Buying a Home With Resale Value

There are many things that should be considered when buying a home. Since most homebuyers expect to buy a bigger and better home someday in the future, resale value is an important factor in decision-making. You use the proceeds from selling one home to buy the next one.

While no one can guarantee that your home will grow in value, there are steps you can take that maximize your potential gain.

"Location, Location, Location"

"Location, location, location," is a common and almost hackneyed phrase in real estate literature. Your agent may even throw it at you when you ask for advice about buying a home. However, what does "location, location, location," actually mean? Why repeat it three times?

Mostly, "location" is repeated to emphasize that it is extremely important to the resale value of your home. The idea is to buy a house that will appeal to the largest number of potential future homebuyers. A careful choice of location can minimize potential negative influences on future resale value, and maximize positive influences.

Focusing on resale value requires you to make several different "location" choices. The first choice you have to make is "which community?" At the very least, you should narrow your choice down to just a few local communities.


http://www.realestateabc.com/homebuying/resale.htm

Scottsdale, Arizona Real Estate Home Buying Tips

Purchasing a home may be the single most important investment of your life, and possibly the largest purchase you will ever make. When you are dealing with hundreds of thousands of dollars, it may be a good idea to use a Realtor with experience, a fine knowledge of the area, education, and aggressiveness. An aggressive Realtor that knows how to negotiate the price of the home with you effectively may be the single most important factor when getting a good price on a home.

The first thing you want to do when purchasing a home in Arizona is to get pre-qualified for a home loan. This step does not take long, but is extremely necessary. In Arizona, you can not get into a contract with out getting pre-qualified for a loan. When you get pre-qualified for a loan, the lender the pre-qualifies you will produce a document called an LSR. Once you have a loan status report, you are able to write an offer on a home.

When purchasing a home, it is usually a good idea to see what has sold recently in the area. When you find the home that you want to purchase, a good Realtor will give you a comparative market analysis. This report will show you recently sold properties in your neighborhood. This will give you an indication of the market conditions in the area you are planning on buying in. You will be able to see if prices have been falling, rising, or remaining steady. This may or may not be an issue, but I do not believe anyone wants to over pay for a home.

Once your have made on offer on your home with your Realtor and the contract has been accepted by the seller, you move in to the inspection period. Generally, you have ten days to conduct inspections. It is a very good idea to have the home inspected by a professional home inspector. If you do not know one your Realtor should be able to recommend one. A home inspection will cost anywhere between three hundred dollars and five hundred dollars depending on the size of the home. This is money well spent because you will know exactly what is wrong with the home.

The inspectors will inspect the electric system, plumbing, roof, flooring, pool equipment, appliances, doors, showers, and several other items. After the inspections have been completed you then ask the seller to make repairs with a document called the Buyers Inspection Notice and Sellers Response. It is a contract within the contract. The buyer and the seller negotiate the terms of what is going to be fixed and what is not. The Realtors will quarterback the process, but again, it is imperative you have a Realtor that is aggressive so that you get more items fixed during the inspection period.

After the terms of the Buyers Inspection Notice and Sellers Response have been negotiated and agreed upon, it is usually smooth sailing until you go into the title company to sign your final loan documents. After the inspection period, you will want to obtain home owners insurance, and make sure all your utilities will be turned on in your name upon move in. Make sure you work with your lender so that there are no hiccups at the end of the escrow. The lenders job at the end of escrow is to deliver the loan documents to the title company so you can sign the documents. Once the documents have been signed the, title company will deliver the signed documents back to the lender so that they can fund your loan. Once the loan has been funded and recorded, you may now move in to your new home.

Again, it is of paramount importance to use a Realtor that knows what they are doing, that has ample experience, and makes sure you best interests are priority. Please visit the link below to get in contact with a professional, experienced, educated, and aggressive Realtor. You will get the quality representation you deserve.

Nick McConnell

Executive Sales Associate for Coldwell Banker Residential Brokerage in Scottsdale, Arizona. Lived in Arizona all his life, Graduated from Northern Arizona State University and has been a Realtor ever since.


http://ezinearticles.com/?Scottsdale,-Arizona-Real-Estate-Home-Buying-Tips&id=650742

Credit is Key to Home Buying

Early on in the home buying process, you should review your credit situation. That way, if you need to improve your credit score, you can start right away.

Improving a credit score takes time, so you want to find out where you stand by (A) obtaining your credit report and score, (B) comparing yourself to the national average, and (C) working to improve your credit score if necessary.

Here are some resources to get you started:

10 Ways to Boost Your Credit Score
This excellent article is written by a mortgage expert, and it provides specific advice on how to improve your credit score in advance of buying a home.

Improving a Credit Score
Here we have gathered advice from BankRate.com, CNN Money, and a wealth of other expert sources.

All About Your Credit Report
Your credit report is different from your credit score. Banks use your credit report to create your credit score, which determines how likely they are to loan you money. This article explains the credit report in more detail, also providing instructions on how to request and review your credit report.

Remember, the better your credit score, the better your chances of qualifying for a mortgage at a good interest rate. So be proactive in maintaining good credit. Start early and focus on the long-term.

Happy home buying!


http://homebuyingtips.statesmanblogs.com/

Subprime Mortgage Loans - A Borrower's Guide

Subprime mortgage lending and loans have certainly been in the news a lot lately. They usually tag along with a news story about the current spike in home foreclosures. In fact, I saw a story about it just a few days ago on KVUE.

There are many reasons that people default on mortgage loans and go into foreclosure. So it's not really possible to blame any one factor. But one thing is perfectly clear -- there is a connection between subprime mortgage lending and the number of foreclosures in the Austin area (and beyond).

Adjustable rate mortgages (ARMs) are aother piece of the puzzle. I call it the subprime-ARM-foreclosure triangle, and it's partially responsible for the current spike in home foreclosures.

So what are subprime mortgage loans, and how do they relate to foreclosures? And if you find yourself in a subprime lending situation, how can you protect yourself from becoming another foreclosure statistic?


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Home Foreclosures Still Rising

In a previous post, we talked about buying a foreclosed home in Austin. But as foreclosures continue to rise (according to the latest news from Bloomberg), I feel I should shift gears and talk about some of the leading causes of foreclosure ... in the hopes it will help prevent a few folks from becoming yet another statistic.

Definition of Foreclosure
Most of you probably know this, but we will start with the basics anyway. Basically, foreclosure is what happens when you can't pay your home mortgage loan and the bank takes over the property. It is a legal process in which the mortgage property is sold to pay the loan of the defaulting (non-paying) borrower.

Common Causes of Foreclosure
Obviously, the root cause of foreclosure is always the same. For one reason or another, the homeowner(s) is no longer able to pay the mortgage. But there are other common factors that lead to this, which we will discuss.

But how can somebody qualify for a mortgage and then be unable to make payments?

This is a common question, for which there are two common answers: either (A) the person's income or debt situation changed after obtaining the mortgage loan, or (B) the lender qualified the person for a subprime mortgage loan with risky conditions associated with it.

Sure, there are more causes than these two. But both the federal government and the mortgage industry have conceded that subprime lending is a big factor in the current spike of foreclosures.

To learn more about this, read my tutorial on the subprime adjustable-rate mortgage.

The best thing you can do to avoid a possible foreclosure situation is to buy within your financial means. Use a free mortgage calculator to break the sale price down into monthly payments, then compare those payments to your budget, your current expenses, etc. Don't overstretch yourself, and don't make the common mistake of thinking, "Well, I plan to make more money soon, so I can get by."

If you can't afford a certain level of mortgage today, you shouldn't plan on being able to in the future. There's too much uncertainty and risk in that line of thinking.


http://homebuyingtips.statesmanblogs.com/

Capital Gains Tax: Is 'A' House, One House?

The villain causing the confusion is the article ‘a’ used before ‘residential house’. The word seems to imply that the exemption would be available only against purchase of one residential house and not two, or more. In other words, when an assessee invests the capital gains u/s 54 or the net sale proceeds u/s 54F in purchasing or constructing two residential houses, only one of these, as opted for by the assessee, will be allowed for the tax concession.

Now, under this background, one can’t help but wonder whether it was plain English usage that led to the use of the article “a” or did the lawmakers really intend the exemption only for one house. For example consider the following sentences ---

“The constitution bestows upon a citizen the following rights.” --- Does this mean only one citizen or all citizens?

“A man should stand by his rights and duties.” --- Does this pertain only for one man or more than one man?

“A person who comes to the rescue of another person in difficulty is a good Samaritan.” --- Does this include all those persons who help the one or more in difficulties or only one of them?

My feeling is that “a” is used as an article to precede a noun. The other two articles “an” or “the” could not be used for grammatical reasons; therefore “a” had to be used.

Adopting the meaning of the article “a” as “only one” is against the very spirit, purpose and intent of the legislation which desires to give a boost to the housing sector. No wonder, this ambiguity has given rise to conflicting case laws.

In the case of Fulwanti C Rathod v ITO, ITAT Mumbai Bench ‘E’ (ITA 1092/Mum./1995), dt 3.5.02, the learned judge observed, “The word ‘a’ can be equivalent to the word ‘any’. Also as per the General Clauses Act, singular includes plural.” The judge referred to the principle of interpretation that when there was a doubt as to its meaning, it had to be understood in the same sense it harmonised with the objective of the enactment. Referring to the Wealth-tax Act and the Estate Duty Act, the words used therein were, ‘one house’ as against the words ‘a house’ used in the Income-tax Act.

On the other hand, in the case of Mrs. Gulshanbanoo R. Mukhi v Joint CIT Appeal #3369 (BOM) of 2000 [AY 96-97] dt 16.1.02 ITD 649 (Mum) ITAT Mumbai Bench ‘C’, it was held that ‘a’ can be ‘any’ but ‘any’ cannot be ‘many’.

Allahabad High Court in the case of Shiv Narain Chaudhari v CWT (108ITR104) held that if the two flats of the building are situated in same compound and within common boundaries and have unity of structure, then they could be regarded as constituting one house.

In spite of such contradictory decisions arising out of ambiguity, CBDT has not issued any clarification in spite of requests from many quarters, including yours sincerely. We have been given to understand that some of the ITOs have been sticking to the literal meaning of ‘a’ as ‘one’, if they do not like your face; not otherwise.

A difficulty

If the stand that ‘a’ is not two is accepted, then it can be claimed that ‘a’ is also not half. Consequently, if an assessee reinvests an amount in a residential property, jointly held with another individual, say his wife, the related exemptions either u/s 54 or u/s 54F would not be available. Yes, this appears to be preposterous, but we have very strong reasons, backed up by a case law, ITO vs Rasiklal N. Satra (280ITR243 dt 19.9.05).

Here the assessee declared capital gains of Rs. 6,68,698 on sale of shares and claimed exemption u/s 54F by investing the same in purchase of residential flats at Vashi, Navi Mumbai. The Assessing Officer noticed that the assessee was co-owner of a flat in Sion (West), Mumbai. Accordingly, the assessee was asked to explain as to why exemption u/s 54F be not denied. In reply, the assessee contended that he was not an independent owner of the house and exemption can be denied only where the assessee is the absolute owner of the house. He also filed details of purchase of the house which showed that he along with his wife had purchased the house on April 13, 1994, for a total consideration of Rs. 3,05,000 out of which the assessee had invested Rs. 1,60,000 and the balance amount was invested by his wife. However, the Assessing Officer did not accept the contention of the assessee since in his view, the assessee could be said to be the owner of house at Sion (Mumbai) on the date of sale of the original asset.

The learned judge observed, “We proceed on the basis of the language employed by the Legislature. The word ‘residence’, as per Strand's Judicial Dictionary, means a place where an individual or his family eat, drink and sleep. So a residential house would mean a building or part of the building where one can eat, drink and sleep. Here, we may clarify that house is not being equated with a building since a building may comprise of many houses. So house means an independent unit where one can eat, drink and sleep. In view of this definition, we hold that the flat at Sion, Mumbai, was a residential house since the assessee along with his family was living in that house.

“The only question remains as to whether the assessee can be said to be the owner of that residential house. The Legislature has used the word ‘a’ before the words ‘residential house’. In our opinion, it must mean a complete residential house and would not include a shared interest in a residential house. Where the property is owned by more than one person, it cannot be said that any one of them is the owner of the property. In such case, no individual person on his own can sell the entire property. No doubt, he can sell his share of interest in the property but as far as the property is considered, it would continue to be owned by co-owners. Joint ownership is different from absolute ownership. In the case of a residential unit, none of the co-owners can claim that he is the owner of residential house. Ownership of a residential house, in our opinion, means ownership to the exclusion of all others. Therefore, where a house is jointly owned by two or more persons, none of them can be said to be the owner of that house. This view of ours is fortified by the judgment of the honourable Supreme Court in the case of Seth Banarsi Dass Gupta v. CIT [1987] 166ITR783, wherein, it was held that a fractional ownership was not sufficient for claiming even fractional depreciation u/s 32 of the Act. Because of this judgment, the Legislature had to amend the provisions of Sec. 32 w.e.f. 1.4.97, by using the expression ‘owned wholly or partly’. So, the word ‘own’ would not include a case where a residential house is partly owned by one person or partly owned by other person(s). After this judgment the Legislature could also amend the provisions of section 54F so as to include part ownership. Since the Legislature has not amended the provisions of Sec. 54F, it has to be held that the word ‘own’ in Sec. 54F would include only the case where a residential house is fully and wholly owned by the assessee and consequently would not include a residential house owned by more than one person. In the present case, admittedly the house at Sion, Mumbai, was purchased jointly by the assessee and his wife. It is nobody's case that the wife is a benami of the assessee. Therefore, the said house was jointly owned by the assessee and his spouse. In view of the discussions made above, it has to be held that the assessee was not the owner of a residential house on the date of transfer of the original asset. Consequently, the exemption under section 54F could not be denied to the assessee.”

Finally

All said and done, all this is theory. In practice, the Department normally grants the exemption on tax on long-term capital gains u/s 54 or 54F only against one house where the assessee has purchased or constructed two or more houses in his own name. However, the exemption is granted even if such a house is held jointly.

Yes, this is the normal practice. But the ITOs are reported to take advantage of the ambiguity depending upon their whims and fancies.

To Conclude

If ‘a’ is one and not two or more, ‘a’ cannot be anything less than one. Clarification from CBDT is imminently required not only to enable the assessees take correct actions and a litigations, but also to ward off rent seeking, if any, by the ITOs.

http://news.moneycontrol.com/india/news/propertyexpert/capitalgainshouseproperty/capitalgainstaxisahouseonehouse/14/38/article/210927

New trend: Warranty on property

A warranty is a contractual promise. An individual making a promise is regarded as undertaking contractual liability, therefore, where a warranty exists, the maker undertakes strict liability for what he asserts. In simple words, it is an agreement between a buyer and a seller, detailing the conditions under which the seller will make repairs or fix problems without cost to the buyer.

Also, a warranty is an assurance by the seller of the property to the buyer that a property is as represented or will be as promised and the seller insures the buyer that the insurance risk or all the terms and conditions specified in the contract would be fulfilled as stated to keep the contract effective.

Indian developers are not providing any warranty on properties. The contract or the development agreement details the agreed price, payment and construction schedule, apartment plans, delivery date and the developer’s liability in case of delay in handing over possession and the developer bears no liability after he has handed over possession to the buyer of the property.

The builders are now recognising the need to commit themselves to quality construction to safeguard the interest of the investors and some developers have started offering a warranty on the building and construction material. However, this new trend was introduced for the first time in the history of real estate development by Pune-based Gera Developments, which is now being followed by other real estate developers.

The five-year warranty that is now being provided by some of the developers in India ensures that the property remains in premium condition and covers three main areas: preventive maintenance in the areas of carpentry, electrical diagnostic works, plumbing and bathroom tiles; repairs as a result of improper installation or supply from company’s end, and re-paint of the exteriors of the building to make it look new before the end of five years, which also maintains the prime real estate value of the property.

In this regard, the Government of India should introduce a new legislation that should make it mandatory for all the real estate developers to offer warranty plans to its investors, as it would build an environment of trust and transparency, which is lacking in the real estate sector at present. This will surely help the sellers in getting a better commercial value of the property and the buyers will have a peace of mind while buying such a property. The quality standards in terms of service delivery and construction are not yet up to the mark and the introduction of such legislation would automatically improve it to international level.


http://news.moneycontrol.com/india/news/propertyexpert/null/newtrendwarrantyproperty/14/38/article/187166