Lat week I had little good to say about Fannie Mae's new Payment Power Program (PPP), which allows a borrower to skip up to two mortgage payments in any 12-month period, and up to 10 over the life of a loan. A skipped payment results in an additional loan, equal to the payment plus a healthy access fee, tacked on to the balance. As an emergency source of funds, it is much more costly than accessing a home-equity line of credit (HELOC).
My view is that borrowers don't need a high-cost way to borrow for emergencies. What they need is a no-cost way to accumulate a reserve within their existing mortgage that would allow them to skip or reduce payments when necessary. A truly flexible mortgage would provide this. Here is how it would work.
The flexible mortgage would base the borrower's payment obligation on the loan balance. A schedule of required balances, declining month by month over the life of the loan, would be part of the contract. If the borrower made all the scheduled payments, his balances month by month would correspond exactly to the required balances. But if he paid more in some months, his actual balance would fall below the required balance, the difference constituting a "reserve account," which he could draw on by paying less later on.
For example, the loan is for $160,000 at 5.5 percent for 15 years, with a monthly payment of $1,307. The borrower receives a bonus every Christmas from which he pays an extra $1,000 on his mortgage. With each extra payment, the gap between his actual balance and the required balance widens. If he does this five years running and then loses his job, he can skip his payment entirely in months 72, 73, 74, and 75, and in month 76 he can pay only $575. At that point, the actual balance and required balance are equal, so his "reserve" is exhausted.
Or suppose the borrower inherits $10,000, which he decides to use as an extra payment in month 12. If he falls sick in month 37, he can skip eight payments and most of a ninth before his reserve is exhausted.
In many cases, a borrower wants only to reduce the payment, as opposed to skipping it entirely. If the borrower who prepaid $10,000 in month 12 needed to cut his payment from $1,307 to $1,000 starting in year 4, he could do it for 39 months before exhausting his reserve.
The beauty of the flexible mortgage from a borrower's perspective is that once he/she gets ahead of the game, his/her payment can be anything he/she wishes. The only limitation is that the actual balance must stay below the maximum balance each month.
This flexible mortgage is not rocket science. The numbers cited above were drawn from an Excel spreadsheet that required only a minor add-on to an existing amortization spreadsheet. The payment option adjustable-rate mortgage (ARM) that many lenders offer today is far more complicated.
Servicing a flexible mortgage presents only modest challenges. At a minimum, the lender would have to inform the borrower of the minimum payment required each month, something they do now on option ARMs. It would not be difficult to provide a wider range of possibilities, or to allow borrowers to test their own preferences by accessing their account over the Internet.
Since the borrower's obligation on a flexible mortgage is defined in terms of the balance rather than the payment, delinquency and default would also be defined in this way. Delinquency would be a single occurrence where the actual balance exceeded the required balance, and default would be a succession of months (perhaps three) in which this happened.
The flexible mortgage encourages borrowers to save nuts for the winter. Hence, I would expect that both delinquencies and defaults would be lower than on our current mortgages.
Some lenders in the United Kingdom, Australia and South Africa provide mortgages with much greater payment flexibility than anything available in the United States. At least one large lender in South Africa allows complete payment flexibility so long as the balance does not exceed the original balance, which is much more radical than using a declining required balance.
On some automobile loans in the United States, a borrower who makes a double payment one month can skip paying the next month. If the borrower makes a triple payment, he can skip two months, and so on. This is not nearly as flexible as the declining balance proposal, but it is very simple and would be a step forward.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=187
Saturday, June 2, 2007
Friday, June 1, 2007
How to protect yourself in a real estate transaction
It's no wonder that buying or selling a home ranks high on the list of the most stress-provoking events one can experience, up there with the death of a loved one and divorce. There's a lot at stake financially when you buy or sell a home. A good or bad outcome can affect your net worth, as well as your sense well being.
There are a lot of factors involved in buying or selling a home that are beyond your control. For example, interest rates could jump unexpectedly, or an inspector might uncover a defect that you were unaware of. However, there are steps you can take to maximize your chances for a successful real estate endeavor.
The first step is to hire the right professionals to help you accomplish your goal. If you don't already have a real estate agent, mortgage broker and closing agent that you've worked with successfully before, ask friends and associates for recommendations. Take the time to interview each referral carefully to make sure that there's a good fit. Make sure to check references. If you have any doubts about a candidate, continue the search until you find qualified professionals with whom you have good rapport.
A common mistake home buyers and sellers make is to underestimate the time it takes to get the job done. Resist the urge to pile additional work on yourself while you're in the midst of a home purchase or sale. By doing so, you'll be better able to manage stress.
HOUSE HUNTING TIP: One of the keys to ensuring that your real estate venture will have a happy ending is to make a commitment to stay involved in the process every step of the way. Even though you hire professionals to assist you, they aren't the decision-makers. You are. Problems can arise if you relinquish control and let your real estate agent or mortgage person make decisions for you.
Let your agent know that you want to be kept informed of developments as they arise. The sooner you know about a problem, or potential problem, the sooner you can work on resolving it.
Don't be shy about asking for an explanation of a facet of the business, or your transaction, that you don't understand. If you don't buy and sell real estate on a regular basis, you shouldn't expect yourself to know the ins and outs of the business.
As tedious as it might be, it's important to read and understand every document before you sign it. Make sure you receive copies of everything you sign. It's a good idea to retain these documents, even after the transaction closes. If there's a problem during or after the transaction, this documentation could prove invaluable in proving your case.
It's also wise to keep a transaction log. This can be something as simple as a notepad on which you record important transaction-related conversations. Keep the log with your other transaction documentation in case you need to substantiate who said what later and when.
Be nice, but let your real estate team know what you expect from them. This should include periodic written or verbal updates. If you're not receiving the service you need, let this be known. Don't expect the people working for you to be mind readers.
You should expect that problems of some sort will arise during the course of your home purchase or sale. How you work through the problems has everything to do with the parties involved and how well you communicate with one another.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=205
There are a lot of factors involved in buying or selling a home that are beyond your control. For example, interest rates could jump unexpectedly, or an inspector might uncover a defect that you were unaware of. However, there are steps you can take to maximize your chances for a successful real estate endeavor.
The first step is to hire the right professionals to help you accomplish your goal. If you don't already have a real estate agent, mortgage broker and closing agent that you've worked with successfully before, ask friends and associates for recommendations. Take the time to interview each referral carefully to make sure that there's a good fit. Make sure to check references. If you have any doubts about a candidate, continue the search until you find qualified professionals with whom you have good rapport.
A common mistake home buyers and sellers make is to underestimate the time it takes to get the job done. Resist the urge to pile additional work on yourself while you're in the midst of a home purchase or sale. By doing so, you'll be better able to manage stress.
HOUSE HUNTING TIP: One of the keys to ensuring that your real estate venture will have a happy ending is to make a commitment to stay involved in the process every step of the way. Even though you hire professionals to assist you, they aren't the decision-makers. You are. Problems can arise if you relinquish control and let your real estate agent or mortgage person make decisions for you.
Let your agent know that you want to be kept informed of developments as they arise. The sooner you know about a problem, or potential problem, the sooner you can work on resolving it.
Don't be shy about asking for an explanation of a facet of the business, or your transaction, that you don't understand. If you don't buy and sell real estate on a regular basis, you shouldn't expect yourself to know the ins and outs of the business.
As tedious as it might be, it's important to read and understand every document before you sign it. Make sure you receive copies of everything you sign. It's a good idea to retain these documents, even after the transaction closes. If there's a problem during or after the transaction, this documentation could prove invaluable in proving your case.
It's also wise to keep a transaction log. This can be something as simple as a notepad on which you record important transaction-related conversations. Keep the log with your other transaction documentation in case you need to substantiate who said what later and when.
Be nice, but let your real estate team know what you expect from them. This should include periodic written or verbal updates. If you're not receiving the service you need, let this be known. Don't expect the people working for you to be mind readers.
You should expect that problems of some sort will arise during the course of your home purchase or sale. How you work through the problems has everything to do with the parties involved and how well you communicate with one another.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=205
Home seller credit could save real estate deal
No one likes to give money away, but a monetary credit from the seller to the buyer can solve a problem that might otherwise derail a home-sale transaction. Here's a typical scenario where a seller credit could save the deal.
The buyers are stretching to buy their dream home. Tapped out financially, they panic when they discover during their home inspection that the roof needs replacing. The inspector impresses upon the buyers that the roof must be replaced immediately; it can't wait. But the buyers don't have enough extra cash to cover the cost of a new roof.
One option for the buyers is to back out of the deal, and find another less expensive house, or a house with a roof that's in better condition. But this puts the buyers back in the market searching for a new house. And the sellers have no recourse but to put their house back on the market, and search for another buyer.
Another option is for the buyers to ask the sellers to credit them enough money to take care of replacing the roof. If the sellers are willing, the transaction stays together. The sellers will net less from the sale, but the sale will close. If more time on the market means less money for the seller, this could be an acceptable solution for both parties.
There are other benefits to be derived from this approach to repairing property defects. One is that it relieves the sellers of the burden of having to oversee work while they're in the midst of moving out of the house. Another is that buyers often prefer to oversee the work themselves to make sure that it's done properly. Also, there's often not enough time to have repairs done before closing.
HOUSE HUNTING TIP: Before you ask the seller to credit you money at closing, check with your mortgage broker or loan agent to find out what restrictions your lender might have regarding seller credits. Usually, lenders will only allow a credit for up to 3 percent of the purchase price. Also, most lenders limit the amount of money they'll allow a seller to credit to not more than the amount of the buyer's nonrecurring closing costs.
Nonrecurring closing costs are one-time-only costs that a buyer pays at closing, such as loan origination fees or transfer taxes. Recurring closing costs are those costs paid at closing that are part of ongoing expenses a buyer will pay, such as homeowner's insurance or mortgage interest.
Lenders don't like money to pass from the seller to the buyer if it in some way lowers the amount of the buyer's cash down payment. But they will usually allow a seller credit that offsets the buyer's nonrecurring closing costs. This means that you won't walk away from the closing with a check for the amount of the credit in your pocket. Instead, the seller credit will lower the amount of money you need to bring to the closing. The money you save can be applied toward repairing the property defect.
Seller credits can be useful when buyers are short of the cash required to make an offer. Let's say you have enough saved for a 10 percent down payment. But you are shy the money needed for closing costs. Your purchase offer could include a provision for the seller to credit you an amount at closing to be applied toward your nonrecurring closing costs.
A credit lowers the seller's net proceeds. So, you may need to increase your asking price to cover the amount of the credit if you're in competition, or if the property is attractively priced.
THE CLOSING: Just make sure, before you do this, that the property is likely to appraise at the higher price.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=184
The buyers are stretching to buy their dream home. Tapped out financially, they panic when they discover during their home inspection that the roof needs replacing. The inspector impresses upon the buyers that the roof must be replaced immediately; it can't wait. But the buyers don't have enough extra cash to cover the cost of a new roof.
One option for the buyers is to back out of the deal, and find another less expensive house, or a house with a roof that's in better condition. But this puts the buyers back in the market searching for a new house. And the sellers have no recourse but to put their house back on the market, and search for another buyer.
Another option is for the buyers to ask the sellers to credit them enough money to take care of replacing the roof. If the sellers are willing, the transaction stays together. The sellers will net less from the sale, but the sale will close. If more time on the market means less money for the seller, this could be an acceptable solution for both parties.
There are other benefits to be derived from this approach to repairing property defects. One is that it relieves the sellers of the burden of having to oversee work while they're in the midst of moving out of the house. Another is that buyers often prefer to oversee the work themselves to make sure that it's done properly. Also, there's often not enough time to have repairs done before closing.
HOUSE HUNTING TIP: Before you ask the seller to credit you money at closing, check with your mortgage broker or loan agent to find out what restrictions your lender might have regarding seller credits. Usually, lenders will only allow a credit for up to 3 percent of the purchase price. Also, most lenders limit the amount of money they'll allow a seller to credit to not more than the amount of the buyer's nonrecurring closing costs.
Nonrecurring closing costs are one-time-only costs that a buyer pays at closing, such as loan origination fees or transfer taxes. Recurring closing costs are those costs paid at closing that are part of ongoing expenses a buyer will pay, such as homeowner's insurance or mortgage interest.
Lenders don't like money to pass from the seller to the buyer if it in some way lowers the amount of the buyer's cash down payment. But they will usually allow a seller credit that offsets the buyer's nonrecurring closing costs. This means that you won't walk away from the closing with a check for the amount of the credit in your pocket. Instead, the seller credit will lower the amount of money you need to bring to the closing. The money you save can be applied toward repairing the property defect.
Seller credits can be useful when buyers are short of the cash required to make an offer. Let's say you have enough saved for a 10 percent down payment. But you are shy the money needed for closing costs. Your purchase offer could include a provision for the seller to credit you an amount at closing to be applied toward your nonrecurring closing costs.
A credit lowers the seller's net proceeds. So, you may need to increase your asking price to cover the amount of the credit if you're in competition, or if the property is attractively priced.
THE CLOSING: Just make sure, before you do this, that the property is likely to appraise at the higher price.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=184
Thursday, May 31, 2007
8 things to ask before buying your home
The search for a new home begins with great enthusiasm and optimism. But along with it come a puzzling array of questions and concerns. To ensure the search for your dream home ends with a smile of satisfaction, Surendra Hiranandani, Managing Director and Founder of the Hiranandani Group of Companies answers common questions that may arise as you make this big decision.
1. How big a house do I need?
If you are buying your second home for the family or preparing to move into an owned apartment from a rented one, the best way to answer this is to look at your present home and see what needs are met in your present home. Discussing with other family members can provide great insights into what makes them comfortable and serves your needs best.
If you are buying your very first home as a couple, do you feel you need just a home for your cozy twosome, or have you wisely kept in mind what may be your future needs when you start or expand your family tomorrow?
Be a good judge and draw up a vision for your new home. At the same time, jot down your budget estimating the area you are getting in terms of built-up and carpet area (the ratio can be as low as 15 percent for an old construction and as high as 28 % for new constructions.) Some developers also offer the concept of super built up ratio including as much as 40 % area, and this is something a buyer should be alert of and verify duly the reasons for including a greater percentage area.
2. Where do I choose my new abode to be?
Generally, the norm is to have a residence that is not too far away from one’s work place, keeping the traffic and transport systems in mind. Rates of property vary hugely between the various areas of the Mumbai Metropolitan Region, with some areas commanding around Rs.20, 000 per sq ft and some others are below Rs 1,000 per sq ft.
Hot Property buys for 2005
Suburbs like Thane, Powai, Ghatkopar, Mulund, Malad and Kandivali are fast transforming into attractive destinations with malls, multiplexes and myriad options for larger and more luxurious homes. With fast development happening in full swing, one is assured of better space and value for money along with the expectation of a good value appreciation of one’s home in the future. Mix-user townships, with commercial and residential facilities are an ideal situation for many families as it does provide a great relief amidst the hectic and fast lifestyle in Mumbai. A sea-facing or lake-facing house or a house in a natural green area can be promising when one visualizes a clean environment away from congestion, the rush of traffic and pollution.
3. Does it live up to my lifestyle requirements?
Aesthetic interiors and exteriors are primary to the attractiveness of any house. Flooring, tiling, classy fittings and fixtures can make a home a pleasure to live in. Jacuzzi, fancy lighting, french windows, swimming pool, gymnasiums, clubhouses, jogging tracks and many such lifestyle features are becoming a standard norm in high quality projects. Some developers also offer the option of complete interior solutions to the customers. While these certainly add to the luxury, one must thoroughly verify the quality of construction and benchmark the new home with existing projects of the builder to ensure that what you see in the sample apartments will be actually what you get.
4. What about the Basic Amenities?
In the process of ensuring hi-end lifestyle amenities, one must also clearly check that the basic amenities are up to the mark. Water supply and power supply, good roads and parking space, children’s play areas, doctors and clinics, basic shopping and public transport stations are very crucial to ensure a hassle free living and one should never underestimate the importance of the same. Well connected both by road and rail, while the international Airport and flyovers should also be in proximity as per the needs of the buyer. One thing that is sometimes overlooked is the security systems and safety of the complex and locality. One must pay due attention to this also. In addition to basic infrastructure, maintenance of the complex should also be given due importance such as cleaning of roads, streets and drains, garbage disposal and organic waste composing, rodent and mosquito control.
5. What value additions do I get along with the home?
Wide, open spaces, lush green gardens, and tree lined concrete roads are all available in the best of the housing complexes in Mumbai. Staying in a landscaped property gives the area an elegant feel and also keeps the air fresh. Rainwater harvesting and sewage treatment plants are some of the eco-friendly ways by which the builders are able to provide a healthy environment in harmony with nature. Not only this, the modern homebuyer also checks the availability of entertainment and recreational options near or within the complex such as bowling alleys, game centers, sports facilities, vibrant shopping malls, food courts, restaurants, to add excitement and color to the place.
http://news.moneycontrol.com/india/news/property/null/8thingstoaskbeforebuyingyourhome/14/27/article/175554
1. How big a house do I need?
If you are buying your second home for the family or preparing to move into an owned apartment from a rented one, the best way to answer this is to look at your present home and see what needs are met in your present home. Discussing with other family members can provide great insights into what makes them comfortable and serves your needs best.
If you are buying your very first home as a couple, do you feel you need just a home for your cozy twosome, or have you wisely kept in mind what may be your future needs when you start or expand your family tomorrow?
Be a good judge and draw up a vision for your new home. At the same time, jot down your budget estimating the area you are getting in terms of built-up and carpet area (the ratio can be as low as 15 percent for an old construction and as high as 28 % for new constructions.) Some developers also offer the concept of super built up ratio including as much as 40 % area, and this is something a buyer should be alert of and verify duly the reasons for including a greater percentage area.
2. Where do I choose my new abode to be?
Generally, the norm is to have a residence that is not too far away from one’s work place, keeping the traffic and transport systems in mind. Rates of property vary hugely between the various areas of the Mumbai Metropolitan Region, with some areas commanding around Rs.20, 000 per sq ft and some others are below Rs 1,000 per sq ft.
Hot Property buys for 2005
Suburbs like Thane, Powai, Ghatkopar, Mulund, Malad and Kandivali are fast transforming into attractive destinations with malls, multiplexes and myriad options for larger and more luxurious homes. With fast development happening in full swing, one is assured of better space and value for money along with the expectation of a good value appreciation of one’s home in the future. Mix-user townships, with commercial and residential facilities are an ideal situation for many families as it does provide a great relief amidst the hectic and fast lifestyle in Mumbai. A sea-facing or lake-facing house or a house in a natural green area can be promising when one visualizes a clean environment away from congestion, the rush of traffic and pollution.
3. Does it live up to my lifestyle requirements?
Aesthetic interiors and exteriors are primary to the attractiveness of any house. Flooring, tiling, classy fittings and fixtures can make a home a pleasure to live in. Jacuzzi, fancy lighting, french windows, swimming pool, gymnasiums, clubhouses, jogging tracks and many such lifestyle features are becoming a standard norm in high quality projects. Some developers also offer the option of complete interior solutions to the customers. While these certainly add to the luxury, one must thoroughly verify the quality of construction and benchmark the new home with existing projects of the builder to ensure that what you see in the sample apartments will be actually what you get.
4. What about the Basic Amenities?
In the process of ensuring hi-end lifestyle amenities, one must also clearly check that the basic amenities are up to the mark. Water supply and power supply, good roads and parking space, children’s play areas, doctors and clinics, basic shopping and public transport stations are very crucial to ensure a hassle free living and one should never underestimate the importance of the same. Well connected both by road and rail, while the international Airport and flyovers should also be in proximity as per the needs of the buyer. One thing that is sometimes overlooked is the security systems and safety of the complex and locality. One must pay due attention to this also. In addition to basic infrastructure, maintenance of the complex should also be given due importance such as cleaning of roads, streets and drains, garbage disposal and organic waste composing, rodent and mosquito control.
5. What value additions do I get along with the home?
Wide, open spaces, lush green gardens, and tree lined concrete roads are all available in the best of the housing complexes in Mumbai. Staying in a landscaped property gives the area an elegant feel and also keeps the air fresh. Rainwater harvesting and sewage treatment plants are some of the eco-friendly ways by which the builders are able to provide a healthy environment in harmony with nature. Not only this, the modern homebuyer also checks the availability of entertainment and recreational options near or within the complex such as bowling alleys, game centers, sports facilities, vibrant shopping malls, food courts, restaurants, to add excitement and color to the place.
http://news.moneycontrol.com/india/news/property/null/8thingstoaskbeforebuyingyourhome/14/27/article/175554
Indians buying homes abroad
In February, chartered accountant Archana and husband Prabhakar, an engineer in Dubai, planned to buy a flat in Mumbai where they want to shift jobs in two years. They were aghast that all they could get for their budget of Rs 2 crore was a one bedroom flat in south Mumbai. For the same price they settled for a two-bedroom villa a few minutes’ drive from Dubai.
Property in Dubai appreciates (thirty per cent last year) less than in Mumbai but rents are nearly double at twelve per cent,” says Prabhakar. Like Archana and Prabhakar, who have an ancestral home in Bangalore, an increasing number of Indians are queuing up to buy real estate in places like Dubai, London, Malaysia and Bangkok. Some want to flaunt a second home with a foreign address, others for holidaying or returns on investment. Some find that property is as expensive or even cheaper in some foreign locations. Some are encouraged by the Reserve Bank’s doubling of the amount an Indian can invest abroad to $100,000, which means a couple can invest $200,000 or Rs82 lakh every year.
“Many are buying property in Dubai because it has no taxes and it’s only two and a half hours from Mumbai,” says Syed Miraj, the India agent in Mumbai for Dubai’s real estate firm Better Homes. “I get 15 inquiries a month and four or five of them end up buying.” The availability of easy bank loans and residence visas in UAE for property buyers are additional attractions. Many brokers are armed with CDs on “hot properties” in UK and UAE.
“Demand (from Indians for property in London) is particularly high in the mid-range price sector 400,000-700,000 pounds (Rs 3.2 crore to Rs 5.7 crore) which means that relatively more affordable locations such as St John’s Wood and Kensington are being considered,” says a study by Knight Frank, the global property consultancy firm. It estimates that this demand from Indians (along with the Chinese) will go up by seven per cent annually for some time.
“Many buyers see a snob value in a London address,”’ says Gulam Zia, Knight Frank’s National Director in Mumbai, pointing out that property in London is still more expensive than in Mumbai. “You can get a top of the line property for Rs5 to 8 crore in Mumbai but not in London.” It’s not just the mid-range properties that the Indians are eyeing. They are even lapping up top-end real estate, says Daily Express (London) in a report last month with the headline: “Wealthy Indians buying their own British Empire.” This, it said, has resulted in spiralling property prices there. It said that Northwood in West London has now become “the most expensive place in the world, thanks to Indian investment.” Knight Frank as well as Hamptons and Savills, UK’s top-end estate agencies, have despatched staff to India to sell London property.
“Malaysia has one of the highest standards and the lowest costs of living with all the modern facilities in place,” is how the Malaysian government is promoting its “Malaysia My Second Home” project to lure the wealthy from across the world. All you need to be eligible for the programme is to deposit in a local bank 300,000 Malaysia Ringgits (Rs36 lakh) from which up to Rs29 lakh could be withdrawn after one year for purchase of a house there. A Malayasian tourism department official has been quoted by the local media as saying that some 700 Indians have registered for the programme.
“Realty markets abroad are stabilised and offer steady returns,” points out Gautam Vohra, Senior Manager (Capital Markets) in Mumbai of Jones Lang Lasalle, a global real estate consultancy.
http://www.dnaindia.com/report.asp?newsid=1096472
Property in Dubai appreciates (thirty per cent last year) less than in Mumbai but rents are nearly double at twelve per cent,” says Prabhakar. Like Archana and Prabhakar, who have an ancestral home in Bangalore, an increasing number of Indians are queuing up to buy real estate in places like Dubai, London, Malaysia and Bangkok. Some want to flaunt a second home with a foreign address, others for holidaying or returns on investment. Some find that property is as expensive or even cheaper in some foreign locations. Some are encouraged by the Reserve Bank’s doubling of the amount an Indian can invest abroad to $100,000, which means a couple can invest $200,000 or Rs82 lakh every year.
“Many are buying property in Dubai because it has no taxes and it’s only two and a half hours from Mumbai,” says Syed Miraj, the India agent in Mumbai for Dubai’s real estate firm Better Homes. “I get 15 inquiries a month and four or five of them end up buying.” The availability of easy bank loans and residence visas in UAE for property buyers are additional attractions. Many brokers are armed with CDs on “hot properties” in UK and UAE.
“Demand (from Indians for property in London) is particularly high in the mid-range price sector 400,000-700,000 pounds (Rs 3.2 crore to Rs 5.7 crore) which means that relatively more affordable locations such as St John’s Wood and Kensington are being considered,” says a study by Knight Frank, the global property consultancy firm. It estimates that this demand from Indians (along with the Chinese) will go up by seven per cent annually for some time.
“Many buyers see a snob value in a London address,”’ says Gulam Zia, Knight Frank’s National Director in Mumbai, pointing out that property in London is still more expensive than in Mumbai. “You can get a top of the line property for Rs5 to 8 crore in Mumbai but not in London.” It’s not just the mid-range properties that the Indians are eyeing. They are even lapping up top-end real estate, says Daily Express (London) in a report last month with the headline: “Wealthy Indians buying their own British Empire.” This, it said, has resulted in spiralling property prices there. It said that Northwood in West London has now become “the most expensive place in the world, thanks to Indian investment.” Knight Frank as well as Hamptons and Savills, UK’s top-end estate agencies, have despatched staff to India to sell London property.
“Malaysia has one of the highest standards and the lowest costs of living with all the modern facilities in place,” is how the Malaysian government is promoting its “Malaysia My Second Home” project to lure the wealthy from across the world. All you need to be eligible for the programme is to deposit in a local bank 300,000 Malaysia Ringgits (Rs36 lakh) from which up to Rs29 lakh could be withdrawn after one year for purchase of a house there. A Malayasian tourism department official has been quoted by the local media as saying that some 700 Indians have registered for the programme.
“Realty markets abroad are stabilised and offer steady returns,” points out Gautam Vohra, Senior Manager (Capital Markets) in Mumbai of Jones Lang Lasalle, a global real estate consultancy.
http://www.dnaindia.com/report.asp?newsid=1096472
Wednesday, May 30, 2007
Preventing Lawsuits - Homeowners Warranty
When a seller inks a deal with a buyer, the buyer expects the utilities and major household appliances to work.
So if the home is sold during the heat of summer, next winter when the thermostat is switched over to heat and nothing comes out of the vent but cold air...
...you can imagine the reaction.
It is the seller's fault. Or the agent's fault. Or somebody's fault.
So the buyer calls his agent who calls the listing agent who tracks the seller down to their new home.
"The heater is broken and the buyer is demanding you replace it," says the agent.
Of course, the heater worked perfectly well last winter, so the seller replies that it will be a cold day in... (well, in the house) before he pays for something that isn't his problem any more.
The listing agent passes that message back to the buyer's agent who passes it back to the buyer and the buyer doesn't believe a word of it.
Obviously, the heater didn't work last year and the seller did not disclose it. The buyer has a brother-in-law who is an attorney and now lawyers are involved.
This actually happens.
Anyone can sue anyone, even when it isn't "fair." Since it costs money to defend against lawsuits, the seller generally gives in and replaces the heater, even when it was in perfect working order last winter. Or the dishwasher, or whatever else has gone wrong.
All of which can be easily avoided through the purchase of a Homeowners Warranty or Home Protection Plan, which is basically
is basically a different kind of insurance.
If the electricity, plumbing, heating, air conditioning, water heater or major appliances break down, the insurance company fixes it.
No muss, no fuss, no lawyers, no wasted time on repetitive phone calls filled with mutual distrust, flaring tempers and bruised egos.
The cost?
For houses under 5000 square feet (which covers most houses) the cost is usually less than $300.
Sellers should price this insurance into their cost expectations when pricing their home. It is not much to pay for peace of mind and the knowledge that when your house is sold, you really will be done with it. Even when the buyer doesn't ask for the warranty, sellers should provide it.
As for buyers, after the first year is up, most warranty plans allow for extensions. In the "olden days," this was considered a waste of money, but things are more expensive now.
The key ingredient in all this is that the seller must warrant that everything is in good working order when the house is sold. So if the buyers insist on a Home Warranty and the seller refuses...
...the buyer is going to wonder, "What's broken?"
http://www.realestateabc.com/insights/warranty.htm
So if the home is sold during the heat of summer, next winter when the thermostat is switched over to heat and nothing comes out of the vent but cold air...
...you can imagine the reaction.
It is the seller's fault. Or the agent's fault. Or somebody's fault.
So the buyer calls his agent who calls the listing agent who tracks the seller down to their new home.
"The heater is broken and the buyer is demanding you replace it," says the agent.
Of course, the heater worked perfectly well last winter, so the seller replies that it will be a cold day in... (well, in the house) before he pays for something that isn't his problem any more.
The listing agent passes that message back to the buyer's agent who passes it back to the buyer and the buyer doesn't believe a word of it.
Obviously, the heater didn't work last year and the seller did not disclose it. The buyer has a brother-in-law who is an attorney and now lawyers are involved.
This actually happens.
Anyone can sue anyone, even when it isn't "fair." Since it costs money to defend against lawsuits, the seller generally gives in and replaces the heater, even when it was in perfect working order last winter. Or the dishwasher, or whatever else has gone wrong.
All of which can be easily avoided through the purchase of a Homeowners Warranty or Home Protection Plan, which is basically
is basically a different kind of insurance.
If the electricity, plumbing, heating, air conditioning, water heater or major appliances break down, the insurance company fixes it.
No muss, no fuss, no lawyers, no wasted time on repetitive phone calls filled with mutual distrust, flaring tempers and bruised egos.
The cost?
For houses under 5000 square feet (which covers most houses) the cost is usually less than $300.
Sellers should price this insurance into their cost expectations when pricing their home. It is not much to pay for peace of mind and the knowledge that when your house is sold, you really will be done with it. Even when the buyer doesn't ask for the warranty, sellers should provide it.
As for buyers, after the first year is up, most warranty plans allow for extensions. In the "olden days," this was considered a waste of money, but things are more expensive now.
The key ingredient in all this is that the seller must warrant that everything is in good working order when the house is sold. So if the buyers insist on a Home Warranty and the seller refuses...
...the buyer is going to wonder, "What's broken?"
http://www.realestateabc.com/insights/warranty.htm
Who Can Claim Moving Expenses with the IRS?
Who Can Claim Moving Expenses with the IRS?
Not everyone who moves can deduct moving expenses when they file their income tax returns. Your move has to be work-related, meaning you changed job locations, started a new job, or moved to seek a new job and were successful in obtaining one.
There are exceptions for retirees and survivors who are moving back to the U.S. from oversees.
And there are (of course) conditions.
The IRS calls these conditions “tests.” The “time” test, the “distance" test and the “work-related” test.
The Work Related Test
Say you pick up all your stuff and move. It isn’t actually necessary that you already have a job in the new location. If your moving expenses occurred within one year of the date you first report on the job in the new location, your move is “work-related.”
So… what happens if you delay moving your family and household until 18 months after you start work because you want your son or daughter to finish high school at their old school?
Well, the IRS isn’t entirely heartless. They make exceptions if you have a good reason.
The Distance Test
Your new job location has to be at least 50 miles further from your home than your old job location.
For example, say you used to drive 15 miles to work from your previous home. That means you new job must be at least 65 miles away from where you used to live. Otherwise, you don’t meet the “distance” test.
This doesn’t mean that you have to move 50 miles. All it means is that your new job must be 50 miles further from your former home than your old job.
The Time Test
The time test varies depending on whether you are classified as an employee or whether you are self-employed.
If you are an employee, then after you move to your new area you must work full-time for at least 39 weeks out of the next twelve months. You don’t have to work for the same employer and you don’t have to work 39 weeks in a row, but…
…basically, you have to work 9 out of the next twelve months in your new commuting area.
If you’re away from work temporarily, like a vacation, or sick, or can’t work because your union is on strike or your employer has locked you out…
…that counts as work.
See? The IRS does have a heart!
What if you’re a teacher who normally works only nine months out of the year? If you spend six months working during the school year…that counts. It is a similar situation for other seasonal workers.
If you’re self-employed, the “time test” is essentially the same, but doubled. You have to work 78 weeks out of the next 24 months after the move. You have to work full-time. Being semi-retired and goofing off on the internet for a couple hours a day on one of those late night television “get-rich-quick” schemes doesn’t count.
You really have to work full-time.
Conclusion
You're probably wondering what you can deduct.
Umm...(furtively looking to the left and right)...
We're out of space.
And you really should ask an income tax accountant to handle that one for you.
http://www.realestateabc.com/insights/movingexpenses.htm
Not everyone who moves can deduct moving expenses when they file their income tax returns. Your move has to be work-related, meaning you changed job locations, started a new job, or moved to seek a new job and were successful in obtaining one.
There are exceptions for retirees and survivors who are moving back to the U.S. from oversees.
And there are (of course) conditions.
The IRS calls these conditions “tests.” The “time” test, the “distance" test and the “work-related” test.
The Work Related Test
Say you pick up all your stuff and move. It isn’t actually necessary that you already have a job in the new location. If your moving expenses occurred within one year of the date you first report on the job in the new location, your move is “work-related.”
So… what happens if you delay moving your family and household until 18 months after you start work because you want your son or daughter to finish high school at their old school?
Well, the IRS isn’t entirely heartless. They make exceptions if you have a good reason.
The Distance Test
Your new job location has to be at least 50 miles further from your home than your old job location.
For example, say you used to drive 15 miles to work from your previous home. That means you new job must be at least 65 miles away from where you used to live. Otherwise, you don’t meet the “distance” test.
This doesn’t mean that you have to move 50 miles. All it means is that your new job must be 50 miles further from your former home than your old job.
The Time Test
The time test varies depending on whether you are classified as an employee or whether you are self-employed.
If you are an employee, then after you move to your new area you must work full-time for at least 39 weeks out of the next twelve months. You don’t have to work for the same employer and you don’t have to work 39 weeks in a row, but…
…basically, you have to work 9 out of the next twelve months in your new commuting area.
If you’re away from work temporarily, like a vacation, or sick, or can’t work because your union is on strike or your employer has locked you out…
…that counts as work.
See? The IRS does have a heart!
What if you’re a teacher who normally works only nine months out of the year? If you spend six months working during the school year…that counts. It is a similar situation for other seasonal workers.
If you’re self-employed, the “time test” is essentially the same, but doubled. You have to work 78 weeks out of the next 24 months after the move. You have to work full-time. Being semi-retired and goofing off on the internet for a couple hours a day on one of those late night television “get-rich-quick” schemes doesn’t count.
You really have to work full-time.
Conclusion
You're probably wondering what you can deduct.
Umm...(furtively looking to the left and right)...
We're out of space.
And you really should ask an income tax accountant to handle that one for you.
http://www.realestateabc.com/insights/movingexpenses.htm
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