Comet Settlement Real Estate

Of course, you’ve already considered location, so the first step you need to contemplate in purchasing a house for flipping is curb appeal. What does it look like from the street? If people aren’t anxious to buy after driving buy, what chance do you have of making a sale? Curb appeal is everything.

Actually, it’s curb appeal times two. You need to consider what it looks like to you for buying and you need to envision what it’s going to look like to a prospective home-buyer when you sell.

If the outside of the home doesn’t captivate you, then no matter what you do to the inside, you face an uphill battle. I’ve had great houses with great prices . . . and potential buyers barely slowed down as they drove by. You need to believe that with a little work and a little money, you can transform a home from a liability to alluring.

Curb appeal consideration for you:

Latent defects are those hidden or concealed defects that would not be discovered in the course of a reasonable inspection. Latent defects are the opposite of patent defects, which by definition are defects plainly visible or that can be discovered in the course of a reasonable inspection. In real estate, although misrepresentation normally requires a statement to be made to the Buyer silence can also result in some liability on the part of the Seller.

Prior to entering into a Contract to sell real estate the Seller is required to disclose to the Buyer any latent defects the Seller is aware of. Failure to disclose will not affect the consent of the parties, but will have similar consequences as misrepresentation.

Technically speaking, latent defects are facts that :

1) are unknown to the Buyer and are so crucial to the enjoyment and value of the property that the Buyer might not have entered into the Contract had he known they existed and
2) cannot be discovered upon reasonable inspection of the property.

An example of a latent defect in one case was the presence of an underground water culvert which was not apparent from a normal inspection of the land and which the Seller was aware of and failed to disclose. If the Seller does not disclose the existence of a latent defect, the Buyer can rescind the Contract and/or recover damages. Other more typical examples of latent defects are the existence of urea formaldehyde foam insulation or asbestos insulation in a property offered for sale. However, the Seller will not be held liable for failing to disclose a latent defect he was unaware of unless a reasonable person would have been aware of it.

Some latent defects are out of the ordinary but must still be disclosed if known to the Seller. For instance, properties rumored to be haunted are one such example, as is a property previously used as a site for a marijuana grow operation. In one recent court case, a luxury condominium where someone had committed suicide was held as a property with a latent defect that the Seller had a duty to disclose to the Buyer. These are known as ’stigmatized properties’ because they are associated with a ’stigma’ , an unusual, distressing event or circumstance such as murder, suicide or criminal activity. These properties may be worth less or could be hard to resell because prospective Buyers might not consider them. As such, the market for stigmatized properties is drastically reduced - and so is their value.

Luigi Frascati

Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real Estate Chronicle at http://wwwrealestatechronicle.blogspot.com where you can find the full collection of his articles. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton-Centre Realty in Burnaby, BC.

[tags]real estate chronicle, real estate,economics, latent defects,finance[/tags]

Tags: economics, finance, latent defects, real estate, real estate chronicle

So why should you invest in foreclosures? In the long-term, it’s for lifestyle and financial freedom.

I do not define success in terms of winning or losing, but rather by whether I am challenging myself to be the best that I can be. One of the reasons I left my 9-5 corporate job, besides getting laid off, was because I wanted MY OWN lifestyle. I wanted to create my own lifestyle for me, my family, and my friends. I wanted to become a champion, the best at what I did. I believe that anything I set my mind to, I would be successful at that endeavor.

However, my biggest problem in working for a company where I was not the boss, the president, or the owner, was that I could not set my own schedule. I would not be able to go skiing when I wanted, play golf, or travel when I wanted. I was a terrible employee because I wanted to do things when I wanted to do them. And today I don’t want to be accountable to anybody, except myself and my family, and the people that are counting on me to create real estate transactions.

Don’t get me wrong. I was pleasant at my jobs, and I showed up, and I produced revenue. But the reason that I think I was a terrible employee was that I only wanted to work just 2 to 3 weeks a year. To me, a JOB means Just Over Broke and my time was not my own time, it was my boss’ time.

When I first started in the real estate investing business I had to ask my wife to give me a chance to make this work. I had a severance package, so I had three months to move forward. When we cashed the first check of $8,000, I took $4,000 and took my wife to Paris, a place she always dreamed of going. That helped tremendously in my pursuit of this business.

Now that I have established my business I take off one week for every six weeks of work. This gives me five to eight weeks of vacation per year depending on how my deals are going. I use this time to connect with my family, vacation, work on other projects, and just go out and enjoy life because isn’t that what it’s all about? If you’re working so hard that you’re not enjoying life then you need, in my opinion, to rethink your priorities.

My 15-yr-old son Nick and I go to hockey games, football games and other things that a 15-year-old and his dad can do together. My 6 year old daughter Chloe and I go skiing in the Rocky Mountains of Colorado where we live and we do it 10-15 times a year. We go camping, take motor home trips, fly to Maui to go to the beach and much more. This is truly a life that I am designing.

My belief is we should constantly have to better ourselves, to acquire new skills, to refuse to be bogged down with the feeling of failure, inadequacy, or that L word–loser. In my opinion, the losers of the world are those that never try. I would rather work with somebody who has tried 10 different businesses and failed than somebody who has worked 30 years successfully for one company and achieved moderate success.

When are you finally a financial success? Only you can answer that question for yourself and your family but to me the answer is when you can totally financially support yourself without having to show up for work. When you can do whatever you want, whenever you want, with whomever you want, anywhere you want, anytime you want to do it, as much as you want to do it, then you have reached financial success. That is the time that passive income is really working for you and your dreams are becoming a reality.

_________________________________________________

Paul Wells has been investing in foreclosures full-time for more than 5 years. For more foreclosure investing secrets like the one in this article, subscribe to Paul’s Free Foreclosure Investing course here: http://www.FreeForeclosureInvesting.com

[tags]foreclosure investing, real estate, real estate investing, bank foreclosures, forclosure, forecloser[/tags]

Tags: bank foreclosures, forclosure, forecloser, foreclosure investing, real estate, real estate investing

We all are thinking about it and some of us are actually taking action and getting their hands on real estate investment properties. The longer the NY Stock Exchanges doesn’t produce desirable returns the more people are starting with real estate investments.

For most of us the obvious choice of properties are single family homes. Although you can invest in real estate without owning a home, most people follow the experience they made while purchasing their own home. This is familiar ground and the learning curve for doing a real estate deal of this type is pretty slim.

Of course there’s a drawback with this approach. The competition is fierce and there are markets where investors are artificially driving up the cost of the properties while completely discouraging first time home buyers. If this is the case, the burst of the real estate bubble is just a matter of time.

How do you avoid these situations and still successfully invest in real estate? How do you get ahead of the competition and be prepared for bad times in real estate investments as well? The only answer I have is commercial real estate.

Why commercial real estate you might ask? Commercial real estate is a solid investment in good and bad times of the local real estate market. The commercial real estate I’m referring to are multi unit apartment buildings.

Yes you will become a landlord and No you don’t have to do the work by yourself. You are the owner and not the manager of the apartment building. The cost of owning and managing the building is part of your expenses and will be covered by the rent income.

Apartment buildings are considered commercial real estate if there are 5 or more units. To make the numbers work you should consider to either own multiple small apartment buildings or you should opt for bigger buildings. This will keep the expense to income ratio at a positive cash flow. Owning rental properties is all about positive cash flow.

With investing in single family homes it is easy to achieve positive cash flow. Even if your rent income doesn’t cover your expenses 100%, the appreciation of the house will contribute to the positive cash flow. With commercial real estate the rules are different.

While single family homes are appraised by the value of recent sales of similar homes in your neighborhood, commercial real estate doesn’t care about the value appreciation of other buildings. The value of the property is solely based on the rent income. To increase the value of a commercial real estate you need to find a way to increase the rent income. The formula on how this is calculated would be too much for this short article. I listed a few very helpful books where you can find all the details.

What’s another advantage to invest in commercial real estate? Commercial real estate financing is completely different than financing a single family home. While financing a single family home you are at the mercy of lenders who want to make sure that you are in the position to pay for the house with your personal income. Commercial real estate financing is based in the properties ability to produce positive cash flow and to cover the financing cost.

After reading all these information about commercial real estate you want to go out there and dive into the deals. Not so fast. First, you need to learn as much about real estate as possible. In commercial real estate you’re dealing with professionals. If you come across too much as a newbie you will waste these guys’s time and your commercial real estate career ended before it actually started. Second, no commercial real estate lender will lend you any money if you can’t show at least a little bit of real estate investment experience.

What’s the solution to this? Go out there and do one or two single family home deals yourself. It doesn’t matter if you make huge profits to start off with. Most newbie investors are loosing money on their first deal anyway. If you can manage to show positive cash flow with your single family home deals you are ahead of the pack.

My advice, buy a small single family home in a decent neighborhood and rent it immediately. This will keep your out of the pocket expenses at a minimum and you will have rent income to cover for your monthly expenses. Bonus, you gain experience as an investor and as a landlord.

Here’s another observation I made during my real estate investment career. Most people like to analyze, learn, discuss and analyze some more. They never actually got to do a real estate deal. They love to talk about real estate investments, but never did it themselves.

My approach to real estate investment was simple.

- I bought some books about real estate investment.

- I read every single one of them.

- I put together a simple plan on how I want to get started.

- I started looking for properties.

- I bought my first investment property 30 days after I started reading my first book.

- I made positive cash flow with all of my properties so far.

What is my point? You have to go out there and practice what you’ve learned. The only valid credential in the real estate business is practical experience. Having a couple of deals under your belt, you can go out there and start looking at commercial real estate and even impress seasoned investors with your knowledge. Because you made this experience by yourself and you know what you’re talking about.

Book reference for commercial real estate investments:

Gary W. Eldred, PhD: “Make Money with Small Income Properties”

Jack Cummings: “Real Estate Financing and Investment Manual”

You will find these books and many more on my real estate investment website at http://www.suncoastrenttoown.com/author_directory.htm

Sincerely,
Peter Dobler

Peter Dobler is a 20+ year veteran in the IT business. He is an active Real Estate Investor and a successful Internet business owner.
Learn more about real estate investments at http://www.doblerproperties.com or send a blank email to mailto:suncoastrenttoown@getresponse.com

[tags]real estate investment, commercial real estate, rental income, real estate[/tags]

Tags: commercial real estate, real estate, real estate investment, rental income

Money is the source of all evils - so goes the popular saying. Money is also what makes real estate spin around. So the critical question of the year becomes: where are real estate prices headed? Short of using a crystal ball, there are indeed a few considerations that can be made to have a general idea as to whether prices will continue to surge - at the average rate of 15 percent a year for the past four years - or, alternatively, if we are poised for a shift in the market.

Record-low mortgages, pent-up demand and improving consumer confidence have made this the fourth consecutive best year for home and condo sales in the Greater Vancouver area. The sales-to-active listings ratio, defined as the number of sales at any given time relative and directly in function of the number of inventory listings available at the same time, is over 30 percent compared to about 20 percent in a balanced market. If we want to be even more technical, price increases have been rising at about 7 to 8 times the national inflation rate, a sure sign that demand has consistently exceeded supply which, in turn, has made real estate a Seller’s market for the most part of the past four years.

And the consequence of this all, albeit you may not have directly noticed, is that Canadians are getting richer because of built-up equity. You bought a condo, for instance, in 2003 for CAD $150,000 using a $100,000 mortgage at 4.5 percent interest calculated semi-annually, not in advance. Your condo is worth, today, $195,000 in 2005 Dollars. Your loan has now diminished to an outstanding balance of approximately $97,770 so that, therefore, you have acquired a built-in equity of CAD $97,230. Since you initially invested CAD $50,000 of your own money, your return has been $47,230 in two years or a hefty 47.23 percent per year. Not too shabby. That sure beats the stock market.

Will you be making another 47.23 percent at the end of 2006 ?
You probably will, unless certain economic forces will conjure up against you. These forces - or variables as they are known in economics - are: energy cost, interest rates and affordability. Now, here there are a few clouds looming on the horizon that may make the future look somewhat different from the past.

Energy costs are on the rise. And Hurricane Katrina and Hurricane Rita and the hurricanes that will come afterwards do not help. To be sure, energy prices were on the rise even before the hurricanes that have devastated the Gulf region came around. In fact, most economists still predict no overall long-lasting impact from Katrina. Yet, the same economists also predict that energy costs will not come down to pre-2004 levels. The rises are here to stay, and that applies to all motor vehicle fuels, natural gas, electricity. Everything that affects our capitalistic economies, and not solely in North America.

Prices of consumer goods, henceforth, are on the rise as well because it is costing more to produce and to ship them all around. Each and every house component is bound to cost more as well. And the people that are in the process today of building your future dream home or your next real estate investment … they too will have to pay more to go to the work site. And, taken globally, a rise in manufacturing and shipping costs typically translates in an overall currency devaluation, a noble way to avoid mentioning the infamous i-word: inflation.

Fed Chairman Alan Greenspan - Mr. Monetarist as some affectionately call him - has been saying this all along this past year. Except that nobody wanted to listen. Reality was much rosier than the somewhat gloomy outlook offered by the venerable Chairman. And the Fed has been keeping the steady course of raising interest rates, albeit not hurriedly or in a draconian fashion. And they continue to hold this course.

Which, then, brings us to the third variable: affordability. Let’s take a look back at the initial example of you buying a condo in 2003 for $150,000 with $50,000 of your own money. Ask yourself this question: could you, today, buy the same condo for $195,000 with the same $50,000 downpayment ? If you are like the majority of real estate consumers, the answer is probably no. You would need a $145,000 mortgage today as opposed to the $100,000 mortgage you took in 2003. Which means you would have to show your lender that your gross income has increased of $15,000 per year - which probably has not. Bankers say they cannot lower their qualifications standards as they are working on the bare minimum (I still have to meet a banker dying of starvation, but …). Which, therefore, leads to the conclusion that you would not qualify today for the mortgage. Such being the case, you would no longer be what we in real estate call a ‘market participant’ . And if a lot of people are or will find themselves into the same situation, the end result will be a lower demand.

So, therefore, what’s the verdict? Are prices going to continue to surge or are we heading for Apocalypse Now? Probably neither. But if the foregoing models hold true, it is reasonable to expect a slowdown in appreciation of property values - which in turn implies a correction in prices. Those of us who are involved into real estate on a professional level are beginning to see this already: asking prices are somewhat shifting down, although asking prices are not really reflective of market trends due to their very subjective nature. And it must also be noted that a shift downwards in asking prices is a far cry from the dreaded real estate bubble some people have been prognosticating all along. But it looks more and more that the market is due for an adjustment.

Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real Estate Chronicle at http://wwwrealestatechronicle.blogspot.com where you can find the full collection of his articles. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton-Centre Realty in Burnaby, BC.

[tags]real estate,real estate prices,economics,real estate bubble,investment,finance,[/tags]

Tags: economics, finance, Investment, real estate, real estate bubble, real estate prices

If you are presently a Tenant anywhere in North America, before you plan to remain a Tenant you should read this Article. There are several good reasons for ownership to prevail over tenancy and the real estate profession is littered with extremely clever pointers as to why Tenants should buy - and buy now. But quite aside from all the hype characteristic of real estate sales, there are five solid economic reasons for Tenants to purchase instead of renting. Here they are:

CAPITAL APPRECIATION

Real estate appreciates over time. This is due to a variety of factors, the most important of which is that bare land does not depreciate. The economic rationale behind this is that bare land cannot depreciate because free, available land diminishes as population increases. You may not notice this immediately if you live right in the middle of the Sahara desert, but in urban environments everywhere there is no question that land is scarce and, in turn, pricey. What depreciates in real estate is the structure, such as the walls, plumbing and electrical circuitry. This is normal functional depreciation due to the constant use - and subsequent wear and tear of the place. But functional depreciation almost never offsets land appreciation, with the end result that even if you mistreat your property you still end up building up equity.

Capital appreciation applies just as well to single-family detached houses as to condominium units. The ‘land’ of a condominium unit is the strata lot, so that if you so happen to live - say - on the twenty-fourth floor of a highrise tower in downtown like I do, your condo unit still sits on a strata lot. And on the twenty-fourth floor your strata lot does appreciate while the structure of your condo is subject to functional depreciation.

RENT MATCHES INFLATION

Inflation, as it is widely known, is defined as the loss of purchasing power of money. Inflation is due to a variety of economic factors and political choices but no matter what our governments do - or fail to do - at any given time, it all boils down to increased borrowing and increased monetary supply and availability which, in turn, decreases the purchasing power of money. In layman’s terminology what this means is that it will cost tomorrow, for the sake of an example, ten cents more to buy a certain good in the economic basket than it does today. You still end up buying the same good, but you pay more for it.

These days inflation is not a problem in North America - at least not the way it used to be. But every year our currencies still lose value, albeit minimally: two percent in the United States and almost three percent in Canada on the respective currencies as of last year’s count. Rent typically increase at the rate of inflation, so that a tenant in Vancouver that was paying - say - CAD $1,000 per month in 2005 can expect to pay CAD $1,030 approximately in 2006. Rent paid is, in essence, the cost of just another service this time offered by a Landlord , and once the rent money is into the Landlord’s pockets it can never be recovered.

MORTGAGE CAPITAL AND INTEREST PAYMENTS

Naturally when you go buy a house and contract out a mortgage with a lender, you will have to pay interest because you are using someone else’s money. But every time you make your monthly mortgage payment you also pay back some of this money. This builds up your equity which then grows over time. Equity growth is typically more evident in the United States where mortgages are amortized in a straight line over the term of the loan. In Canada lenders are more complicated and apply a process known in the business as compound interest, i.e. interest on the interest. Still at about halfway through over a typical 25-year amortization span, in Canada too principal repayment takes over interest payment, so that equity growth builds up faster.

CAPITAL GAINS

Capital gains are not to be confused with capital appreciation, although they are a consequence of it. Simply put, there is a realized capital gain when the amount of money you sell your property for minus the price you paid for it is positive. The real estate market may fluctuate, but it is a matter of fact that house prices increase over time. Economic capital gains are adjusted for inflation and expressed in Dollar/Year. For instance, here in Vancouver a single-family detached home that sold in 1975 for CAD $57,000 in 1975 Dollars may very well sell today for CAD $525,000 in 2005 Dollars.

On a cursory count, CAD $57,000 in 1975 are equivalent to approximately CAD $80,000 in 2005, so that your economic capital gains from the time you bought the house in 1975 to the time you sell it in 2005 are the difference between CAD $525,000 and CAD $80,000 expressed in 2005 Dollars, or a whopping $445,000. You can easily determine from this example how much real estate has appreciated over time in my hometown, with the appreciation already adjusted for inflation.

PRIVACY AND CONTROL

In a Tenancy Agreement you are entitled to privacy typically for the period you pay rent for, subject to the Landlord’s rights. These rights include the Landlord’s right to inspect the tenanted premises on reasonable notice, the Landlord’s right to sell the tenanted premises, the Landlord’s right to repair and ameliorate and so forth. In essence, just because you pay rent that does not make you the owner. The rent simply guarantees your exclusive use of the premises for a certain period of time, again subject to the Landlord’s rights.

Likewise, in most cases you as the Tenant have no control over items such as remodeling, repainting and redecorating. It is true that in most jurisdictions Landlords have a duty to rent premises reasonably fit for human habitation, but then it is also true that many Landlords do not go one inch over and above the minimum threshold required by law. But from an economist point of view, if you spend money you should be entitled to reap the rewards - something you entirely miss out in a tenancy situation.

Too many tenants and renters think that owning a property is a farfetched goal. Yet, now more than ever it is the best time for them to take the plunge and buy real estate. Mortgage rates are still historically low and the buying process is easier than ever.

Are you missing out, if you rent? You bet.

Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real Estate Chronicle at http://wwwrealestatechronicle.blogspot.com where you can find the full collection of his articles. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton-Centre Realty in Burnaby, BC.

Luigi is very proud to be an EzineArticles Platinum Expert Author. Your rating at the footer of this Article is very much appreciated. Thank you.

[tags]real estate chronicle,real estate,economics,finance,tenancy[/tags]

Tags: economics, finance, real estate, real estate chronicle, tenancy

With the United States real estate market growing faster then ever before in history everyone seems to be asking “Where are the preconstruction real estate hot spots?”. Now I could just tell you the best places to invest in real estate are Orlando, Las Vegas, and Miami but that doesn’t make an exciting article. The truth is it depends what kind of investor are you. Ask yourself:

* Are you the kind of investor that is willing to take a bigger risk for a chance of bigger profits?

* Are you the kind of investor that focuses on rental income over flipping houses?

* Are you the kind of investor that prefers to visit the property on vacation or are you never going to see the property?

If you’re the kind of investor that is looking for preconstruction investment real estate that you will be sure to sell at a whim’s notice AND bring you high rental income then perhaps you should look in Miami. Miami has long been a upper class vacation hot spot with it’s gorgeous beaches, exciting nightlife, 5 star restaurants and hotels, and interesting mix of cultures. Although out of Las Vegas, Orlando, and Miami - Miami has been growing the longest which means prices have risen greatly over the last few years, but as long as you have preconstruction in mind this is still a great investment. Those of you that know Miami know that it’s a seller’s market to say the least. Desirable properties usually only stay on the market for a few days and the price just keeps going higher and higher. For many Miami residents, the chances of owning a upscale property in Miami is slim to none simply because of the high price tag. This is the very reason why preconstruction investment properties are doing so well there.

Imagine you’re looking at two identical properties, one is three years old and one is just starting to be built. The one that has been around for three years has an overwhelming amount of amenities (gourmet restaurants, spas, high end retail shops, etc) while the new development doesn’t have any amenities yet. Because of this the price on the new condo (The preconstruction development) is significantly lower and thus more affordable for the investor. Now after this condo development is completed amenities will stop popping up around it and it will then be worth as much as the original condo that has been around for three years.

Some people say that the real estate bubble in Miami is going to pop soon but the fact is it just makes preconstruction real estate even more valuable. When real estate hits such a high mark like Miami has it makes every investor desperate for preconstruction. Why? Because they know the real estate will sell because it’s in such high demand AND they know because they’re buying it in the preconstruction phase that they will be getting it at well below market value.

Bottom line is finding preconstruction investment developments in Miami is tough right now but they are out there. These projects are not advertised but if you do your due diligence you should be able to find them. If you have trouble finding them contact your local brokerage and be sure to ask for “Preconstruction” or “Investment” real estate.

For further information visit www.investrealestate101.com
Goldberg Executive Realty Group>
Mark Goldberg>
Phone: 1-866-247-2259>
E-mail: GoldbergRealtyGroup@cfl.rr.com>

http://www.investrealestate101.com

[tags]investment, real estate, miami, florida, investing, preconstruction, buying[/tags]

Tags: buying, florida, investing, Investment, miami, preconstruction, real estate

Why are real estate investors having so much success
offering “rent to own” homes?

Lease-options offer home ownership opportunities
to folks with little cash and not so hot credit.

Oh boy, there are plenty of those around.

Both parties in a lease-option deal are counting on the
buyer being able to qualify for a home loan before the
option expires.

The investor wants to collect his profit when theoptionee buys. The optionee wants to own the home.

During the lease period the renter/optionee must be
working to improve their credit score to the point
where they can qualify for a loan and buy the home.

Even though there is plenty of subprime loan money
floating around at the present time… the lease-option
method of acquiring a home seems to appeal to many.

In our own investing program…. Before we accept
someone for a lease-option deal we have them interviewed
by our friendly loan broker. He gives us thumbs up
or thumbs down on whether our prospective buyers has a
chance to qualify for a mortgage loan loan during the
next 12 to 24 months.

It would be unetical and dishonest to enter into a
lease option deal with a couple whose credit could never
be cured even with a miracle drug.

We are not aware that it has happened, but we fully
expect to see a lawsuit filed against some careless investor
who does a lease option deal with someone whose credit
is beyond redemption.

That renter/optionee has been lead to believe he can buy the
home and when he finds out he can’t we are sure some
hungry lawyer will rush to their rescue.

We can visit that investor in jail and bring him a copy
of a “no money down” book with a file hidden inside.

About The Author -
Mark Walters is a real estate investor and author. Hispublished works can be found at his web site…
http://www.CashFlowInstitute.com

[tags]Lease option, rent to own, real estate, investing,[/tags]

Tags: investing, Lease option, real estate, rent to own

Many parts of the country remain seller’s markets. With not enough inventory and too many buyers, many houses are actually selling for too much.

This happens when the contract price exceeds the appraisal value of the property. The buyer must then come up with the difference, or the seller must reduce the sales price.

Many buyers are beefing up contracts without going over the appraised value of a property. This keeps them from having to renegotiate or lose the contract entirely.

Their strategies include using monetary and non-monetary offers. With one recently winning contract in a hot market, it wasn’t the sales price and bottom line to the seller that enticed the seller — it was the offer to allow the seller to remain in the condo for a week after settlement. Quite clever as this is a time-honored strategy used in buyer’s markets the other way around. Most times, sellers offer unusual attachment to the contracts, but now the tables have turned.

Another addendum frequently used is to offer a bonus to the seller instead of a higher sales price. You have to check with your lender to make sure that this is allowed. This works quite simply. If you know the house will only appraise for $225,000, it’s a waste of time to offer $235,000. But you might have an extra $10,000 in savings. You can offer this to the seller as a bonus, rather than making it part of the sales price.

Take the time to meet the seller on a deeper level. The relationship angle can win in a contract war. Many home sellers don’t care that they recevie $2,000 more from one buyer over another. If they truly loved their home, it could be that they are looking for a good feeling about who is buying the house. A great selling point is to market yourself to the seller.

For example, one family wrote a letter to the seller explaining how the home would be perfect for their handicapped little girl. They stressed that it would meet their family’s needs so well that they hoped their offer would be accepted.

The sellers verified the story and were so touched that the family won the contract.

Letters to the seller are nice, but keep them brief and to the point. Simply explain how the house fulfills your dreams or needs and what you love about the house. Compliment the seller on the upgrades, colors, additions, etc, that they have done. Don’t just kiss up, tell them why you care about the home.

When it comes to writing the contract, have your agent call the listing agent and find out what the sellers are looking for. Many agents should already know to do this, but many need a little nudge. If you can find out why the sellers are moving, where the are moving, if they are retiring or if they need money, you could have an edge in winning the contract.

There is a real difference between someone who just plops down a lot of money and someone who takes an interest in you. The bottom line isn’t always the bottom line. Find out what the seller wants and give it to them.

Martin Lukac, represents http://www.RateEmpire.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies! Visit http://www.RateEmpire.com today.

[tags]seller market,real estate economy,real estate trends,real estate,buying homes[/tags]

Tags: buying homes, real estate, real estate economy, real estate trends, seller market

Dear fellow Realtors, if there is a gratuitous piece of advice I can offer it is never to tell a Buyer with ‘cold feet’ that he needs not worry because it is not his money. I did it once and the result was catastrophic. ‘Cold feet’ is that special mental state by and through which someone - typically a real estate Buyer or a groom - can’t bring himself to say ‘Yes’. And it is surprising how many people, mostly men, are afflicted by it. Women do not seem to suffer of the same ailment, at least not nearly as disproportionately as men: a lady real estate Purchaser, just like a bride, will say ‘Yes’ anytime, anywhere. I am teasing you ladies, of course, but it is a matter of fact that men, come time to remove the conditions precedent, suddenly become fearful of completing the transaction. They are pervaded by all sorts of doubts about what they are purchasing, their financial future, and the Agent that is sitting at the table right across from them all of a sudden looks in their eyes much better dead than alive.

The origins of the expression ‘to have cold feet’ are in and by themselves very pictoresque. ‘Cold feet’ originates from the Italian ‘piedi freddi‘, but the nuance is different. To have cold feet in Italy means to be penniless and rather financially stuck. There is no connotation of fear in the Italian expression, rather the meaning is more sarcastic - as in the case of someone who has squandered his riches foolishly away and is now financially stuck. To become suddenly fearful better translates in Italian with ‘la gola secca‘ or to have a ‘dry throat’. So, in essence, if you have ‘cold feet’ in America you have a ‘dry throat’ in Italy, and if you go to Italy and say that you have cold feet chances are they will give you money, or at least will offer food and clothing - but I digress.

Buying a home can be an overwhelming process. There are so many decisions to make and any of them can bring serious financial consequences. The darkest side of purchasing a home, after all, is that it is your greatest financial debt even while it puts a roof over your head. As it appreciates, it also needs repairs and maintenance. Yet, you really want to buy a home because you know that few purchases will provide the quality of life that a home of your own does. There are plenty of advantages as well - rising real estate values, a stable environment for the family, increase in your net worth to name only a few. But then, what is it that routinely makes thousands of homebuyers literally freeze in front of their agents when they have to complete the deal ? Here are the most common causes of cold feet and their remedies:

Fear of spending too much

Lenders will loan you money at the top of your ability to borrow. Realtors will suggest that you will be happier in a “bigger, better” home, eliminating the need to “trade up” in a few years. Stretching to buy the most home you can possibly afford is a good strategy, but only under certain conditions - for instance if you are confident that your salary will rise, that your income is stable or secure and will remain like that, and that you can handle large surprise expenses, should the need ever be there. If you do not feel confident in any of the foregoing situations, then just do not take the step longer than your leg. You can’t go wrong by buying slightly under your ability and maintain a certain room for financial manouvering, should you ever be in need of it.

A conflict in goals

Many couples purchase homes with the idea that they will have a child, so stretching buying power to have the extra space makes sense. But if you are trying to accomplish two big financial goals at the same time - buying a home and adding to your family, then you will have to make a choice. You can’t have it all - peace of mind, a large mortgage, and burgeoning expenses at the same time. It is imperative that you prioritize your goals and adjust your financial resources accordingly. If you are worried about cash flow, then making disproportionately large mortgage payments will tarnish the joy of home ownership. Work to improve your cash flow by, for example, accelerate your credit card payoffs and by not incurring into new debt. Re-budget your outlays and eliminate unnecessary expenditures. And above all, do not be influenced by others to live beyond your means.

Fear of the future

All humans are fearful of the future one way or another because of what psychologists refer to as the ‘fear of the unknown’. We are raised and educated in our culture to be in charge of our livelihoods and deeds, but we can possibly be - or pretend to be - as such only in the present time. The same psychologists, however, will tell you that fear can be tamed by looking at the worst case scenarios compared to the best case scenarios. So face reality and examine the question that is really bothering you : what if you can’t make your payments? This question can be balanced by the best case: what if you manage your money so well that you can double your payments? You can easily see that fear is manageable in this terms. It all comes down to how confident you are about managing your money. If you aren’t sure of yourself, get advice from a disinterested party like a financial adviser or ask someone whose money management style you admire.

Fear that the value of your investment will diminish

Look at the properties surrounding the home you are considering purchasing and ask your Agent how much he/she would think they were worth one, two, five years ago. There isn’t a single real estate agent in North America - nor for that matter is there a single lawyer, notary, banker or appraiser - who will tell you that those homes in the neighborhood were worth more yesterday than today. It is a fact of life that real property appreciates and that such appreciation is in direct function of scarcity of available land. The secret in good, wise real estate investing is not to over-extend yourself.

Cold feet is an irrational behavior that has more to do with yourself and how you see things than what you are about to buy. Money may not be the root of all evil, but it is the root of your indecision - at least when you are paralyzed about buying a home. Think through the process that has led you to hire the services of your good Agent in the first place, the exhilaration you proved when your offer was accepted, the dreams and projects you and your spouse have mentally constructed while waiting to finalize the transaction, the soundness of both your financial situation - as proven to you by your own banker - as well as the integrity of the house you are about to purchase - as verified by the appraiser the bank has hired on your behalf - and be confident that the step you are about to take is the correct one. In ultimate analysis, we are the ones that lay out the foundations of our own future.

Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real Estate Chronicle at http://wwwrealestatechronicle.blogspot.com where you can find the full collection of his articles. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton-Centre Realty in Burnaby, BC.

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[tags]real estate chronicle, real estate,economics, buyers remorse,cold feet[/tags]

Tags: buyers remorse, cold feet, economics, real estate, real estate chronicle