
It has come up more recently lately, and it may just be the time of year, but folks are calling me in a bit of a panic. They gave their 60 day notice to the apartment complex that they are moving out and now they are having a hard time finding where to go. It’s an innocent enough mistake, I suppose, one that could have been avoided by CALLING A REALTOR first, but that didn’t happen and so here we are.“Now what?! Save the lecture, Emerald, I’ll never do it again, but how do I fix this?!”
Well, I’m glad you asked! The first thing I’m going to do is start by asking you a ton of questions because how you answer those questions determine our next course of action. So let’s start right there! Below are the questions you can expect from me and why each answer matters in the process:
“Why are you moving?”
This question may seem obvious to some, and pointless to others. Believe it or not, I’ve had people flat out respond to that question with, “Why do you need to know?” To be fair, I get it, what business is it of mine? It’s simple, the reason you are moving will help answer a lot of other questions for me and save us both some time. If your reason is something like, “I just got a great new job and I want to be closer to it,” or “I just got a puppy for Valentine’s Day and the pet fees here are crazy,” that will help answer other questions down the line and give me a better idea about what to look out for when helping you find your next place. If your answer is, “I hate this ^&(#^$@ complex and everything they stand for!” then we may have some work to do… More on that in the “Do you owe money to any landlords or complexes” section.
Answering this question also helps me help you decide some things if you are on the fence about whether to buy or rent a home, or whether you should move to another apartment versus a rental house.
“When do you have to be out?”
This matters a great deal for a myriad of reasons. First, if you are buying a home, the typical amount of time it takes to close on the house will be anywhere from 30 to 60 days from the time you get it under contract to the time you get the keys. This is just an estimate and it doesn’t factor in the time it takes to FIND a house you like and get your offer accepted by the seller. Nor does it factor in some of the fun and crazy things you might find in the inspection that could send you screaming into the night and cancelling the contract to find a more favorable home. Don’t panic. That’s why I’m here and asking all these questions.
Second, if you don’t have the kind of time or the financial readiness at this moment to buy a home, we will want to focus on finding the right place for you to rent until you are ready to buy. Timing is everything.
“What are the penalties for moving out after that date?”
This may seem like an odd question for me to ask, but I have a great reason. If you have to be out of the apartment by the 15th and you are charged a $500 per day hold over fee if you do not comply, that changes a lot of variables for you! Or, if it you would just go month to month with an additional $600 per month due on top of your current rent, that may not be as steep of a penalty. For example, let’s say you are buying a home and you’re all set to close in 3 weeks. The apartment complex knows you are moving, along with everyone on Facebook. But you get a call from your Realtor that the Seller’s just had some kind of horribleness befall them and they now need a few extra weeks to move out. If your apartment complex is going to charge you $500 per day to stay there after you said you’d be out, you may need to ask the poor seller to spot you that $500 per day, or you may need to figure out a short term storage/living situation. But if your apartment complex will allow for a slight hold-over then perhaps the issue is not as big as it seems.
On the rental side, if we are out looking at rental properties and you have to be out in 30 days but the house that’s perfect for you won’t be available for 45 days, there will likely be some additional negotiations and, potentially, compensations to consider before putting in an application for that home. You know what they say, “The Devil’s in the details.”
Questions to expect if you are looking to Rent A Home:
“Do you have animals, if so, what kind, how many, what breed, are they a service or support animal?”
Let me start by saying, I am an animal lover. I have about 200 pounds worth of dogs in my home right now and would live in my car to keep them with me. I’m not saying that’s wise, or that animal welfare services shouldn’t be called if I went nuts and chose to do that, but I am saying, I get it. That said, not everyone feels that way, and I need to know going in what kind of battle I need to be prepared to fight.
Breed & Weight Restrictions:
This one is often misunderstood and maligned. The breed and weight restrictions of pets, specifically where dogs are concerned, are not always a direct result of the landlord or owner of the property being a jerk. Often, it’s an insurance issue. Here’s what I mean. If the owner of the property has an insurance policy that does not allow certain breeds of animals or animals over a certain weight, the owner can be dropped from the policy without warning if they allow animals outside the stated restrictions. Why does this matter to you as the renter? Because if the owner loses insurance on the property and are forced to get a different policy, that policy could cost quite a bit more resulting in, you guessed it, higher rents for you. I’m not an attorney and cannot give legal advice, but I am smart enough to know that there are some pretty big legal issues with not having insurance that would likely be shared by the renter. So, bottom line, be honest about the breed and weight and number of your animals and check with your landlord before adding to your family in that way. It will save you a lot of heartache, potentially money, and might help to keep you out of court!
Let’s continue the conversation about breed restrictions as well as the total number of animals. Why do I care about these things? Because if you are my client, I want to do all I can to protect every nickel and dime possible. Lease application fees can get expensive! Ranging anywhere from $35 to $100 per applicant, I would like to see you and yours only have to pay that fee once if at all possible. If I know ahead of time what kind of animals and how many, I can have the other agent check with the owner before you even see the house so that you don’t waste your time and mental energy falling in love with a house you would be unable to rent.
Service and Support Animals:
There’s been a great deal of work done by some very awesome people and organizations to further the protection of people with disabilities and one of the areas we’ve seen changes in recently is the service and support animal area. I’ve had a lot of questions about this topic and again, I am not an attorney and cannot speak to the legal aspects or give legal advice. I can tell you that registered service and support animals, with the appropriate paperwork, are NOT considered pets and landlords should not deny applicants with these animals based solely on the fact they have said animals. If you have a service or support animal, I’ll likely ask for their documentation so that I can submit that with your application to avoid any hiccups. If the landlord, owner, or other agent is not familiar with the laws and practices regarding service and support animals, I’m always happy to send resource information like what can be found here at the Humane Society’s Website, or the pdf from the Department of Housing that can be found here.
“Who all will be living with you and how many of them are 18 or over?”
Each applicant that is at least 18 years of age or older will be required to submit an application and pay the application fee, EVEN IF THEY ARE NOT CONTRIBUTING TO THE RENT PAYMENT. That roommate’s application will also be part of the landlords decision as to whether they will rent the property to you as well, so pick your roomies wisely. Why? Well, there are a multitude of reasons why, not the least of which has to do with insurance and code restrictions, but I’ll give you some hypotheticals. Most cities have property code restrictions that do not allow more than 2 adults per bedroom in a residential property, so, the landlord needs to know how many people over 18 will be living in the house to make sure they don’t get a code violation. Why do you care? Well, let’s say you move into a 2 bedroom house with your boyfriend and then he gets a call from his fraternity that 3 of his frat brothers need a place to crash. You all come to an agreement to live in harmony and split the rent and life is good. But the city inspector gets a call from your nosy neighbor next door that there are 5 cars out front every night and they think 5 adults are living in a 2 bedroom house! Landlord gets a code violation notice that you don’t know about and the landlord calls you. You explain the situation, and maybe he’s cool with you having other roommates but one of them has to go. Everyone is sad that Jerry has to leave, because he made the best pasta fagioli EVER.
Here’s another ‘for instance’ with the same scenario. Let’s say there wasn’t a nosy neighbor and no one ever filed a complaint or code violation, but let’s say all 5 of you are living in this 2 bedroom house and the landlord only knows about 2 of you. Let’s say your water heater goes out and the landlord heads out there to fix it and discovers that there are 5 of you there and is cool with all 5 of you living in the house but he needs applications for the other 3 to have on file. The other 3 fill them out and as it turns out, Jerry, who we all love so much, has a felony on his record and that is in direct violation of the landlord’s strict ‘no-felonies’ policy. He could evict all of you, not just Jerry. So, the take away, be honest from the get-go. Who knows, maybe having everyone fill out applications will let you know, hey, maybe rooming with Jerry might not be such a great idea…
*AGAIN* I AM NOT AN ATTORNEY AND AM NOT GIVING LEGAL ADVICE. Don’t cite this blog as a reference in any of your law school papers either, I don’t want your professor to be mad at both of us.
Time to get into your Kool-Aid:
“What is your credit score and that of your roommates?”
This matters because this is one of the first things a landlord looks at when it comes to an application. Your collective credit scores give the landlord a clear picture on what kind of debt risk you are and how likely you are to keep the rent paid on time or to be evicted. Evictions are costly not only for the landlord but for you as the renter as well, they can prevent you from renting another apartment or house and even prevent you from qualifying for a mortgage. So, don’t get evicted if you can help it, and know your credit score. Some landlords will allow low credit score applicants to rent from them, but will have an additional monthly charge tacked on or require a higher security deposit for the privilege. Call it a “risk tax” if you will, it’s a higher risk credit score so there’s a higher payment or fees associated with it. Knowing if a low score will be a factor for you or your roommates also allows me to have difficult conversations on your behalf upfront to potentially save you all those application fees. For example, if the landlord’s minimum credit score is 640 and you have a 550, we’ll know to keep looking.
“Do you or your roommates have any evictions or owe money to another landlord or complex?”
This question goes hand in hand with the credit score question and for the exact same reasons I listed above. Sometimes, if the eviction is old enough, it’s not as much of a problem, but it’s still good to get that out in the open so if the landlord has it posted as a general policy, we can keep looking or call to clarify. If money is owed to another landlord or complex, you’ll want to contact that complex and pay it off. I know that’s not what you wanted to hear, but here’s why: If you no longer owe the complex, and you have a letter from their management or the owner themselves with a contact number to verify that this is true, it can go a long way with a potential landlord to see that you will do what is necessary to clean up that mess.
“Do you or any of your roommates have any felonies, pending convictions or other criminal history?”
Remember poor Jerry? Well, there are several laws that have been passed about denying housing to applicants and there was a recent bill passed about landlords’ liability when renting to folks with criminal records. House Bill 1510: “No cause of action accrues against a landlord for leasing to a tenant who has been convicted of, arrested, or placed on deferred adjudication for an offense.” HOWEVER, the landlord may still be held responsible if they negligently lease to a tenant who has been convicted of certain sexual offenses or violent crimes. SO, you’ll want to speak to your attorney on exactly what that might mean to you and your situation.
But from my perspective, it’s best to know what we are facing with regard to criminal records up front. That way, if we hit a snag and need a good real estate attorney, I can put you in touch with one or more.
If you are Buying a Home:
“Do you have your financing figured out?”
This will always be my very first question to any one looking to buy a home. If you read the previous blog about Pre-Qualifications, Pre-Approvals, and Proof of Funds letters, you’re ahead of the game! If you’d like to pause and read it now, here’s a handy-dandy link to it and I’ll be happy to wait. If you don’t want to read it now, that’s fine, but you’ll want to check it out for the in depth explanations around the “why” I ask this. For now, just know that how you are going to pay for the home and finding out the details around that, are the very first steps. We can’t do anything more without knowing all of the financing. Why? Because knowing how much you can get approved for and how much you want to spend per month determine exactly how much you can buy, which also might determine where and when you can buy as well.
“Do you have enough money for your down payment, closing costs, and pre-paids?”
I will be doing an in depth exploration of the questions I ask my buyer clients when we first start the process of buying a home in a later installment of this blog, but for now, let me break down this question. If I’m asking this, I assure you, I am not judging you based on your answer. I am asking this because if you don’t know the answer, or if the answer is, “No,” I can STILL HELP!! It just changes how I help you and, possibly, when I help.
The amount you need for your down payment varies based on the following factors, what kind of loan you have, what kind of payment you want, your credit score, and sometimes, even where the house is located. So if you don’t know how much you will need for your down payment, guess what? Yep! I will have more questions for you! But that’s ok! It’s my job to know the questions to ask and that’s really the hard part. The answers aren’t the hard part because you already know them! You already know exactly how much money you have access to, so the answers really are the easy part.
Closing costs are the fees associated with document preparation, loan origination, and various taxes and required insurances. Simply put, closing costs are the costs associated with purchasing the home. Your closings cost will vary dependent on a variety of things like the sales price of the house, what kind of loan you have, what kind of payment plan you have chosen, your credit score, what kind of assistance programs you’re receiving, how much your home insurance is, your taxes, HOA fees and various other fees from lenders, lawyers, and escrow agents. But the good news is, once I know the answers to some of the questions above, I’ll be able to give you a good ball park estimate. The better news is that the lender will be able to give you an even better estimate before we even set up the first showing. ‘Cuz, knowing’s half the battle, right?
So this is a fun one that folks often over-look in their rush to search Realtor.com, the pre-paids. Pre-paids are all the costs you’ll incur before you even get to closing. Pre-paid items are often credited back to you at closing, but sometimes they aren’t. I’ll explain. The most common pre-paid items are the Option Fee, Earnest Money, Inspections, and Appraisals. I’ll get into each of those at another date, but for now, you’ll want to know what’s going where.
The Option Fee is paid to the seller for the right terminate the contract within a certain number of days and the amount paid varies on the circumstances. If you chose to move forward with the purchase of the home after the Option Period is over, you might get that fee credited back to you at closing, if that was what was agreed upon in the contract negotiations. If you chose to terminate the contract and not buy the house during the Option Period, the amount you paid for the Option Fee is gone. (It may hurt but it’s a small price to pay compared to 30 years worth of mortgage payments on a money pit.)
Earnest Money is the a check cut to the title company to hold onto until you go to closing. It’s the “putting your money where your mouth is” portion of the contract and, without boring you too much, it’s a requirement to make the contract legal. If you move forward to closing, the earnest money is credited back to you. It’s first applied to any down payment you owe, and any excess beyond that is then applied to closing costs. But, it’s taken out of your bank account the day it’s given to the title company so that money is gone until closing and that’s why it made my pre-paid list.
The cost of inspections can vary too. (I know, you’re probably just loving all the direct dollar amounts in this section.) Inspections can get expensive but they are really, really important. There’s the general home inspection, a pool inspection if there’s a pool, a septic inspection if there’s a septic tank, and then any other amount of item-specific inspections like electrical, plumbing, HVAC, if the general inspections call for a more detailed look into those items. You can see how the costs could add up quickly, but, don’t panic, once I know the price range you’re looking in, and what kinds of features your home will likely have, I can usually give you a good estimate on what inspections might run you. Inspections are not shared costs with the seller, regardless of what you find in them, and they are not credited to you at closing. The bright side, they weren’t included in the closing costs to begin with because they are an elective charge. BUT, even though you don’t HAVE to get inspections, I wouldn’t recommend you buy any property without them, in fact, I’ll even have you sign a document stating I told you to get one and you didn’t want it if you choose to not have inspections done. Really!
Lastly, in this arena, the appraisal. Appraisals are required by the lender and can range anywhere from $350 to $1000 depending on, you guessed it, the type of loan, the type of assistance programs you have, if any, how fast you need it, and the type of property being appraised. Lenders require payment for the appraisal upfront and they order the appraisal for the property. You do get a credit for it on the closing documents, so at least there’s some good news there!
As I said before, when I know the answers to the “how much,” “what,” and “where,” questions, I can get you some good estimates of what you can expect your upfront costs to be. Take a deep breath, I’ve got your back.
If you are Looking for Another Apartment:
I’m not ashamed to admit I don’t know it all and am happy to refer my clients to competent professionals that specialize in areas that I do not. So! I will be happy to get you with someone who works closely with some fantastic apartment locators to get you all set up!
The Take Away:
There’s a lot to know when you are getting ready to make a move, but the good news is, you don’t have to know it all, or any of it, before you start. I LOVE what I do and I LOVE talking about real estate, so if you have questions, please ask. Questions give me purpose, and they give me more blog topics too!
EXP Realty LLC, Dallas/Fort Worth, TX
legal advice. **