Tips to Selling Property Quickly – With or Without an Agent

January 13, 2010

Amenities are equally important. The type of flooring, countertops, lighting fixtures, etc that you are offering are all considered amenities. You want to look and see how what you are offering compare to other houses in your area. In fact, you should have done this before you purchased the property to make sure there was enough money allocated in your budget to cover these amenities.

Everyone wants to see a brand new listing so you need to put your best foot forward on day 1. I have seen so many times where a rehabber lists a house and the agents take potential buyers to the house, but the house isn’t quite finished. There are a few odds and ends that still have to be taken care of. Agents rush to new listings the first two weeks to see if they want to bring any of their buyers to that house.

When they come out there and they see a dirty house or one that is not complete, they are not overly impressed by it and are less likely to bring buyers back. You are losing that critical time period by not having the house done. Always have your best foot forward day one. Whether you are listing with an agent or selling yourself, make sure that each and every person that comes by is going to see a beautiful home. Here are some things you can do to ensure a quick sale:

1. Curb appeal. This is one of the most important aspects of the house. The exterior is the first thing people see. If potential buyers drive up to your house and do not like the outside, chances are they will not even get out of their car and see the inside. The inside of the house could be gorgeous but they will never see it.

2. Staging. Staging is those added touches that give a house that lived in look. I am not talking about doing a model home where you bring in furniture and window treatments. What I am talking about is little odds and ends things that give it that home feeling. For instance, in the kitchen adding a rug on the floor. Putting hand towels that are full of color. Putting a cookbook on the counter. Even opening up some spices. By opening up the spices what you are also creating a smell in the air. You want to start changing their senses from smelling paints to smelling home type things. Another trick is to get fresh ground coffee beans and open them up in a bowl. They are pretty to look at but also they give off that aroma that will start filling the house. In your bathrooms, you can do flowers and soaps and towels and curtains around your showers. Do all these things that give it that nice lived in look. Staging will sell your house. I don’t believe that those white on white and those absolutely neutral colors like off white and ivory are a good choice. Yes, anybody can come in and match their stuff to it, but the first thing you are going to hear from all the buyers is that they have to paint the house. That means that they are not falling in love. If you want you buyers to fall in love with your house what you have to do is give them color, contemporary colors not old colors from back in the 70s. You want to give them contemporary colors that give the house a designer feel. When you go to see a model home they are never painted white. They have a lot of color in the house because that is what makes it feel like a home. You can’t do a model home because you only have that one house. So make that one look great.

3. Cleanliness. You need to go beyond having the house cleaned up. It needs to shine. The windows should sparkle. There shouldn’t be a speck of dust on the fixtures or counters. The floors should be spotless. Everything should look great.

4. Sun shine. Open the blinds and remove the curtains. Clean the windows. Take out the screens and store them. Let plenty of light come in to create a bright and cheery environment. You do not want the house to appear dark and dismal.

5. Light bulbs. Make sure that all of your light fixtures and bulbs are working. Buyers should be able to turn lights on when they come in the house.

6. Temperature. Keep the house at a comfortable temperature where people will stay in it and have time to walk around and fall in love. I have walked into homes where it is either so hot in the summer time or so cold in the winter time that the only thing you can focus on is how soon can you leave. That is not what you want your buyers thinking about.

7. Access. If you are not going to list the house and have a realtor lock box, then you need to figure out how to have easy access. You need to have an easy way for buyers to get into the house when they are there looking at it. If they have to call you and make an appointment to come back two days later, chances are slim you will ever see those buyers again.

8. Information. Be sure to have flyers with information about the house right there on site. Don’t have empty information folders. Make sure that either you or your agent is responsible for keeping that filled.

9. Signage. Make sure there is good signage that let’s people know that the house is for sale and even some special features about it. Make sure there is also special signage from the main roads so that people know that the house is back there.

10. Other Agents. If you are offering the house for sale by yourself and you are not using an agent, then you should put up a sign that says “agents protected”. This means that even though you are not going to list the property, if an agent brings a buyer you would still pay them the normal half commission.

11. Pictures. If you have the house listed online check what pictures are being used. Make sure they are good, clear pictures that show the features of the house.

12. Description. Whether you are marketing online or in print, make sure you offer a great description of the house. Talk about the features that will sell it. For example, you might say “This is a beautiful home with 10 foot ceilings and heart of pine floors. It’s got an oversized master bedroom with sitting area and large bath. You won’t be cramped for space with this over 3,000 square foot home.”

13. Mortgage Broker. Make sure that you have a good mortgage broker available that offers a wide variety of plans for people with different types of credit, especially if you are listing the house as a FSBO. Many of your buyers are not going to have financing.

14. Incentives. Buyers are usually in need of cash so rather than drop the price, offer to pay things on their behalf. They won’t have to bring as much cash to closing. You could offer to pay the closing costs or give them some sort of allowance toward decorating. That will often attract them more than just the discount price of the house. Let’s say that the price was discounted $10,000 off the original price. This is a big deal to you, but to a buyer, this is only a $10 per month difference.

15. Commission Rates. Offer higher than normal commissions to the selling agent. If the house down the street is offering 3% but you are offering 4%, they are more likely to show the buyers your house.

If you do all of these things, your houses will sell quickly. Just always remember to look at it from a buyer’s prospective and make sure you are offering a great deal.

Lou Castillo has been successfully investing in real estate since the early ‘90’s. Castillo was on his way up the corporate ladder until he recognized that real estate offered a greater opportunity for financial freedom, and for the lifestyle he desired. Lou has a knack for developing powerful & proven systems that work in real estate and has authored more than 7 books and courses on the subject.

For more information or to sign up for Lou’s Powerful real estate Investing Tips go to: http://www.FreeRealEstateStrategies.com

This PR has been submitted by TrafficMagicians.com

By admin | Posted in Uncategorized | Tagged | Comments (0)

Glasgow House Quick Sale For Cash

January 13, 2010

Relocating can be an exhilarating experience, especially when it is a great personal or business opportunity. However, if you have to concern yourself with selling your Glasgow home in order to do it, you may be in for stressful times ahead.
The good news is that there are options available to help you achieve a quick sale, allowing you to complete your relocation quickly and easily.
*** Moving Abroad? ***
So you have been offered a great opportunity to move abroad for work, and you are truly excited to take advantage. Yet, part of you is concerned with how you are going to sell your family home in Glasgow. In order to purchase a new home in your new destination, you need to access the current equity within your existing home. It has been on the market now for several months with no offers, and you are going to lose out of the home of your dreams if you cannot sell your current one; what do you do? Well, you are in luck as there are companies available that offer quick house sales in Glasgow that will give you an offer within days, if not minutes so that you can move on to buy your next dream home. Take advantage of the piece of mind in knowing that you have an alternative option to quickly access the equity within your home.
*** Are you Getting Married and Need to Consolidate Homes? ***
Getting married is another exciting time in your life, but there can be a challenge if you need to consolidate from two residences into one residence.
One of you or both of you will need to sell your existing homes for cash in order to move into the same location. You can either sell it traditionally my listing it on the open market, or you can opt for a quick sale in Glasgow by using a reputable real estate company specializing in just that- quick house sales in Glasgow. So, if selling your home is getting in the way of the enjoyment of planning a wedding, know that you have other options available to create a fast house sale in Glasgow, allowing you to enjoy the joys of consolidating homes with your partner without the added stress.
*** Do You Have a Job Offer that You Can’t Refuse? ***
Sometimes we get the job offer of a lifetime, but get stuck as we have to sell our current home in order to take advantage of it. A fast house sale option in Glasgow will offer the ability to quickly get out of your current Glasgow home so that you can take advantage of your brand new job opportunity.
Some employers are flexible and provide you with temporary housing, some offer assistance with the relocation and sale of your personal home, while others let it all in your hands to complete in a timely manner. No matter which option you are given, know that you have choices that will assist you in the fast house sale of your Glasgow property.
So, don’t delay and look into the available options for you personally to experience a fast house sale in Glasgow, giving you the opportunity to take advantage of a relocation opportunity.

By admin | Posted in Uncategorized | Tagged , , , | Comments (0)

Do you have the Money to Buy a House?

January 9, 2010

To finance you’re your home you will probably have a loan and mortgage. A mortgage is a transfer of an interest in land from the owner to the mortgage lender, on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed. In other words, the mortgage is a security for the loan that the lender makes to the borrower. Before you make any loan there will be a rigorous check of your financial capabilities.

The first thing you have to do when you want to buy a house is have a financial check up. Figure out how much you can afford to spend on both a down payment and monthly mortgage payments. Determining how much home you can afford means figuring out what size mortgage a lender will qualify you for. To calculate this number, lenders consider your income, your credit rating, the size of the down payment The length of loan, the amount of your outstanding debts, the interest rate for your mortgage and the likelihood that you won’t be able to pay back your loan.

The terms of your mortgage will probably be the biggest determinant of the size of your monthly payment, so you’ll want to shop around. The main points to resolve are figuring out what kind of loan you want, who you want to provide it, and for how long you want it. According to HighProfileRealty.com today’s homebuyer has more financing options than have ever been available before. From traditional mortgages to adjustable-rate and hybrid loans, there are financing packages designed to meet the needs of virtually anyone.

To further familiarize yourself with the types of loans for your home financing HighProfileRealty.com has provided us some information. Most loans fall into three major categories: fixed-rate, adjustable-rate, and hybrid loans that combine features of both.

Fixed-rate mortgages- carry the same interest rate for the life of the loan. According to HighProfileRealty.com fixed-rate mortgages have been the most popular choice among homeowners, because the fixed monthly payment is easy to plan and budget for, and can help protect against inflation. The most common fixed rate mortgages come in 15 or 30 year terms.

Adjustable-rate mortgages- According to HighProfileRealty.com Adjustable-rate mortgages differ from fixed-rate mortgages in that the interest rate and monthly payment can change over the life of the loan. This is because the interest rate for an ARM is tied to an index (such as Treasury Securities) that may rise or fall over time.

Another type of loan is the Hybrid loans. Hybrid loans combine features of both fixed-rate and adjustable-rate mortgages. Typically, a hybrid loan may start with a fixed-rate for a certain length of time, and then later convert to an adjustable-rate mortgage. As mentioned in HighProfileRealty.com you be sure to check with your lender and find out how much the rate may increase after the conversion, as some hybrid loans do not have interest rate caps for the first adjustment period.

There are so many financial help options to choose from when buying a house but the most important thing that you have to keep in mind is buy only what you can really afford because no matter what financial aid you might avail if in the long run you won’t be able to sustain it then you’ll end up loosing more.

By admin | Posted in Uncategorized | Tagged | Comments (0)

How to make $10,000 in 30 days and Six Figure in Six Months Buying and Selling Houses

January 3, 2010

Your exit strategy is an extremely important part of your real estate investing business. In fact, it is one of the most important parts. Sometimes investors get excited because they learn how to buy properties, they find them and they have the money lined up to purchase them, and they do, But when they get them, they have no idea what they plan to do with them.
You must know your exit strategy when you buy. What do you plan to do with the property? Knowing this allows you to make all types of decisions, from how much to offer, to what kind of financing to us, and more.

What is Wholesaling?
It is simply finding a bargain property and passing it on to a bargain hunter. That bargain hunter will be an investor who will either purchase the property to resell it or purchase it to hold it for rental income. Your profit as a wholesaler should be between $5000 and $15,000 on each house. In some cases it will be higher than $15,000 and on some deals your profit may be a little lower than $5,000. Why wholesale?

Real estate investors choose to wholesale properties for a few reasons. They could be:

Quick cash – it is possible to turn a property around anywhere from 7 to 45 days and get cash in your pocket. If you need to get your hands on some cash quickly, this would be a reason to wholesale. Or, you may not need the cash immediately. You might just want to build your cash reserves. Wholesaling is a good way to do this quickly.

Too many houses – maybe you’re good at finding houses, but you find more than you need or can use at any given time. If this is the case, wholesaling is a smart move for you. You can still profit from your locating skills, even if you aren’t going to keep the property for your personal portfolio. Flexibility – at any given time, you can determine whether you want to keep a property or sell it. This gives you flexibility as you locate and purchase properties.

An important fact to remember:
Probably the most important thing that you need to remember when you decide to wholesale is, your buyer should get the majority of the profit! This is important because your buyer will be the one to purchase and rehab the property. There has to be enough room in the deal for your buyer to do this and still retain a nice amount of money for cash out and/or equity.

This does not mean that you find properties and give them away for $1,000. If you did that, you would be a bird dog, not a wholesaler. Your profit will vary depending on the house, but the better you are at locating properties and putting together offers, the greater your profit will be – while still maintaining an excellent profit for your buyer.

Keys to Successful Wholesaling

There are several things that you can do to ensure a successful and profitable wholesaling business. We will discuss those now.

Consistent source of properties – Earlier in the program, we discussed several ways that you can locate properties. If you want to make wholesaling your main business, you will need to make sure you have a consistent source of properties. For instance, you may develop a relationship with a probate or divorce attorney, who knows a continuous stream of people with houses to get rid of. You may even develop a relationship with someone at a bank that works in the REO (real estate owned) department. These are the properties that the bank has had to take back due to foreclosure. However, you decide to find them, you need to make sure that you have a consistent source.

Your buyers list – If you decide to wholesale, you must develop a strong buyers list. This will allow you to locate properties with the assurance that you can move them. Even if you only wholesale properties occasionally, it is highly recommended that you have a buyers list built up. As we previously discussed, there are several ways that you can market to build up your buyers list. Two of the easiest ways to do this are to place ads in the paper and to advertise at REIA’s. You may even put out roadside signs to attract buyers. You should think of your buyers list as money in the bank. A good list will make it a lot easier for you to move properties. You will also feel more confident getting the properties, knowing that there are people ready to purchase them from you.
Good properties at good prices – Again, we are building on what we learned earlier in the program. You want to make wise choices when you look at investment properties, including when you wholesale.

Even though you are not going to keep the house, you still need to make sure that it is a good house in a good area at a good price. You can get 2BR 1BA houses at cheap prices all day long, but do you really want to? We would say no, unless the house is so cheap that your buyer could add an extra bedroom with little trouble. But even then, we wouldn’t recommend it. You always want to go the path of least resistance. Don’t get the houses with the weird floor plans.

They shouldn’t be too small or have any type of structural damage. Most investors do not want to take on rehab projects of more than $15,000 – $20,000, especially if they are just starting out. If you find a good deal that requires an intense rehab, you will probably want to save that one for yourself or pass on it altogether. And again, you need to make sure that the price is right. There should be enough room in the deal for your profit, your buyer’s profit and the rehab funds. Your profit will vary depending on the deal, however, to make it worth your time, you should shoot for a minimum of $5,000 per deal. Of course, this will vary by property. Review your buying formulas for wholesaling properties. Remember -wholesaling is not illegal flipping. You never want to artificially inflate the value of a property.
Relationship with your closing attorney – Typically, your lender will choose the closing attorney. However, this does not stop you from developing a relationship with them as well. In fact, if you work with the same lender a lot (for your purchases or your buyer’s), you will find yourself in that closing attorney’s office quite a bit of the time. Learn the culture of the office. How does it run? What are the personalities of the staff? What are their names? How do they like to do things? You will find that all closing attorneys are different. Some are more laid back while others are more uptight. Some will accept documents and requests faxed from you, while others want them directly from your buyer and/or your lender. The key is to find out how to best work with them so that your deals run smoothly. Find out what you can do to make things easier on the staff to bank some goodwill, you might need it on a bumpy deal!

Relationship with your contractors – Although they tend to get a bad rap, it is entirely possible to find a good contractor and to develop a relationship with him. You may have to go through several contractors to do this, but it is possible. Your relationship with your contractor is important, because you need to be able to count on the quality of the work and the prices at which it can be done. Even if your buyer uses their own contractor, you should have someone that you can bid the jobs and that you can recommend. Their prices should be in-line with those that you have found to be fair and reasonable in the market place and their quality should be the same. If you are recommending your contractor out, do your best to make sure that this person is reputable, fair and does quality work. There is no guarantee in this, we have come across some duds ourselves! But always do your due diligence. Check with references and view jobs that they have already completed. And always be on the look out for more contractors. You can never have too many good ones!

Relationship with your appraiser – Your appraiser will also be one that is approved by the lender. This is good for both you and your buyer. You always want to make sure that your values are as accurate as possible. The appraiser will make sure of that. Again, it is worth your time to develop a relationship with the appraiser. When you do this, you will be able to get them to verify values for you. This is important if you are unsure about an area and need to make a quick decision. A lot of the knowledgeable appraisers can tell you values off of the top of their heads. This is very valuable for you. You also want an appraiser that will get the appraisals completed quickly. There is really no reason to wait more than 3 or 4 days for an appraisal. If an appraiser has you waiting longer than a week, you need to look for someone else. Most lenders are amenable to trying out new appraisers, if there is justification. If you are having problems with them, they probably are too. The good thing is, there are a lot of appraisers out their with experience appraising investment properties.

Relationship with your private lender – this is of paramount importance, for both your purchases and those of your buyers. One of the most important things that we have learned with wholesaling is – You must approve your buyer’s lender. If possible, you should require that your buyer use only lenders that you approve. This is important because the lender can literally make or break your deal. You need to know what areas the lender likes, what types of houses, how much money they have and how quickly they can close. It is not heard of for a lender to approve a house sight unseen and then change their mind when they go to see it the morning of closing. Lenders can run out of money. They can have as many stipulations as a conventional bank. We have seen all of this happen before and it is not fun. You need to control this part of the process. Then, you can be assured that the deal will close when it is supposed to. You should work with a lender who appreciates your business and makes you a priority.

Know your closing requirements – These requirements typically depend on the lender, but you should know what you need ahead of time. This will allow you to close quickly and easily. You may begin securing some of the documents as soon as you lock down the house. Some typical requirements are: appraisal, title insurance, survey, and builder’s risk policy.

Marketing – The entire last lesson was devoted to marketing. That’s how important this is. Market, market, market!

Integrity – In business, as in life, it is so important to have integrity. Simply put, you need to do what you say you are going to do. Everyone that you work with should be able to count on the fact that you are good to your word. In wholesaling, there are a lot of things that are out of your control – which it why it is so important to be careful of who you decide to do business with. But, always do what you can and people will want to do business with you. Remember, good news travels fast, but bad news travels faster.

Whether you decide to make wholesaling your main business or a part of your business, it is a good option for you!

By admin | Posted in Uncategorized | Tagged , , , , , , | Comments (0)

Eight Steps To Getting A Home Loan And Buying A House

January 2, 2010

Step 1 – Know How Much You Can Afford
Before you start looking for a house, you need to know how much you can afford in terms of monthly home loan payments, property taxes, maintenance and your general living costs.
Ginne Mae, a government housing initiative, offers a free calculator to help you figure out how much house you and your family can actually afford. It’s available online at – http://www.ginniemae.gov/2_prequal/intro_questions.asp?Section=YPTH.
Step 2 – Know Your Rights
Whether you’re a low-income home buyer or a wealthy real estate magnate, you have to know your rights. The HUD (Department of Housing and Urban Development) offers a very informative series of reports dedicated to protecting consumers and prospective home buyers from predatory lending practices. You can read them here: http://www.hud.gov/offices/hsg/sfh/pred/predlend.cfm.
Other resources to look into include the Real Estate Settlement Procedures Act (RESPA) and the Fair Housing Act.
Remember, you’re the customer and you deserve to be treated with respect. As a borrower, you have the right to shop for financing, request a written Good Faith Estimate of your total costs, ask your mortgage broker exactly what they can do for you, ask any questions you need to clearly understand the process and associated expenses, understand your fee structure and the right to be evaluated for a loan on criteria that’s free from discrimination.
Step 3 – Find a Loan
When looking for home financing, you want to find the best balance among low-rate financing, a loan that fits your lifestyle and plan, and a lender that’s going to provide ongoing, quality customer support. Don’t be stingy on the time investment at this stage, as finding the right lender will pay off for decades!
Step 4 – Find a House
Using a real estate agent and armed with your pre-qualification, you’ll begin your search for a home. Based on what you can afford and your wish list of options and amenities you want in a home, you should be able to locate what you’re looking for. Take the time to solicit recommendations from people you know and respect before selecting an agent.
Step 5 – Make an Offer
An offer is a tricky minefield of negotiations and real estate law. But, with guidance from your trusted real estate agent, you’ll get through it. If you are uncomfortable with the price of a home, feel free to counter-offer what you believe it is truly worth in the current real estate market and that neighborhood.
Step 6 – Have the Home Inspected
Every offer should be contingent on a full home inspection. Hire a quality and experienced inspector who can give you a complete evaluation of the home and let you know if any major renovations or repairs are going to be needed. If the inspector identifies expensive needs, that will either afford you room for negotiation on the price or an opportunity to move on to another home.
Step 7 – Get Insurance
Lenders are going to require you to have insurance on the property, at least until they no longer own a large chunk of it.
Step 8 – Close the Deal
Last, but not least, is signing and closing the deal. Once you’ve gotten to this point, you’ve secured your financing, the offer has been accepted and you’re finally signing the deed to your new home. Shortly thereafter, you will be moving in!

By admin | Posted in Uncategorized | Tagged , , , , , , , | Comments (0)

Why your Credit Rate is Important When You’re Buying a House

December 29, 2009

Going into the real estate market takes more work than what meets the eye. The whole buying process undergo a lot of phases, wherein each phase can determine the success of the entire house-buying process, as well as its failure. One of the things that can stop this process from happening is if a buyer’s credit rate is not good.

People who are looking to buy a house sometimes do not have the exact amount in their possession when they decide to purchase a house, which is why these people may need to take loans or mortgages just so they can pay the necessary amount needed in order for them to get the house that they want. One of the things that these lenders will take a close look at before they will lend you the money that you need in order to purchase the house that you want is your personal credit report, or your credit rate.

These lenders will make sure that you are a good credit risk before they would even think about lending you the money that you need. To help them assess your credit rate, they will consider a few factors to help them decide if you are indeed credit worthy. They will take into account your payment patters, wherein they will check how often you pay your debts on time or how late. They will also look at how often you apply for credit, as well as your debt ratio, which helps them gauge your ability to pay. They do not want to lend people who cannot keep up with their payments money.

One way of being able to make sure that you will maintain a good credit rate is to make sure that you limit the amount of credit that you may attempt to handle, which should be based on your income. If you are only earning a certain amount of money per month, make sure that you do not exceed that amount in the amount of credit that you attempt to borrow or use.

If you do not pay back the amount of credit that you have been using or borrowing, then you will have a bad credit rate, making it more difficult for you to be able to get credit later on in the future. If this happens, then you will not be able to get loans, or secure larger interests rates in securing larger loans, to pay off the price of the house that you want to buy. This can greatly affect the entire house-buying process.

In order to maintain a good credit rating, a person must appear to be a good credit risk for the lenders, which will help him or her get the loan that he or she may need to purchase the house that he or she wants. One way of doing this is by making sure that you make the required payments in a timely manner. Make sure that you pay your bills on time, pay off your bills in the time required without overextending your debt. The fewer debts you will have in your credit history, the better your chances will be of getting the loan that you need for buying the house.

Vanessa Arellano Doctorhttp://miamirealestateinc.com

By admin | Posted in Uncategorized | Tagged , , | Comments (0)

Buying a House – 5 Steps to Help with the Search

December 28, 2009

A lot of times when home buyers decide to buy that next property instinctively they call their real estate agents to find them new homes that fit their current criteria and needs. This is a great first step because this is what real estate agents do; their job is to find you that next great house.
Sometimes however agents stay on the course and present properties that are easy for them to find and easy for them to work with. However there could be that perfect house out there that gets missed because it’s not in the system for lack of a better term.
It’s a good idea to do some house hunting yourself. Your agent generally won’t be offended if you bring some properties to the table that you want to check out. Listed here are 5 great alternatives to finding that hidden perfect house.
1) Word of Mouth: Telling everyone you know that you are in the market for a new home might give you an advantage in the market. It is very possible somebody knows somebody that has or is about to list their house on the market. Getting that chance to be the first one to look at a property can be invaluable.
2) Real Estate Magazines and Newspapers: These publications usually list new developments and homes being sold. This kind of information in the very least gives you an idea of how much properties are going for.
3) The Internet: Using a site such as MLS.ca to find properties has become the most common way to check out new property listings. The Internet provides instant and updated information about the location, price, and home features for any house in any community. The great thing about the Internet is you can narrow your search down instantly for properties you are interested in looking at.
4) For Sale Signs: Take a drive through the neighborhood of your new community. One: you will be able to compare what you have seen on the Internet or in the paper to what you see in real life. Two: you might find that Gem that is being sold by the owner, usually these houses aren’t as exposed as properties listed by real estate agents.
5) New Development Areas: If a new home interests you, check out the new development areas in your area. Usually builders will have a model home that shows what a typical house in that area looks like. Builders also give new homebuyers options and extras that they can incorporate into their new home if they build from scratch.
These are some great areas to explore along with your agent when buying that next house. Remember using a real estate agent only gives you only 1 option to find that next home.

By admin | Posted in Uncategorized | Tagged , , , , , | Comments (0)

What Documents are Involved When you Buy a House?

December 26, 2009

Buying a house is not as simple as just giving another person the money for the house, and then the house is instantly yours. There are a lot of other things to consider before the whole process of purchasing any house can go underway. Once all of these elements are taken into account, the whole purchasing process can go very smoothly and expediently, but if things are not in order, then the process may take a longer time to complete.

Before you should try to buy any house, there are a few things that you need to make sure first so that you will encounter less problems along the way. You must first make sure that you have enough money to allow you to invest on a house.

The amount of credit that you have to your name does not necessarily need to be the exact amount of what you need for the house that you intend to purchase, just as long as your credit allows you to pay whatever mortgage plans or whatever payment schemes you have entered into. If you are earning, make sure that you are brining in more money than what you need to spend. This will help ensure that you have enough money in your credit to be able to pay for whatever purchases you make.

Also make sure that you have enough money to use as down payment for the house, which ranges from 10-20 percent of the purchase price of the house.

It is also a good idea to look at other houses that are available in the vicinity, and see if there are other options for you. This will help you gauge what you really want in a house, and if the house that you intend on buying is what you really want.

Try looking at the overall layout of the other houses, the number of rooms in the house, the bedrooms, kitchen, garage, and anything else that you may think as important to help you decide. Try to find other choices just in case the house that you are currently looking at is not feasible later on. Also, try to look at the neighborhood as well. This can also be a factor in how you are going to go about making your decision.

You should also have a decent real estate agent that will help represent you in the entire process of searching and negotiation of the house. Once you have already found the house that you want, allow your real estate agent to negotiate with the seller in order to get you the best deal possible. Once this has been consummated, the process of turning over the house to you now begins.

Before the house can be legally given to you, there are a few things that is necessary in order for the contract between you and the seller of the house to be consummated. The final step in the process of buying a home is usually conducted in a title office. This is where the parties involved will have to sign the necessary documents and mortgage arrangements. One of the important documents that is needed when there is a purchasing of a house is the deed of the house. This will help prove that once the whole sale has been consummated, that you are now the legal owner of the property that you are purchasing.

Another document that is needed in this type of sale is the title of the house, which helps show people that you are the person who has any legal claim to the property, or that you are the person who has any lien against it.

Once these two documents are already with you, then the house that you have purchased can already be transferred to your name, and you now legally can do whatever you wish with it, just as long as your mortgage arrangements do not encounter any problems.

Vanessa Arellano Doctorhttp://realestatepress.org

By admin | Posted in Uncategorized | Tagged , , | Comments (0)

Is Buying a House a Good Investment?

December 25, 2009

Intended Audience

Individuals looking to purchase a home for personal use or as an investment. As well, looking into conventional wisdom’s statement that buying a house is one of the best investments someone can make.

Summary Points to Take Away

Analysis

Conventional wisdom states that buying a house is one of the smartest and best investments an individual can make. This article is geared towards challenging this conclusion to see whether this statement rears any truth to it.

Why a House is a Good Investment?

Forced Savings Plan

Most individuals claim that the purchase of their personal home was the best investment they’ve ever made, which is true in most cases because it is the only investment they’ve ever made. The general public struggles with saving for retirement; thus, purchasing a house assists in that problem as it forces individuals to continuously pay down the mortgage (or lose the house in a foreclosure to the bank); therefore, allows the storing of equity for the owners. This built up equity (i.e. market value of home minus remaining mortgage) can be borrowed against during their retirement years or they can downgrad into a less expensive house in order to provide some retirement funds to the owner. If individuals take a disciplined approach to saving, then the benefit of being forced to save in order to pay for a house diminishes

Leverage

Typical real estate purchase require only a 5% deposit, while the remaining amount can be borrowed through bank debt. Few alternative investments outside of real estate can the acquirer obtain such significant leverage, which can enhance investment returns.

Example, suppose that you purchased a home for $200k, for which you made a 5% deposit down ($10k). During the next few years the house appreciates in value and you sell it for $220k (10% higher than the level you purchased it). Though the return on the house is only 10%, the return to the investor based on invested funds sunk into the home ($10k) is 200% ($20k earned over $10k investment) –  that is the power of leverage. On the negative side, more debt means higher fixed monthly mortgage payments; thus, higher risk of being able to make the monthly mortgage payments. As long as cash flow is not a concern and the mortgage payments can be met – investments should be leveraged to maximize returns to the investor. Could you imagine walking into a bank and asking for $100k to invest in equities while only putting 5% down – likely to never happen, this is a major benefit of real estate ownership.

Inflation Resistant

Real estate holds its value during inflationary periods; thus, acts as a hedge against the investors other assets that aren’t protective against inflation (ex. Currency). The asset will continue to hold its buying power (store of value), which is difficult to get outside of investing in precious metals. The reason real estate holds its value is there is the same number of houses that the increased monetary supply of dollars are chasing; thus, it’ll take more dollars to purchase the houses as the supply of houses stays stagnate while the demand rises (due to the increase in the number of dollars in everyone’s hands). This can become critical given the current economic times and numerous expansions of monetary supply across many nations, which will have the aftermath affect of higher inflation.

Capital Gain is Tax FreeIn Canada, every home owner is provided with a capital gain exemption on amounts earned in excess of cost for their principal residence. Only one piece of real estate can be claimed as the principal residence per individual. For example, if you owned a home and a cottage, only one of those houses upon selling could take advantage of the principal residence exemption. No other asset class has such advantageous tax reduction characteristics. Unfortunately this is a onetime event; thus, those holding numerous pieces of real estate can only apply it to one property.

Allows for Control over the Asset

Real estate is typically an investment an individual has control over (assuming you’re the majority owner – which is typically the case) by the means of the owner has the ability to increase the value of the asset, which may not be the case in most other investment opportunities. When purchasing real estate, owners can make capital improvements to the home (ex. Finished basement, new porch, etc.), which will increase the value of the property (capital appreciation) as compared to purchasing stocks or mutual funds as assets where the owner can’t take action to increase the value of those assets (unless they’re a significant owner, greater than 20% – which is typically unlikely). The ability to control an asset adds value to the owner through what is known as a control premium, as a real estate asset may be more valuable in the hands of some individuals over others.

Why a House is a Bad Investment

Lack of Diversification

Average individual thinks the stock market is very risky while investing in real estate is more of a certainty. Purchasing equities allows the owner to conveniently hedge their risk amongst various companies in numerous industries, countries, etc. The purchase of real estate doesn’t provide the ability to diversify risk away as easily unless an investor plans on owning numerous pieces of different types of properties (ex. residential, commercial, resorts, etc) across various markets (North America, Europe, etc) – which is probably very unlikely for the average investor. Purchasing real estate prevents the diversification of risk because it’s dependent on the economic, migration, and regulation trends of the local area.

For example, assume you purchased a home in Oshawa, Ontario – which is a town extremely reliant on the large manufacturing facility of General Motors (GM). Should GM cut back on production or move their facility housing prices would fall sharply as it is the biggest employer in the area; thus, demand from individuals will decline as unemployment rises and real incomes fall. With a decline in demand and supply staying stagnate (as you typically can’t “un-build” a house once it’s constructed) the price will have to shift towards in order to align demand with supply.

Real estate doesn’t allow the investor to diversify away the specific risks in the local area as compared to purchasing equities, which allows the investor to spread risk amongst investments that perform differently during different points along the business cycle. Most individuals when purchasing real estate have all their eggs in one basket.

Maintenance Costs

Transaction and maintenance costs are significantly higher for real estate investments than stocks, mutual funds, etc. When purchasing stocks costs are typically broker commissions ($20 per transaction if using an online discount broker), while when purchasing a home it is typically 2% commission on the transaction value, significantly higher than purchasing equities.

Once you purchase shares, no further cash is required from the investor unlike real estate, which requires constant annual expenditures that continue to increase the investors cash committed towards the property, such as property taxes, insurance, utilities, maintenance and repairs of the asset, etc. These are costs that real estate investors or home purchasers don’t factor into their expected return, but play a significant role as the payment of property taxes (etc.) doesn’t contribute to the value of the property for eventual sale in the hopes of capital appreciation.

Historical Lower Returns Compared to Equities

During any 20 year period throughout history, no other asset class has outperformed equities, which includes real estate. This is from the perspective of asset vs. asset without consideration of leverage and how that may enhance returns (as discussed earlier). While it is true that over the long run real estate prices go up in value, this is typically due to inflation incurred. Recent spikes in housing prices seen in the past 10 to 15 years has been due to changing demographics, specifically the baby boomer generation (who makes up largest segment of the population in North America) go through life stages at the same time (same goes for starting a family and purchasing a home and real estate investment property). The result was a large influx in demand without a corresponding increase in supply as construction requires lead time; thus, leading to rising real estate prices.

Will this high demand continue? That’s where the argument lies. Likely there will be softness felt in overall real estate demand as baby boomers already have their homes and they’re likely to either stay put, move to retirement homes or downgrade into a smaller place in order to obtain some retirement income. Immigration will continue into North America that will prop up demand, but likely not the extent to fulfill the whole in demand left by the baby boomer generation; therefore, the future appreciation in real estate properties is likely to flatten out.

Can’t Take Advantage of Available Opportunities

The purchase of a home or real estate property requires the individual to tie up a significant portion of their net worth into the property (in a lot of cases, all of it). Having all your net worth in real estate is a risky strategy as you’ll be severely impacted by movements in real estate prices as compared to having your cash tied up into several asset classes; thus, less vulnerable to swings in any one asset class. Similar to the discussion had under the “diversification” section of this article.

With the majority of an investors net worth tied up in a real estate property, there isn’t available cash to take advantage of other opportunities that come along; thus, significant opportunity costs are involved in venturing into real estate. This should be considered before purchasing an expensive personal home or making a real estate investment.

Limited Scope

Real estate is a local good, unlike gold for example – which can be bought and sold throughout the year for the same market price. An individual looking to buy a personal home or make a real estate investment doesn’t have access to all available properties as there are physical limitations to contend with. It comes down to wanting to live where you grew up or currently work or not wanting to buy a rental property far from your home in order to reduce logistical issues. For example, if you live in Toronto, Ontario and are looking to make an investment in a rental property, you’re unlikely to consider properties in Paris, France though the opportunities may be better than those surrounding Toronto due to language and logistic issues. Equities (and etc.) are globally traded and available; thus, users can take advantage of opportunities around the world; thus, their scope is not limited to the local area of their current surroundings like real estate is.

Additional Points to consider if you’re purchasing a Home for Personal Use.

Doesn’t Provide Any Cash Flow

An asset typically provides you with cash flow, i.e. puts cash in your pocket. When purchasing a home, cash only flows out (property taxes, repairs, etc.); some would argue that if it appreciates in value then it is an asset. In this instance it is only an asset when converted into cash and if that is the case, where will you live? Likely end up buying a new house, which has also gone up in value similar to your house.  This makes it difficult to realize the value of your personal home appreciation, which acts more like a liability than an asset since it takes cash out of your pocket instead of putting some in there.

Tax Deductibility of Interest

Interest expense paid due to bank loans taken to finance investment properties is deductable against income because the investor is pursuing income and tax legislation allows deduction of any expenses incurred in the pursuit of income. This is not the case for a mortgage taken out to purchase a house for personal use as the individual is not in the pursuit of income; thus, interest expense is paid with after tax dollars, with no tax shelter provided. If those funds had been borrowed to invest in equities or mutual funds, the interest would be deductable because again that would count towards the theme of pursuing income.

Can Get Personal Joy Out of It

Unlike equities and other alternative investments, the investor can’t personally use or get joy out of it as compared to purchasing a home, which the individual can live in and enjoy during the investment process. An investor who purchases shares in General Motors (GM) can’t exactly borrow and test drive cars whenever they please simply because they’re a part owner. This is a qualitative benefit that is difficult to quantify, but should be considered.

Where to go from here?

The main reason to purchase a house is to have somewhere to live and enjoy their life, don’t think of it as an investment. Buying a home isn’t a bad decision; it is the investor’s perception that may be tainted because it is important to realize that there are many arguments against a home as an investment to be considered. Don’t buy real estate property with the mindset that an individual can’t lose and that there is no better investment opportunity than to purchase a home, etc. Beware of conventional wisdom that states there is no better investment than purchasing a house.

THANKS,

SIMON GIANNAKIS

By admin | Posted in Uncategorized | Tagged , , , , , , , , , , , , | Comments (0)

Buying a House…within your Means

December 24, 2009

Purchasing a home can be the largest, most expensive undertaking you will face in your lifetime. With real estate prices experiencing double digit growth year over year for the past few years, it may even be our greatest investment. Most of us drive to the neighborhoods with the biggest, nicest homes and dream about one day living there. Our homes are our mark in this world, our castles. Given this, should we spare any expense when it comes to buying one? Most people fall into the routine of living in the most house they can afford. It becomes a matter of, “if I make x and have y to spend on a home, I will look for a house that costs y” instead of “I will look for a house that costs y minus what I don’t need”. My article on living below your means looks at this phenomenon in more detail.
A house should be a place to live, not a place to die. In other words, choose a home that you will be happy living in for many years, not one that will stress you out with high mortgage payments. Choose one in a nice neighborhood that has great schools, allows you to live a comfortable life, and doesn’t strap you for cash. In today’s real estate environment it may be a pipe dream to find a home that doesn’t strap you for cash, but opportunities exist around every corner. Whether it is buying a smaller home, one that needs a little work, or one with a smaller yard, you always have options. If you can’t find a place that allows you to live comfortably while remaining affordable, then maybe you are not ready to own a home.
When buying, there are 10 things you must remember about a home:
1. It is an asset, not an investment.
2. Home expenses can eat your wallet and life.
3. Real estate taxes are calculated using percentages.
4. Home buying and selling has high transaction costs.
5. Size is less important than quality of living space.
6. Utilities increase with square footage.
7. Insurance increases with the price of the home.
8. Upkeep increases with the size of the home.
9. Do it for the kids; get a home in a great school district.
10. A home can loose its value!
Let’s examine each item in this list. Number 1 is getting at the meaning of cash flow. The savviest of investors invest for cash flow, not appreciation. An investment in a home should be no different. If your house is not generating income, it is not an investment. Banking on appreciation is a risky business and should only be performed with risk capital. Risk capital is money that you can afford to lose. Since a place to live is a necessary thing in life, you are better off treating it like an asset. If you buy a home treating it like an asset instead of a speculative investment you are less likely to act irrationally and take unnecessary risks.
Number 2 – This point highlights that homes are not cheap. Mortgage payments, insurance payments, taxes, utilities, maintenance, lawn care, etc. all add up to a substantial amount and can really impact your budget. Buy a home at a price you feel comfortable with, one that will allow you to maintain your freedom to live life the way you want. That could mean changing your job, starting a business, or retiring. You should always avoid a situation where you lock yourself into something for an extended period of time. Buying a home at the top of your price range can really put the shackles on your freedom.
Number 3 – It is important to keep taxes in mind. Remember, death and taxes are the only things certain in life. The pricier the house, the more you will pay in taxes. You will always pay taxes on your home, even if you own it outright. I mention taxes because they are one of the most substantial expenses to owning a home, and they are often overlooked. If you have a house worth $300,000 expect to pay in the neighborhood of $5000-$7000 in taxes a year depending upon where you live. That is about $500 a month! Talk about a budget buster.
Number 4 – Buying a home for the short term is more risky because of high transaction costs. For a buyer, closing costs can be around 3-5% of the purchase price. That doesn’t include the cost of moving which averages around $10,000 per move. If you are a seller using an agent, commissions are typically 6% and that doesn’t include any legal, title, or survey fees. All the benefits of homeownership can quickly evaporate if you are in it for the short term.
Number 5 – I see so many houses built just to be BIG. They don’t always look the best and have a lot of space that probably doesn’t get much use. It’s like everyone is in constant competition to have the biggest house. If you are a first time home buyer don’t put too much value on space. You really need to live in a house before you know what your requirements are. Remember, you still pay for all the space you don’t use. Besides, most people get more enjoyment out of a small house with character than a gargantuan “Mc-Mansion”. The following items in the list highlight the other benefits to having a smaller house.
Number 6 – The size of the home you purchase can have a substantial impact on utility costs. It is safe to assume that the bigger the house, the bigger your utility payments. Remember, more than just the sales price determines the expense of a house. Utility payments can be a big “gotcha” for first time homebuyers. So heed this warning and buy an efficient home without an excesses amount of space.
Number 7 – Insurance is generally pretty cheap for a home. If you live in a flood plain or other area prone to natural disaster it can become more substantial. The bottom line is that like most other household related expenses, insurance premiums increase with the value of your home.
Number 8 – Most people don’t think about upkeep when they purchase a home. That 4 bedroom 4 bathroom house sounds wonderful until you have to clean 4 bathrooms. This holds true with lawn care also, the bigger the yard the more the work. A large house can be wonderful, but remember it takes a lot of work to keep it that way.
Number 9 – School districts are usually the biggest factor for homebuyers. This is for good reason; well educated kids grow into well educated adults. Society benefits from well educated people. One of the greatest gifts you can give your kids is an education. Besides being a huge positive for your kids, great school districts keep real estate prices from falling because they drive up demand for the area. So, even if you are a bachelor/bachelorette with no plans for kids, the price of one of your largest assets is safer in a great school district.
Number 10 – This is probably the most important point to remember, especially since home prices have recently gone through the roof. Your house may lose its value. This is usually what causes the most financial problems for people. Imagine someone who has stretched their budget so thin to afford a house and is unable to start a savings account. If they lose their primary source of income and can no longer make the payments they will need to either find another source of income or sell the house. If the house has decreased in value and they need money to make up the difference between their equity and market value they are probably in some deep trouble. This happens when one sacrifices a savings account for a home. It can also happen if there are no other options to generate the same level of income. Bad things can happen. Make sure you are able to weather the most difficult of storms when purchasing a home.
You may have noticed a common theme with these ten items. Sustainability is key to owning a home. Can you afford the mortgage while still saving/investing? What about the utilities, taxes, insurance, and upkeep? Take all of these things into consideration when purchasing a home. Always make sure that you are able to maintain and grow a savings account or investment portfolio. It is critical that you have a worst case scenario fall back plan. If you can’t afford the home when you want to change jobs or start a business, then you might want to think twice before buying it. Despite all this doom and gloom, home ownership is one of the biggest factors of class distinction in America. You are much less likely to become wealthy if you don’t own anything.
For more information on Real Estate visit The Real Estate Database.

By admin | Posted in Uncategorized | Tagged , | Comments (0)