Email : [email protected]
Direct : (626) 354-2813

Blog

Breaking Down the Offer

by

 

For a seller who has had their house on the market for some time, receiving a call about an offer can be a thrilling experience. Initially, there’s a rush of excitement, but then reality sets in, and worries about the offer not meeting expectations start creeping in.

Agents typically refrain from disclosing the price offer over the phone because there are numerous other factors to consider beyond just the price, such as contingencies, seller concessions, and real property requests.

It’s crucial not to solely focus on the price; instead, carefully examine the entirety of the offer, particularly considering how much net profit you stand to gain.

Your agent should be capable of explaining the different sections of the contract, but having prior knowledge of real estate contracts is advantageous. While specifics may vary by state, the general structure remains similar.

Here are the fundamental components you can anticipate in a contract:

  1. Earnest Money Deposit: This deposit demonstrates the buyer’s sincerity and is often held by a third party like an escrow, attorney, or broker’s trust account. It’s typically applied towards the downpayment and returned to the buyer if the sale falls through.

  2. Purchase Price: While this is of primary interest, it’s essential to consider what else the buyer is proposing.

  3. Mortgage Contingency: This contingency outlines the terms of the buyer’s loan, including the term, rate, and time limit, which must be analyzed carefully to ensure realism and prevent being tied up unnecessarily.

  4. Seller Concessions: Buyers may request various concessions, especially in less competitive markets, though in hot markets, these requests tend to be minimal.

  5. Inspection Contingencies: These allow buyers to back out if inspections reveal significant issues, and they should be reasonable.

  6. Personal Property: Buyers can request items physically attached to the house, while sellers can specify items to be removed before closing.

  7. Appraisal Contingency: This ensures that the house’s appraised value meets the sale price, which can be complicated if there are significant concessions involved.

  8. Buyer Selling Property Contingency: This applies when the buyer needs to sell their property first, potentially prolonging the process. A kick-out clause can protect sellers from extended delays by allowing them to continue marketing the property if another offer arises.

Determining Your Net Profits

by

 

When selling your home, it’s essential to recognize that you won’t take home the full sale price due to various fees and deductions. These expenses, which can amount to as much as 7% of the sale price, include commissions, taxes, and miscellaneous costs.

Determining your net profit involves understanding and accounting for these deductions. Your real estate agent will provide you with a Seller’s Estimated Net Proceeds worksheet upon receiving an offer. This document outlines all the costs that will be subtracted when you close the sale.

Here are some typical costs deducted from the sale price, though they may vary depending on your state:

1. Mortgage payoff balance, encompassing your home loan, second mortgages, and home equity lines of credit.
2. Loan payoff fee, an administrative charge from your lender to close your loan.
3. Lien release document fees for settling outstanding obligations like contractor payments, court judgments, or property taxes.
4. Prepayment penalties, if applicable for paying off your loan early.
5. Recording fees to show previous loans have been paid.
6. Commissions for agents, which is negotiable.
7. Notary fees for document verification.
8. Escrow fees for the protection of funds during negotiations.
9. Title search fees to ensure the property is free of issues.
10. Seller concessions, where a portion of the sale price is returned to cover the buyer’s closing costs.
11. Repair costs, either required by the buyer or lender.
12. Home warranty payments requested by the buyer.
13. Termite letter fees, if required by state regulations.

It’s crucial to consult your real estate agent to anticipate and prepare for any additional costs not mentioned here. This proactive approach ensures a smoother transaction and helps you accurately estimate your net profit from the sale.

Helpful Tips for Showing Your Home

by

 

To ensure a swift sale of your home at an optimal price, it’s crucial to enhance its appeal to potential buyers. Here are twenty effective strategies to achieve this:

Preparation:

  • Begin by focusing on the exterior since it forms the initial impression for buyers. Maintain a well-groomed lawn and ensure pathways are clear of debris, ice, and snow. A clean front door enhances the welcoming ambiance.
  • Address any signs of wear such as faded paint or worn wood, as these can detract from your home’s perceived value. Investing in new wallpaper can yield returns. Redecorating efforts can significantly elevate your home’s marketability.
  • Maximize natural light to create an inviting atmosphere; draw back curtains and let sunlight flood in at no extra cost.
  • Attend to necessary repairs promptly, fixing loose knobs, sticking doors, and other minor issues that can undermine the impression of upkeep.
  • Optimize space perception by decluttering utility areas like the attic and basement. Light-colored paint can further enhance the sense of spaciousness.
  • Prioritize safety by removing any potential hazards, particularly on staircases.
  • Organize storage spaces like closets and cabinets neatly to create the impression of ample storage capacity.
  • Ensure bathrooms are clean and well-lit, with functioning faucets.
  • Present bedrooms as tidy, appealing sanctuaries with fresh bedspreads and laundered curtains.
  • Confirm that all lights are operational, creating a warm and inviting atmosphere, especially during evening viewings.

Showing:

  • Limit the number of people present during tours to avoid overwhelming potential buyers.
  • Soft, ambient music can enhance the viewing experience, provided it doesn’t overshadow conversation between the agent and buyers.
  • If you have pets, keep them out of sight during viewings to minimize distractions.
  • Be courteous and accommodating, allowing buyers space to explore and form their impressions without feeling pressured.
  • Avoid apologizing for any perceived flaws in your home; allow your agent to address concerns professionally.
  • Trust your agent to highlight your home’s strengths and navigate negotiations effectively.
  • Refrain from disposing of furniture or furnishings until a sale is finalized.
  • Schedule viewings exclusively through your agent to ensure a professional and controlled showing experience.

Co-buying a House

by

Owning a home is a big deal, right? It’s like the ultimate goal for many folks out there. But let’s face it, it’s not exactly pocket change. Sometimes, even with all the determination in the world, you just can’t muster up enough cash or get the right funding to make that mortgage dream come true. Enter the idea of co-buying.

You know, teaming up with a friend or family member to make it happen. It’s like pooling your resources to snag that perfect pad. Brian Free shared his experience with U.S. News & World Report, talking about how teaming up with a buddy helped them both land a place in a great neighborhood. They couldn’t swing it solo, but together? Piece of cake.

Of course, going halfsies on a house with someone you know comes with its own set of risks. But fear not! There are ways to navigate these murky waters and minimize the chances of things going south. It’s all about careful consideration and planning.

First things first, let’s talk titles. How you hold title can make a world of difference when it comes to legal stuff. If you’re not tying the knot with your co-buyer, you can go the route of tenants in common (TIC) or joint tenants with right of survivorship (JTWROS). Married couples have a couple more options like community property or tenancy by the entirety.

Now, let’s break down TIC versus JTWROS. With JTWROS, it’s all about equality. Each owner has an equal stake, and if one owner passes away, their share automatically transfers to the surviving owner(s). Simple enough, right? TICs, on the other hand, can be a bit more complex. Shares might not be equal, and when one owner passes away, their share doesn’t automatically go to the others. Instead, it can be willed to whoever the owner wants. If things get messy, TICs can be dissolved or the property sold through legal action.

But hey, there are some common threads between TICs and JTWROS. Both give co-owners rights to the property, and when it comes time to cash in, everyone gets their fair share.

Now, let’s talk about laying down some ground rules with a co-ownership agreement. This document is like the holy grail of co-buying. It spells out who owns what, how expenses are split, and what happens if someone wants out.

Speaking of expenses, it’s crucial to figure out how ongoing costs are divided. Mortgage payments, property taxes, utilities—you name it. These should all be outlined in your co-ownership agreement. Maybe you split it based on ownership shares or who’s putting in the elbow grease on maintenance.

And what if one co-owner wants to sell? Well, they can’t just go rogue. The other co-owner has a right to step in and buy their share first. It’s like a built-in safety net to keep things fair and square.

So there you have it, folks. Co-buying can be a game-changer for getting your foot in the homeownership door. Just make sure you’re on the same page with your co-buyer and have all your bases covered. Happy house hunting!

Buyers, Get an Edge During The Busy Spring Season

by

 

Typically, spring and summer mark the peak seasons in residential real estate. Many families seize the opportunity presented by the favorable weather and their children’s summer break to embark on their house hunting journey. However, it’s worth noting that in most regions, spring is synonymous with higher housing prices due to increased demand. Consequently, the market becomes saturated with buyers, intensifying the competition.

Here are some strategic steps you can take to gain an edge over other buyers:

1. Engage Early with Real Estate Agents: If you’re considering working with a real estate agent, it’s wise to start the process early. Take the time to interview three to four agents and also reach out to their references. Once you’ve made your selection, communicate your preferences clearly and comprehensively. Being specific and detailed about your requirements will streamline the search process.

2. Obtain Pre-Approval for Your Loan: Getting your loan pre-approved ahead of time serves multiple purposes. It not only reduces your workload by eliminating one task but also provides you with a clear understanding of your borrowing capacity. This knowledge prevents you from wasting time considering properties beyond your financial reach. Additionally, submitting an offer with a pre-approved loan signals to sellers that you’re a serious contender.

3. Determine Your Down Payment Capability: Assessing how much you can afford for a down payment is crucial. According to NAR, first-time buyers typically contribute around 6 percent towards the down payment, with a notable portion sourced from gifts. If this isn’t an option for you, explore loan programs that accept lower down payments, ranging from 5 to 3 percent. Additionally, be prepared for closing costs, which typically range from 2 to 7 percent of the property’s cost.

4. Stay Available for Your Agent’s Notifications: In a competitive market, timing is crucial. Be prepared to act swiftly when your realtor identifies a promising property that aligns with your criteria. Once you’ve assessed its potential and determined it’s a sound investment, promptly submit an offer.

5. Consider the Potential of Properties: While some aspects of a property are immutable, such as its location and basic layout, others can be altered to suit your preferences. Don’t dismiss a house outright due to superficial factors like paint color or carpet design. Visualize the space with your desired furnishings and décor to gauge its true potential.

6. Navigate Seller’s Markets Strategically: In a seller’s market, seek guidance from your real estate agent regarding offer amounts. If competition is fierce, consider offering above the listing price to enhance your chances. Avoid making demands for extended closing dates or additional concessions, such as carpet allowances, which could weaken your position.

7. Initiate Planning for Home Insurance: It’s never too early to start considering your insurance needs. Begin by verifying the accuracy of your credit report, as it significantly influences insurance coverage and premiums. Obtain a loss history report, such as a CLUE report from ChoicePoint or an A-PLUS report from Insurance Services Office, to assess any prior insurance claims. Maintaining a positive insurance history, particularly if you’ve previously held renter’s insurance, can enhance your prospects when applying for coverage for your new home.

Determine How Much You Can Afford

by

 

When you’re gearing up to buy a house and you turn to lenders to sort out your finances, it’s easy to wonder: do they really get what I can afford? Sure, they’ll crunch numbers based on your income and expenses, but they don’t have the full picture of your spending habits. Only you know if your income can comfortably cover your lifestyle, including housing costs and all the extras like new furniture, appliances, and maintenance.

Now, let’s talk about the magic numbers lenders use. You might have heard of the 28/36 rule—it’s kind of like the golden ratio in the mortgage world. Basically, lenders typically cap your housing expenses at 28 percent of your gross monthly income, and your total debt load (including things like credit card payments and car loans) at 36 percent.

Up in Canada, they’ve got a similar setup. Buyers can usually borrow up to 32 percent of their gross monthly income, with a total debt load not exceeding 40 percent.

But here’s the kicker: with interest rates on the rise, lenders are starting to loosen the reins a bit. Some are willing to stretch that housing loan to as much as 50 percent of your gross monthly income. Sounds tempting, right? But before you jump on board, take a step back and really think about whether you can handle it in the long run.

It all comes down to knowing your spending habits inside and out. Are there areas where you can tighten the purse strings to make room for that mortgage? After all, it’s not just about keeping a roof over your head—it’s about having peace of mind and keeping your home in tip-top shape. So do some soul-searching, evaluate your finances, and make sure you’re setting yourself up for success. Your future self will thank you!

Exterior Improvements Give You More Bang for Your Buck

by

 

Enhancing the exterior of your home is crucial as it forms the initial impression on potential buyers, sparking their interest in your property. Investing in exterior improvements is a prudent decision, as highlighted in Remodeling Magazine’s 2009-10 Remodeling Cost vs. Value Report, where six of the top ten remodeling projects were focused on outdoor enhancements. Realtors nationwide were surveyed for this report, demonstrating the widespread significance of exterior upgrades.

Even minor alterations, such as replacing a steel door for approximately $1200, can yield remarkable returns, surpassing 120% of the initial investment upon resale. Similarly, attic bedroom conversions costing $49,350 typically recoup about 83% of the expenditure, while adding a deck returns approximately 80% of the investment.

Outdoor improvements are favored due to their cost-effectiveness and significant impact on a property’s curb appeal. Typically costing less than $15,000, these upgrades significantly enhance the attractiveness of a home, a crucial factor in its saleability. Among the top ten projects in the report, midrange outdoor endeavors such as deck additions, vinyl siding replacements, and door replacements rank prominently.

Moreover, exterior improvements contribute to energy efficiency and can qualify homeowners for tax credits under the American Recovery and Reinvestment Act, further enhancing the financial benefits. Upgrading windows, roofs, and siding not only reduces energy costs but also enhances the marketability of the property.

While kitchen and bathroom renovations are valuable investments, moderation is advised to avoid overspending. A midrange kitchen remodel, costing $21,410, typically recovers about 78% of its expenditure upon resale. Conversely, a major renovation at $57,215 yields approximately 72% in returns.

In upscale properties, major kitchen remodels at $111,800 typically recoup around 63% of the investment, while bathroom renovations costing $52,300 yield slightly over 61%.

However, improvements in home offices or sunrooms tend to offer lower returns, typically around 50% of the construction costs.

Buying a Home With Loans from Family and Friends

by

 

Seeking a home loan from a friend or family member can be challenging, even when you’re close. The financial stakes are significant, and chances are you interact frequently, adding pressure to the dynamic. Rejection could strain your relationship. However, presenting a case that demonstrates mutual benefit can lead to a positive outcome.

Approaching the Loan Request

Thomas Fox, Cambridge Credit Counseling’s community outreach director, advises treating a private home loan request with the same seriousness as a bank mortgage. Before broaching the topic with a relative or friend, prepare a thorough plan or proposal.

“Borrowers must realistically assess their repayment capacity and avoid overborrowing. Treat it as any other loan and be practical,” says Fox.

It’s essential to establish a formal agreement for the loan, even if it’s with family members, as missed payments could lead to legal repercussions.

Similarities between Private and Traditional Loans

Private home loans, also known as intrafamily mortgages, resemble bank loans in many ways. Both parties sign a promissory note detailing the terms, including the borrowed amount, interest rate, and payment schedule. Additionally, a deed of trust grants the lender the right to foreclose if the borrower defaults, securing the lender’s lien on the property.

This structure safeguards borrowers, preventing arbitrary payment demands or foreclosure due to personal reasons from the lender.

Benefits for Borrowers

Negotiating interest rates with a private lender can result in more favorable terms compared to institutional loans. Borrowers can also propose manageable payment schedules. However, it’s crucial to honor the agreed-upon terms to maintain trust.

Federal tax deductions applicable to traditional loans also apply to private home loans.

Benefits for Lenders

Despite potentially lower interest rates, lenders still stand to gain more from private home loans than other investments. The promissory note provides assurance of consistent income based on the agreed terms.

Addressing Missed Payments

Unexpected circumstances, such as job loss or unforeseen medical expenses, may lead to missed payments. It’s essential to communicate openly with the lender to explore modification options, such as adjusting payments or extending the loan term. Ignoring communication from the lender could exacerbate the situation.

10 Things You Should Keep In Mind When Investing In Real Estate

by

When it comes to investments, everyone’s got their own game plan and principles. But there are some key tips that every investor should keep in their back pocket to stack the odds in their favor.

First up, comparison is key. Take a good look at property rates in the area to gauge the value of a potential investment. Check out what similar properties are selling for and what rental fees they’re commanding. Speaking of rentals, keep those fees reasonable to attract tenants—nobody wants to pay through the nose when they could just buy their own place.

Tax laws can be a wild card, so keep an eye on them. Make sure your investments won’t take a hit if the tax landscape shifts.

Stick to what you know. Focus on a market you’re familiar with, whether it’s condos, starter homes, or fixer-uppers. Master one niche before branching out.

Know the costs inside and out. From financial statements to vacancy costs, get a handle on all the expenses before diving in. Knowledge is power, after all.

Speaking of tenants, find out where they’re coming from. If rent just shot up, they might be eyeing the exits. And don’t forget to snag their security deposit while you’re at it.

Taxes can make or break an investment, so get savvy about them. A good tax advisor can be worth their weight in gold when it comes to maximizing your returns.

Insurance is another biggie. Make sure the coverage matches the property’s value to avoid getting burned down the line.

Utility costs can eat into your bottom line, so do your homework. Get the lowdown from local companies to make sure you’re not getting blindsided.

A top-notch accountant is worth their weight in gold. They’ll help you navigate the tricky waters of taxation and keep your finances shipshape.

Last but not least, inspect, inspect, inspect. Don’t sign on the dotted line until you’ve thoroughly vetted the property. Bring in the experts if you need to—better safe than sorry, right?

Alright, there you have it—your crash course in real estate investing. Armed with these tips, you’ll be well on your way to success in the world of property investment. Good luck out there!

Contingencies Your Home Offer Should Include

by

 

As you embark on the home buying journey, you’re making a significant commitment amid numerous uncertainties. Introducing contingency clauses into the contract provides buyers with a sense of security against these uncertainties. These clauses outline specific conditions that must be met before the sale can be finalized.

Mortgage Contingencies: Among the most common contingencies is the mortgage contingency, offering additional assurance to buyers. This clause stipulates that the buyer must secure a particular type of mortgage at or below a specified interest rate for a set portion of the purchase price (typically 80%) by a specified date before the closing. Failure to obtain the loan as per the contingency terms allows the buyer to withdraw from the contract, with earnest money refunded.

Seller Protection: Contingencies not only benefit buyers but also safeguard sellers. If the buyer fails to secure a loan but neglects to inform the seller by the agreed-upon date, they remain obligated to purchase the property, with or without financing. Depending on the contingency, the seller may assist in finding a mortgage for the buyer. To enhance seller protection, setting an earlier deadline or negotiating forfeiture of a significant portion of the earnest money if the buyer fails to secure a loan by the deadline can be considered.

Appraisal Contingency: Working hand in hand with mortgage contingencies, appraisal contingencies serve two purposes: (1) Allowing the buyer to withdraw from the sale if they cannot obtain an appraisal covering the asking price; (2) Providing the buyer with the opportunity to negotiate a lower price if the appraisal falls short. If the seller does not agree, the buyer reserves the right to walk away from the sale.

Inspection Contingency: This clause grants the buyer a designated period (typically 3-14 days) to inspect the property. If significant issues are uncovered during the inspection, the buyer retains the option to withdraw from the transaction.

Additional Considerations: Various other contingencies exist, such as insurance or mold inspection contingencies, with common contingencies differing by state. It’s imperative to carefully review and understand all contract details, including fine print, before signing, as the contract is legally binding, and reversing your decision post-signing is not an option.

HELPFUL LINKS

pages of interest

Forms

Contact us

Copyright © 2025 | MATT HELGANZ

Powered by Intagent