If you're looking for a bargain home purchase or looking to turn a profit, consider locating a foreclosure property - one that has been taken away from an owner for delinquent payments.
Home buying has been one of the more stable investments of the last century. If bought with forethought and patience real estate can create a financial future for you and your family faster than you can say “stock market”. In doing your homework you will make a path to a strong home purchase that will never put you in the category of foreclosure.
WHAT IS FORECLOSURE?
A foreclosed home is one that someone else is unable to pay for. The lender, a bank, individual, or company that has loaned the money for the initial purchase, takes back the property from the delinquent homeowner.
Steps to a declaring a foreclosure and taking the property back will vary slightly state to state. A bank will want to turn over the property quickly and not hold on to it so foreclosed properties will be discounted at a high rate. That means getting the purchase prices cut by up to thirty percent or more in some cases.
FINDING A FORECLOSURE
Foreclosures are a difficult animal to locate and to execute. The potential is what usually draws people into the process. Turning them over for a profit is a motivating factor.
Look for foreclosures in real estate magazines, local newspapers and on the Internet. Lenders will often have a department that handles REO, or real estate owned. Call your local lenders and ask for their REO listings. Fannie Mae and the Department of Housing and Urban Development, HUD, also have foreclosure listings. Also worth noting, any lender who has decided to foreclose must file a notice of default in the county clerk’s office where the property resides. The county may be the best place to locate fresh foreclosure leads.
BE PREPARED
Foreclosures bring with them their own set of difficulties. Because the prior owner was obviously in financial straights (who would give up a home in the first place, right?) it stands to reason that other difficulties may have pushed them to failure and liens might have been drawn against the home. Know what the foreclosure brings with it by doing the homework. Check for liens and unpaid property taxes and locate who is responsible for paying those. Making sure these are cleared up before making an offer is advisable. Check for these in the county clerks office where the property is located.
Purchasing foreclosures requires more paperwork than should be legally allowed. This is especially so when a government agency is involved in the purchase. To protect yourself make sure you have a real estate agent that is well versed in the foreclosure process. Have the agent check pricing in the vicinity of the foreclosure to make sure what seems a bargain is a bargain. This will have much more meaning if you are intending to resell the property and are hoping to gain the discount you were given as profit.
Arrange a home inspection. Foreclosures can have a lot of damage if the owner’s were financially negligent for any length of time. If you cannot pay the mortgage chances are you were not keeping up with typical home maintenance needs as well. Neglected maintenance can lead to long-term problems that may include water leaks and foundation issues as well as termites and infestation problems. Tour the property yourself to make an initial assessment but make sure a professional inspector is hired.
Foreclosures can be difficult. Most people are motivated by the possibility of a large profit and forget to fill in the blanks. If you will do the homework a foreclosure purchase can occur in a smooth manner.
http://www.essortment.com/home/homebuyingfore_smyu.htm
Monday, July 2, 2007
Tips for finding earthquake insurance
Do you need an Earthquake Insurance Policy? This article explores finding the best insurer for you and how to compare companies.
Whether you are a homeowner, business owner or renter, if you live in earthquake territory, you must consider insurance to cover the risk. There are a handful of states which have no recorded earthquake activity and there are quite a few with no activity within the past 30 years. However, did you know that Charleston, South Carolina, was nearly demolished in 1886 by a 7.3 quake and damage was reported as far away as Ohio, Alabama, and Kentucky? In 1811 the New Madrid area of Arkansas was hit with a 7.0 and a 7.7 quake, and one of the largest recorded quakes with a magnitude of 8.0 hit the same region on the Missouri side in 1812. If a quake within those magnitudes hit your home would you be able to rebuild?
It is certainly worth your time to investigate whether your property is at risk of such catastrophic damage. Once you have established that you are at risk, the time has come to explore your investment in Earthquake Insurance.
You may think you are covered under your general homeowners or renter’s policy. All standard homeowner insurance policies list exactly what they cover. It is worth your time to re-read your policy. Some will provide coverage for “falling objects” without specifying what caused the objects to fall. With such a general homeowner’s policy, one may be able to reclaim some loss of household items, when a roof falls on those items due to an earthquake. However, your roof that caved in is not covered. Other general policies may specify…”unless caused by earth movement/earthquake. In most states, Earthquake coverage is a separate policy with a separate premium.
Most insurance companies offer Earthquake Insurance. Starting with your current homeowner’s insurance company, inquire of the cost of earthquake insurance for your home or business. Premiums differ widely between insurance companies, and area. If there is a greater probability of an earthquake in your area, the cost of Earthquake Insurance will reflect that. The type of structure you are insuring will also vary. Brick tends to be higher than wood structures. If your insurance company’s premiums for earthquake insurance seem much too high, it is good to shop around. If you have access to the internet through home, business, school or library, you can easily compare rates for all companies that offer insurance in your state. Entering “insurance” in the internet browser, will bring up pages of insurers. You can receive free quotes from any insurance you query. If internet is not an option, use your local library to look up Insurers, call and have them send you appropriate information. Some other handy resources are your State’s Insurance Commission, Office of Consumer Affairs, and Consumer Reports. These resources can assist you with discovering the quality of the insurance companies you are investigating – has there been any complaints lodged against a particular insurance company, how do they rate in comparison to other insurance companies, and how long have they been in business.
This sort of information will provide you assurance that you are considering only companies with a good record. When you pay your premiums in good faith, you need to know before a time of crisis that you are dealing with a company who will perform well.
In addition to the cost of yearly premiums, earthquake policies come with a deductible. Some are a flat rate. For example, your premium may be $900.00 a year, and your deductible is $5,000. That would mean that, if you have earthquake damage, you must pay $5,000.00 of the cost to repair/replace. Most Earthquake Insurance, however, is a percentage. The percentage can vary as wide as $1 per $1,000 insured, to $20.00 per $1,000. So, if your percentage is $10 per 1,000, and your structure is insured for $100,000. Your deductible would be $10,000. If your home is worth $600.000 and above, such deductible requirements could be prohibitive.
Other crucial issues in earthquake insurance are “loss of use” expenses. Where will you live or conduct business until your property is rebuilt? This may not seem very important, however, if a major earthquake hits your area, your needs for repairs are in line with everyone else. It is possible to have “loss of use” for up to a year! Also, to be considered are “other structures”. This would include barn, pool, detached garage, or tool shed. You will need to determine an overall value of personal possessions as well. Some insurance companies will require you to rebuild the other structure and keep receipts for re-purchasing of personal items. Then and only then will they reimburse you for anything over your deductible. Other insurance companies will pay total or percentage of loss, at time of loss, no replacement required. This is an important factor. If your personal possessions are deemed a total loss and your insurance sends you a check for that covered loss, this money can help you recover from the deductible, and enable you to start rebuilding.
If, at this point, you feel overwhelmed, get a sheet of paper and a pen. Make columns to the left and write in the names of insurance companies. On the top of your sheet make rows with these headings: Deductible, Other Structures, Loss of Use, Personal Possessions, Total Yearly Premium, and Company Rating. Take your time in adequately filling in the details. When Earthquake insurance is a must and premiums/deductibles are high, your strategy in planning may determine just how helpful your coverage will be in time of crisis.
With your sheet of paper, finally filled out, you can see the best overall value in each different insurance company. One company may have a higher premium, but an affordable deductible. One company may require you to replace before receiving cash for loss, while another company will use such loss as part of your deductible, thus saving you money in the long-run.
http://www.essortment.com/home/tipsfindingear_smto.htm
Whether you are a homeowner, business owner or renter, if you live in earthquake territory, you must consider insurance to cover the risk. There are a handful of states which have no recorded earthquake activity and there are quite a few with no activity within the past 30 years. However, did you know that Charleston, South Carolina, was nearly demolished in 1886 by a 7.3 quake and damage was reported as far away as Ohio, Alabama, and Kentucky? In 1811 the New Madrid area of Arkansas was hit with a 7.0 and a 7.7 quake, and one of the largest recorded quakes with a magnitude of 8.0 hit the same region on the Missouri side in 1812. If a quake within those magnitudes hit your home would you be able to rebuild?
It is certainly worth your time to investigate whether your property is at risk of such catastrophic damage. Once you have established that you are at risk, the time has come to explore your investment in Earthquake Insurance.
You may think you are covered under your general homeowners or renter’s policy. All standard homeowner insurance policies list exactly what they cover. It is worth your time to re-read your policy. Some will provide coverage for “falling objects” without specifying what caused the objects to fall. With such a general homeowner’s policy, one may be able to reclaim some loss of household items, when a roof falls on those items due to an earthquake. However, your roof that caved in is not covered. Other general policies may specify…”unless caused by earth movement/earthquake. In most states, Earthquake coverage is a separate policy with a separate premium.
Most insurance companies offer Earthquake Insurance. Starting with your current homeowner’s insurance company, inquire of the cost of earthquake insurance for your home or business. Premiums differ widely between insurance companies, and area. If there is a greater probability of an earthquake in your area, the cost of Earthquake Insurance will reflect that. The type of structure you are insuring will also vary. Brick tends to be higher than wood structures. If your insurance company’s premiums for earthquake insurance seem much too high, it is good to shop around. If you have access to the internet through home, business, school or library, you can easily compare rates for all companies that offer insurance in your state. Entering “insurance” in the internet browser, will bring up pages of insurers. You can receive free quotes from any insurance you query. If internet is not an option, use your local library to look up Insurers, call and have them send you appropriate information. Some other handy resources are your State’s Insurance Commission, Office of Consumer Affairs, and Consumer Reports. These resources can assist you with discovering the quality of the insurance companies you are investigating – has there been any complaints lodged against a particular insurance company, how do they rate in comparison to other insurance companies, and how long have they been in business.
This sort of information will provide you assurance that you are considering only companies with a good record. When you pay your premiums in good faith, you need to know before a time of crisis that you are dealing with a company who will perform well.
In addition to the cost of yearly premiums, earthquake policies come with a deductible. Some are a flat rate. For example, your premium may be $900.00 a year, and your deductible is $5,000. That would mean that, if you have earthquake damage, you must pay $5,000.00 of the cost to repair/replace. Most Earthquake Insurance, however, is a percentage. The percentage can vary as wide as $1 per $1,000 insured, to $20.00 per $1,000. So, if your percentage is $10 per 1,000, and your structure is insured for $100,000. Your deductible would be $10,000. If your home is worth $600.000 and above, such deductible requirements could be prohibitive.
Other crucial issues in earthquake insurance are “loss of use” expenses. Where will you live or conduct business until your property is rebuilt? This may not seem very important, however, if a major earthquake hits your area, your needs for repairs are in line with everyone else. It is possible to have “loss of use” for up to a year! Also, to be considered are “other structures”. This would include barn, pool, detached garage, or tool shed. You will need to determine an overall value of personal possessions as well. Some insurance companies will require you to rebuild the other structure and keep receipts for re-purchasing of personal items. Then and only then will they reimburse you for anything over your deductible. Other insurance companies will pay total or percentage of loss, at time of loss, no replacement required. This is an important factor. If your personal possessions are deemed a total loss and your insurance sends you a check for that covered loss, this money can help you recover from the deductible, and enable you to start rebuilding.
If, at this point, you feel overwhelmed, get a sheet of paper and a pen. Make columns to the left and write in the names of insurance companies. On the top of your sheet make rows with these headings: Deductible, Other Structures, Loss of Use, Personal Possessions, Total Yearly Premium, and Company Rating. Take your time in adequately filling in the details. When Earthquake insurance is a must and premiums/deductibles are high, your strategy in planning may determine just how helpful your coverage will be in time of crisis.
With your sheet of paper, finally filled out, you can see the best overall value in each different insurance company. One company may have a higher premium, but an affordable deductible. One company may require you to replace before receiving cash for loss, while another company will use such loss as part of your deductible, thus saving you money in the long-run.
http://www.essortment.com/home/tipsfindingear_smto.htm
Saturday, June 30, 2007
Real estate agent vs. realtor
Learn the difference between real estate agents and realtors, as well as how to choose one.
If you will soon be buying or selling a home, you will need the assistance of a professional real estate agent or realtor. You have probably heard these terms used interchangeably, but real estate agents and realtors are not precisely the same.
All realtors are real estate agents, but not all real estate agents are realtors. In the United States, the realtor designation applies to those real estate agents who are members of the National Association of Realtors (NAR), or whose firms belong to that organization. The National Association of Realtors, founded in 1908, is the largest professional organization for real estate agents. It has over three quarters of a million members in the United States, and it is divided into state and local organizations.
Is There an Advantage to Using a Realtor?
If you belong to a professional organization yourself, you know how much you benefit from the chance to keep up in your field and communicate with your colleagues. Real estate agents who join NAR reap similar benefits. While all real estate agents must pass a licensing test before they are permitted to enter practice, attaining the realtor designation adds an extra layer of certification. Realtors agree to adhere to a strict Code of Ethics and Standards of Practice which protect you as a home buyer or seller.
NAR offers additional certifications that extend beyond the realtor designation. The organization encourages it members to be strong generalists, but also to develop an area of specialty. To that end, it offers a number of designations that a member can achieve, based on the kind of property they handle most often. When you are investigating real estate agents, you can ask about these designations in addition to asking if they are NAR members. The designations that a homebuyer is most likely to be interested in are ABR (Accredited Buyer Representative), which reflects expertise in representing buyers, CRS (Certified Residential Specialist), which reflects expertise in listing and selling residential properties, and ALC (Accredited Land Consultant), which reflects expertise in dealing with undeveloped land, including individual lots.
Certified Residential Specialists have their own organization alongside NAR, the Council of Residential Specialists, with more than 30,000 members. Attaining this designation shows that a real estate agent is committed to working with homebuyers and sellers, has reached a certain volume of transactions, and has completed their education requirements.
Choosing a Realtor
Going with a real estate agent who can use the realtor designation means working with a committed professional. Once you’ve decided to work with a realtor, however, you will need to choose one, and not all realtors are created equal. The NAR and CRS websites both have search functions to help you locate their members, and this can be a place to start. Ask friends, family members and colleagues who have moved recently about their experiences with their realtors. Talk to several realtors to see who might be a good fit, and ask about the realtor’s special qualifications and experience, particularly with any special needs you might have. Ask the agent if he or she represents mostly buyers, mostly sellers, or an even split. If you’re buying, you’ll want an agent who specializes in working with buyers, and vice versa.
Be especially careful if you’re selling your home. You might be tempted to work with the realtor who quotes you the highest price for your house - but this realtor might take longer to sell your house (and at a lower price than you first talked about) than a realtor who is realistic with you from the beginning.
http://www.essortment.com/home/realestateagen_smrv.htm
Market value vs. appraised value
The difference between market value and appraised value can be easily explained with the definition of each term
Market value can be defined as the highest price a buyer is willing to pay and the lowest price a seller is willing to accept on a particular piece of property. Another definition for market value is the price a house will sell for within a certain amount of time. One more definition for market value is that it is the most probable price a particular property should sell for in a competitive and open market with all conditions for that market being met by the property, such as the buyer and seller acting on their own and the price not being affected by any undue stimulus. Market value is usually not the price the property could have been sold for, but is the price the property is sold for. Several factors influence market value. These are location to a good school district, well fitting additions to the existing house, well-maintained neighborhood, the house not being over improved or the largest house on the block, and the last is that the style of the house matches the neighborhood it is in. Other factors to consider are the motivation of the buyer and seller, how well informed both parties are, the amount of time the property has been on the market, payment arrangements, and the final price being normal, not being affected by any special or creative financing or sales concessions by any party to the sale.
Appraisal value is defined as the opinion of a qualified appraiser, based on the knowledge, experience and analysis of the property being sold. A thorough property appraisal generally scrutinizes factors that may benefit the homeowner to become acquainted with. These factors include the current market value for same type home, in same condition and in the neighborhood of the homeowner’s property. Considering fluctuations in the real estate market is important as well as the considering the demand for housing of that type at that particular moment must be another consideration.
Appraisal companies generally have access to census data for the particular area as well as the statistics regarding local home sales for the city, county and state where the property is located. These appraisal companies will also have the ability to research the previous sales as well as the tax records of the property. Having access to these records affords the appraisal company the ability to acquire all the facts pertaining to the property and consequently to present a clear value of the property. Getting a thorough appraisal offers many advantages to the seller as well as the buyer.
The difference between market value and appraised value can be easily explained with the definition of each term. The market value of a home, based on the buyer, is the price the market is willing to pay for the property in question. The appraised value is the unbiased value of the property after a qualified person who is generally employed by an appraisal company, real estate company, lending institute or a bank, has completed an inspection on the property.
http://www.essortment.com/family/marketvalueapp_slzl.htm
Comparing neighborhoods: schools, traffic, taxes and other concerns
Issues and concerns when comparing neighborhoods, such as schools, taxes, traffic, and availability of services
Shopping for a new house or apartment can be fun and exhilarating, or extremely tiresome, as all the properties start to resemble one another after you have looked at several dozen. When this occurs, other important aspects of home hunting, which should be priorities, are oftentimes ignored; the neighborhoods themselves, and other items of issue when choosing a place to live, such as traffic issues, schools, taxes, and other properties that are adjacent or nearby. In addition, in these modern times, some issues that in the recent past, never even existed, such as accessibility to high-speed internet.
A real estate agent can help you on some of these issues, others will be affected by personal preference, and others still, will need to be investigated by you, the shopper, yourself.
Tax Issues
A real estate agent will answer tax questions, in part, but knowing if there are any pending tax milleages, or other ongoing issues, such as a new development nearby that may change the tax base, need examining. What the previous owners paid in taxes is a major part of the overall tax picture, but bear in mind, it is not the complete tax picture.
Traffic
Sometimes, traffic can be an obvious concern when house shopping. The property may be located on a busy street or near a known busy intersection. However, sometimes, the traffic issues at hand are not so obvious. The time of day that you visit a property may give a false sense of quietness, when in reality other times of the day the traffic is both heavy and loud. Inquire of the real estate agent if traffic is busy at certain times, and, before committing to a property, visit the property at different times of the day. Car and truck traffic are not always the only forms of traffic that need consideration either, nearby train tracks, flight paths of airports, and bus traffic all need consideration.
Schools
Where are they, how many, any private schools nearby, what types of transportation are offered, what, if any, special subjects do they offer, what grades do they encompass…The list of questions of inquiry into the schools that service the locale you are interested in, should be as specific as can be. If possible, visit schools that your children would attend if you were to choose a particular property. If you, as an adult, are considering going back to school or college, are there any colleges or adult education centers located within a convenient distance. Are there any residency rules required for attendance, and would you qualify if you chose a certain residence over another.
Availability of Services
High-speed internet is a convenience that many of us take for granted, yet it is not available everywhere. Many rural and urban locales do not offer any type of internet service, or if they do, it is commonly dial up.
Cable is another service that many take for granted, yet also, is not always available. Satellite service can usually fill the gaps, but even satellite does not work everywhere, or is not an option for different reasons.
Cellular phones are one more convenience of the times, and a growing portion of the population choose to use their cellular service as their main type of telephone, often because they can move, and they do not ever have to change their telephone number. Check that your current cellular service will work in the new home, and if not, will it be that big of an issue to change providers.
http://www.essortment.com/family/comparingneighb_skjo.htm
Tips for seller financing
Seller financing can accelerate the sale of your home and can maximize your return on your real estate investment. Learn how to finance the sale of your home.
When selling your home, there are many ways to attract prospective buyers and to maximize your profit. One way to attract a larger pool of buyers is to offer to finance the purchase of the home yourself. While this is a potentially lucrative position, it can be wrought with perils if you aren’t careful.
First, ensure what you want to do it legal. Homes with an existing mortgage may not always be titled to the new buyer without paying off the first mortgage. As soon as the deed is titled, your existing mortgage lender may call the loan. If you cannot afford to pay off the existing mortgage and the new buyer cannot obtain financing, you could face a lawsuit. Check with the current lender if you have a mortgage to make sure you can carry a note for the new buyers.
In some cases, a lease/option is the better way to go. You are still financing the purchase of the home, and ensuring the sellers can buy the home at a reasonable price within a set period of time. The only difference is the home is not deeded to the new buyers, and part of each payment is credited toward the purchase price. This option is best exercised when the person buying your home cannot obtain traditional lending at this time. Typically, lease/options are two years in duration and afford the buyer time to build a high enough credit score to complete the purchase with traditional bank financing.
If you do not have an existing mortgage or are cleared by the current holder of your mortgage to complete the transaction, you will still want to secure a significant down payment. Pull a credit report on the prospective buyers. If their score is particularly low, ask why. Ask for a higher down payment the lower the score goes. The higher the down payment, the less risk you take in offering to hold the mortgage. Down payments are not refundable, and if your buyer walks away, he loses his investment. A struggling family is a lot less likely to leave behind a $15,000 deposit than a $1,500 one.
Review the published mortgage rates before deciding how much interest to charge. Excellent credit scores afford more consideration than poor ones. Bad credit lenders often charge in excess of 13% for the mortgages they write. Next, determine the duration of the loan. You can decide to carry the mortgage as long as you wish. Many people are comfortable with a 30 year note, though you may not want to wait 30 years to fully cash out from your property. Mortgages are amortized over a set period of time. You can carry a mortgage for one, two, five, ten or twenty years or anything in between and base it on a 30-year amortization schedule. This provides you with the highest rate of interest return while lowering the borrower’s monthly payment.
You will use a title company to record the transfer of the deed in most cases. You may also wish to have the title company collect the monthly payments from your borrower and to disperse the monthly payments in accordance with your wishes. They assume the responsibility of reporting the loan to the credit agencies and for ensuring the interest is calculated correctly. This is especially helpful come tax time when your buyers may want to write off their interest. They also prepare the W-9 form you will need to attach to your tax return to report your interest as earnings.
You need to ensure the title company records the mortgage on the property properly, and secures a lien against the property in the event the buyers stop making their payments. Foreclosing on a property can be difficult and can take a long time to complete. During that time, your buyers can cause a lot of damage. Take out an insurance policy to guard against this type of damage in the event you need to foreclose on the property.
You may wish to consult with a lawyer to have the loan documents created. Many lawyers will be able to insert clauses that will help you recoup some of your losses in the event you need to foreclose on the property. Consider adding rules about the way the buyers shall maintain the property until bank financing is secured. This helps to ensure the property is kept in good shape while the buyers occupy it. By maintaining the property’s value, it makes certain you can sell your property with a minimal amount of effort to a new buyer in the event the current buyer’s deal falls through.
Offering seller financing can be a lucrative way to increase your net worth if you follow these tips.
http://www.essortment.com/lifestyle/tipssellerfina_sjma.htm
When selling your home, there are many ways to attract prospective buyers and to maximize your profit. One way to attract a larger pool of buyers is to offer to finance the purchase of the home yourself. While this is a potentially lucrative position, it can be wrought with perils if you aren’t careful.
First, ensure what you want to do it legal. Homes with an existing mortgage may not always be titled to the new buyer without paying off the first mortgage. As soon as the deed is titled, your existing mortgage lender may call the loan. If you cannot afford to pay off the existing mortgage and the new buyer cannot obtain financing, you could face a lawsuit. Check with the current lender if you have a mortgage to make sure you can carry a note for the new buyers.
In some cases, a lease/option is the better way to go. You are still financing the purchase of the home, and ensuring the sellers can buy the home at a reasonable price within a set period of time. The only difference is the home is not deeded to the new buyers, and part of each payment is credited toward the purchase price. This option is best exercised when the person buying your home cannot obtain traditional lending at this time. Typically, lease/options are two years in duration and afford the buyer time to build a high enough credit score to complete the purchase with traditional bank financing.
If you do not have an existing mortgage or are cleared by the current holder of your mortgage to complete the transaction, you will still want to secure a significant down payment. Pull a credit report on the prospective buyers. If their score is particularly low, ask why. Ask for a higher down payment the lower the score goes. The higher the down payment, the less risk you take in offering to hold the mortgage. Down payments are not refundable, and if your buyer walks away, he loses his investment. A struggling family is a lot less likely to leave behind a $15,000 deposit than a $1,500 one.
Review the published mortgage rates before deciding how much interest to charge. Excellent credit scores afford more consideration than poor ones. Bad credit lenders often charge in excess of 13% for the mortgages they write. Next, determine the duration of the loan. You can decide to carry the mortgage as long as you wish. Many people are comfortable with a 30 year note, though you may not want to wait 30 years to fully cash out from your property. Mortgages are amortized over a set period of time. You can carry a mortgage for one, two, five, ten or twenty years or anything in between and base it on a 30-year amortization schedule. This provides you with the highest rate of interest return while lowering the borrower’s monthly payment.
You will use a title company to record the transfer of the deed in most cases. You may also wish to have the title company collect the monthly payments from your borrower and to disperse the monthly payments in accordance with your wishes. They assume the responsibility of reporting the loan to the credit agencies and for ensuring the interest is calculated correctly. This is especially helpful come tax time when your buyers may want to write off their interest. They also prepare the W-9 form you will need to attach to your tax return to report your interest as earnings.
You need to ensure the title company records the mortgage on the property properly, and secures a lien against the property in the event the buyers stop making their payments. Foreclosing on a property can be difficult and can take a long time to complete. During that time, your buyers can cause a lot of damage. Take out an insurance policy to guard against this type of damage in the event you need to foreclose on the property.
You may wish to consult with a lawyer to have the loan documents created. Many lawyers will be able to insert clauses that will help you recoup some of your losses in the event you need to foreclose on the property. Consider adding rules about the way the buyers shall maintain the property until bank financing is secured. This helps to ensure the property is kept in good shape while the buyers occupy it. By maintaining the property’s value, it makes certain you can sell your property with a minimal amount of effort to a new buyer in the event the current buyer’s deal falls through.
Offering seller financing can be a lucrative way to increase your net worth if you follow these tips.
http://www.essortment.com/lifestyle/tipssellerfina_sjma.htm
Real estate tips: determining property value
The ability to assess property values is not just for professionals, research and comparison of recent sales will allow you to develop house valuation acumen.
Maybe it is time to buy a house or maybe you are considering selling or refinancing one you already own. Chances are you have been keeping an eye on the real estate market and what is available. If that is the case, congratulations! You’ve taken the first step towards determining the market value of your current or future home! However, the work does not stop with merely knowing recent sales in your area. Quite a lot goes into determining the actual value of any home. Square footage, special features, neighborhood, age, and condition are among the many things appraisers consider when establishing the value of a home. That said, you do not have to be an appraiser to gain insight into the value of a particular property. The best way to achieve a basic skill in determining the value of any home is through researching and comparing homes that have recently sold.
Realtors have at their fingertips current home listings as well as recent sales. They, and mortgage companies, refer to homes sold within two miles and 6 months of a home in question as “comps”. So, how important is a comp, or comparable listing, to your research? Well, suppose you are interested in buying a 4 bedroom, 2 bath home that is listed at $225,000. How do you know if it is a fair value? A good place to start is to compare it with recent comps of similar size. Is the list price in line with recent sales? What should you think if that amount is $15,000 more than another 4 bedroom, 2 bath that sold two weeks ago not two streets over? Is the seller asking too much? Not necessarily. Now is the time to look more closely at comparable home sales and take note of any differences between the house in question and the closest comps. For instance, does the more expensive property have special features? Is the lot especially large? Does it have more square feet, extra buildings, or a pool? If so, the asking price may be more than justified. In order to know how much those extras add to the value of a property you may need to move beyond what you can glean from public information sources and start creating comps of your own. In other words, if you are serious about getting a good idea of property values, you would be well advised to learn as much as you can about homes currently on the market. Start by compiling detailed records about those properties. If a basic 3 bedroom, 2 bath house on an average sized lot sells for $185,000, but the same model house on a lot twice the average size recently sold for $195,000 you can be fairly certain that an extremely large lot adds $10,000 to the value of a home in that neighborhood. Comparing recent sales of similar homes and listing their attributes versus their sales price can help you come up with a good idea of the basic value of certain property characteristics. This may entail much more effort than merely scanning the Sunday paper and using a search engine designed to find recent sales in your area. So, be prepared to not only keep up with online listings, but also to visit open houses, take notes, and follow up on sales prices. Still, keep in mind that even your estimates based on this information are only as good as the amount of time that has elapsed since you gathered your facts.
Timing in the real estate market can have a tremendous effect on home values. Prices tend to be higher in the summertime because there exists a preference to move during that season. The weather tends to be warmer and parents appreciate the benefits of not changing their child’s school during the academic year. Since demand is greater, prices are usually higher. The reverse is true for the wintertime. Houses may remain on the market longer and the sales price may be lower than expected. In short, comparing sales of homes in opposite seasons could lead to a slightly skewered determination of value. Also, season aside, a lot can change in six months. Major employers can cut employees or add more jobs and that directly affects the demand and, hence, value of property in a relatively short amount of time. In other words, it is smart to gather information, but do not forget to take into account the larger picture of season and events when seeking to apply it to home valuation. This especially holds true if the house market is hot. During times of particularly high demand and low supply, home values can double within a year. This is a glorious time for a home seller, but a very dangerous time for a homebuyer. Home prices tend to inflate rapidly as bidding wars ensue. Tensions may run high as buyers, eager to snatch up the house of their choice, get caught up in the chase and try to out do their competitors. When that happens, it can be very difficult to assess the real value of a home. When what was worth $175,000 three months ago is now valued at $200,000, what will it be next week? An even more frightening question for the buyer (and any potential lenders) is whether or not rapidly elevated values are genuine. Will they hold if the supply increases? Will they plummet if one business eliminates jobs? Even armed with the best knowledge, a seller is well advised to consider carefully the long-term stability of prices before jumping into an intense market. If you have any doubts about what decision to make, consult several professionals and get their take on the longevity of recent prices. They make it their business to cultivate contacts that will provide them with information regarding future plans that may impact the real estate market. Generally speaking though, unless you plan on investing in multiple properties or the market is unusually fast paced, you can get a pretty good idea of property values without the assistance of a professional.
Whatever your real estate goal, understanding property values can be done by anyone from a housewife to a retiree. Even just by keeping track of recent sales and noting the value of different amenities, you can build up a storehouse of knowledge with which to ascertain the value of other comparable properties. The caveat is that you must know how and when to apply your newfound skill. Even though you may develop a valuation sense that is always right on the money, some real estate markets demand the expertise of a skilled professional. Yet, that does not mean you should not arm yourself with all the information you can gather. Having a feel for the market will allow you to be more comfortable in the choices you make and, if necessary, more easily justify the value of a house in the face of a recalcitrant lender. Knowledge is, as the saying goes, power and that definitely holds true when it comes to the home valuation process.
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