DO YOU KNOW YOUR HOME?
The person who is selling his home is generally a poor judge of it's condition. It may need a little remodeling, but often the owner has lived there so long he has learned to overlook things that a prospective buyer might feel are serious drawbacks.
That's why it's vital the seller have a knowledgeable third party go through his home and make suggestions on things that can increase the sales price and make the home sell faster.
Before you sell your home, ask your real estate broker for advice after an unbiased look at your home. Your broker can show you the little things that can turn an ordinary house into a showplace - and a profitable sale!
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HELP YOUR AGENT HELP YOU
When selecting a new home, location is paramount. The first step is defining the geographic area in which you are willing to buy. Then list the qualities of a desirable neighborhood, in order of their importance.
How far are you willing to travel to work, for shopping, or entertainment? Is access to public transportation imporatan?
Traffic patterns may inluence your choise; a quiet out-of-the way neighborhood, or quick access to major thoroughfares.
If you have children, schools and parks are important. Can they walk to a movie or shops, or will you be the chauffeur?
Save time by letting your agent know what's important to you and making a list of your top priotities, this way your agent won't be wastingyour time or his by showing you homes you definately aren't interested in.
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TAX ADVANTAGES CONTINUE
Changes in the federal tax code over recent years have left some potential homeowners wondering if the historical tax advantages of home ownership still exist. The answer is an unqualified "Yes." Home ownership remains the best tax-saving move for the vast majority of American families.
Mortgage interest and property taxes on your primary residence are still deductible from your federal income tax. If you are fortunate enough to own a second home, you may deduct interest and property taxes. If you rent out your second home to a third party, you may also take depreciation allowances from your federal taxes.
OPTIONS PROVIDE FLEXIBILITY
The presence of an option in a real estate contract means the owner is giving the prospective purchaser the right to buy or lease the owner's property at a fixed price within a set period of time.
The purchaser usually pays a fee for this right and assumes no obligation to make any other payment until deciding to exercise the option, that is, to buy or lease the property, or to allow the option to expire.
If the option is not exercised within the specified period of time, it is considered expired. The buyer cannot recover the consideration fee paid for the option. But the owner could agree to apply the fee to the purchase price of the property.
| WHEN TO REMODEL, WHEN TO MOVE
Remodeling your current home may seem like a good idea... adding an extra bath or bedroom or modernizing the kitchen. But how can you tell if it's better to move than remodel?
One rule of thumb is that if your home is already at the high end of the price range for neighborhood, moving makes more sense.
Estimate the cost of planned improvements. Add fifty percent of that cost to the appraised value of your home. If the new value will put the price over the top ten percent for your neighborhood, think twice before remodeling. It is unlikely that you will recoup your investment when you sell.
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CONCERNED ABOUT SPACE?
Space is an important dwelling consideration, so get it right before you buy.
Like beauty, square footage can be in the eye of the beholder. Has the living room been measured inside wall to inside wall? Are the garage and deck considered part of the overall square footage? How about the unfinished basement? Is the seller candidly revealing how much living space is within the house or providing only the larger outside dimensions?
If you want to make sure your grand piano or antique bedroom set will fit in your new abode, put it on tape before you inch your way to a signature.
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IF YOU'VE GOT IT, FLAUNT IT!
More and more people are shortening their daily office commute from several miles to a few steps. In addition to the millions of self-employed people working from home, almost 25% of the largest U.S. companies rely on telecommuting employees.
A home office offers valuable tax and expense deductions, too, making it a major selling point when listing your property. It adds extra appeal to a relocation sale, especially among two-income families.
If your home has an office, advertise it! If not, but you have a room or area that could be adapted into a home office, tell your real estate agent to highlight that, too.
YOUR 401 (K) A DOWN PAYMENT SOURCE?
Many people now have 401 (K) retirement programs. In accordance with current federal regulations, you can borrow up to 50% of the account balance - up to $50,000 - to garner money for a down payment on property.
The question is: do you really want to? The borrowed money must be repaid; if not, you could suffer significant tax consequences.
You need to find out how much you can borrow, the loan term, interest rate and default consequences as well as lender qualification policies before you dip into your 401 (K).
Tax laws change frequently, so check with your financial advisor before pursuing this or any real estate strategy.
PICK A GOOD LOCATION
Few decisions are as important as location in choosing a home. It ranks alongside the price and size of the house. So if you're buying a house, first check the community. Determine how the new location could affect the lives of you and your family.
Questions to ask when choosing a location include:
Is it convenient for your personal needs, close to schools, shopping transportation routes?
What are the plans of the community, such as parks, highway construction, shopping areas, etc?
Are properties in the neighborhood increasing or declining in value, relative to the rate of inflation?
KEEP INSURANCE TILL CLOSING
You have accepted an offer on your home, and breathe a sigh of relief. Escrow closes in three weeks, and your homeowner's insurance premium is due in two. It hardly seems worth the trouble of renewing, only to go through the process of getting a rebate when the escrow closes.
But imagine this scenario: A fire causes extensive structural and smoke damage after your policy expires. Is it your problem or the buyer's?
Until the closing of escrow, the responsibility is yours, and if damage occurs, you must either restore the property to its former condition or renegotiate the deal.
Don't risk a loss to save a few premium dollars.
LEGAL PITFALLS
Your real estate broker must be familiar with real estate law. While brokers do not practice law as such, they must know the procedures that assure your interests are protected when you sell property, and the language of the law as it pertains to real estate.
Real estate is a complex business, which is why brokers and agents must prove they are knowledgeable before being licensed. Much of the complexity is written into law, and in a language typically obscure to the untrained. While it is up to you to "read the fine print," your broker can serve also as your interpreter. Wise buyers and sellers protect themselves by using experienced real estate professionals.
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BUYING TO SELL
If you want to buy a house, fix it up and then sell it at a profit, here ate some guidelines for a more profitable project.
Ask your real estate broker to help you select a neighborhood with a recent history of increasing property values. Also look for a house that's been on the market for a long time; the seller may be ready to deal. The house should be comparable in size to its neighbors, structurally sound, but in need of modernization.
Start with the landscaping and the home's exterior. This is what the buyers see first. Next, concentrate on the "hot spots" of buyer appeal - a bright kitchen and modern baths. And look for low cose ways to increase closet and cabinet space.
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NEGOTIATE REPAIRS BEFORE SALE
The home you seek to buy may have a few minor nightmares to be dealt with to make it the home of your dreams.Updating heating and cooling systems, repairing a water line, or replacing outdated wiring can add thousands of dollars to the cost of a home after the purchase.A seller may opt to have the repairs you require done before the sale. In other cases it is more expedient to reduce the purchase price in accordance with the expected costs. If you negotiate for the latter method, be sure to get at least two cost estimates from reputable companies.
Your agent can help you determine which course of action will best meet your needs.
WHY HOMEOWNERS ARE VIP'S
Why do applications for credit ask whether you own or rent you home? The reason is clear. The ownership of real estate is widely recognized sign of financial stability, since one must usually demonstrate that stability in order to buy real estate. It demonstrates a person's determination, willingness to accept responsibility, and to set, and achieve long-term goals. Usually, home ownership also indicates geographic stability, since most owners plan to stay put for at least a few years. Home ownership is an important step to financial independence, one that will influence both your quality of life and your credit-worthiness.
IS REFINANCING FOR YOU?
If interest rates are falling and the rate of your mortgage is sitting at a high level, how do you decide when the cost of refinancing your mortgage is warranted?
The rule of thumb says two percent. If your mortgage is at 12 per cent and you have the opportunity to lower it to 10 percent and you intend to live at least another two years in your home, do it. You will recoup the cost of the refinancing (points, fees, etc.) in approximately one and a half or two years. On a $100,000 mortgage, as an example, you will save $151 a month. In 20 months you will make up the average cost of refinancing.
THE CONTRACT IS VITAL
A real estate sales contract lists all the details of the agreement between the buyer and seller of property.
This agreement may be known as an offer to purchase, contract of purchase and sale, earnest money agreement or deposit receipt. Whatever it is called, it is the most important document in the sale of real estate because it establishes the legal rights and obligations of the seller and buyer.
Details in any real estate contract should include price, terms, legal description of land, and information about the title.
Your real estate agent can explain the contents of your contract.
IN THE EYES OF THE BEHOLDER
"One man's meat is another man's poison." Keep this proverb in mind as you prepare to sell your home.
To one prospect, a large kitchen may bring visions of entertaining; to another, it means miles of tile to clean.
A gardener sees flowers and vegetables when viewing your large lot; a non-gardener dreads Saturdays mowing and raking.
An oddly placed room may be the ideal office or sewing room. A room with little light may be the perfect media center.
Lots of built-ins are usually a plus; to an art collector they may leave little space for display.
Almost any "con" can be a "pro" to the right person.
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PITI AND YOU
Buying a home requires careful budgeting, particularly if it is your first. There are some costs of home ownership that are fixed on the purchase price and assessed valuation of the house. There are the monthly amortized costs of principal, interest, taxes and insurance known as "P .I.T.I." But "fixed" does not mean forever.
Even if you assume a mortgage, your monthly costs may not remain the same as the seller's. Increases can result from changes in assessed valuation, in insurance premiums, in property tax rates, and for assessments for improvements and services, such as sidewalks, sewers and lighting.
A decision that stretches your means to the limits can make P.I. T.I. read "pity." So plan carefully.
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BALOON MORTGAGES
If you have a balloon mortgage, you will make monthly payments which would amortize, or payoff, your loan over a period of time, typically thirty years. The substantial difference between the balloon and other mortgages is that on some specified, fixed date before the end of the amortization period, the entire unpaid balance is due. This date is often within ten years of the initial loan.
At this point you must pay, refinance, or lose your property; pretty alarming thought to most folks. Balloon mortgages appeal mainly to those buyers who are sure that they will initiate a sale before the payment is due. Your agent can explain this and other financing options.
WHAT IS TITLE INSURANCE?
Everyone uses title insurance, but few people know what it is. Essentially, it protects buyers of property against losses if there is a defect in the property's title.
This insurance means the insurer will pay to defend lawsuits attacking the title as well as pay any claims if the title proves defective. It should be part of most sales contracts.
Standard title insurance covers defects in public records, forged documents, incompetent grantors, incorrect marital statements or improperly delivered deeds.
Extended coverage includes defects in property inspection, inquiries of person in possession, examination of survey, unrecorded liens not known by policy holder. An examination to determine if there are defects in a title is called a title search.
CHOOSE HOW TO PAY
So you've found the home that's perfect for you. Now you need to find the perfect loan so you can buy the house.
There are lots of variables in selecting your method of financing. Interest charges can vary from one lender to another. Do you want the same interest rate for the life of the loan or would you be better off with a variable rate? Will the loan be guaranteed by the VA or FHA? The size of a down payment and the closing costs also affect how much you pay.
Don't let all the variables overwhelm you. Your real estate broker knows how to tailor the terms to your needs.
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DEFINING POINTS
The language of home financing can confuse and frustrate. Case in point: "Points." When financing the purchase of a house or other real estate, you pay the lender interest for the term of the loan. But you may also pay "points." A point is a single percentage of the total amount to be borrowed.
Points are a one-time charge by the lender for making the loan, and may be paid by buyer or seller. The points paid will vary with the supply of mortgage money and the type of loan.
Points - one more reason to let an experienced real estate professional help you through the maze of financing.
HOW MUCH CAN YOU HANDLE
How much house can you handle, in financial terms? The two big loan packagers on the secondary market, which buy, pool and resell mortgages, have well-researched figures on what an individual can manage.
Here's what they want to see:
Enough money for down payment and closing costs |
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NEW OR USED?
When looking for a house, it's tempting to consider only newly built homes. The clean, fresh appearance of a new house and neighborhood can be hard to resist. But an existing home has some advantages.
With an existing home, the neighborhood is established.. you know who your neighbors are and whether the area is kept up. In addition, mature landscaping can add much to the desirability of the location. Homes in an older neighborhood may have design qualities you find attractive that are hard to find in new housing. "Character" is an indefinable quality often found in older homes, especially where each was individually built.
Only your own tastes can determine the right choice for you.
THE SIMPLE THINGS COUNT
If you're selling your home, you're probably wondering just how far you should go with improvements. The answer: Don't go overboard!
It's the little things that count. Look at your home objectively. What do you see? Overgrown shrubs? A messy garage, toys in the driveway? Dingy kitchen walls?
Clean thoroughly. Make things look orderly, but keep major modifications and improvements at a minimum. Larger expenditures are risky. You'd be surprised how many prospective buyers whisper to their spouses, "We'll have to re-do this."
Remember, prospective buyers are trying to visualize your home with their own possessions. Any redecoration should be discrete and subdued.
CHOOSE A SKILLED NEGOTIATOR
One of the ways in which a real estate professional can help you in the sale of your home is in handling the delicate negotiations that usually occur when homes change hands. Even more than in other forms of real estate transactions, personalities can play an important part.
Your agent is accustomed to working out the details of negotiations, serving as a "go-between" in areas that might be difficult for the principals in the transaction to discuss. You are spared from myriad details that can be time-consuming and confusing.
Negotiation is a skill acquired with practice and training; the right agent will have both.
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From "Real Estate Corner" Spectrum Newspaper
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