Aug
11
Contracts When Selling Your Home Without An Agent
Posted By: Ramon Rivas on August 11, 2010 at 7:46 pmA recent survey revealed that approximately 30 percent of homeowners intend to sell without a real estate agent. I bet more would if they didn’t fear the contract side of the process.
Contracts When Selling Your Home Without An Agent
If a seller can save so much money by foregoing an agent, why don’t more people do it? Simply put, they are scared of the process. In particular, real estate contracts can be a scary issue for most homebuyers. How do you know if you are doing it correctly? What if you don’t? Will you lose the home? Will there be lawsuits? Frankly, most people have nightmares about the idea of dealing with these issues. This need not be.
First off, most real estate agents do not know anything more than you do about contracts. They are in the business of selling real estate, not being legal experts. Moreover, most real estate contracts are of the pre-printed form variety. All and all, you need not be overly concerned with this issue. Of course, it isn’t my property.
There is a very simple way to get around the stress associated with dealing with real estate contracts and documents. The answer is found in the legal field. Specifically, you can hire a real estate lawyer to handle everything. You will get a legal professional that is one your side and who knows the details of the real estate process inside out. Frankly, they are a heck of a lot more competent than real estate agents when it comes to the transaction.
Ah, but isn’t it true that attorneys are incredibly expensive? Well, yes. In this case, however, they are much less expensive than paying a six percent commission to a real estate agent. Keep in mind our example above where we are paying a realtor $18,000 in commissions. Most attorneys charge in the $200 an hour range. If it takes 20 hours to handle the transaction, which is probably on the high end, you are looking at $4,000 in legal fees. In practical terms, you get much better advice and save $14,000 on commissions. In such a scenario, hiring legal counsel absolutely makes sense. Frankly, I am surprised more people do not do so.
The biggest barrier to selling a home by owner is often the fear of contract documents. Follow the above advice and you should have no problems.
If you currently find yourself in the enviable position of looking to buy a second property then congratulations. The equity that you stand to gain from this purchase can be considerable, just remember to plan properly, to maximize your gain. The first step in this process is to decide what the second home will be utilized for. Is it a vacation home? Perhaps a long or short-term rental? Either way, the more detailed about your forward planning you are, the smoother the process will be.
If you are looking at this purchase as a source of revenue then there are certain steps that you should take to ensure the home will bring in as much money as possible, thereby allowing you to pay off the mortgage quickly. For this type of investment, the cleaner the better. Nice homes are in high demand, and they fetch a good monthly rate. Enough so that the mortgage payment can be made easily with cash to spare. Also, ask yourself, “am I ready to be a landlord?” This will involve the task of finding and maintaining good tenants, and sometimes having to do what’s right for you and your property, not what’s right for the renters. If you have the tendency to be “too nice,” land lording might not be for you.
No matter what your property is intended for, be sure to cover all the bases. Be as diligent as you were when buying your first home. Even more so, you will be able to apply any lessons you learned during that process on the new home, and avoid any mistakes or area of stress that were present in the first purchase. Many people buy a second house only to find themselves buying yet another. Once you start to climb the equity ladder its kind of hard to stop!
| Filed Under: Articles Tagged with Investment Homes, Ladder, Landlord, Mortgage Payment, Much Money, Planning Process, Short Term Rental, Stress, Tendency, Vacation Home |
May
22How to Make The Perfect Deal Out of Your New Estate
Posted By: Ramon Rivas on May 22, 2010 at 8:26 pmSo, you are buying a new estate, and want the perfect deal available. Well, first of all, it all depends on how you’ve chosen your estate. Your decision was surely hard enough to make, but you finally did it. Now, you have to learn, how to loose NO money (in ideal circumstances) and EARN as much money as possible (in ideal circumstances).
In order to explain this, we’ll set up some “conventions”. The optimality of your estate can range between 0 and 10. The higher this value is, the more money one can earn from a little investment. Anyway, if the optimality value approaches 0, you could land up losing money on your deals. That is something no one would like, since the main idea is to earn money on the deal and to not lose money.
What would happen if you do lose money, since you have chosen not to buy the best estate available? When you lose money or rather if you have not earned any money on the deal, you wouldn’t want to lose more obviously, you’ll have to sell the property immediately. How does a seller think? A seller always wants to make things look perfect, and ask as much money as possible for what he is selling. So, literally, you have to tune up your property, and sell it for the highest possible rate.
What if you earn money out of a deal? That is what you’d like to know about! This gives way, to the following scenarios.
Scenario 1: The Price is low, but the optimality is high
This is the optimal and ideal case for everyone. You spend a little money, buy a valuable estate, then sell it, and make a sure profit, which gets you the perfect deal. When you sell something, not only you’ll have to make it good, you’ll have to talk about its negative sides. The idea is to try not to trick out your potential customer. Just imagine, someone buys your home, and thinks it is good, and is happy for some days. Sometime after that, for some reason, the floor breaks while the new owner is walking towards the bedroom.
Now that could turn into a catastrophe! Your customer comes back, he/she finds you, and wants his/her money back instantly.
Scenario 2: The Price is high and the Optimality is also high
Well, this is a fortunate case too, but not as good as the one mentioned above. The idea is no doubt the same. You just need to get the maximum profit out of your estate.
This case could also be an exception, since your house is valuable, and expensive. If you’re lucky, you could sell your estate to someone with more money thereby you earn a lot more here than in the prior scenario.
Whatever you choose, pricing and decisions should be realistic.
Scenario 3: Average Price with average optimality
Now, this can be considered kind of a standard case. You have an estate, which wasn’t that expensive neither was cheap. Its value is unknown, but is somewhere between optimality and disaster.
At this juncture, you should probably sell it immediately. Since you have not purchased it for yourself you could be losing money in a few days, weeks or months, but for certain.
However you make your decisions, whomever you sell your estate to, you should always try to make the perfect deal, which means maximal profit for you without tricking the buyer into any false promised deal. If you are able to manage this, you can surely succeed in the foreclosure business.
Has home building declined in recent years? The answer to that question is yes. In fact, is has reached its lowest rate in 17 years.
What this means is that the number of homes or apartments being built will be the fewest since the Second World War. The reason for this is simple, not that many people are willing to build a home and banks are a bit hesitant whether or not to approve a loan.
In some states, there was a decline of more than 20 percent for new housing permits. This means contracts don’t have that many jobs and there is not that much money collected from real estate taxes and building permits which contribute to local revenue.
A good example is the state of California which lost more than 220,000 jobs in the past 2 years. This translates to a loss of about $30 billion to the state’s economy. Some companies have gone bankrupt with others forced to close down their projects.
So what should people do now? Well a lot of experts advise consumers to tighten their belts and then wait till the smoke clears before they consider building a new home. If you have the money, you could buy a homes sine many are up for sale especially when a lot of them are foreclosed and now owned by the bank. If you don’t have a lot of cash, make sure you save enough money to save it from being foreclosed.
Since the property of most homes has also gone down, many of the current homeowners can’t even make a profit if they decide to sell it now in hopes of building a new one.
For those who are renting, continue paying for it because it is cheaper to own until maybe you have save enough to consider building your own home. In most places, annual rent is still less than 3% of the acquire price and mortgage rates are 6.5% which makes it cost more than double to try and borrow money to build a home.
Analysts believe that the decline in home building may be dramatic but it is as bad as you think because it is simply a market reaction to recent building which went way ahead of new household formation. What this simply means is that more houses were built than people could actually buy. The question on everyone’s mind now is how long before things are on the up trend.
Many people that it will take between two to three years for the market to stabilize so business will be back to normal by 2011. So again, if you have the money, there is a lot of houses that are now available in the market to buy and when these are sold, equilibrium is achieved and there will be a construction boom once again.
There is no doubt that the current financial crisis is the cause of the decline in home building. The good news is that things will change for the better in less than 5 years so in the mean time, those who are paying for a home should sit tight until the bailout and any other remedy the government is trying works. As for those who are renting, be patient because now is not the right time to consider building a home.
