Be Faithful

Many buyer’s now-a-days shop for homes online; and then when they find one they are interested in, they will reach out to a real estate agent – be it one they know, one they were referred to, or one of the several agents listed as a contact agent for that online listing. The latter is where it is easy for a buyer to fall into a trap – a trap where they end up writing an offer with one of those “contact agents” and not with the agent they were initially working with.

Did you know that when you do the contact agent or the request more information form on one of the many home search engines available on the internet, it does not go directly to the listing agent? The request goes to every agent that was listed under that contact request form, along with the listing agent – meaning that you could have up to six different agents pressuring you into viewing and writing an offer 91774-8ef9eon either the property you requested information on or other properties currently available on the market.

This is all well-and-good if you have not already been working with an agent – you get to choose the best agent for you this way, or the first one that contacts you. But, if you have been in contact with an agent, one who has been sending you listings, showing you properties and getting you into contact with lenders and other contacts, it can cause an uncomfortable and even a frustrating situation – one that is upsetting to the agent you were already working with, the agent who has already put in the time and energy to assist you in purchasing your next home.

When you are shopping around online and see a house that intrigues you, reach out to the agent you have already been working with. They are able to pull up that very same listing on the multiple listing service and find out even more information regarding that listing – information that is not available on public websites. They can also find out who the exact listing agent is and reach out to them for more information. Your agent is also able to show the listing to you as well. Many times, it feels like a “slap to the face” for that agent.

If you do end up filling out the request information form, do not let agents push you into viewing and writing an offer. Just let them know that you were just looking for more information and are already working with an agent. That agent should not mind, but if they continue to push you – hang up and let your agent know.

Some tactics that I have seen or heard about some of these agents doing is baiting buyers into making a commitment with them – through scare tactics (this listing will not last long, so you must view it and write an offer today), by stating that since they are the listing agent you are only allowed to go through them to view and write an offer, or by saying negative things about the agent the buyer is working with (evening knowing that some statements are false).

Overall, just stay loyal to the agent you have already been spending time with. They have become familiar with what you are looking for, what your style is, and have come to know you as a person – each important characteristics when searching for a home.

Helpful Tips for Home Buyers

Buying a new home can be a daunting experience – especially if you are new to the game. With the market making the transition into a seller’s market due to the low inventory and the abundance of buyer’s out there, the home shopping venture can become frustrating. In this type of market, it is even more important for buyer’s to have that ever so important pre-approval letter in hand from their lender, and to be ready to pull the trigger when they

do find a house worth writing an offer on. Outside of that, there are others tips for buyer’s that are important to remember before and during the home buying process:

  • SAVE MONEY. In order to be a successful homebuyer, you will need to begin saving money in order to hep cover your down payment and closing costs. Savings also demonstrate to a lender that you have the capacity to be a successful borrower
  • DO NOT ENTER INTO NEW DEBT. The more debt you have, the less you can borrow to buy a home.
  • STAY CURRENT WITH EXISTING PAYMENTS. Make sure you pay all your bills on time. Any late payments will show up on your credit report and may disqualify you as a borrower. If you can, pay extra on credit card payments to reduce your debt and interest expense
  • GET A FREE COPY OF YOUR CREDIT REPORT AND CLEAR UP ANY ISSUES. The credit report shows your debt payment history and tells the lender if you are a good borrower. Review your credit report to see if it is accurate.
  • ADJUST YOUR BUDGET TO REFLECT THE ADDITIONAL COSTS OF HOMEOWERNSHIP. Even though you may qualify for a high loan amount, take time to consider the additional expenses that come along with becoming a homeowner – things like water, sewer, garbage, and maintenance costs

Buyers and Sellers Wish They Would’ve Done Sooner….

Due to the limited inventory on the market, listings seem to be flying off the shelf – especially within a certain pricing bracket.

With the spring home buying season upon us, we are expecting the market to become competitive. Based upon research conducted, when it comes to Home-For-Salethese competitive markets, both buyers and sellers had wished they had prepared a lot sooner.

Over 13,000 people were surveyed and it was found that sellers regretted not preparing their home for selling and buyers regretted not starting their property search sooner.

Zillow Groups chief marketing officer, Jeremy Wacksman, stated that “this spring, both buyers and sellers should be prepared for fast-moving sales, intense negotiations, and even bidding wars.”

Here are a few important tops for home buyers:

  • Keep options open
  • Have a realistic budget
  • Arrange a mortgage in advance

Overall, whether you are selling or purchasing, choosing a good real estate agent is important.

TENANTS! Simple 123 of Home Buying

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Interest rates are low and affordable, and there are plenty of loan programs out there. There are also plenty of people out there right now who are making the step towards home ownership from renting. If you are unfamiliar with the logistics of finding your own home, it is as simple as the following (it’s your agent and lender who do most of the work):

  1. Get qualified for a loan – you can compare that to how much you want to pay per month
  2. Find a real estate agent who will listen to your wants and wishes – and who will send you addresses to go by (these properties meeting your parameters). The agent will then show the properties that you would like to see on the inside, all with no obligation
  3. When you find “that” property, which is within your financial parameters, it is time for negotiations
  4. Once negotiations successfully come to a close, within 30 to 60 days from that point, you will be a proud owner of something that can last and add to your estate for you and your family

Contract & Negotiations

Follow up negotiations may be necessary during your offer consideration period. The seller could take a number of steps in response to your offer, such as: Accept it AS IS, reject it AS IS, counter specific changes to the offer, counter multiple offers with the same or different changes to each offer.

Each contract and offer is different. Deal points will take into consideration both parties financial positions, diligence in investigation of the property, timing of the escrow and moving necessities.

Once both parties are able to find common ground on deal points and the offer is fully accepted and executed, it will be time to open escrow.

Financing Your Home Purchase

Lender, banks, and other loan sources take into consideration a combination of items when determining whether or not to loan you money:

  • Current income
  • Length of time at your current job
  • Debt-to-income ratio
  • Past rent or mortgage payment history
  • Your credit report
  • Tax returns
  • Down payment amount
  • Months of reserve money

Your income level, debt and credit information will be used to pre-qualify you for an amount the lender thinks you can afford. A pre-approval takes into account your credit report, the debt-to-income ration and a more in-depth analysis of your financial situation. Once pre-approved, you will receive a pre-approval letter that can be provided to a seller with an offer.

A pre-approval can provide a more definitive price range for your search and is best completed as a first step.

There are benefits to obtaining a mortgage on your home. These benefits can help you decide if it is the right time for you to buy, and provide other values such as the mortgage interest deduction to offset income against your taxes or making mortgage payments as an investment into building your wealth.

Once you have identified a property for purchase, and have an accepted offer, the lender will begin processing your loan. They will take into account other factors impacting an approval:

  • The preliminary title report
  • Any homeowners association dues
  • An appraisal report
  • Homeowner insurance payments
  • Property taxes

The combination of your financial profile and the property gives the lender a complete picture of the risks and benefits of providing you with the loan. Once all these items are reviewed and approved through the escrow process you will be in the home stretch for closing on your new home.

Is It The Right Time to Buy?

Deciding when to buy a home is a personal, financial, and emotional decision. Exploring the idea, stages and requirements involved in home buying is a good first step to making the right decision.

RENTING VS. BUYING. It is important for your mortgage or rent payment to be manageable, but take into consideration the mortgage interest deduction, or the emotional comfort of having your own home.

CURRENT INTERET RATES AND HOME PRICES. The market is cyclical and the value of owning a home isn’t just in the equity you build, but also in the memories you build.

YOUR FINANCIAL STATUS. You should consider all costs involved: Down payment requirements, mortgage payment, homeowners insurance, property taxes, association dues, etc.

FUTURE PLANS. There are options of what to do with your property in the short or long term, like living in it, renting it or selling it. These options will depend on future market values and if you are planning to expand your family, or eventually move.

BUILDING WEALTH AND INVESTING IN YOUR FUTURE. You will build equity in your home over the long run by paying down your mortgage or realizing an increase in value when you sell.

THE COMFORT OF A HOME. It is a place to create a comfortable environment, a place for family and friends, and a place to create memories.

Rules to Investing

Rule #1: Buy to hold forever. Buying for the short-term means that you have to be able to predict markets. The rich buy and never sell

Rule #2: No negative cash flow. It costs about 40% of market rents to run a building effectively. If you own an “alligator”, you must be depending on appreciation – so see rule #1

Rule #3: No adjustable or variable note mortgages. They go up and cause negative cash flow. See rule #2

Rule #4: No balloon payments. They cause you to have to re-finance in an unknown mortgage market, and you will be stuck with a variable loan. See rule #3

Rule #5: Buy in areas where you don’t have to collect rents with a gun. Who needs the pain?

Rule #6: Buy local. When you buy out of state, you are going to pay $45 to change a light bulb

Sixteen Mistakes Investors Can Avoid

  1. Not determining what your goal is. Talk to your real estate agent about cash flow, capital appreciation, tax benefits, ease of management, equity pay down, or pride of ownership (sometimes these items are mutually exclusive)
  2. Believing the seller’s or the seller’s agents numbers. Check everything: Rent, income, taxes, expenses, deposits, lease expirations, etc. Hype is an epidemic in investment real estate
  3. Not joining your local apartment association. The best local source of forms, pending laws, procedures, and education on investment property
  4. Forgetting you’re buying a business. Owning an investment property carries with it great responsibility and potential, along with the very difficult decisions – evicting tenants, who to rent to, whether or not to make that improvement, etc. Remember it’s not hands-off investment. It’s easy to forget this during times of appreciation
  5. Being emotional. An emotional purchase is not always your best investment. Pay attention to the numbers, not necessarily to your heart
  6. Buying negative cash flow. Unless you know there will be constant appreciation, don’t buy investment property that eats like an alligator – it’s no fun. It may cause you pain and force a sale before the benefits of appreciation can be seen
  7. Agreeing to balloon payments. Here is a stress inducer – long-term investment goals financed with short-term  instruments, a classic investment mistake. You should own real estate for long term; with long-term real estate investments, you find long-term financing
  8. Not doing a thorough inspection. Look at every system. Hire a professional inspector and ask the tenants questions about the property. Don’t get lazy on this one
  9. Not getting estoppel letters. Get letters rom tenants confirming the statistics of tenancy. Make sure their story agrees with seller’s interpretation. Ask hard questions. If the seller won’t give the answer, get them from the tenants
  10. Inspect, approve, and confirm all documents after the close. Get the building permits, zoning laws, rental applications and leases, by-laws, easements, title policy, mineral leases, inspection reports, purchase contract, insurances, rules and regulations, note, trust deed, mortgage, etc.
  11. Not getting a bill of sale. There are many different types of personal property (appliances, fixtures) involved in an investment sale. Make sure you know who owns the pieces of personal property, then prove you do after the close
  12. Have adequate insurance at close. Get a professional insurance agent to make sure you are covered. Tenants and their guests bring liabilities
  13. Treat your tenants as customers. Vacancies and turnovers are your largest expense. Change fair rents and attend to realistic tenant needs immediately
  14. Not selecting qualified tenants from the start. Check references from previous landlords, employers, bankers, and friends. Check credit, bank balances and judgments. Drive by where they currently live. A little work up front can save 95% of your problems later
  15. Not renting right. Too low rent costs money, but it can cut turnover and can decrease vacancies. High rent increases cash flow and the value of the building, but can increase the vacancy factor and turnover
  16. Spending positive cash flow. Remember successful investors have free and clear properties. Apply your cash flow to the payment and speed up that amortization schedule

These are the sixteen most common mistakes that investors often make but can easily avoid with a little foresight.