Sep
13
Buy The Most Expensive House In The Neighborhood?
Posted By: Ramon Rivas on September 13, 2010 at 11:01 amThink Long-Term
Assume you fall in love with the masterpiece home in a particular neighborhood. It has everything you could dream of: black bottom pool, marble, an incredible kitchen, top of the line windows, stunning brick work and so on. The sellers obviously put a lot of time, effort and money into the home. Accordingly, it stands out as the pearl on the block. Why wouldn’t you want to snap it up immediately?
Before you start signing documents, take a look at the sales prices of comparable homes, “comps”, in the neighborhood. If you compare the comp prices to the dream home, you should notice a pretty significant price difference. This difference should act as a metaphorical slap in the face or pouring of cold water over your head. The dream home is undoubtedly selling for a price range far beyond the comps. Warning lights should be going off at this point.
You are going to have a problem if you give into temptation and purchase the most expensive home on the block. In fact, you are going to have two problems.
The first problem is the appreciation of the value of the home. The appreciation on the best home in a neighborhood is always going to be dragged down by the structures around it. If you take a $900,000 home from a private community and put it on a block of $250,000 track homes, the $900,000 value is going to come down a lot because the neighborhood will not support it. When you eventually sell, buyers are going to look at the comps in the neighborhood and laugh at a $900,000 asking price.
The second problem is “hemming.” Since you own the most expensive house in the neighborhood, your appreciation potential is already limited. This becomes a bigger problem if you want to remodel or add on to the home. Taking such action would typically add to the value of a home. With the most expensive home, not only will it not add value, it may cut into your equity. Why? If you do a $50,000 remodel, you may see a $10,000 gain for your $50,000 cost. You just lost $40,000.
Dream or Nightmare
Unless you can accurately predict an increase in valuations for an entire neighborhood, you shouldn’t buy the most expensive home on the block. If you do, the dream home could quickly turn into a nightmare.
| Filed Under: Articles Tagged with Adsense, Asking Price, Black Bottom, Brick Work, Buying Real Estate, Cold Water, comparable home prices, Comps, Dream Home, expensive home, Fall In Love, Google, Laugh, Marble, Masterpiece, Neighborhood, Pool, Private Community, Real Estate, Slap Face, Slap In The Face, Temptation, Time Effort, Top Of The Line, Warning Lights |
Texas is a very big state, nearly 900 miles from east to west, with dramatic diverse landscapes and over 500 cities to explore. This remarkable state is organized into seven regions, each with its own Texan personality. Texas real estate comprises of Texas homesites, farm and ranch properties, riverfront properties on the Colorado River, fine custom homes and commercial properties in different counties inside Texas.
People who are involved in active buying and selling of real estate properties to earn commission are realtors or real estate agents. There are many real estate agents working inside Texas to help people in buying, selling or relocating a home.
A good agent will first listen to your needs, desires, and will help you find a dream home. Customer satisfaction will be their first priority. They will also help the customer to sell their home for top dollar and in a timely manner. Again, if someone is moving to Texas, the agent will assist him/her in collecting the information; they need and make their transition as smooth as possible.
Role of a real estate agent in Texas;
1. Help you find the right community
2. Negotiate on your behalf
3. Schedule inspections, closings, and document review
4. Ensure all deadlines are met
5. Provide consultation services during transaction
Unless specifically contracted, all real estate agents in Texas are seller’s representatives, since the seller pays the commission and the selling agent is acting on behalf of the listing broker. Many present themselves as buyer’s agent, but there is no legal relationship unless a specific contract is signed between buyer and the real estate agent. There are many licensed real estate agents in Texas. If you want to purchase a home and wish to use an agent, then you can hire an agent to represent your interests. That makes him a buyer’s agent.
In Texas, second home sales have been increasing over the last few years with more people becoming second homeowners. Over 40 percent of homes sold were second homes. Healthy rise in home prices have contributed to this development in the second home market. With the help of real estate agent, who have a proper knowledge of these kinds of properties, you can relax a bit. Whether you are a buyer or a seller, the professional real estate agent you select, always plays an important role. Therefore, a real estate agent is one of the most useful resources for a real estate investor.
Jul
07Pre-Approval Letter – How To Use It To Get Your Dream Home
Posted By: Ramon Rivas on July 7, 2010 at 7:42 amWhen house hunting, many buyers make the mistake of waiting to contact a lender until after they have located their dream home. As a buyer, you will be in a much stronger position with a seller if you are pre-approved.
Pre-Approval Letter
To effectively house hunt, you must know the amount you can borrow from a lender. There is nothing worse than find your dream home, but failing to qualify for the amount you need for a loan. Avoid this by asking your lender to pull your credit information and to let you know what needs to be done to get a pre-approval letter. If you are going to have problems with getting a loan, it is better to know about it as early as possible.
Sometimes buyers resist contacting lenders because it’s not the enjoyable part of home buying and they’re afraid an extra credit check will reduce their credit score. This resistance is penny wise and pound foolish. Buyers who get their loan arrangements lined up at the beginning of the house buying process are really doing themselves a favor.
Much of the country is experiencing a hot, sellers’ market. It is not unusual for a seller to get more than one offer on the same day. If that happens to you, your pre-approved status can give you an edge over the competition. In fact, it can make a seller choose you over another bidder.
Presenting Your Letter to a Seller
When you tell the seller you want to buy their property, give them a copy of your pre-approval letter. They will probably recognize the value of the letter, but don’t depend on this assumption. Make sure the seller realizes the loan is already approved.
As you give the seller the letter, explain to them that you are serious about making the transaction go smoothly and, for that reason, you have already been through most of the loan application process. Point out that the lender has pulled your credit info and you’ve provided copies of W-2s, pay stubs, and all the other things the lender needed to decide that you do qualify for a loan. Tell the seller that the only remaining thing to do is to give the lender a copy of the contract that you and the seller sign, and the property needs to appraise for an appropriate amount.
Taking this approach puts you in a very strong position. The seller knows you are not just wishing; you are capable of buying his property. One of a seller’s worst nightmares is signing a contract with someone, taking his property off the market, wasting time and then finding out that the would-be buyer cannot get a loan. On the other hand, you and your pre-approval letter are dreams come true.
Put on your shining armor and get pre-approved by a lender. Once you have the letter in hand, get out there and find your dream home.
| Filed Under: Articles Tagged with 2s, Application Process, Assumption, Contact, Credit Check, Credit Information, Credit Score, Dream Home, Dream House, Extra Credit, Getting A Loan, home buying, House Hunting, Lenders, Loan Application, Loan Arrangements, Mistake, Pre Approval Letter, Resistance, Stubs |
Jun
28Figuring Out Whether You Can Afford That Home
Posted By: Ramon Rivas on June 28, 2010 at 12:11 pmHouse hunting can be a brutal affair, particularly if you don’t know what you can afford before hand. No your price range in advance and you can avoid looking at really nice homes you’ll never get. .
Mortgage – Monthly Payments
The biggest costs associated with owning a home is the mortgage. Unless you are filthy rich, you are committing to apportioning a significant amount of your monthly income to that dream home. In evaluating whether you can afford the mortgage, you need to consider the difference between the mortgage payment and what you are currently paying.
If it is a significant step up, will you be able to pay it now and in a few years? Under no condition should you assume you will be making more money in the future. Base everything on what you are making now.
When considering monthly mortgage payments, you also need to factor in the type of mortgage. Interest rates have been at historical lows for some time, but are starting to creep up. If you are taking the plunge on an adjustable mortgage, will you be able to make the payments if the interest rates increase over the next few years? In coming to a conclusion on this, you should assume the rates going up to the caps indicated in the mortgage for the relevant period of time. Again, you don’t want to get stuck in a financial bind because you let your eyes overrule you brains when selecting a home.
Other Expenses
The pride of home ownership comes with a few extra costs. In gauging affordability, many home buyers fail to take into account the twin evils of property taxes and homeowner’s insurance. The expenses associated with each of these necessary items can be surprisingly high. In some states, property taxes can be an ugly surprise the first year of home ownership. Much like taxes, they are collected in a lump sum and can be thousands of dollars. If you fail to plan for them, your finances can become unbelievably strained.
Buying a home is absolutely the best move you can make if you’re renting. Just make sure you can meet those payments without losing sleep.
The US housing market consists of the construction, sale and resale of residential properties all across the country. In the second quarter of this year, reports have shown that there has been a decline in home building as well as the sale and resale because of the collapse in the subprime lending industry last year which was one of the factors that contributed to the current financial crisis.
This means that a lot of people have to foreclose their homes if they can’t pay the amortization. Those who have not yet lost their homes are trying to find a way to keep theirs. Individuals who are well of have to think twice before considering building a home so they don’t fall in the same situation as others are also experiencing.
Companies involved in the construction industry have to layoff some workers rather than keeping them on the payroll because they are just wasting money keeping them around when there is no work to be done.
But it is not as bad as you think. There are advantages when there is a decline in home building. The price of materials and cost of labor are much cheaper so you can do a lot with your hard earned money. Since contractors need projects to survive, you will be able to find one very easily and also get a good price.
When you hire a contractor, you should know that your home will be built at a slower pace. This is not to stiff more money from you but to make sure that it is done right. Surely, you don’t want to stay in your new home and experience some problems less than 6 months after moving in right?
One way to make sure it is done just the way you want it is that the contractor of your choice will be able to hire only the best to work on your home.
The only catch to build your dream home is that you must have money stored somewhere since you will have a hard time lending this money right now from the bank.
If you don’t have that much cash on hand to build a house, another option will be to buy one because there are a lot of foreclosed homes right now and banks would rather sell it than just keep it with them.
Just how bad is the decline in home building? A report released by the US Commerce Department reveals that in August, there was 6.2% decline so that existing built units could be sold. This is their way to restore stability between supply and demand but it is going to take more than that to change the current situation.
Some stronger remedy is needed and maybe the $700 billion bailout plan could be the answer. Will it work? Only time will tell but a lot of people hope that it does so the economy will be in good shape and we can see a construction boom in the foreseeable future.
So what should we do until that happens? Pray and just hope for the best. If things work out like what most analysts predict, we will see a recovery by the 2nd half of 2009 which means thee will be no longer a decline in home building.
