Should I Insist on a Home Protection Plan

Several national and some local companies offer plans that give you some insurance protection for the major systems of your home. Typically they cover plumbing (including water heater), heating, air conditioning, electrical, appliances, and so forth. The idea is that for a set period of time after you move in (usually one year), should there be a problem, the home protection company will cover it (minus a small deductible). The cost is usually nominal, a few hundred dollars for a year's worth...

Additional Internet Resource

Robert Irwin www.robertirwm.com The author's Web site If you're just getting introduced to real estate, you'll quickly realize that people in this field have a language all their own. There are points and disclosures and contingencies and dozens of other terms that can make you think people are talking in a foreign language. Since buying a home is one of the biggest financial decisions in life, it's a good idea to become familiar with the following terms, which are frequently used in real...

Alternative Possible Sources of Down Payment

Cash value of life insurance (borrowing on it may be inadvisable check with your financial advisor first) Refinancing or selling an auto or boat Sale of other physical assets to generate cash Sale of stocks, bonds, or other securities (first check with your financial advisor) Gifts or loans from relatives or friends Refinancing investment real estate you already own (should be done before applying for the new loan) Letter of credit or credit line from a bank (should be obtained before applying...

Are There Active versus Inactive Offices

Just as there are two types of agents, there are also two types of offices the active office where sales are constantly happening, and the inactive office where the agents sit around and commiserate with one another about the slow (to them) real estate market. There are a few good ways to tell the two types of offices apart How to Identify Active from Inactive Offices An active office almost advertises heavily. Check the ads in your local paper. An active office usually has quite a few agents...

Are There Agents Who Work for Both Buyer and Seller

There is no easy solution to the problem of agency for buyers. One answer, however, that is gaining increasing popularity in some areas of the country is to have a dual agent. A dual agent represents both buyer and seller. This agent owes both the seller and you, the buyer, integrity, honesty, and loyalty. However, unless permitted by the seller, the dual agent still may not tell you if the seller will accept a price less than the property is listed for. However, to compensate for this, the...

Beware of Manipulation

What's given flipping a bad name more than anything else over the past few years are unscrupulous buyers who have manipulated mortgages, appraisals, and rebuyers. Rather than do the real work of the transaction, namely finding properties that are selling below market, they have purchased properties at actual market and then, through manipulation, sold them for above market to unwary buyers. This sometimes has been done in apparent collusion with lenders who secured higher appraisals than were...

Beware of Overbuilt Homes

You're looking at a house in a neighborhood that typically has three-and four-bedroom, single-story homes. Suddenly you come across a house with two stories and six bedrooms. The owner has added on. There's an extra bath, a remodeled kitchen. In fact, the house looks like a palace. And the price is palatial. Nevertheless, it offers so much that you're thinking of some way that you can get into it. Sell the car, the boat, the dog Work an extra two jobs Anything to get this wonderful house....

Budgeting to Determine How Big a Payment You Can Afford

__Increase after calculation for interest and property tax __Increase after eliminating voluntary deductions ___Utilities (Gas, electric, water, garbage) ___Auto (Lease Purchase pmt., ins., gas) ___Maintenance (gardening, painting, etc.) __Income Available for Mortgage Payment *It's important to remember that your net monthly income is after voluntary deductions such as 401K contributions, which can be reduced or eliminated. Also remember, some of your involuntary deductions, such as for...

Can I Afford to Buy a Home

Once the decision to investigate buying has been broached, it becomes a matter of determining what you can afford. To find out, most prospective home buyers usually begin the traditional task of putting together a budget of their income and expenses. Their two big questions are, How much money will I have to put toward a monthly payment How much money do I need for a down payment and closing costs Unfortunately, this is like putting the cart in front of the horse. My suggestion is to stop, take...

Can I Find Properties Before They Are Listed

There is another category of property that, though rarer, offers potentially greater financial opportunities to you, the buyer. This is a property that has not yet come onto the market. Sellers have a world of reasons for selling. Sometimes it is a well-thought-out decision determined over a long period of time. In other cases a sudden event such as job change, illness, or death may cause a quick decision to sell. Regardless of how it happens, there is always a period of time between when...

Can I Learn to Negotiate Successfully

In the old days in real estate (by old days I mean as late as the 1950s) the Latin expression caveat emptor was often quoted Let the buyer beware. Since that time, consumer protection laws have swelled to the point where today the buyer who knows how to take advantage of these laws is protected and even has advantages as never before. However, when it comes to the actual negotiations, there are no protections for the buyer. You are at your own mercy. You can make a good deal. Or you can get...

Can I Negotiate on a New House

Sometimes you're buying a brand new home instead of a resale. The builder developer has a set price written in ink on the brochure. Either you pay that price, you are told, or you don't get the home. Right It depends. If the market is hot and new homes are selling as fast as they can be put up, yes, you'll have to pay the set price. In fact, when the market is very hot people will sometimes camp out in front of builder developers' offices for days just for...

Can I Rely on What the Lender Says

Yes, in the sense that today lenders use highly sophisticated computer models based on hundreds of thousands of actual case histories to determine what makes a successful borrower. Where you fit in that financial profile determines the maximum amount that you can borrow. And if you fit the profile of a successful borrower, chances are excellent that you will be one. On the other hand, if you fit the profile of someone who's likely to lose the property to foreclosure, then you might reconsider...

Check Out Your Inspector

Ask your future inspector for at least three referrals from past jobs. Then call those people. Hopefully, it will be at least six months or more since the inspection and they will have had an opportunity to see if something came up that wasn't initially discovered. You may get some surprising answers. Check the inspector's credentials What qualifies him or her to be an inspector Look for someone with a related degree and a broad building background such as a soils or structural engineer. Often...

Checklist for Determining Market Conditions

Are interest rates low or high, rising or falling _ Are housing inventories high and rising, low and falling __ Are listing times getting shorter or longer __ Are their housing shortages in your area __ Can more (or fewer) people afford to buy in your_area Where are you today in the seven-year cycle __ And always keep in mind Will Roger's famous quip about real estate, They ain't makin' any more of it Even if you guess wrong and buy in a down market, if you can just hang on long enough, chances...

Comparing Adjustable Rate with Fixed Rate Mortgages

Now we're at the stage of comparing apples with oranges. However, in truth, a direct one-to-one comparison isn't usually very helpful. Rather, what's more important to most borrowers is comparing the usefulness of each type. It's sort of like saying, Do I want to eat an orange now, or will an apple taste better Here are some guidelines that may prove helpful. When interest rates are low, get a fixed-rate mortgage to lock in the low rate. When interest rates are high, consider an adjustable-rate...

Composition Roof Checklist

Is the color of the shingles good (Fading shingles are a sign of wear.) Are the edges of the shingles curling up (This is a sign of wear in hot climates.) Are there any bare spots on the roof Are there any signs of leakage in the ceiling or walls inside the house. Aluminum Shingles. These have a life span of 50 years or so. Generally they don't wear out unless they have been damaged.

Cosmetics versus Renovation in a Fixer

Paint will handle most of the problems New carpeting will do the trick Landscaping the front will be the finishing touch You need to put in a new kitchen and or bath There are structural problems with the roof, foundation or framing Major systems (plumbing, heating, electrical) need repair However, fixing such calamitous problems requires ingenuity, money, nerve, and stick-to-itness. Unless you have all four, plus a pretty strong background in renovation, my suggestion is that you simply stay...

Credit Bureaus and Organizations

Consumer Data Industry Associations http www.cdiaonlme.org Information on credit reports and credit laws Fair Isaac (credit scores) www.fairisaac.com Main credit scoring organization Federal Trade Commission www.ftc.gov Handles credit reporting complaints Trans Union www.transunion.com National credit reporting agency

Do You Negotiate from Weakness

I once had a friend who had a strong dislike for traveling in Mexico, even though her business obligations required that she routinely go to such places. Why I asked her on one occasion. The people are very friendly. The scenery in many areas is spectacular. And the currency exchange rate for Americans is often favorable. So what don't you like about it She glowered at me for a moment, then replied, In many areas, particularly rural ones, you seldom know what the price of anything is. She...

Dont Overlook the Closing Costs

Many buyers simply forget about this very real cost. Don't. Closing costs are expensive. Typically they are around 5 to 8 percent of the purchase price of the house. If you pay 100,000 for a home, expect to pay about 5000 to 8000 in closing costs. These are cash costs. You'll need to come up with them in addition to your down payment. (We'll have more to say about them in Chapter 16.) They include Typical Closing Costs When Purchasing a Home Points (percentage of the mortgage paid to the lender...

Exterior Paint Checklist

Is the paint chipped or peeling Are the colors faded (Faded colors indicate paint that is aging.) Is the caulking around windows starting to fall out Is the paint on the gutters or siding peeling In general, you need an expert to tell you if there are serious plumbing problems. There are, however, some telltale signs you can check for.

Finding Fixer Uppers

A fixer is short for fixer-upper (also sometimes called a handyman's special). It's a house (or condo co-op) that is in less than perfect condition, sometimes far less. Some merely need paint. Others need a complete makeover. Some even require structural repair. Whatever their deficiencies, they are typically sold at a discount. If you're having trouble finding a home you can afford to buy in the neighborhood you want, then one alternative may be to consider a fixer. Here you can sometimes...

Get It in Writing

But by Thursday morning the sellers may be having second thoughts and want to start negotiations all over again. Get yourself immediately down to an attorney or agent who'll write up the deal, and then get everyone's signature. Only then can you breathe a conditional sigh of relief (conditioned on the deal finally closing some 30 days later after you get financing, the seller clears title, and everything goes according to plan).

Get the Best Mortgage in Town

One of the newest and most important developments in real estate lending is that now almost everyone can get financing, from the most- to the least-qualified buyers. In the past, in order to get a mortgage you had to be a premium buyer high salary, few other debts, cash in the bank, and sterling credit. Not so anymore. Lenders are taking less-qualified buyers and offering them financing with slightly higher interest rates to make up for the added risk. In other words, if you've been shy of...

Have You Asked the Sellers Whats Their Lowest Price

This may come as a surprise to many buyers. You mean I can talk to the seller Of course you can. The worst the seller can say is, I'm not discussing the sale. Talk to my agent. The best the seller can do is to tell you how desperate he or she is and how urgently a sale is needed and how low an offer might be accepted. TRAP AGENTS DON'T LIKE PRINCIPALS TALKING TOGETHER Your agent isn't likely to encourage you to talk to the seller. That bypasses the agent and arouses all kinds of suspicions...

Have You Tried Hiring an Appraiser

The trouble with hiring an appraiser is that it usually takes too much time and is too expensive (typically 150 to 300). But if you have the time and want a professionally acquired figure for the true market value of the property, you can call in an appraiser. And if the appraisal comes in low, it can provide ammunition to blast the seller down from a high asking price. Appraisers usually work on a fee basis for lenders. Chances are that if you're going to get a mortgage on the property, you'll...

Househunting Checklist

Okay, let's say that you have an idea of what you want and you're ready to look. Where do you begin Start by checking the resources you have for finding just the right house. In most cases they include checking the paper, driving around looking for For Sale signs, talking and working with agents, checking bulletin boards, talking to friends, acquaintances, and people at work and, of course, searching on the Internet (most listed homes are on the Internet either at www.realtor.com or some other...

How Big a Deposit Should I Give

Once you've settled on the price, the next consideration for most buyers is the deposit. The deposit is money that you put up at the time you make an offer on a piece of property to show that you are in earnest about buying it. (You're putting your money where your mouth is, so to speak.) Hence the deposit is actually earnest money. It is supposed to demonstrate to the seller that your offer isn't capricious. An offer can be made without a deposit. However, a seller is less likely to accept it....

How Can I Watch Out for Shoddy Construction

One of the advantages of buying a resale is that you pretty well know what you're getting. If the home has been standing for 5, 10, or more years, chances are it will stand another 30 or 40. On the other hand, when you purchase a new home, you're buying something that is as yet untried. If there are defects, they could show up in the first few years of usage. But, I hear many readers saying, aren't new homes fully inspected by city or county building departments Don't they have to meet strict...

How Do I Avoid Garbage Fees

There are two ways, both of which have already been suggested. First, know what the costs and fees should be. If you can't recognize a garbage fee, how can you challenge it Second, demand that all garbage fees be eliminated or at the least reduced. However, you must do this at the opening of escrow. If you wait until the deal is ready to close to try to make changes, you could endanger your loan, which could mean no deal and a very angry seller. If the lender won't dismiss garbage charges when...

How Do I Find a Good Builder

Of course, you can build it all yourself, if you happen to be a relative of Hercules. However, some of the work is extremely hard, such as pouring concrete and lifting heavy timbers. Some requires special skills, such as soldering, plumbing, and plastering. And some is just plain tedious, such as putting up siding and sheet rock. The alternative is to hire workpeople and or a builder. Unless you plan to do at least 75 percent of the work yourself, you're better off striking a deal with a...

How Do I Find an Active Agent in an Active Office

If you walk in off the street and into an active real estate office (see above), chances are actually against your getting an active agent. The reason is that all agents pull floor time. This is time they are expected to sit in the office and pick up potential clients who come in across the transom. You walk in and you get the current floor agent or, if there's a receptionist, the next agent who is up. You'll immediately know this person. How While other people in the office smile at you, this...

How Do I Find the Right New Home

If you're determined to buy a new home, be prepared to spend some time looking. In most areas of the country, the era of the huge tract has given way to smaller, condensed tracts built a phase at a time. To see all of the new homes in your area, you may have to spend time traveling. Many areas have a buyer's guide to new homes a small magazine detailing the houses and their price range and show ing maps of how to get there. The Sunday real estate section of any major newspaper almost always has...

How Do I Help an Agent Help Me

Once you find an active agent, you must decide whether he or she is right for you. Watch for obvious problems such as personality clashes or basic differences in outlook. In addition, you want to be sure that the agent isn't so aggressive as to overwhelm you. You want to be able to control your agent, not the other way around. Remember, agents influence your decision by what they do or do not say. Be sure that they aren't using this power to manipulate you into something you may not want. You...

How Do I Know What the House is Worth Get a CMA

Market value in real estate is determined by comparing what's for sale with what's sold. If a house in a tract sold for 250,000 a month ago and the nearly identical house next door is now for sale, it's a pretty good guess that it, too, is worth at least 250,000. Once you find a house you are interested in, ask to see a CMA or Comparable Market Analysis. Any good real estate agent can very quickly prepare a list of all the similar homes that have sold over the past six months to a year. Check...

How Do I Know Whom My Agent is Working

Further, before you sign any documents, including a sales offer, your agent should present you with a written statement describing who that agent works for (seller, dual, or buyer). Many states now require a formal disclosure as part of their agency law. (California, for example, requires dual agents to give a signed statement to that effect to both buyer and seller.) Don't assume that just because your agent isn't the listing agent of the property he or she...

How Do I Make a Counteroffer

You make an offer that the agent and or attorney writes up. The agent presents the offer as soon as possible to the sellers. The sellers either accept the offer exactly as presented or turn it down. If the sellers turn down the offer, they can make a counteroffer to you. (They can't both accept and counter.) You may now accept their counteroffer exactly as written, or turn it down. If you turn it down, you may counter back. (You can't both accept and counter.) This countering can go on almost...

How Do I Negotiate in Real Estate

Which brings us back to buying a home. Here, everything is nego-tiable the most important items usually being the price and the terms. If you're a good negotiator, you may end up paying 5 to 30 percent or more below what the seller is asking. Negotiation is an inherent part of buying real estate and if you're going to participate, you should plan on learning the basic skills. At this point, I'm sure some readers are saying, Hold on. I worked with an agent when I bought my last home. The agent...

How Do I Offer an Option

Real estate options are not much different from stock options. For the buyer, they are an opportunity (but not a requirement) to purchase for a set price at some future date. For the seller, they are a commitment to sell for a set price at a set date. Note, an option is not a purchase. Rather you are buying an option on the property getting the right, but not the obligation, to purchase sometime in the future. For this privilege you would normally give the seller some option money, perhaps 1000...

How Do I Sniff Out the Areas

Once you've whittled down the general areas that are in your price range, do some investigation on your own. First, drive the areas. You should look for how people keep up their properties. Are all the lawns nicely mowed Or are there broken cars and auto parts strewn across lawns Watch for broken fences, scattered trash, and graffiti sure signs the neighborhood is going downhill and may be unsafe. Check the public transportation. Stop at the bus or train station and talk to people. Find out how...

How Much Should I Offer

Sellers in most markets ask more that they are willing to take for their homes. They are expecting to come down some, hence the above-market asking price. If you pay what the seller is asking, you could be wasting money. The real trick is knowing how much less than asking price a seller will take. Sometimes a seller will only come down a few thousand dollars. Other times they may drop 10 percent or more. And, of course, there's that occasional seller who refuses to come down a dime. (And in...

How to Avoid Getting Gouged at Closing

They are the transaction costs of buying real estate that we all would rather do without. Nevertheless, closing costs do exist, and sometimes they are abused. It's important to understand that closing costs are not completely regulated. Lenders can sometimes charge what they want, leading to so-called garbage fees or unnecessary charges that only benefit the lender. (What are garbage fees is open to interpretation I give you my take on it throughout this...

How to Compare Variable Rate Mortgages

Variable-rate, also called adjustable-rate, mortgages (ARMs) can also be compared, except that many more factors are involved. The first thing you'll notice is that the interest rates usually will seem much lower for ARMs than for fixed-rate loans. Once again, don't be fooled. Remember, compare apples with apples, not with oranges. The low initial interest rate (often called the teaser) is the traditional appeal of ARMs. As such, they appear to be giving you a better deal. But it isn't...

How to Get a Lender to Put Up All or Most of the Money

Nothing-down financing does it really exist Or is it just a buzzword used by real estate gurus selling you a seat in a seminar or a tape on late-night TV Today, it really does exist, for some buyers. And that's a good thing, too. Most people who want to buy a home often find that the biggest roadblock is coming up with the cash down payment. (So if you're feeling the pinch, rest assured you're not alone ) Let's face it we live in a credit society. A family with a 100,000 annual income can...

How to Recognize a Real Estate Recession

Statistics available from brokers and published in the business section of the local papers indicate that the volume of home sales is dramatically down from the previous year. The number of houses advertised for sale (both new and resale) in the newspapers is enormous. The price of homes is declining. This is usually measured by the median price. Instead of going up, statistics may suggest it's declining. Government home auctions by the FHA (Federal Housing Administration) or the VA (Veterans...

Hybrids What About a Combination Fixed and Adjustable

There are a whole bunch of hybrids out there, any one of which may be better for your situation than a straight fixed or ARM mortgage. Some ARMs may be convertible to a fixed rate, or vice versa. Many allow a conversion at a set date three or seven years, for example in the future. Just be sure the conversion is guaranteed at the lowest interest rate at the time of conversion. There are literally hundreds of types of convertible mortgages available. Some lenders will even create one just to...

Info

Buying a Lot, Building a Home Yourself, and Saving Why buy someone else's home when you can design and build your own You'd certainly be the rare person if the thought hadn't at least crossed your mind at some point in your life. It's the secret dream of a great many of us. I know it was the dream of my wife and myself when we first did it years ago in the Sierra woods of Northern California. The lessons we learned, as well as those of other self-builders with whom I've talked, can be extremely...

Interior Paint Checklist

Are there marks on the walls Is the current paint flaking, indicating it will have to be sanded before new paint can be applied Are the colors light or dark (Covering dark colors may require two or more new coats.) Is there lead in the paint (You may want to have it tested. Homes painted prior to 1978 often have lead paint in them. Your agent should be able to suggest a lead testing company nearby or check with www.epa.gov.) Exterior. Weathering is the problem here. Even the best paints...

Is a Larger or View Lot Worth it

If the price isn't that much more, go for it. For example, a lot with a view or a larger lot may cost 3 percent more than a standard lot. Usually this will pay in the long run. On the other hand, back off if the price is excessive. Keep in mind that if you buy a view lot, it may be the best money you can spend. If you're in an area where view lots are prized, you could get it back several times over when you sell. On the other hand, beware if you buy a larger lot. Unless you landscape it so...

Life Is Making Choices

In later chapters we'll see how to get sellers to reduce their price. We'll look at mortgages that require nothing down, indeed, that even pay some of your closing costs We'll see how to rent-to-buy. And more Nevertheless, at some point you'll have to return to the above comparison and one way or the other, make What's left for me to live on fit under, What I must have to live on. You might want to come back to this chapter several times as you go through this book...

Mail Order Plans

Mail order is definitely the cheapest way to go, since a set of plans can be obtained for just a few hundred dollars. There are literally thousands of mail-order plans available. Be sure you check to see that they are appropriate for your area of the country and that the building materials list doesn't involve some overly expensive timbers or metal. Be careful, however, if you buy through-the-mail plans. A working set includes all elevations as well as details of all unusual construction. Some...

Mortgage Closing Costs Fees Checklist

Assumption Fee If you're assuming an existing mortgage, you will undoubtedly have to pay a fee. It's typically in the 100 or less range. However, most loans today are not assumable. Document Preparation Fee A garbage fee paid to the lender for preparing the loan documents. Since the lender is making the loan and since it takes only a few taps on a computer keyboard to spit out the documents, in this author's opinion it's absurd to charge a high fee for it. Points A point is equal to 1 percent...

Must a Deposit Be in Cash

A deposit doesn't necessarily have to be in the form of cash. It can be a promissory note or a check that all parties agree not to cash or even personal property such as the title to a car or boat. Cash (cashier's check), however, talks the loudest when you're trying to convince a seller to accept an offer. Sometimes sellers will specify in a listing agreement that they will accept no offers with less than, for example, a 5000 cash deposit. Remember, however, everything is negotiable. You can...

New Home Checklist

Three or four is often best for resale, two may restrict your ability to resell quickly, five could make the house overbuilt for the area.__ Number of bathrooms. Two is minimal, three is better, four could be overkill.__ Ceilings. High ceilings are in vogue. A better house will have at least one room with vaulted ceilings, usually a living or family room._ Kitchen. Large and well-equipped kitchens sell houses. If your kitchen has an island in it complete with a stove, all...

Other Related Organizations

Provides information on real estate (fee) National Association of Realtors www.realtor.com,www.realtor.org. Provides information on members, homes for sale, and other data Real Estate Services Providers Council www.respro.org Provides information on news regarding home closings and other aspects of real estate The legal description www.thelegaldescription.com Provides information on legal news regarding home closings

Real Property

This includes the land and anything appurtenant to it, including the house. Certain tests have been devised to determine whether an item is real property (goes with the land). For example, if curtains or drapes have been attached in such a way that they cannot be removed without damaging the home, they may be spoken of as real property. On the other hand, if they can easily be removed without damaging the home, they may be personal property. The purchase agreement should specify...

Rely on Yourself

If you've been looking at homes for a while, you should have a pretty good idea what similar houses are listed for. This gives you a good idea of the price range your prospective house is in. TIP HOMES RARELY SELL FOR LISTED PRICE Selling prices and listing prices are usually different. In most markets they sell for less than listed. In some hot markets, of course, they may actually sell for more Check the comps. Ask your agent to let you see the selling prices of similar homes going back at...

Set Your House Hunting Parameters

How many bedrooms will you need Most houses have three or four bedrooms. You'll probably have to pay a premium for five or more bedrooms. Houses with fewer than three bedrooms are often more difficult to resell, although they may cost less initially. How many bathrooms will you need Don't buy a house with only one bathroom. It's very difficult to resell. Do you want a newer house with all the modern goodies such as better insulation, copper plumbing, high-efficiency heating and cooling,...

Should I Ask the Sellers for a Second Mortgage

If the sellers are willing, it's probably the best mortgage you can get. There's usually no qualifying and you can bargain for the interest rate. (You might offer a slightly higher purchase price for a lower interest rate.) Many sellers, however, cannot give a second mortgage because they need to cash out in order to buy another home. Others are reluctant, fearing you might not make the payments and they would have the considerable expense of foreclosing and taking the property back. You can...

Should I Insist on a Final Walk Through

You see the property before you make the offer. The offer's made and accepted. Then there's a wait of a month or so while financing is arranged, title is cleared, and so forth. Now you're ready to close the deal. But how do you know that the property is now in the same condition as when you first saw it How do you know the seller hasn't smashed holes in the walls and broken the appliances (Unlikely, but it does happen.) How do you know there aren't scratches on the floor, damaged sinks and...

Should I Lowball the Seller

You can't very well go lower after you've previously made a high bid you would lose credibility and the seller's interest. However, if you bid too low initially, the seller may not believe that you're in earnest in buying the property and may simply turn your offer down without even a counter. Which brings up the biggest risk when lowballing, you may lose the property entirely. Now it's a matter of understanding yourself. From an investment perspective, it's...

Should I Work with a Buyers Agent

As if it isn't confusing enough already, there is yet another designation of agent we've hinted at, a buyer's agent. This is an agent who truly works for you, the buyer. (After all, if sellers can have their agents, why can't buyers ) There's are some good reasons to work with a buyer's agent. After all, it's the only way you can be sure the agent is on your side. Remember, a true buyer's agent has a fiduciary responsibility to you, not to the seller. Such agents must tell you everything they...

Should I Work With Agents

Agents are always on the lookout for fixers, and if they know that's what you want, most will look for you. However, don't expect agents to fall over at your feet if you tell them you specifically want a fixer. Agents know that good fixers seldom come along, and completing a deal on them often takes lots more work than selling a ready-to-go house. Check the MLS (Multiple Listing Service), which your Realtor should be able to access. This can take time and careful scouting. However, today the...

Should I Write in Personal Property That Goes with the Sale

When you purchase a home, you are basically buying real property. Loosely defined, real property is the land, the house, and anything that's permanently attached to it. For example, the windows in the house are real property. Personal property, on the other hand, is everything else. Furniture is personal property, as are dishes, clothes, and most things that you can take with you. For most things the definition of what's personal and what's real property is easily grasped and readily agreed to....

Should You Buy a Not YetBuilt Home

You may have a choice between buying an already built brand new home or one that a builder has yet to put up. There are pros and cons with going each way. With the already-built home, you know what you're getting and usually can see the neighborhood. But, with the yet-to-be-built home, items can be changed to fit your specific needs. My suggestion is that whenever possible, always buy a home that is already built. I believe that knowing what you're going to get is more important than being able...

Steps to Quicker and Easier Home Buying

Imagine trying to win a game of football without knowing the rules. You'd send your team out into the field not knowing the difference between quarters or innings, how many points you would get for a touchdown or a field goal, or even which direction to run It wouldn't matter how professional your team was. If you didn't know how the game was played, even a grammar school team could beat you. Real estate is similar. Buying a home is not like buying anything else. It's not like buying a car, or...

Technique 4Improve Your Income Expense Ratio

You shouldn't fudge, but how you express your income can make a difference. When filling out a mortgage application it usually pays to emphasize length and continuity. For example, you're a teacher who has gotten his first job in years just a month ago. The lender is bound to wonder if you will succeed at the work. However, if you note that you were a teacher with nine years experience a decade ago before leaving the field to help raise children, it can help put your application in a whole new...

Technique 5If Youre Self Employed Try NoDoc LowDoc Loans

How you receive your income is important, too. If you work for an employer and receive wages (meaning a W-2 form at the end of the year), you get preference mainly because it is easy to verify your income and because, presumably, you have something called job security. On the other hand, if you're self-employed, you may be turned down. Usually, at minimum you will be asked to produce the last two years of 1040 tax forms. However, in some cases of self-employed individuals, this may not tell the...

Technique 6Pay Off Excess Debt

In calculating how a big a monthly payment mortgage to give you, lenders take into account your available income. However, the more debt you currently have, the less income is available to pay the new mortgage. Therefore, when possible, pay off as much of your short-term (such as from credit cards) debt as possible. That way you increase your income (less is set aside to pay for the short-term debt) and you may have a better chance of qualifying. There is a downside to this, however. The more...

Technique 7Put More Money Down

I've emphasized in this book that low-down financing is readily available today 10 percent down, 5 percent down, nothing-down, 103 percent financing. However, to get this requires increasingly better credit. On the other hand, if your credit isn't wonderful, then you can still get a good low-interest-rate loan if you're able to increase your down payment. Put down 20 percent and lenders will love you. Put down 30 percent, and you should be able to get an equity loan from a lender no matter how...

The Big Problem with Flipping

Almost all sellers have a kind of personal relationship with the buyer. They want to know who's buying their property. (This is even the case with lenders, which almost always insist on knowing exactly whom they're dealing with.) When you assign the purchase agreement, you break that bond. Many sellers, nevertheless, are willing to go along provided the deal concludes in a reasonable fashion. After all, they're still getting a sale out of it. Many lenders will not, so your rebuyer may have...

The Effects of Dealing with a Sellers Agent

Unless the seller has authorized it, your seller's agent can't disclose how much less than the selling price the seller might take, even if the agent knows of a specific figure (This isn't to say that many agents don't hint at the lower figure, but they aren't supposed to come right out and tell you, for example, that the seller said, My price is 100,000, but I'm so desperate to sell I'd take 75,000, but don't you dare tell that to any buyer ) The agent can't disclose that the seller might...

The Hardest Part

Probably the hardest part of buying a fixer is getting the seller to accept a reasonable price. (Refer to our earlier formula for determining how much to pay.) Sellers have heard that property prices have gone up. And they want to participate on the boom. Of course, they don't want to realistically discount their property because of the poor shape it's in. All of which is to say, plan on doing lots of negotiation. And plan on making lots of lowball offers, most of which won't be accepted. Just...

Tile Roof Checklist

Are any of the tiles broken Are there any signs of leakage in the ceiling or walls inside the house Interior. In a resale, don't expect to get a house that doesn't require repainting. As noted in an earlier chapter, as soon as the seller's furniture gets moved out, you're going to see whole areas that need repainting. The only question is Will you do it or will the seller

Tip 11Keep to the Same Document When Possible

It is good strategy to make the counteroffer (either your own or the sellers') on the same document as the original offer. The reason is psychological. When the sellers counter on the same document, even though you may know that their counter rejects your original offer, using the same document makes it somehow seem like you're closer than before. When you counter the sellers' counteroffer, putting it on the same document does the same thing for the seller. Some agents use sales agreements that...

Tip 12Know When to Stop Countering

Sometimes you and the sellers are so far off on price or terms that it becomes obvious that there is no real room for compromise. For example, the best offer you can make is 212,000 and the best counter the seller can make is 250,000. Sometimes you have to accept the fact that not all deals can be made. Refusing to counter can also be a bargaining tool. After several counteroffers you're still apart on price or terms. Instead of accepting the sellers' most recent counter, you do a walkaway and...

Tip 1The Terrible Offer

Some buyers will purposely make very unfavorable offers to sellers in the hopes they would counter with a compromise offer that was still far below what they were asking. This is a strategy, also called low-balling the seller, which sometimes works. However, it is also fraught with peril. Remember, the seller may be insulted by the low offer and simply turn it down out of hand and not counter at all, which could end negotiations. If you accept this risk, however, and the seller does counter,...

Tip 2The Compromise Offer

If you don't want to risk alienating the sellers right off the bat, then there's the compromise offer. It's higher than the lowball, but still far lower than what the seller is asking. This is an offer that you're pretty sure will drive the sellers to the negotiating table. It sets the stage for a bargaining process that will get you the property at a price and terms you can afford and are willing to pay. How do you know what to put into the compromise offer What price, terms, and so forth...

Tip 3The Wonderful Offer

You would only make this offer if you were desperately in love with the home and or the market was strong. You would offer very close to full price. (Sometimes in a very hot market you might offer full price or higher ) You want the sellers to know that you're intent on buying their home. But you're hoping that they will cut you a little slack by either accepting your offer as is, or countering by taking a little off the price. In a normal market, the sellers might indeed accept. Or they might...

Tipbuying Later In A New Development Can Pay

Many new developments are built in phases. If the initial phase is successful (a good neighborhood), the later phases usually turn out similar. If you can get a later-phase home at an earlier-phase price, you could be headed for a profit-making deal. Real estate is a localized market. That means that you cannot say that something is true at any given time for all parts of the country. While Southern California, for example, or New York may see property values skyrocket, at the same time parts...

Tipfollow Interest Rates

If you're concerned about the market, be sure to check interest rates regularly. When they are falling, it's almost a sure sign that soon, if not already, prices will likely rise. When they are rising, watch out. Real estate does not like higher interest rates, and a slowdown could be imminent. In a hot market, prices go up for both resales and new homes. When you are seeking a new home in a hot market, the odds are set against you. You are competing against other buyers for relatively few...

Tipget Them Customized

Even if you order plans through the mail, you will probably have to modify them to accommodate your building site. Why not hire a local architect on an hourly basis to modify these plans The cost can be a fraction of what drawing up a set of plans from scratch would be. Custom-made is the most expensive way to go, but you can arrive at a unique and well-built house. You hire an architect to draft a set of plans for you. Typically, the cost is 3 to 5 percent of the cost of building the house....

Tipif You Want Less Volatility

Historically among the least volatile rates have been the cost of funds and the Libor index. However, as we move into new economic climates, that could change. Lenders should provide you with a chart showing changes in the index for your loan. Be sure you ask for a chart that includes the period of 1979 through 1981 and 1999 to 2003 so you can see how the index performed in both high-interest-rate and low-interest-rate economic conditions. falling, you may want a more volatile index that will...

Tipits Not Simply Cosmetic

My wife and I have a running battle over what constitutes a fixer. She feels that if the paint isn't new and there are one or two cracked counter tiles, it's a fixer. I, on the other hand, maintain that the property has to have a big enough problem that no one will pay full price for it obsolete kitchen bath, broken doors in interior, cracked foundation, and so on. Her complaint is that no one will come down on the price for what she considers a fixer. Mine is that they often won't come down...

Tipknow Thine Own Abilities

Perhaps the most important thing when evaluating a fixer is to determine whether you can do the work yourself, or whether it's beyond you. For this reason, it's always a good idea to call in experts contractors, engineers, agents people who specialize in fixing the particular problem. In many cases they'll simply give you a bid. In others you may have to pay them a fee. But either way, very often only they can tell you how the problem can be correctly fixed. And how much that will realistically...

Tipnew Homes Are Cheaper To Operate

As a rule, new homes will have newer and more efficient heating and cooling systems, more insulation, better windows (double pane and low-E), tighter weather stripping, and so on. This all translates into lower energy costs. While the salespeople in the office try to get you to make a quick decision, remember that you usually have plenty of time. You can leisurely shop around, going from model to model until you find just the right home for you. Once you find it, you can often negotiate more...

Tips for Making Successful Counteroffers

Some people say that writing is, in reality, the art of rewriting. In real estate it's similar. Getting the deal you want isn't just in the offer you make, it's also in the counteroffer. Counteroffers occur when the seller turns down your original offer, but then sends you back a sales agreement that offers different price, terms, or virtually anything else that departs from your original offer. It is at this point that negotiations begin in earnest. How well you respond to the seller's...

Tipsometimes Youll Want To Renegotiate

Nonetheless, buyers have used faults found on the final inspection to attempt to back out of a deal at the last minute. (Their reasons can vary from finding a serious fault in the property, to finding another more preferable house.) My suggestion is that if you want to renegotiate based on the final walk-though, you better have found some serious problem with the house, or else you'll have an angry seller to contend with. Sometimes agents will suggest that a specific date for the final...

Tipspecial Loans For Special Borrowers

You do not always need to have great credit or high income to qualify for a conforming loan. Both lenders have special programs that are designed for people with limited income and credit problems. For a few examples (available through lenders, not directly from Freddie Mac or Fannie Mae) Affordable Gold 5 from Freddie Mac, is designed for moderate-to low-income borrowers. It only requires a 5-percent down payment and is available on a mortgage with terms of 15, 20, and 30 years. Freddie Mac's,...

Tipstretching Makes Sense In An Up Market

If you are looking at homes after having been out of the market for quite some time, you've probably run into sticker shock. The prices for today's home can be much, much higher than you paid for your old castle. However, your income may have increased sufficiently to handle the new price payments. Further, even if you have to stretch to make the payments, if the market is moving up, it might be worthwhile. In a rising market, the value of your new home, and your equity, will quickly grow.

Tipthe Best Attorney Price In Town

On the East Coast, the usual price for having a real estate attorney handle all the paperwork in a typical transaction is between 750 and 1500 (depending on what's involved). Today the many new fee-for-service agents charge similar amounts (see Chapter 6). Keep in mind, however, that while attorneys that handle real estate transactions are found all over the East Coast, they are seldom found in other parts of the country. Fee-forservice agents, however, are cropping up everywhere. If the seller...

Tiptrade Closing Costs For Cash

Remember, the closing costs are cash. However, sometimes they can be financed. You offer the seller a good price (assuming the property appraises out) and get a big loan, sometimes for the full value of the home (see Chapter 4). In return, the seller pays your cash closing costs. Of course, some buyers who are very tough negotiators argue for it all good price, good terms, and seller pays closing costs As I said, in a bad market where houses just aren't selling, sometimes desperate sellers will...

Title Insurance Escrow Organizations

ALTA form www.alta.org store forms homeown.pdf Provides the basic form for ALTA policies American Escrow Association http www.a-e-a.org A major escrow trade association American Land Title Associations www.alta.org A major title association trade association California Escrow Association www.ceaescrow.org California's trade escrow association California Land Title Association www.alta.org store forms homeown.pdf California's trade title association Chicago Title Insurance Company www.ctic.com A...

Trapbe Careful When Comparing Mortgages

The best way to compare interest rates is to do it for like-kind mortgages. You don't want to compare apples and oranges. Today there are two major kinds of conventional (nongovernment insured or guaranteed) mortgages available a fixed-rate mortgage, where the interest rate does not change for the life of the loan and a variable-rate mortgage, where the interest rate can change. When you compare mortgages, be sure you compare fixed-rate to fixed-rate and variable to variable. (There are so many...

Trapbeware Of Being Simply Qualified

On the other hand, a mortgage broker or even a real estate agent can ask you a couple of financial questions over the phone and then send you a pre-approval letter. However, if your credit report wasn't checked, if your income and assets weren't verified, if underwriting standards weren't applied (and if it wasn't issued directly by a reputable lender), it probably isn't worth the paper it's written on. The reason is simple no lender will back it up.

Trapbeware Of How You Pay And To Whom

Most builders will want you to sign a building agreement in which you agree to provide them a series of payments out of which they will pay their workers and their materials suppliers. However, if you pay the builder and the builder does not pay the workers and suppliers, you could still be liable for full payment to those workers and suppliers. (They could file mechanic's liens on your property and force payment, even if you have to pay twice ) Your only recourse, in such an event, may be to...

Trapbeware Of The Big Balloon Payment At The

On short-term fixed-rate mortgages, if it turns out that you can't sell or refinance as you planned at the end of the term, you could lose the property to foreclosure You're gambling a lower interest rate on future market and personal financial conditions. Therefore, make sure a shorter-term mortgage includes an automatic refinancing option at the end. Usually this is an ugly adjustable, but at least if worse comes to worst, you won't be without a loan. Hybrid mortgages are available from...

Trapdont Count On The Inspectors

Don't count on the local building inspector to ensure that everything is done right. Building inspectors can't watch everything all the time. If you don't know how it should be built, hire someone who does to supervise the job. Plan on spending more time than you first estimate. Workers don't show up on time. Building materials are delayed getting to the site. The weather turns against you. To be perfectly safe, use a rule of two. It takes twice as long to do anything as you think it will....

Trapdont Expect An Allowance

So, you don't like what the builder offers And chances are you don't like the upgrade prices So what do you do The most logical thing is to tell the builder no thanks and that you'd like an allowance for his cost of materials. You'll go out and buy your own. Not a chance (in most cases) Most builders will not give you an allowance against standard items. There are several reasons that builders limit the changes and upgrades you can make. One is cost. They get guaranteed estimates from a few...