Buyers

When you see a house that seems exactly what you’re looking for, you’ll feel the impusle to make an offer right away. A beautiful, airy and relaxing house can make buyers easily fall in love with it. But don’t allow your emotions to make you forget about what’s real.  Leslie Levine, author of “Will This Place Ever Feel Like Home?”  says, “Sometimes we want something so badly, we’re not willing to ask all the questions we should.”

A beautiful house may only mean a beautiful facade. A closer inspection is necessary to ensure that this is really the house you want. You may see a basketball hoop over the garage and assume the neighborhood is great for kids. But a closer inspection may show that it’s rusted and hasn’t seen a ball in a decade, and that other yards in the neighborhood have no jungle gyms or tire swings out back, Levine says.

• Visit the house at different times of day
  One of the features you may love about the house is its large windows. But it can be a big problem at night when you have a peeping neighbor. If the house is beside or across a school, you may think of it  as an advantage. Visit the house during school hours so you can find out if you can handle the hustle and bustle that the school brings. You could visit a house in the middle of the day and think it’s a quiet neighborhood but it could be noisy and busy during morning or evening rush hour.
• Go through recent newspaper archives
  You might find out that the neighborhood’s water supply has a high level of contaminant; or they’re thinking of putting a high voltage line through the house  you’re eyeing. Levine suggests,  “Make sure you’re getting information on what you can’t see.” It’s also a good idea to check with the county or city for proposed projects in the area.
• Talk to neighbors
  How many of the people around you are actually homeowners? It will be hard to tell at first if most are rental houses.
• Ask the neighbors if they have an association
  “Is there a newsletter for it? How often does the neighborhood get together? Do they have a block party every year?” According to Levine, “Even if you don’t plan to attend, the fact that they’re having a gathering says they care about their community, that they want to get to know each other, that they’re willing to socialize that way. People who behave that way are building a community. They’re going to look out for your kids; they’re going to look out for your house. It’s a nice, safe way to celebrate something.”
• Ask the sellers
  The house may have had past problems that you need to know of. Even if they’ve been fixed, it’s still worth knowing so you won’t do anything that could damage it again. The house may have had water damage years ago because of an ice dam. Knowing this will allow you to prepare and take preventive measures. You might find a landscaping which might seem to be unlikely to you. But you might find out it was actually made to prevent basement flooding.
• Get a home inspection
  According to National Association of Exclusive Buyers Agents, all houses have defects. Some may be obvious and most of it can be fixed. Being aware of the damage or potential problems of the house allows you to prepare for future expense or help you negotiate for a lower price. You should also consider having your house inspected for lead, radon and wood-eating pests.
• Ask for records of past improvements
  If the house went through renovations or repainting. Ask if they could show you the receipts. If the whole project cost just $1,000, it means cheaper paint was used. Be prepared to repaint it soon. Getting these records isn’t always porrible but it’s worth the try.
• Don’t assume remodelling will be easy
  If you talk to the seller about your ideas for future improvements, they might tell you more details you need to know. For example, you might notice a shower in an unexpected place. You’ll probably discover that there’s a structural problem that would’ve cost the previous owners a lot if they put a shower where it’s supposed to be.
• Consider the view
  Levine says, “So many neighborhoods now have teardowns. So look at the two houses on either side of you. If this neighborhood has had some teardowns, one of those houses might be a candidate. And they may build some behemoth structure that affects your light or the way your house looks or your view.”
• Check the utility bills
  You may love the house for its high ceilings, walls of glass or perfectly beautiful green lawn. But it might cost a lot to maintain them. The previous owner may have paid a so much for heating or cooling.
• Consider the taxes
  It’s not enought that you look at the latest tax bill. Ask what the previous years tax bills were. In some areas, houses are re-appraised and taxed higher frequently. The house may seem like a good deal but with taxes that keep going up, you might want to reconsider. If you can’t get the information from the seller, you can also look for it in newspaper archives or ask your real estate agent about this. In some areas, the school’s funding come from property taxes. If this is the case, taxes will increase faster than in other areas.
• Check with city hall
  NAEBA suggests checking the zoning of the neighborhood. You might also want to check any potential easements, liens or other restrictions that has something to do with your property. The seller should be able to tell you this but it’s better to do your own research. You can also ask your real estate agent about this.
• Reconsider the bells and whistles
  Are you okay with a one-car garage? Are you comfortable with on-street parking?  You may consider a house with a pool as a perk but can you really afford one?
• Explore the surrounding area
  This is especially important if you’re new to the city or state. Make sure you’re not moving into an ugly part of town. I’m also certain you don’t want to move in a noisy area. Find out if the property is near an airport, fire station, police station, hospital or railroad track. You might also want to live away from agricultural or industrial areas as they are prone to air pollution.

Most first-time home buyers are eager to have their very own home but it has to be at a price they can afford. Smaller homes, fixer-uppers and cheaper commutes to work are the best options to look into.

The problem is, most firt-time home buyers expect more than what they can actually afford in a home. Coldwell Banker conducted an online survey with 150 of its brokers. The result of the survey yielded a strange trend among first-time home buyers.

Almost of the survey respondents said affordability was their top concern first time buyers. Yet, 81 percent are looking for move-in conditions. Only 7 percent are considering fixer-upper homes. The real estate company suggests looking into fixer-upper homes if you want affordability.

“In the past, first-time home buyers were willing to purchase older, more basic houses in an effort to save money and bhttp://www.doctilo.com/article_writing/index.php?e=33reak into homeownership,” said Jim Gillespie, president and chief executive officer, Coldwell Banker Real Estate, LLC. He adds, “It is important for first-time homebuyers to remember that by considering a fixer-upper for their first home purchase, they can build equity over time and later move up and into their second-stage home that better reflects their expectations.”

Buyers who choose to go with fixer-ups homes should have the house inspected by a professional home inspector. Buyers need to find out how much it will cost you on repairs. You might end up spending more than what you saved. Homes that need basic fixing or improvement can give already give you a lot of savings but you can even save more on houses that need major work. Again, buyers need professional help so you can determine if your savings on the house is more than the cost of repairs.

Another surprising discovery was that most first-time buyers wanted affordability yet they looked for bigger houses within the metro. The survey shows that 71 percent of first-time buyers wanted bigger houses than they were 10 years ago. A smaller home is less expensive because of smaller footprint and square footage. 41 percent were considering proximity. They were looking for a house near their workplace so they could save on gas. However, houses around economic centers are expensive. These properties bank on the value of convenience. Those who live in areas like this can save on travel time and gas money.

A good alternative to this is finding an affordable place far from economic centers but near a transit oriented development (TOD) or low-cost public transit. There is also the option for carpooling or car-sharing communities.

The survey also showed that most of these first-time buyers looked at five to ten homes before they decided on a house. But if you want to get the most for your money, invest more time in looking at houses. More houses, more opportunities for savings. Look at at least 10 houses. You can usually find big discounts from these: houses that had been on the market for at least 90 days; houses being sold by long-time homeowners; houses for sale from flipping investors who got unlucky; and houses from we-want-to-sell-real-estate banks.

Usually, spring and summer is the busiest time in residential real estate. Most families want to take advantage of the good weather and the children’s summer break. However in most regions, spring is also when houses are most expensive. During this time, there are a lot of buyers and competition is tough.

Here are some measures you can take that can give you an advantage over other buyers:

• If you plan to work with a real estate agent, start early. Interview three to four agents and talk to their references as well. Once you have chosen, let the agent know exactly what you’re looking for. Be specific and detailed. 
• Get your loan pre-approved. By doing this early, you have one less task to think about. You’ll also know how much you can borrow. This will save you from looking at houses you can’t afford. And when you make an offer with a pre-approved loan, the sellers know that you’re serious.
• Determine how much you can afford for downpayment. According to NAR, first-time buyers usually make a down payment of 6 percent on a home purchase, and 24 percent of down payment funds were gifts from relatives or friends. If you don’t have this option, you can turn to loan programs that accept 5-3 percent downpayment. Closing costs typically range from 2-7 percent of the property cost. 
• Always be ready for your agent’s call. If the competition is tight, as soon as your realtor finds a good deal that is up to your criteria, they’ll notify you. Be ready to visit the house and once you determine that it’s going to be a good buy, make an offer. 
• When you look at houses, consider the potential. There are some things you cannot change like the neighborhood, proximity to job centers and schools, the basic floorplan of the house, and size of the back yard. But don’t turn your back on a house because you don’t like the color of the paint, the design of the carpet or wallpaper. These are things you can change according to your taste. Try to imagine the house with the furniture and carpet which you think goes best with the house.  Do you ike it now?
• If you’re in a seller’s market consut your real estate agent on how much you should offer. If there’s competition, consider offering more than the listing price. Avoid asking for a long closing date or extras like carpet allowances. 
• Start thinking about home insurance now. Start by checking that your credit report is accurate. The accuracy of your credit repor is very important. It will determine if a company will cover you and for how much. According to the Insurance Information Institute, you should get a copy of your loss history report like a CLUE report from ChoicePoint or an A-PLUS report from Insurance Services Office. They record home insurance claims. If you weren’t able to file a claim in the past five years, you won’t have a loss history report. This gives you a better report and a lower premium. If you previously rented, you should have renter’s insurance. Your insurance history will be helpful when you apply for insurance for your new home. 

Asking for a home loan from a friend or family member is difficult; even if they are people close to you. The money involved is big and you probably see each other frequently or at least once a year. If they turn you down, you might feel uncomfortable with each other. But if you could show them how it could also work for their advantage, you’ll achieve a favorable result.

• Asking for the loan

  Thomas Fox, community outreach director at Cambridge Credit Counseling said borrowers should approach a private home loan the same way they would a mortgage from a bank. Before you come talk to a relative or friend asking for a loan, you should come up with a plan or proposal.

  “Borrowers should be realistic about what a practical repayment plan would be and not try to borrow more than they can repay. You have to treat it the same as any kind of loan and be realistic,” he says.

  When you have a contract for the loan, even if it is with your parents, they can sue you for missed payments.

• What private home loans have in common with traditional loans
  Private home loans or private mortgages are also called intrafamily mortgages. They are not very different from a loan you could get from a bank or credit union.
  • Both parties – lender and borrower, sign a promisory note or a mortgage note. This note contains the terms of your agreement.
  • The promisory note states the following: amount that was borrowed; the interest rate; frequency and date of payments.
  • There will be a deed of trust which gives the lender the right to foreclose the property when the borrower fails to pay according to the payment plan.
  • The lender holds a lien on the mortgaged property.

  This set-up is also for the protection of the borrower. The lender cannot ask for full payment abruptly or foreclose on the property because of personal reasons. Your friend or relative can’t just change the payment plan because they changed their mind and want the money back.

• How borrowers can benefit from private home loans
  • You can get better interest rates. You can negotiate with the lender interest rates that is more reachable for you. The lender can still benefit from this arrangement even if the interest rates you propose is less than what the banks apply.
  • You can propose a payment term that’s doable for you. It can be monthly, semi-weekly or any other. But even if your lender is generous, don’t take advantage. Live up to the terms you agreed on. 
  • Federal tax deductions that apply to institutional loans can also be applied to private home loans.
• How Lenders Benefit from private home loans
  • Even if the interest rates your proposed are less than what the bank applies, they can still get more compared to other investments like a savings account in the bank or other investment.
  • This will give your friend or family extra income. The promisory note gives them a sense of assurance that they can expect a certain amount from you based on what was agreed upon.
• What happens if you miss payments?

  Sometimes unexpected things happen that will cause us to miss payments. You might suddenly lose your job or accumulate medical costs that you didn’t financially plan for. Discuss this situation with your lender. This also applies to institutional loans. The loan can be modified like lowering or postponing the payments but for a longer loan term. But don’t avoid your lender’s calls. It might lead to more problems.

When you enter into the buying process, you will be commited despite all the uncertainties involved. By adding contingencies clauses in the contract, the buyer feels a sense of protection from the unknowns. Contingencies clauses state things that need to be met before closing the sale. 

• The protection buyers get from mortgage contingenciesThis is one of the most common contingency. It provides additional security for the buyer. This contingency states that the buyer will acquire a certain kind of mortgage at or below a certain interest rate for a particular amount of the purchase price (usually 80 percent) on or before a specific date before closing. If the buyer is unable to get a loan according to the terms stated on the contingency, he can withdraw from the contract and the earnest money will be given back to him.
• Protection for sellersThe security that comes with contingencies protects not only the buyer but the seller as well. If the buyer is unable to secure a loan but fails to inform the seller by the date agreed, the buyer is still obliged to buy the house with or without a loan. Depending on the contingency, the seller can also find a mortgage for the buyer. To provide more protection for the seller, they could do the following: set an earlier date for the deadline so the buyer can’t back out at the last minute; negotiate that a significant part of the earnest money will be forfeited if the buyer can’t get a loan by the deadline.
• Appraisal contingencyAppraisal contingencies work with mortgage contingencies. It can work in two ways: (1) If a buyer cannot get an appraisal that can cover the asking price, the buyer can back out of the sale; (2) If the buyer cannot acquire enough appraisal, the buyer can negotiate for a lower price. If the seller does not agree with it, the buyer can walk out of the sale.
• Inspection contingencyThis contingency allows the buyer time to inspect the house. Typically the time frame is 3-14 days. If the inspection reveal major problems with the house, the buyer can opt to back out.There are many other contingencies available like insurance contingencies or mold inspection contingencies. Common contingencies vary among states.Never disregard fine prints. Read them carefully and make sure you understand what you’re about to sign. The contract is legally binding. You can’t just change your mind once you sign it.

Buying a home is expensive. A lot of people want to have a home of their own but do not have enough cash or can’t get enough funding to afford a mortgage. On the other hand some people are looking for ways to be able to take advantage of tax benefits from being a home owner. So they turn to co-buying.

“Neither of us had a big enough chunk of money to put down for a home in a desirable neighborhood,” Brian Free told the U.S. News & World Report about his decision to purchase a home with his friend. “However, aggregating our resources allowed us to find a home that suited our needs.”

However, co-owning anything with a friend or relative comes with risks. But there are things you can do to reduce the risk of running into problems. Careful delibiration and planning is a must.

• Think about how you will hold title

  The decision on how to hold title will affect your say in legal documents. Unmarried co-buyers can share a title as TIC (tenants in common) or as JTWROS (joint tenants with right of survivorship). Co-owners who are married can take title via community property or tenancy by the entirety.

• TIC versus JTWROS

  With JTWROS both owners have equal shares in a home. When a co-owner has passed away, his share will go to the other owners. Consequently this means that the last surviving owner gets all the shares. In a TIC, the shares may or may not be equal. Each co-owner has its own title. Right of survivorship doesn’t work in TICs. When a co-owner dies, his share will not go to surviving co-owners. Each co-owner can pass their share to their family members or whoever they want to will it to. TICs can be dissolved if a co-owner buys out the share of the other co-owner/s. Or to sell the home, one co-owner can file a partition action.

• The similarities of a TIC and JTWROS

  In both ownership arrangements, owners have rights to the property. If it is rented or sold, co-owners each receive each will receive a part of the money that is according to their shares.

• Secure a co-ownership agreement

  It is important to lay the ground rules and protect your share. It is wise to make things clear for all parties involved before problems arise. No matter how close you are with the co-owners, there is always a possibility that ownership issues will be challenged. A co-ownership agreement can help resolve the issue.

• What are the ownership percentages?

  Joint tenants have equal shares. Co-owners in a TIC agreement can divide the shares based on the amount that each has put in for the downpayment.

• How are ongoing costs divided?

  They refer to ongoing costs like mortgage payments, property taxes, insurance, utilities and maintenance. The division of expenses like this should be part of the co-ownership agreement. Co-owners may divide this according to their shares or according to the amount of time each co-owner will put in in maintaining or improving the property. You may want to open a joint checking account so each co-owner can withdraw from this account to pay for ongoing expenses.

• What if a co-owner wants to sell?

  The co-owner who wants to sell does not need to get the approval of the other co-owner as to whom they could sell it to. However, the other co-owner can object to the sale because of their right of first refusal.

Finding your perfect home starts with searching for your kind of neighborhood.

What is so important with a good neighborhood? The environment you live in affects your lifestyle and quality of life for you and your family. You may want to live near a park so you and your kids can often walk there and they could play with other kids. Others want to live in a quiet suburb so after a hard day’s work they could retire to a relaxing home. For some a perfect neighborhood should be close to busy commercial districts where shopping and dining is convenient.

The search for a perfect neighborhood starts with driving around, especially in areas you’re not familiar with. Take note of neighborhoods that interest to you. Walk around to get a better feel. See if the houses are well-maintained.

If you have children, you might be looking for a safe, kid-friendly neighborhood. You’ll also want to think about these things:

• Are there good schools in the area?
• How is the crime rate?
• Are there grocery stores nearby?
• Is theproperty value likely to increase?

If you work with a realtor they should be able to tell youthings you want to know about the neighborhood you’re interested in.

• School

  Even if you don’t have children, there’s a good reason for living near a good school. Properties near a reputable school is more likely to appreciate in value. Years from now if you sell your house, you will be able to sell it at a high price in no time. Properties like this are attractive to buyers. If you want to know more information about the schools in the area you’re eyeing, you can conveniently do this online. You can just search for the zip code or geographical area and you’ll be able to find ratings for the school system as well as standardized test scores. You can also ask your realtor about the school/s. Or try talking to neighbors with children who go to the school. If you have kids the best thing to do to validate your research is to visit the school yourself or with the kids. And get the feel of the school.

• Crime Record

  This is a very important aspect you should look at. The good news is, you can easily find information online. There are websites where you can see statistics on crime and other relevant information. Homestore allows you to search for crime data and school information in the area you are searching for. Just enter the zip code or city you choose. The site can also give a comparison of crime rates between another area.

  You can also do these as you research:

  • Observe if the windows and doors of the houses in the neighborhood have bars.
  • Look out for graffiti and vandalism on walls and walkways.
  • Talk to neighbors.
  • Ask the police or sheriff’s office.
  • If you’re looking in town or in busy areas, nooise and traffic is expected.

Go beyond facts and figures. Don’t focus too much on the value of your investment. There other important factors to consider aside from this. Like the convenience it offers to work and school; its proximity to restaurants and shopping centers; or even just the relaxing feel it can give you and your family. But usually property value is a reflection of the area’s overall health. When you do your research find out as well how much property taxes have gone up over the past few years.

Their major responsibility is to protect your interest as a buyer and as their client. Their main roles are the following:

• Educates you about your market.
• Negotiates on your behalf
• Analyzes your wants and needs.
• Guides you to homes that fit your criteria.
• Coordinates the work of other needed professionals.
• Checks and double-checks paperwork and deadlines.
• Solves any problem that may arise.

Looking for a new home is exciting and overwhelming. There are so many things and details to pay attention to. Focus on these five most important areas: electrical, foundation, plumbing, the attic, and landscaping. According to Don Walker, inspector and owner of Ace Home Inspections, these are the five areas in homes that he frequently reports problems with.

• Electrical

  Most people assume that if they buy a newer house, they won’t have electrical problems anytime soon. “I inspected a brand new house — four years old but the electrical was all done incorrectly,” says Walker. Through a complete home inspection, potential problems are detected early on.

• Foundation

  Walker said he inspected a four-year-old home that was already showing signs of major damage that is expected to cost you a lot of money in repairs. “It was a model home. What [the homeowners] did was plant trees for shade to make it look really nice, but they planted the wrong trees and they’re going to crack the foundation and it’s going to cut the property value down by $50,000,” says Walker.

  Walker says in the case of that home, the trees were causing micro-fractures in the tile in various locations of the home. “As you walk through the house, 21 feet in and 30 feet deep, there’s just too much root invasion and it’s going to ruin their tile,” explains Walker.

  He says some tell-tale signs with this home were the minor cracks in the foundation that were causing a lifting and separation of the foundation. Also, the windows were not opening and closing properly, “which means the foundation is moving.”

  But not all cracks is an indication of a foundation problem. Walker said, “Most people don’t understand that there are natural cracks in a house. That’s why when we do an inspection report we have to look at it and say ‘Okay, this is a typical crack and this one is an untypical crack.”

• Plumbing

  According to Walker, is another area that poses a big concern yet often goes undetected. “Mold forms underneath sinks when people have a leak and they fix the pipe but they don’t take care of the mold,” says Walker. He said caulking the sink can help prevent mold. “That’s my number one thing I always find — bad sinks.”

  He says, “When you look at the sink, look behind it and most of the time you will discover a little crack. What happens is, when you wash dishes or you wash your hands in the bathroom or the kitchen, the water gets in that crack and seeps down. Once the water gets behind the cabinet it’s in a perfect position to create mold.” When it’s dark and damp, it becomes a perfect breeding ground for molds.

• Attic

  Walker says, “You can tell everything about the house by the attic.” When you fix other parts of the house, you can already mask the problem. Take for example a wall damaged by leaks. You can have it fixed and repaint it to make it look new. But Walker says the attic is sort of the eyes to the soul of the home. “In the attic you can tell where all the damage has been.”

  “If you’re in a 20-year-old house and you see that the insulation is brand new, you know that there was a water leak because it had to be replaced,” says Walker. He adds, “You can tell if the roof is good because you can look right at the wood.”

• Landscaping

  “There should not be moisture or plants next to your house,” says Walker. He says there should be a 12 inch barrier between the landscape and the house. If not, the foundation might crack. If the landscape is too close to the home, when the plants are watered, the foundation and soil expand. And when the they’re not, the foundation dries up and shrinks which causes it to crack.

  Acquiring the money to pay for a house is not the only preparation you need to buy a house. Learn what you can about the house and how to take care of them. It will save you a alot of money in the near  future.

Buyers are now in a better position when it comes to buying a house. Gone are the days when real estate is a hot market and you need to make an upfront offer as soon as a property is put up for sale.

Competition has mellowed down in most areas. This gives buyers an opportunity to be able to deliberate on what is available and take advantage of the best deals. How do you determine the climate of your market? According to economists, real estate is directly related to employment. So if there is a rise in employment, you can say that the value of your property is also looking up. In the Midwest real estate is not doing as good as auto manufacturing. Prices are low and is not expected to rise anytime soon. It might take a while until the market rebounds.

Things buyers can keep in mind to get the best deal in the market:

• Do your homework and negotiate fairly.

  In a changing market, the biggest problem is human nature. Market value can drop or stagnate. But sellers often refuse to believe this. To them, the price of their home is based on how dear it is to their heart regardless of its actual market value. On the other hand, buyers take advantage of a market slump and make unrealistically low offers. Before you make an offer, research and think about important things like the features of the home that you want to be in the home, the size of the home and the going rate of properties in the area.

• Research on comparable sales.

  Find out how much the last one in the area sold. According to Beverly Durham of ReMax Gold Coast Realty in Camarillo, Calif., “See what’s going on out there.’’ Don’t insult the seller by making a very low offer. You’ll drive them away. Your goal is to make them consider your offer.

• Why is the seller putting it up for sale?

  Find out as much as you can about this. Is it because of retirement, job-related, divorce, they need to relocate, or they simply want to sell to the highest bidder.  This information is crucial. If a buyer knows this, they can either negotiate better or decide to look elsewhere.

• Check the MLS (Multiple Listing Service).

  They usually state what the seller owes. Or your agent can provide this information for you.With this information, you could negotiate accordingly.

• Timing.

  According to Durham, “After 45 to 60 days the seller is usually absolutely sick of keeping their house spotless and sick of people walking through.’’ After this period the seller will be anxiouse to sell their house.

• Go for newer or well-maintained houses.

  It will cost you time, effort and money to fix damages.

  Even in a tight market, it’s okay to ask the seller to add the closing costs to the price of the house. It’s better to pay 20% downpayment and roll the closing costs into the loan than pay 15% downpayment and pay upfront for the closing costs.

• Be reasonable

  when you ask for extras.You can also ask for new kitchen appliances or washer and dryer. Durham said you can even ask the seller to pay for the first year of homeowner association dues. But don’t ask them for things that involve workmanship. Durham said, “Don’t ask them to paint.’’“They won’t do it the way you want. They’ll do a lousy job.’’

  When you consider buying a home, think about staying there for atleast five years. Remember your goal as a buyer is to get the home that you want; not to outsmart the seller.

Your success in the realty market lies in how well you negotiate. But negotiation is a complicated matter. All the parties involved want things to go their way. Given these conditions, how can you make things work for your favor? How does one become a succesful negotiator?

Based on experience, these five aspects determine a successful negotiation:

• What the market says

  Study the market. There will be times when it’s more favorable for buyers and there will be other times when it will lean towards sellers. The key is to strike when the time is favorable for your side. For example, as a buyer you are in a position to offer the seller a quick deal and you know that the seller is in a hurry to sell the property. Take it as an opportunity to make things work in your favor.

• Determine who has leverage

  If word has gotten out that the seller has gone bankrupt, you are in a position to make reasonable demands. On the other hand, if you know that the house is a hot item, expect many competition. Therefore, you are in no position to dictate the terms or ask for “extras”. The owner has the liberty to choose the buyer they want; usually to the highest bidder with the best terms.

• What are the details?

  What are the other costs (or savings) involved? Most people think that the price of the house is all there is to it. But in fact, there are other things to consider. For instance, Both house A and house B cost $275,000. However, house A is an older house that needs costly repairs. Plus the seller of house A agreed to pay  a portion of the closing costs. On the other hand, house B also costs the same. But cost of  necessary repairs will not be covered by the seller.

  Think about all the costs and savings involved and determine where you can get better value for your money.

• Financing

  All transactions involve money. Money affects negotiations in so many ways.

  Is the buyer pre-qualified or pre-approved by a lender? Finding your ideal house does not guarantee that financing will also be available. Your loan application can be denied because of several reasons; among them: appraisal problems, title issues, survey findings.

  One of the advantages of being pre-approved is that buyers already know how much they could afford. Sellers like buyers who are pre-qualified. They pose less risk to the seller. They won’t have to worry about waiting for the buyer to find a loan to seal the deal. Being pre-qualified means that you have the financial capacity to pay for the loan.

  Lower interest rates mean a broad market – a lot of potential buyers.

  Nowadays, downpayments are made easier. Now you can find loans with as low as 5% downpayment or even less. 100 percent financing or no downpayment plans is even an available option. 

• Broker expertise

  Brokers are now representing not only sellers but buyers as well. If you have competition, being represented by a reputable broker gives you an edge.

Are you looking to finance a new home? Or are you finding the best mortgage rate to refinance your home?

The first step is to shop around. But what does that really mean? Research and prepare. Take time to think and analyze different mortgage plans. You could save a lot by doing this. Take this for example: on a 30-year mortgage for a $300,000 house, a homeowner would pay approximately $1,520 each month at a 4.5 percent rate. But if the homeowner chooses a slightly higher rate of 5.10 percent, it would increase the monthly mortgage payments to $1,633, which would make a difference of $40,680 in 30 years. (Figures were calculated on a 20 percent down payment.)

The best thing you should do is retrieve your credit scores. If lenders retreive them multiple times, it can lower your score. 

If you’re looking for a lender, look into their track record. Ask family and friends about them and when you’ve narrowed down your options to two or three lenders, compare their rates.

Before you compare rates, establish a budget. Think about how much maximum you can afford to pay every month.

The lender should be able to give you a comparison of loan terms with conventional methods of financingso you can make an informed decision. Don’t just jump into a plan with low rates. Make sure you understand all the costs with it.  Rate lock is a contract with the lender that ensures the interest rate will not change. But you will need to get the loan within a certain period of time; usually 60 days. If the rate increases, you will not be affected. Using a mortgage calculator , compute the monthly payment at different interest rates. If you find a rate that is lower than your limit, lock in to that rate.

When you see rates that are lower than your limit, act fast. Don’t miss out on good deals and offers.Some lenders offer a “float down.” This means that even if you’re already locked in on a low rate, you can get even lower rates. Specific contracts may vary depending on lenders.

When you look for a lender, don’t just consider one. Look into other lenders as well. Different lenders offer different products. Understand the products. Some products for example have low rates for new homebuyers but not for those who want to refinance.

It’s a good idea to try different institutions from a direct lender, credit union or a community bank. Once you’ve made up your mind on a lender, ask what other fees are added to the loan. You might choose a plan with a low rate but have a lot of additonal charges. Before closing the deal, make sure you know the total amount of the loan.

Once this is settled, decide when you want to close the deal. Discuss your intended date with the lender. Ask about the charges for loan lock periods. Lock in for the best rate and the right amount of time.

When you think about buying a home, one of the first questions that come to mind is whether you buy an old house or a new one. A new house may be attractive because everything is new. Nothing has been used yet. The walls are clean, the closets have never been used before, they come with energy-efficient appliances and you won’t have to spend on repairs because of wear and tear. On the other hand, you may fall in love with traditional look and feel of an old house.

When you’re at a crossroad, these points can help you decide:

Old homes

• Neighborhood.
  Some people prefer a home in an established neighborhood. Another plus factor are the full-grown trees and mature landscaping you can’t get from brand new houses.
• Maintenance and repair.
  Existing homes need to be inspected by a proffesional home inspector. There might be existing damage or potential problems that will costly to repair or maintain. Old appliances may need to be replaced. All this needs to be considered in the purchase price.
• Home improvement.
  If you’re into home improvement projects, an older house present opportunities to put your DIY (do-ityourself) skills to action.
• Freebies.
  Existing houses come with features, furnitures and appliances that are already there. You can consider them freebies.
• Land.
• Location.
  Older homes are situated in or near business centers. But newer houses are usually in far suburbs.
• Opportunity to remodel.
  There are some homebuyers who are excited at the opportunity to customize an old home according to their liking.
• Price.
  In general, existing homes cost less than brand new ones.  Buyers can even get more for their money because of existing features that count as freebies – drapes, carpet, landscape.
• Track record.
  With an existing home, you’ll already have an idea of the property’s value based on how much it has appreciated or depreciated over the years.
• Tax savings.
  Existing houses have lower property tax rates (depending on your state). Plus you could save on local bonds associated with new development, such as schools, parks, or road or transportation improvements.
• Traditional layout.
  People who love classic, formal dining and living areas will love older homes.

• Definition
  A 1031 Exchange (Tax-Deferred Exchange) is One Of The Most Powerful Tax Deferral Strategies Remaining Available For Taxpayers. This allows the taxpayer to pay due taxes at a later date. In usual transactions, the landowner pays a percentage of his gain from the sale for taxes. But Section 1031 of the Internal Revenue Code allows the landowner to trade the property with another “like-kind” property. This however does not mean tax-free. It simply gives the taxpayer time to reinvest their profit.
• Advantage
  The obvious benefit of a 1031 Exchange is that the taxpayer can postpone paying taxes. But an exchange of property of like kind has to happen. And this only pertains to investment property; not a personal home.
• Disadvantage
  The exchange needs to be done within a limited time frame and reduced cost. And the funds need to remain invested. The taxpayer also needs to pay the exchange fee.
• Exchange Techniques
  There are several ways of drafting a tax-deferred exchange. But it has to abide by the 1991 “safe harbor” regulations. It established procedures which include the use of an Intermediary, direct deeding, the use of qualified escrow accounts for temporary holding of “exchange funds” and other procedures which now have the official blessing of the IRS. Because of this, you will need the help of an Intermediary.
• Investor Services
  Our extensive knowledge and experience proves our credibility in terms of improvement costs and acquisition guidelines. This helped us develop a strong relationship with owners and investors who help us understand all sides of any deal.

To us, negotiation is important and we have the patience to go through the the process of getting a good deal.

Our success rate is strong giving no wonder we enjoy a big share in the percentage of success rating in growing nationwide business.

Buying a home is a big move. It leads to a series of things to think about. 

One of them is whether you want to live in a condo or a single unit family house? Each choice comes with their own set of advantages and disadvantages. Only you can determine what’s best for you.

Michelle and Kevin Millsom, 31 and 36, is a newlywed couple living in Boston. Choosing to live in a penthouse apartment was the best thing for them. They don’t have any children, both have high-powered financial careers, and they love the excitement that the city had to offer.

“We enjoy everything the city has to offer—the restaurants, theatre, outdoor concerts. We walk everywhere and find the easy access to the airport to be a plus since we travel frequently for work,” said Kevin. “When we have children, we may think about a house in the suburbs, but for now this is where we want to be.”

They wanted to be at the heart of the city. So they bought a penthouse apartment overlooking Boston’s famous esplanade and Charles River.

Sounds to good to be true? As with all things, it also comes with its own share of disadvantages. They live in a two-bedroom/two-bath condo that costs way more than a home three times the size of their condo. And it’s just 20 minutes away. They share the building with fourteen other tenants which means that decision-making  with regards to the building need to be consulted with them. They also need to pay $300 per month for a parking spot for a car which they seldom use because of the convenience of their location. To most people the cost may sound unreasonable. But to Kevin and Michelle, who appreciate the convenience and the good location, the cost is all worth it.

Condo living is not for everyone. Adriana Forte, 62, chose to live in a “condex,” (a two-family home with a shared wall) in the Boston suburb of Arlington. After her divorce she chose to live in a condex thinking that taking care of a home will be too much to handle. However it turned out to be a wrong decision. “It’s difficult to live with neighbors so close,” Forte said. “First there was the noise. My neighbors are night people, and every night they are just getting geared up when I’m trying to sleep. Then I found myself handling 100 percent of the finances and maintenance of the duplex—without compensation. I may as well be living in my own house!”

She missed out on a lot of things that a single-family house can offer – fresh air and private outdoor space. Forte loves maintaining a home and a garden.

Consider these things to help you decide what is most important to you.

• Location – Where do you want to live? Are both the condo and house in the same area?
• Privacy – Are you comfortable about living closely with neighbors? How much do you value your privacy?
• Responsibility – Do you want to have full control over decision-makings for your home? Or do you want to share that responsibility with other neighbors?
• Maintenance – Do you enjoy taking of your home and garden? Or are you the type who is just not into plants?
• Budget – How much can you afford? A condo might be more reachable right now.

Life is dynamic. People change and situations change. Whatever you decide now, can still be changed to suit your current lifestyle and preferences.  

• The higher interest rates, the more it’s going to cost you

  If it’s your first time to invest in real estate and you don’t know much about interest rates, here’s something you should always remember: the higher the interest rate, the more it’s going to cost you. When you borrow money, this means that you have to pay a lot higher than what you borrowed. Another good tip is to use an adjustable rate mortgage. This can make the property more affordable for you. You can choose from many price range depending on the financing plan you choose.

• No one knows for sure

  No one can predict interest rates – not even the Feds. Mortgage interest rates are influenced by political, economic and social events that are unpredicatable. Experts will try to predict this but no one can be certain. When you make financial decisions look at the real estate climate. Consider your budget, expenses and future plans.

• Lock in for low interest

  Once you’ve decided to lock in at a certain interest rate, complete your loan application and send it to your lender in the soonest possible time. This ensures that your commitment doesn’t expire before your loan is approved. Check ton make sure that all the necessary documentation is there. Get a property appraisal through your loan agent as soon as possible. This usually costs $300.

• Don’t wait too long

  Some buyers wait hoping for lower interest rates. But this isn’t always the best idea. You may actually end up paying more. In the event that interest rates go down, you can think about refinancing.

For most people, the process of purchasing a house starts with finding what you can afford, finding a lender, finding a real estate manager, making a list of your requirements, checking out properties – a lot of them, making an offer, securing your mortgage and sealing the deal. Visiting and inspecting properties is time-consuming but a very important part of the process. Most people are keen about checking out the houses that no matter how busy they are, they do not want to skip this process. But not all buyers think this way.

Yes, believe it or not, there is an increase in sight-unseen real estate purchases. Some buyers just look up properties in MLS (multiple listing service) or look at the pictures, descriptions and virtual tours online. Some investors are in a hurry to close what they see as great deals online that they are willing to skip inspecting the property. Some properties are also worth the risk to some buyers because they are at a good location that if they wait longer, it might no longer be in the market. But this type of deal is very risky. You may get lucky but it can also be a big problem. You need to study all the risks involved before going into this kind of transaction.

• Distressed Properties

  Distressed properties are properties that are damaged, in poor condition, about to be foreclosed, or advertised as for sale. Banks are in a hurry to get rid of them because they cost so much for them to keep. They would need to pay property taxes, maintenance and legal fees. It can cost them $1,000 per day. So banks often try to sell them for a lot less. Buyers and sellers have an opportunity to make a transaction below market rates.

• Tight Market

  In areas with limited properties, buyers are often driven to buy properties even if they haven’t seen them yet. Though they are sight unseen, prices of such properties are based on market value or even higher. In areas like Boston or New York City, bids can be very competitive and this drives prices high. Investors who bid for proerties in tight markets usually have not seen the property but are willing to take the risk because they know the market value of properties in that area is promising.

• Pre-construction Properties

  Some properties are sold on the market even before the project is done or even started. This allows buyers to purchase them for significantly lower rates than they will be when it has been completed. It also works to the advantage of the seller because they can use the money from the buyers to complete the project. Buyers who invested before the construction can sell the property at a much higher value in the near future.

• Competition

  Buyers’ tough competition in landing a great deal are flippers. Flippers are big-time investors, wholesalers or large companies that buy prime lots for as low as possible and later sell them at a lot higher price. Flippers look for low-priced properties, make necessary repairs and sell them after a short period of time for a much higher price. When they see a distressed property, they assess the property’s After Repair Value (ARV). This means the market value of the property after the cost of repair had been taken out. They estimate their profit by subtracting the purchase price and other fees from the ARV. Other fees include carrying costs or the cost while keeping the property such as property taxes, insurance and utilities. Some flippers do not purchase sight unseen properties when there seems to be more risk than profit. Others like purchasing properties they can get at very low rates despite the damage and odds involved. And they bank on auctions or other opportunities where they could resell the property to buyers who cannot view the it prior to the sale.

  Real estate wholesalers also buy properties and sell them in a short period of time. But unlike flippers, they don’t spend time fixing or improving the property. They buy properties and draft a contract with contingencies so they could cancel the contract if necessary. Then they sell the property to other investors. They profit by selling the property at a higher rate than they originally got it. Wholesalers are like middlemen that scout good deals and hand over the properties to other investors.

  Institutional investors have the capacity to buy many distressed properties all at the same time and sell them with the most profit. They are the toughest competition especially when it comes to good deals. They can get all of the good deals in their target market.

  Some individuals are compelled to purchase sight unseen properties usually out of necessity. Oftentimes, it’s because they need to move to a new location, making it difficult for them to scout for a new place. They usually contact a local agent and trust them to find a good property that match their requirements. They settle for the pictures, virtual tours and information that are sent to them or which they can access on the internet. If you’re looking to buy sight unseen properties, it is important to be specific about what you want. It should not be limited to the house but the area or neighborhood you want as well.

• Risks

  Buying sight unseen properties is very risky. There are many things you cannot see on the surface and cannot be captured by cameras. Structural damage, infestation, molds and water damage (among others) can be hidden from cameras. Some of these damages were caused by the previous owner’s neglect. They probably didn’t have the time, knowledge and resources to take care of the house. But in some cases, the damages were intentionally made. Some people resort to damaging the property so the bank will have a hard time finding a new buyer for it. Or the sale value will be a lot less. In other cases, it’s a matter of practicality. They bring with them all that they could from the structure so they could still use it. Furnitures, appliances and some fixtures are usually among the things that they take with them.

  Another important aspect of the property that you cannot see from pictures or virtual tours is the environment in the neighborhood like the noise, pollution, traffic, unpleasant odor or a troublesome neighbor. Unless you actually visit the property, you won’t be able to see these things and decide if you are okay with them.

  Time is another risk that flippers, wholesalers and institutional investors face. The longer time they hold on to a property, the more money they lose. While they keep a property, they incur carrying costs. Their object is to buy and sell the properties in the soonest time. Aside from carrying costs, they can also end up paying for more necessary repairs.

• Protect Yourself

  Adding a contingency clause is the best way to protect yourself in buying sight unseen properties. A contingency is a condition that needs to be honored so the deal can push through. An inspection contingency allows the buyer a certain period of time, like 5 to 7 days to inspect the property. A professional home inspector checks the house’s internal and external structure including  the electrical, plumbing and ventilation. The buyer can still make negotiations or cancel the deal if necessary. This contingency allows the buyer to:

  • Accept the report of the professional home inspector and push through with the deal
  • Back out of the deal based on the report
  • Ask for more time to make further inspection
  • Request for repairs or concessions

Buyers can also include a walkthrough contingency. This clause allows you to do a waltkthrough before pushing through with the contract. Keep in mind though that sellers are not obliged to accept any contingency that the buyer set. They can also make the price go higher because of the risk that a contingency brings. The deal can not push through because of a contingency.

Hiring a professional real estate agent can give both buyer and seller extra protection. It should be clear that your agent is on your side protecting your interest. Your agent has a fiduciary responsibility to you and should protect your propety and money. So it’s important that you can find a reputable agent whom you can trust.

Buying sight unseen properties is very risky. You might get a property that’s not actually worth your investment. But to some it is unavoidable because the deal sounds too good to pass up or the buyer is not able to check the property before purchasing it. What’s important is you protect yourself with a good real estate agent and make use of contingency clauses. Having a good real estate agent can help you with this.

Being a homeowner has its perks and a lot of responsibilities. So before you commit to years of paying for a house, make sure you understand what you’re getting into.

First, think about the costs. There are many costs associated with owning a house. You need to pay a downpayment, home insurance, and other fees needed to close the contract. When you move into a new house, you will also need to spend on moving, buying furnites, appliances, fixtures and landscaping. And there is always a possibility that the property you purchased will depreciate.

If you’re used to calling the landlord whenever there’s a problem like a leaky faucet or a broken cupboard, that won’t be the case anymore. As a homeowner you will now be responsible for all the damage incurred from plumbing, appliances, paint job, roofing and so on. And all these cost money. You can expect to spend more on repairs and maintenance if you purchase an old house.

If you want to find out if you’re ready to become a homeowner, try to do the following:

• Find out the property value of homes that you’re interested in. Your real estate agent can help you with this. The property value can be determined by comparing the value of properties in the area that are of comparable size.
• Study different mortgage loan types. Take note of the downpayment required and compare it with the money you have. Downpayments usually range from 3 to 20 percent of the property value. They vary depending on the value of the property or the type of mortgage you chose. Then there’s private mortgage insurance (PMI). This insurance helps mortgage lenders recover if a borrower fails to fully repay a loan. The lowest downpayment is three percent. The lower the downpayment, the higher the PMI. Usually, they cost  between $40 and $125 a month.
• Estimate your closing costs. This includes points, taxes, recording, inspections, prepaid loan interest, title insurance, and financing costs from your mortgage lender or a real estate agent. All these fees will add to the property value by 2-7 percent.
• Add the cost of the downpayment and the closing costs to know how much money you’ll need upfront. But the expense doesn’t stop there. In fact you’re just getting started.
• On the actual move, you’ll need to spend on movers. The more stuff you have, the more it will cost you.
• As a homeowner, part of your responsibility is to pay property taxes. Most lenders usually require an impound account that pays for both tax (and usually with insurance) and mortgage. The average yearly tax rate is about 1.5 percent of the purchase price of the house.
• House repairs and maintenance. According to HouseMaster, a home inspection company with 300 franchises nationwide, based on a study that evaluated 2,000 inspection reports, these are usually the costs of major repairs:
• Roofing: $1,500 to $5,000
• Electrical systems: $20 to $1,500
• Plumbing systems: $300 to $5,000
• Central cooling: $800 to $2,500
• Central heating: $1,500 to $3,000
• Insulation: $800 to $1,500
• Structural systems: $3,000 to $1,500
• Water seepage: $600 to $5,000

If after you’ve considered these and you realize you don’t have enough funds to own a house, don’t lose hope. You can also turn to lenders or think of creative ways to come up with a financial source.

Don’t overlook home insurance. Factors like the kind of house you have, the age of your house, your credit and insurance record, and new cases like toxic mold cases can increase insurance rates.

According to a report by the National Association of Insurance Commissioners, in 2007 homeowners spent an average of $822 on home insurance.

But despite the financial woes, there are also financial benefits of owning a house. Mortgage payments are more consistent than rental fees that can increase anytime. There are also tax benefits and the likelihood that your property value will increase as ayears go by. And most of all, it feels good to have your very own home.

When you go to a real estate agent, the first thing they’ll want to know is what kind of property you are looking for? What are the things you want in a house? What are the things you don’t like. For them to lead you to houses that are up to your standard, you need to be specific about the features and details you want and don’t want. 

Here’s a guide that can help you:

• Are you looking for old, historic properties? Or are you looking for newer houses?
• Is there a particular design/style that you want? Bungalows? Ranch-style?
• How many bedrooms do you want it to have?
• How many bathrooms do you expect the house to have?
• How many stories?
• What kind of design do you want the living and dining room to have? Do you want a formal, contemporary or casual look?
• How big a house are you looking to buy?
• Do you have a specification for the ceiling? How high?
• What kind of kitchen do you want to have? Recently updated? Do you want a kitchen that lead to other parts of the house?
• Do you want to have big cabinets? A lot of cupboards? Does the house need to have a garage?
• Do you want a garage or carport? For how many cars?
• Does the house need to have an attic or basement?

What amenities do you want your future home to have?

• an office
• a mini gym
• a play area
• ‘security system
• sprinkler system
• workshop
• pool
• fireplace
• jacuzzi
• patio, deck, porch
• laundry room

When you turn to lenders to acquire a house, they determine how much you can borrow based on computations. But do they really know your financial capacity? They can count your income and concrete expense but they don’t know exactly how much you’re regularly spending? You’re the only one who knows if your income can support your lifestyle. Do you have enough to fund housing costs? And don’t forget to leave room for new furniture’s, appliances, landscaping, repairs and maintenance.

Banks have been using the 28/36 ratio in determining how much they should let you borrow. The approved housing loan should be no more than 28 percent of the borrower’s gross monthly income. 36 percent should be the maximum total debt load of the buyer. This includes credit card payments, loans, car payments.

Canada uses a similar formula. Buyers can borrow up to 32 percent of their gross monthly income. And their total debt load should not be more than 40 percent.

But due to rising rates lenders are willing to stretch the housing loan to as much as 50 percent of the gross monthly income. But before you commit to this loan, think and rethink if you can really afford it.

Evaluate your spending habits. Think if there are areas where you can save so you can sustain the mortgage and keep a well-maintained house. After all it’s not just a matter of keeping your house. It’s also about having peace of mind.