Monthly Archives: December 2016

The Deal Is In The Details

No two real estate agreements are the same, the result of the infinite amount of twists and turns any purchase agreement can take. The intricacies of your own property will be unique to you but there are some common themes that can be applied to a purchase agreement to ensure that both buyer and seller are protected.

For home buyers, there are a slew of clauses that can be included in any contract to provide some extra aspects of the contract that could very well come in handy down the road. They could be clauses to save you money or clauses to allow you to get out of the contract without penalty and your realtor will offer up these clauses as applicable in your case if they indeed are.

It is entirely acceptable to make your offer contingent on some other action. In many cases, financial contingencies dictate that a real estate transaction is agreed to only if the buyer can secure financing for the deal. In some cases, this can turn a seller off if another offer is on the table that has no financial contingencies. If you are at all worried about either getting financed for enough money or about a home being offered on before you can push financing approval through, a financial contingency clause is one option for you.

Inspection contingencies can be common in some areas of the country and dictate that the buyer gets a chance to bring in an inspection professional or other consultation to tour the home and point out any weaknesses or issues that may need to be addressed. If issues are found, those can then become part of the negotiation of price or other terms of the contract.

Earnest money clauses can offer to a seller a bump up in earnest money if and when an offer is accepted. To communicate that interest in a real estate property is sincere, a buyer will often put down money in escrow as a good faith effort. By including a clause in the contract for earnest money to go up upon acceptance, that gives the seller a way to make a good faith effort in accepting the offer while still seeing a benefit in added earnest money, communicating an even more serious desire to buy the property.

Of course, the seller has every right to dispute anything in the contract, but that is all part of the negotiation of a deal. It is entirely possible that a particular part of the contract could become a sticking point and discussions will have to be made at that time, but that is what your realtor is for and there is usually some value in including clauses you deem important, even if they could be disputed later.

The best advice is to sit down with your realtor and make clear the clauses or conditions that are important to you. As with all twists and turns in a real estate deal, it is important that as a buyer you feel comfortable with all aspects of the purchase. The contract is perhaps the most important step, so be sure to investigate all of your options with your realtor.

When To Call In The Inspection Professional

Though home inspections are often part of the home buying process that is not the only time you may look to the abilities of a professional inspector for your needs. When making large additions to your home or trying to put your home on the market with accurate information about the state of things like your roof or furnace, professional inspectors can also offer their services.

Foundations, roofs, major appliances and other aspects of your home can be subjected to professional inspection to ensure that they are in the proper working order. While the professional is usually the best decision in most cases where legal issues come into play such as a home sale or purchase and permitting for new structures on your land, simply doing a first inspection yourself can sometimes save you the hassle of having multiple inspections.

Things To Take A First Look At
Your roof is something that you can usually take a look at and pinpoint areas that need to be improved. Do you have shingles that are damaged or out of place? Is there anywhere on the roof where you can see through the outside shell? These may seem like common sense issues to address, but they are the kind of common sense issues that a professional inspector would point out as well.

You don’t need to wait for a professional inspector to tell you to fix a broken roof. Take the initiative and make an effort to get your home in good shape before the professional inspector is called. During a home selling process, this can leave you with fewer issues to discuss later as part of a contract negotiation.

In addition to the roof, there is certainly something to be said for simply eyeing the exterior of your piece of real estate. If there are cracks in any of the outside walls, especially near the base, those will need to be looked at and probably repaired. Again, these are common sense tips but steps that can often be overlooked during the frenzy of buying or selling a home.

The Professional Inspector’s Role
When legal agreements start to come into play, such as during a home-buying process, a professional inspector is usually required to come out to the home and look over the property in its entirety. During any deal when you purchase a home that is already built, there will inevitably be some issues that come up during inspection and it is then up to your realtor to work out a deal to remedy those situations.

On the minor side, these inspections can turn up things like small cracks in interior walls or wood working that needs to be tended to, but they can also turn up big problems such a shaky foundation or substandard furnace. Furnaces tend to be a hotspot (no pun intended) for inspection issues because most people don’t have the knowledge to accurately appraise a furnace on their own.

No matter what kinds of issues an inspector turns up, they are all then fair game for the negotiating process and often times an agreement will be hammered out as to what the seller must repair or replace before a deal can be consummated. Real estate transactions are themselves a long negotiation and the home inspection is just one step on that process.

So, as you get ready to sell your home or perhaps undertake a smaller endeavor like periodic repairs, know that you can save some time and effort by going through and looking at the key parts of your piece of real estate yourself and remedying situations before professional inspectors ever need to get involved. The periodic upkeep of your property will yield dividends later when the professional shows up and has nothing to report. A blank inspector clipboard is the positive result of strong personal inspections and upkeep.

The City/Property Connection

Buying a new home is an exciting prospect that consists of purchasing not just a place to live but in some cases a whole new way of life. A fresh lawn, a new place to call home, all of it comes with a home purchase. However, the purchase entails more than just building materials and pavement.

Like it or not, buying a piece of property ties a home owner into the city, both in a social and financial link. As the financial state of the city around your property changes, so to does the potential equity level of your property. If a builder surrounds your high value property with low value developments, that can have an irrevocable effect on your significant investment.

Using that knowledge can help you as you go through the process of picking a home and picking an area to live in. As you look at homes, inquire to either your real estate agent or other expert what the surrounding environment is like. Has the commercial fate of the surrounding area improved lately? Have homes decreased in value over time? These are extremely valuable questions to ask.

Current Trends
Understanding the current state of the neighborhood around your potential home is a crucial part of the real estate process. While many people spend time investigating things like the quality of the school district or cleanliness of the neighborhood, not everyone investigates the financial state of the surrounding area and the general flow of population in and out of the region.

Are the businesses in the area of a potential home faring well? Have commercial developments seen a lot of turnover? While it may seem like an unrelated development, if businesses start migrating away from a potential area, the prospect of an eye sore abandoned strip mall increases. An abandoned strip mall may seem like a small portion of an entire local economy, but it is a symptom of economic decay that potential buyers are constantly reminded of as they drive to showings.

Just as this enters into your own determination, so too will it enter into the determinations of potential buyers as they research homes in your area. As buyers are deterred from your area, prices will have to be lowered to attract new residents and that decrease will affect the value of your property.

Future Development
While the current economic state of your area certainly plays a role, the future value of your property is even more important as it will dictate the sale price of your property when it comes time to sell. In addition, future development can be very difficult to forecast, leading to a lot of uncertainty over how a home will fare.

There are a few things you can take into account when you try to forecast the economic future of your investment. Population statistics are available for the United States that can tell you the amount of people that have come to and left a particular area. If people are leaving, an area is likely to see an economic downturn and that can affect your property value. Your realtor can also be a good resource in this regard as time spent buying and selling properties can build up a high level of expertise in pinpointing when areas are beginning to hit a downturn.

So, as you go through the process of choosing a new home for you and your family, keep in mind that when you pick a home, you pick its immediate neighborhood too. With the considerable amount of money you are likely to pour into a mortgage, you need to protect your investment as best you can. To do that, understanding what might be the financial future and financial present of the surrounding area can give you valuable information as you choose your new home.

Are Foreclosures Worth the Risk?

Many home buyers and real estate investors have been prompted by steadily increasing interest rates to be more aggressive in their hunt for bargain homes. Competition for the best-priced and most attractive homes has only increased in most real estate markets and because of that intensity, foreclosures are drawing more and more interest from prospective home buyers and investors.

While foreclosures certainly offer some financial benefits, there are also risks involved, as you might expect. Not every foreclosure is the same and while the interest in them is growing, you need to be aware of what to look for when evaluating whether or not a foreclosure opportunist is right for you. Here are some things to look for.

Pre-Foreclosures
Pre-foreclosure properties can offer an attractive investment or home purchase opportunity to those willing to work for it. There exists a period of time in between when a home owner is notified that their loan is in default and when the bank actually seizes the home to put it on the market to recoup expenses. During that period of time, it is possible to purchase the home and satisfy financing requirements on it.

There are two negatives at play when going the pre-foreclosure rate and both discourage a majority of the potential investors that contemplate the pre-foreclosure route. One is the extremely brief period of time available to complete a deal. The period of time is regulated by individual states and usually consists of a couple months.

The other discouraging aspect is the necessity to deal with a home owner that is probably embarrassed by the foreclosure and may not even be aware that such information is made public. Knocking on a door or picking up a phone to contact someone that may not even be aware of pre-foreclosure purchases can be a difficult thing to do.

The Risky World Of Auctions
The best advice for those pondering auctions as a way to get in on foreclosed property is to simple not get involved at all. The risks are immense when dealing with a bank-run auction as you will most likely not have seen the house, have no way to protect yourself against title problems should they exist and must pay in cash.

That collection of traits discourages most investors and rightfully so. There is simply too much uncertainty when dealing with auctions to know for sure that the low sticker price is necessarily worth the hassle of going through title clean up issues and scraping together the cash for a purchase.

Foreclosed Homes
As the final step on a bank’s path of foreclosure, the home is put up for sale on the real estate market, though often for at least close to its market value. Because a home has traveled through a variety of steps and banks are in no hurry to lose money on any loan, savings are often slim on foreclosed properties that make it to this step.

However, there are certainly positives. Most likely there will be at least some kind of discount off of the market price of a property, albeit slim and deals are much easier to put together. Real estate transactions more closely follow the format of common real estate transactions and offer similar protections.

So, as you go through the process of deciding to get involved with foreclosed property, make an effort to decide which step of the process you want to target. There are opportunities all along the path of foreclosed properties, but each step has its own pros and cons that must be weighed against potential benefits. Having a clear plan will save you headaches later as you complete the purchase.