Environmental Issues

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When purchasing a piece of property, it is important to be aware of any environmental liabilities associated with it. For example, you should find out if there are any registered underground tanks within several miles of the property, known contaminated properties in the neighborhood, or property owners who have been fined by the government for failing to meet environmental safety standards.

Before, it took a costly site investigation to acquire this type of information, but now there are online environmental databases available at a fraction of the cost. Anyone can access reports on otherwise hard to detect environmental issues. With these databases, it is possible to obtain a list of hazards near a property, or spills and violations attributed to businesses nearby.

Some reputable databases include VISTA Information Systems, located in San Diego, California, which allows you to register and search the data bank for free, and E Data Resources, which is located in Southport, Connecticut. These services are all relatively inexpensive, but can provide you with priceless information that is useful before you make a purchase.

Common Ways of Holding Title

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How Should I Take Ownership of the Property I am Buying?

Real property can be incredibly valuable and the question of how parties can take ownership of their property is important. The form of ownership taken -- the vesting of title -- will determine who may sign various documents involving the property and future rights of the parties to the transaction. These rights involve such matters as: real property taxes, income taxes, inheritance and gift taxes, transferability of title and exposure to creditor’s claims. Also, how title is vested can have significant probate implications in the event of death.

The Land Title Association (LTA) advises those purchasing real property to give careful consideration to the manner in which title will be held. Buyers may wish to consult legal counsel to determine the most advantageous form of ownership for their particular situation, especially in cases of multiple owners of a single property.

The LTA has provided the following definitions of common vesting as an informational overview. Consumers should not rely on these as legal definitions. The Association urges real property purchasers to carefully consider their titling decision prior to closing, and to seek counsel should they be unfamiliar with the most suitable ownership choice for their particular situation.

Common Methods of Holding Title

SOLE OWNERSHIP

Sole ownership may be described as ownership by an individual or other entity capable of acquiring title. Examples of common vesting in cases of sole ownership are:

1. A Single Man/Woman:

A man or woman who has not been legally married. For example: Bruce Buyer, a single man.

2. An Unmarried Man/Woman:

Seller Tip #10:What is a Short Sale Anyway

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An increase in foreclosure rates will inevitably bring with it an increase in short sales. But what is a short sale?

A short sale happens when you sell your house for less than your remaining mortgage balance, the proceeds of which go to the lender and in return the lender forgives the remaining balance. Selling your home as a short sale is one way to avoid foreclosure.

As a general rule, lenders lose money when they foreclose on a property. Consequently, they would rather not have to foreclose if it can be avoided. A short sale represents an opportunity to cut their losses because a short sale usually allows them to recoup more of the cost of the loan than a foreclosure process would.

However, don’t think that a short sale is an easy thing to accomplish. In order to get permission for a short sale, you must provide documentation showing a genuine financial hardship. And don’t think that the decision for accepting a short sale is solely in the hands of the lender. Sure the lender must first agree, but this is not the final word. If there is mortgage insurance involved, this company also gets input on the decision. If there is an investor backing the mortgage, they also get input as to whether to accept a short sale.

The transaction process for a short sale can be rather cumbersome as well, whether you’re on the buying or selling side. Many short sales fail due to additional demands by the lender, such as requiring the broker to reduce his or her commission and/or that the seller signs a document requiring him or her to pay back the shortfall.

If you’re on the selling side of a short sale, consider having your agent or other experienced professional negotiate with your lender for a better deal. And remember, if the lender does accept a short sale and forgives part of your debt, that is considered taxable income and you must declare it as such to the IRS.

Seller Tip #9:Setting the Price

The price is the first thing buyers notice about your property. If you set your price too high, then the chance of alienating buyers is higher. 

You want your house to be taken seriously, and the asking price reflects how serious you are about selling your home.

Several factors will contribute to your final decision. First, you should compare your house to others that are in the market. 

If you use an agent, he/she will provide you with a CMA (Comparative Market Analysis). 

The CMA will reflect the following:

• houses in your price range and area that were sold within the last half-year
• asking and selling prices of houses
• current inventory of houses on the market
• features of each house on the market

From the CMA, you will learn the difference between the asking price and selling price for all homes sold, the condition of the market, and other houses comparable to yours.

Also, try to find out what types of houses are selling and see if it applies to your area. Buyers follow trends, and these trends can help you set your price.

Always be realistic. Understand and set your price to reflect the current market situation.

Seller Tip #8:Plan of Action

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1. Analyze why you are selling - If you understand your motives, you will be able to better negotiate and to get what it is that you want, whether it be a quick sale, high price, or somewhere in the middle.

2. Prepare your home for the buyer - Maximize the strengths of your property and fix up its weaknesses. You want the buyer to walk away from your home with a lasting good impression.

3. Find a good real estate agent that understands your needs - Make sure that your agent is loyal to you, and can negotiate to help you achieve your goals. In addition, they should be assertive and honest with both you and the buyer.

4. Be prepared for negotiation - Learn and understand your buyer’s situation; what are their motives? Can you demand a big deposit from them? Try to lock in the buyer so that the deal goes through.

5. Negotiate for the best price and the best terms - Learn how to counter offer to get maximum value from every offer.

6. Make sure the contract is accurate and complete - Be honest with your disclosures; you do not want to lose the deal because you were lying or diminishing your home’s defects. Insist the buyers get a professional inspection. This will protect both you and the buyer.

Seller Tip #7:Making a Good First Impression

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If you want buyers to be interested in your home, you need to show it in its best light. A good first impression can influence a buyer both emotionally and visually, thus prompting them to make an offer. In addition, what the buyer first sees is what they think of when they consider the asking price.

A bad first impression can dissuade a potential buyer. Don’t show your property until it’s all fixed up. You do not want to give buyers the chance to use the negative first impression they have as means of negotiation.

Ask around for the opinions others have of your home. Real estate agents who see houses everyday can give solid advice on what needs to be done. Consider what architects or landscape designers have to say. What you need are objective opinions, and it’s sometimes hard to separate the personal and emotional ties you have for the home from the property itself.

Typically, there are some general fix ups that need to be done both outside and on the inside. As a seller, you should consider the following:

• Landscaping - Has the front yard been maintained? Are areas of the house visible to the street in good condition?
• Cleaning or Redoing the driveway - Is your driveway cluttered with toys, tools, trash etc.?
• Painting - Does both the exterior and the interior look like they have been well taken care of?
• Carpeting - Does the carpet have stains? Or does the carpet look old and dirty?

Seller Tip #6:Know Why You are Selling

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If you know exactly why you are selling then it is easier for you to follow the right plan of action for getting what you want.

If you are a seller who needs to close a sale as quickly as possible, then you should know that getting the highest price possible is not one of your priorities. It does not mean that you won’t or cannot get the highest price, but it means that the price is not the deciding factor. A buyer who can give you a quick closing time will appeal much more to you than a buyer who can offer you more money but the negotiation and closing time drag on.

It’s always good to know how low you will go, in terms of selling price. This will help to eliminate some of the offers that you find simply offensive or ridiculous. Even though you should consider all offers seriously and take into consideration the terms of each offer, sometimes, if you know the bottom line and are strict about it, you can save yourself time.

Once you know what your limits and reasons are, discuss them with your agent so that they can help you set your goals realistically. If you decide to list your home on your own, make sure you do research on the current market, and you get the proper advice you need in terms of legal issues, etc. The key is to be realistic and to know what your goals are so they can be met.

Seller Tip #5:Insist on a Home Inspection

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A professional home inspection protects both you and the buyer. It allows both you and the buyer the opportunity to learn about the property’s defects.

A home inspection usually covers the following:

• Plumbing conditions - if there is leakage or clogging
• Roofing conditions - the extent of deterioration, if there is leakage
• Electrical conditions - if there are inadequate circuits or potential fire hazards
• Structural problems - if there are problems with the underlying foundation of your home

As a seller, the home inspection reports protect you because it establishes the actual condition of the property at the time of sale.

Seller Tip #4:Getting the Highest Price in the Shortest Time

In order to get the highest price in the shortest time, you need to know how to market your home. The better you market your home, the more offers you will get. And the more offers you get, the more choices you have to get the price and terms you want.

The most important factor of marketing your home is pricing it right. Your price should be adjusted to reflect the market and your property’s worth. The key is to get as many people as possible checking out your fairly priced property. If your property is not priced fairly, there will be no buyers because your price is set too high.

Another important factor is the condition of your home. Make sure that your home looks ready to be sold. Fix any defects (peeling or faded paint, cracks, stains, etc.) Condition alone can sometimes prompt fast buying decisions. Not only should you fix any defects, but consider upgrading your home by making major repairs and cosmetic improvements before selling. A nice looking home triggers the emotional response that can lead to a financial response.

Learn how to negotiate the best terms for all parties involved. Terms are another factor that may be adjusted to attract buyers. If you insist on getting your asking price, think of what you can offer to the buyers. For example, improvements you’ve made or even offering seller financing at a lower than market interest rate on a portion of the sale price. Convince them why they should be paying the price you have set.

Lastly, get the buzz out about your home. List your house with a hot agent that ensures your house is listed on the MLS and on the Internet. On your own, get the word out. It should always be visible to passersby that your house is for sale, whether it is through signs, local advertisements or you telling friends, family, and acquaintances.

Seller Tip #3:For Sale By Owner - A Good Idea?

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FSBO (pronounced fizz-bo), or For Sale By Owner, is a way of selling your home without the use of a professional real estate agent or broker. The idea behind FSBO is that by selling your home yourself, you save the approximate 6% that would be the agents’ commission.

6% may not sound like a lot, but it can add up, especially on more expensive homes. But before you run off and decide to sell your home FSBO, you must remember that to get a savings like that, there must be a cost. So what’s the catch? Selling FSBO is hard. A lot harder.

Only about 10% of sellers that decide to do FSBO are successful at it. And not all of them end up saving themselves money. FSBO sellers often end up accepting a lower price for their home than they would with an agent.

There are of course other issues as well. Can you afford to make selling your home your full-time job? Because for a lot of FSBO sellers, that’s exactly what it is. Do you have the time and capital to spend on the marketing, advertising, inspections, paperwork, phone calls, showings, and problems that come up when any home is sold?

Selling with a professional agent also has other advantages. An agent can get your home listed on the MLS (Multiple Listing Service) and other popular websites where not only homebuyers but also other agents can easily find it. Professional real estate agents also have an extensive network that allows them to more easily find a buyer.

So before you decide to sell your home yourself, thoughtfully consider just how much time and effort you can spare for selling your home, as well as how important it is that your home sell sooner rather than later.

Seller Tip #2: Finding the Right Agent

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Not all agents work the same way. The most important attribute of an agent is that he/she is well connected to the real estate industry. He/she should know the market and provide information on past sales, current listings, his or her marketing plan, and at least 4 solid references. In addition, you also want to look for an agent that is honest, assertive, and one that best understands your needs.

Try to go with a local agent. They can better serve your needs because they should be more familiar with the local market conditions, local prices, and what’s hot or not in your community.

Seller Tip #1:Considering Offers

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When reading an offer, keep in mind that you are out to get the best price AND the best terms for you. If you focus solely on the price, you may overlook terms that could be favorable to you as a buyer.

Some terms that may work in your favor:

• higher-than-market-interest in a second mortgage for your home
• the buyer will pay for most or all of the closing costs
• the buyer will take care of any repairs
• quick close - the buyer is pre-approved and ready to close in a timeframe that best suits you
• all-cash deal

When reading through offers, remember to look at the whole package. Take the time that you need to assess what is being offered and if it meets your needs.

Buyer Tip #10:Why You Should Not Make Any Major Credit Purchases

Don’t go on a spending spree using credit if you are thinking about buying a home, or in the process of buying a new home. Your mortgage pre-approval is subject to a final evaluation of your financial situation.

Every $100 you pay per month on a credit payment could cost you about $10,000 in home eligibility. For example, a car payment of $300/month could mean that you qualify for $30,000 less in a mortgage.

Even if you have accumulated enough savings, you should consider not making any large purchases until after closing. The last thing you want is to know that you could have purchased a new home had you curbed the urge to spend.

Buyer Tip #7: Is Buying a Home Still a Smart Plan?

With the burst of the housing bubble, credit crisis, and millions of foreclosures across the country, you may wonder if buying a home is such a good idea after all. However, it’s important to consider all of the facts. The important message to take away from these events is not that buying a home is a bad idea, but that you must be smart about buying your home.

The housing market, like every type of market, unavoidably has its ups and downs. That doesn’t mean buying a home is a bad investment. As a long-term investment, homeownership is still one of the best investments for individual households. Historically, real estate has consistently increased in value, despite shorter periods of depreciation due to local markets and/or national economic conditions. The data shows that homes generally appreciate about 5% per year.

Savings & Investment

Five percent may not seem like a great return on investment, but you have to think about it in the context of the situation. For example, let’s say you put 10% down on a $200,000 house. That’s a $20,000 down payment, or initial investment. At a 5% annual appreciation rate, your $200,000 home would gain $10,000 in value during the first year. Earning $10,000 on an investment of $20,000 is a whopping 50% return.

For further perspective, let’s say instead of spending that $20,000 on a down payment, you invested it in the stock market. With a 5% return, you would gain only $1,000 in profit.

Buyer Tip #6: Importance of Inspection

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As a buyer, you are entitled to know exactly what you are getting. Don’t take anything for granted, not even what you see or what the seller or listing agent tell you. A professional home inspection is something you MUST do, whether you are buying an existing home or a new one. An inspection is an opportunity to have an expert look closely at the property you are considering purchasing and getting both an oral and written opinion as to its condition.

Beforehand, make sure the report will be done by a professional organization, such as a local trade organization or a national trade organization such as ASHI (American Society of Home Inspection). Not only should you never skip an inspection, but also you should be present with the inspector during the inspection. This gives you a chance to ask questions about the property and get answers that are not biased. In addition, the oral comments are typically more revealing and detailed than what you will find on the written report. Once the inspection is complete, review the inspection report carefully.

You have to demand an inspection when you present your offer. It must be written in as a contingency. If you do not approve the inspection report, then do not buy the home. Most real estate contracts automatically provide an inspection contingency.

Buyer Tip #5: Hot, Normal, and Cold Markets

Hot Market

This is an extremely competitive market and is advantageous to the seller. Sometimes, homes will sell as soon as they are listed or even before homes are listed. Typically, during a hot market, multiple offers will be made on each home and more often than not, homes will sell for more than the asking price. It is even more crucial to be prepared and to be ready as a buyer when the market is hot. It can be easy to get caught up in the bid for a home, but if you are prepared (pre-approved, solid in price range, realistic about your needs), it is easier to remain focused on your housing needs and price range.

Normal Market

In a normal market, there is a fairly large number of homes available and an average number of buyers. This market does not necessarily favor the buyer or the seller. A seller may not have as many offers on their home, but he or she may not be desperate to sell either. Again, it is the buyer’s responsibility to be prepared. During a normal market, the chances to negotiate are higher than in a hot market. As a buyer, you can expect to make offers at lower than the asking price and negotiate a price at least somewhat less than what the sellers are asking.

Cold Market

In a cold market, houses may be listed for more than a year and the prices of houses listed may drop considerably. This market is advantageous to the buyer. As a buyer, you have the time to make an offer that works to your best interest. It is not uncommon to low-ball and to find that sellers are accommodating to meet your needs. Keep in mind that even though this market is a great time for buyers, you do not want to lose your dream home by being unrealistic. Your goal is to get your dream home at the best possible price.

Buyer Tip #4: Getting a Legitimate Lender and Getting Pre-Approved

It used to be that buyers could go house shopping and when they have found their dream home, then they go to get pre-approved. However, in today’s market, that has proven to be one of the least effective methods in landing the dream home.

Most lenders can pre-qualify you for a mortgage over the phone. Based on general questions about your income, debt, assets, and credit history, lenders can estimate how much mortgage you qualify for. However, being pre-qualified and pre-approved are different things. Pre-approval means that you have applied for a mortgage; you have filled out the mortgage application, received your credit report, and verified your employment, assets, etc. When you are pre-approved, you know exactly what the maximum loan amount will be.

A pre-qualified letter is not verified and in essence, does not count for much if you are competing with other buyers who are pre-approved. When you are pre-approved, you and the seller know exactly how much house you can afford. It gives you credibility as an interested buyer and lets the seller know immediately that you will qualify for a loan to buy their property.

In addition to being pre-approved, it’s important to be pre-approved with a legitimate lender. Legitimate lenders include: banks, mortgage bankers, credit unions, savings and loan associations, mortgage brokers, and online lenders.

Some lenders to avoid: those who lose a form or misplace a file, those who gather information from you in an unorganized manner, those who are not informed about interest rates, points or costs, and those who cannot provide you with the right information.

Buyer Tip #3: Finding the Right Seller

The best seller is one who is highly motivated. A highly motivated seller is more likely to sell at a price that is less than his or her house is actually worth. And it matters that you find out why. Learning the reason why can help you get the price you want and help the seller get what they want: a timely sale.

When given the opportunity to meet with sellers, ask them why they are selling. The reason could be anything, such as a job change to a new location or financial problems. If you can solve their problem, whether it is cash related or time related, do so. For example, if the sellers are highly motivated because they need to move quickly, give them a fast sale - and a lower price. If you can make an offer, even a low one, that gives them cash in a short time, they are more likely to accept.

There are also some sellers that you should avoid. Not every seller is as genuinely motivated as they make themselves to be. Some possible hints:

• they stall on having the home appraised or inspected
• they are unable to clear up liens against their property
• they do not own 100% of their property
• they push back the move-out date
• they do not have a replacement property or back up plan
• etc.

It is impossible to find the perfect seller. But it is possible to find out which sellers are legit and which ones aren’t.