By Dale Beaumont
Let's do a quick test!!
1. What is your hourly rate?
2. Now divide that number by 60 and what do you get?
That's the value of your time every minute. If it's more than $1.00 you're doing well. However, how would you like to increase that figure to $100, $1000 or even $10,000 per minute? Well you can, simply by learning the art of how to NEGOTIATE. As real estate investor Hans Jakobi says, "NEGOTIATION Is The Highest Paid Work You'll Ever Do!"
A new book titled: 'Secrets of Property Millionaires Exposed!' takes people up-close and personal with eleven of the country's most successful property investors, including John Fitzgerald, Hans Jakobi, Ed Chan, Dymphna Boholt, Gordon Green, Craig Turnbull and others. In a surprisingly candid way each contributor shares their own unique wealth strategy and dozens of hints and tips from their years of experience.
The following six (6) points are the author's perspective of the contributor's views on the subject of 'The Psychology of Negotiation'.
1. Understand where the money is made
All successful property investors know that the money is made when they 'buy' and not when they sell. Buying at wholesale or 15-20% below market value is like adding rocket fuel to your portfolio's growth. By buying below market value you instantly build significant equity in your investment. You can use this equity to move onto your next property faster, or perhaps to fund renovations which in turn increases the property's value even further (more equity) and enables you to receive a higher rental return (more income).
2. Know that the deal you do is the best deal for them
Remember that if you come to a deal with the vendor, it was the best deal they had on the table. So by doing a deal with them, you have in fact helped the vendor take the property off their hands and you've paid more than what others could afford to pay. By understanding this you will make a small yet significant shift in your psychology when negotiating on a property. By having the mindset that you are there to help the vendor out of their predicament you'll be less inclined to become emotionally involved in the negotiation.
3. Get to know the vendor's needs
Although it is true that in negotiation 'information is power', it is information about the vendor's needs that will help you to reach the best deal for both parties. If you can find out the real reason why the vendor is selling, you'll know how motivated they'll be to accept your low offer. What's more, by asking questions, you'll be in a better position to offer more favourable terms and conditions. So show interest and ask questions!
4. Don't act too keenly on a property
When talking on the phone or while doing a house inspection, a trained real estate agent will ask pointed questions of you to extract information which may later be used against you to lever up the price. When this happens stay neutral and even a little nonchalant. But be careful to not come across as disinterested, otherwise you wonÕt be seen as a serious contender and you'll be left out of the communication loop. So stay relaxed and cool but with your eye on the ball.
5. Never lose your cool
Keep in mind that you'll need to be communicating with the agent and vendor over the entire length of the contract, which could be up to 90 days or more. So it's imperative you stay consistent and refrain yourself from sudden outbursts if something doesn't go right. Remember if the vendor believes they have been taken advantage of or felt offended, even the smallest request by you will be seen as an opportunity to get even. It's called human nature!
6. Be prepared to walk away
Sophisticated investors understand the deal of a lifetime comes around once a week, so don't be disheartened if one slips through your fingers. Take some time to sit and think about what happened and what you can learn from the experience. Then get on your feet and keep moving, because another deal may just be waiting right around the corner.
_____________________________________________________________________________________
About the Author
Dale Beaumont is a young entrepreneur and the creator of the 'Secrets Exposed' series. Having now released over 15 best-selling business books (available in bookstores across Australia or from www.SecretsExposed.com.au). Dale has been featured in all forms of the media and has become a sought-after speaker. To discover more about Dale's books, read his blog or to download other free articles and resources, please visit: www.DaleBeaumont.com
Photo: Courtesy of www.mastercleanco.com
Negotiation: The Highest Paid Work You'll Ever Do
How Can Inspections Save You Money in Real Estate Investment
by: Paulie Sabol
Think about this: any property you come across is likely to be a used good. Real estate investment is like a garage sale; only instead of exchanging old t-shirts and record players, you’re buying and selling the actual garage, the High Victorian, the Colonial.
You will never find the perfect house, but you may certainly find the perfect house for you. For these reasons, it is absolutely essential that your investments are inspected thoroughly by a licensed professional. The sale of property is always negotiable, and a proper third-party inspection is a tenant of the deal that you’ll want to remain always firm upon. Put it in writing, and get it signed. Leave nothing to chance.
Here are a few things to consider:
If there is wood in or on the property, you may need a separate termite and pest inspection of the premises. General home inspections focus primarily on structural and mechanical features; they don’t typically check for bugs. Here again is an opportunity to get to know your inspector. Termites, carpenter ants, mice and other bugs can severely weaken walls, floors, attics and shelving. They can chew through wiring and cause electrical problems.
Professional inspectors will likely begin at the foundation, searching for major cracks, level ground, and/or evidence of water damage (i.e. water stains, mold, mildew, and mineral deposits). Some inspectors will also check for the presence of radon gas concentrations.
The house is examined as a structural whole; angles and joints and frames must meet at proper locations to ensure a solid foundation. Plumbing and electrical systems are inspected for damage, wear, and to be certain they conform to industry specifications. Pipes are checked for leaks, rust, lead, and other chemicals. In addition, some inspectors measure flow-rate and water pressure.
It is important to have properly functioning electrical systems. Be weary of faulty wiring, uncovered switches or receptacles, incorrect grounds, inadequate or malfunctioning circuit breakers, or poor-quality GFCI trips (those tiny red buttons in the middle of your outlets, which act as miniature circuit breakers).
Air conditioning and heating systems will be checked for duct leaks, the condition of filters, and adequate capacity and flow. It is also important to ensure that the thermostat is in proper working order.
Attics are checked for proper framing and strength, noting any water leaks or obvious damage. The roof is inspected for tears or holes, loose tiles, weaknesses, and to be certain that vent pipes are sealed properly.
Appliances (i.e. stove and water heater) must comply with standards. If there is a propane or wood-burning stove, these must be checked for physical integrity and proper function.
Carpets should not show signs of inappropriate wear or water damage. All faucets must be tested for leaks.
In addition to these major aspects, your inspector may check a variety of other systems. You’ll receive a detailed report of his or her findings, and as the buyer you may use these defective items as bargaining chips during the negotiation phase. As a seller, this professional inspection may be done before listing, so that problem areas can be given attention before the property reaches the market.
Home inspection can be costly, but a few hundred dollars may well save thousands in the long-run, and there’s something to be said about peace-of-mind.
____________________________________________________________________
About The Author
Paulie Sabol, often called the ‘legal bank robber’ for his real estate financing and bank owned foreclosure investing, is a nationally recognizedreal estate investor trainerand financial thinker. Sabol, has personally completed 100’s of real estate investments, and helps real estate investors learn to make more money with creative investing. Visit his site at http://www.reiunion.com/rei.htmlPhoto: Courtesy of www.HMRInspectionsllc.com
Brokers or Lenders — Which Do You Want for Your Real Estate Mortgage?
by: John Harris
A mortgage is a mortgage is a mortgage. NOT! Not only do mortgages differ between lenders, but they also differ greatly by the lenders, themselves. There are two types of real estate originators — brokers and loan officers.
Brokers generally are self-employed professionals, who work to secure a real estate loan for you. They work through a variety of lenders and earn a fee for the transaction. Most of the mortgage lenders who advertise on the Internet are brokers.
Loan officers are employees of a bank, credit union, or other lending institution, such as a mortgage company. They sell and process mortgages and other loans only for their employers. They are usually local and in a physical location.
There are advantages and disadvantages in using both brokers and loan officers for your real estate purchase, so you need to shop for the one that is right for you and your particular circumstance.
Brokers
The advantages to using a mortgage broker for your real estate purchase are many. Usually, the better deal they get for you, the buyer, the more they are paid on the transaction — a big plus for you. If your local bank, mortgage company, or credit union has refused you a loan, a mortgage broker may be able to find a lender, even if you have bad credit — just expect to pay a higher interest rate. If your real estate is unique or commercial property, using a mortgage broker to secure a loan is at times easier and faster.
One downside of using a mortgage broker is that your mortgage loan will be sold to another lender immediately after closing. Another is that brokers choose to do either non-conforming loans, which are higher risk and usually higher interest rates, or conforming loans. This limits your loan options. Brokers do not have to disclose a “good faith” estimate on what closing costs will be, nor are they regulated by the Fair Credit Act. Additionally, they seldom have a physical office with employees offering you face-to-face customer service, and they generally are in another town or state than where your real estate is located. This means they may not understand the local market in which you purchased your real estate. Important issues may arise from the real estate classifications and terms used by your appraiser, for example.
Loan Officers
Though loan officers offer a variety in the types of loans available, you are limited to only those products offered by one institution. Usually a local institution, the loan officer will be familiar with all local regulations and issues will not arise over lack of knowledge in local market terminology.
Banks and Mortgage Companies
Bank and mortgage company loan officers will give you face-to-face customer services, at least before the closing. Like brokers, banks have the option of selling real estate loans on the secondary market. Some banks sell only low-end mortgages or those that require too much servicing with little return. Some sell the loan but keep the servicing portion, making it appear that your mortgage continues to be owned by the bank or mortgage company. They are required, however, to tell you during the initial paperwork if your mortgage may be sold. I suggest you ask before you ever get to that point, if this is a deal breaker for you.
Bank and mortgage company loan officers are licensed and must meet certain criteria. They have more criteria that you must meet, as well, in order to secure a loan (banks usually require the most). Many real estate buyers are refused mortgage loans by these institutions. Both banks and mortgage companies generally do offer better rates and terms. They also must disclose a good faith estimate on what closing costs will be, and they are regulated and audited under the Fair Credit Act.
Credit Unions
You must be a member of a credit union to apply for a loan with them. Many credit unions do not offer real estate loans. The major advantage of securing a loan from a credit union is that they pass on only actual costs of the loan to you — no broker fees or commissions. They also never sell their loans on the secondary market, they always are local, and give you continuing face-to-face customer service.
What to Do
The time to begin looking for a mortgage lender is before you begin looking at real estate. Ask family and friends for referrals, as well as their experience with the real estate lender. Ask your real estate agent for referrals. Then, contact each prospective lender and ask questions — lots of questions! Compare interest rates, terms, after the closing mortgage sale policies, and what criteria do they require that you meet in order to qualify for a real estate loan.
If you are a residential real estate buyer, consider getting pre-approved for a loan. You will know exactly what you can afford to buy, which usually turns out to be much more than you expect.
Spend as much time shopping for a mortgage lender as you will for your real estate. The deal you get can save or cost you thousands or even millions over the life of the mortgage. Get the best deal possible, as well as the right lender for your real estate purchase.
____________________________________________________________________
About The Author
John Harris is an expert researcher and writer on real estate topics such as economics, credit improvement tips, home selling advice and home buying preparations. For more on San Diego Homes for Sale visit http://www.twtrealestate.comPhoto: Courtesy of www.HollanderFinancial.com
10 Tips for Successful Real Estate Property Investment
by: Rhiannon Williamson
Just because real estate prices seem to have hit a temporary ceiling in many countries around the world, that doesn’t mean that profits from property investments are hard to come by.
Even during a real estate market slowdown, stagnation or depression profits can be made locally and overseas. This article shows you the top ten tips that real estate investors apply to their property portfolio building strategy to ensure success from their investments.
1) Research the curve - the concept of a property market cycle existing is not myth it’s a fact and is generally accepted to be based on a price-income relationship. Check the recent historical price data for properties in the area of the country you’re considering purchasing in and try to determine the overall feel in the market for prices currently. Are prices rising, are prices falling or have they reached a peak. You need to know where the curve of the property market cycle is at in your preferred investment area.
2) Get ahead of the curve – as a basic rule of thumb, professional real estate property investors seek to buy ahead of the curve. If a market is rising they will try and target up and coming areas, areas that are close to locations that have peaked, areas close to locations experiencing redevelopment or investment. These areas will most likely become ‘the next big thing’ and those who by in before the trend will stand to make the most gains. As a market is stagnating or falling many successful investors target areas that enjoyed the best levels of growth, yields and profits very early on in the previous cycle because these areas will most likely be the first areas to become profitable as the cycle begins turning towards positive once more.
3) Know your market – who are you buying property for? Are you buying to let to young executives, purchasing for renovation to resell to a family market or purchasing jet to let real estate for short term rental to holiday makers? Think about your market before you make a purchase. Know what they look for in a property and ensure that is what you are going to be offering them
4) Think further afield – there are emerging real estate property markets around the world where countries’ economies are going from strength to strength, where a growing tourism sector is pushing up demand or where constitutional legislation has been or is about to be changed to allow for foreign freehold ownership of property for example. Look further afield than your own back yard for your next property investment and diversify that real estate portfolio for maximum success.
5) Purchase price – set yourself a budget that will realistically allow you to purchase what you’re looking for and profit from that purchase either through capital gains or rental yield.
6) Entry costs – research fees, charges and all expenses you will incur when you buy your property – they differ from country to country and sometimes even from state to state. In Turkey for example you should add on an additional 5% of the purchase price for all fees, in Spain you will need to factor in an average of 10% and in Germany fees and charges can be in excess of 20%. Know how much you will have to incur and factor this amount into your budget to avoid any nasty surprises and to ensure your investment can become profitable.
7) Capital growth potential – what factors point to the potential profitability of your real estate property investment? If you’re looking overseas at an emerging market, which economic or social indicators exist to suggest that property prices will increase? If you’re buying to let out are there any indications to suggest that demand for rental accommodation will remain strong, increase or even decline? Think about what you want to achieve from your investment and then research and find out whether your expectations are realistic.
8) Exit costs – if you will incur substantial capital gains taxation liability if you sell your property investment for profit, will that render the investment profitless? In Spain a foreign buyer can incur up to 35% capital gains tax, in Turkey on the other hand property sales are capital gains tax free if the underlying real estate has been owned for four or more years.
9) Profit margins – what levels of capital growth can you realistically gain on your property investment or how much rental income can you generate? Work out these facts and then work backwards towards your initial budget to work out your potential profit margins. At all times you have to keep the bigger picture in mind to ensure that your real estate investment has good potential for profit.
10) Think long term – unless you’re buying property off plan and intending to flip it for resale and profit before completion you should view real estate investment as a long term investment. Real estate is a slow to liquidate asset, cash tied up in property is not simple to free up. Take a long term approach to your property portfolio and give your assets time to increase in value before cashing them in for profit.
____________________________________________________________________
About The Author
Rhiannon Williamson is a freelance writer whose articles about property investing and emerging real estate markets have appeared in publications around the world. She is currently working on a brand new property investment resource http://www.amberlamb.com/
Photo: Courtesy of www.ValuePlusAppraisals.com
So Now That Your Real Estate Deal Has Closed...WHAT’S NEXT?
I am sure that you already know the scenario. The momentum builds up, your paperwork is all in place after rushing for last minute signatures, etc., you overnight your package in and without you even having to be there, you are the proud owner of a new addition to your real estate portfolio. Now that the smoke clears and everyone goes home from the closing table, you may be left with the burning question…. "Now What?"
After all the adrenaline and getting to the closing table which takes a lot of patience, attentiveness, organization, etc., you may feel a bit of a let down. Not to worry! Amongst all the excitement of now being the proud parent of a new born project (at least new for your portfolio), you should not forget that there are still items and tasks that need your attention.
Immediately After the close. 
After you leave the closing table (if you were even there at all), one important thing that you should make sure that you have is a copy. A copy of what, you may ask? A copy of everything that crossed the table during closing, especially anything that you put your signature on. While this may be a common sense item, it is amazing when I talk with clients and members of our group who say that they did not get a copy. If you did not get it right after closing, then make sure that you request a copy from the group that coordinated the closing, whether it is the attorney, title company, etc. This is something that could save a lot of headaches in the future.
A PARTICULARLY important part that you will need is called the HUD, and is the long legal form that shows all of the closing costs and other money transfers. The reason this is so important is that you will need to provide a copy to your accountant at tax time, or if you do you own taxes, you will need the facts and figures.
Hopefully this next step should have already been started during the initial reservation or letter of interest stage. Again, this is a common sense item but still very important. Make sure that you have a separate file or folder that you keep for this new project. Keep it identified so that you can easily go back and find the project that you are looking for. However you do it is up to you and I am sure that everyone has different ways to organize their files (by State or location of project, address, date of acquisition, type, etc.).
You may even want to have a file for the project and subfolders for individual items such as initial deposit (copy of completed reservation form, check, unit selection criteria, etc.), loan application, closing papers, and folder for post-closing events (such as loan payoff, insurance, taxes, etc.)
The good thing is that you have time; time to get things straightened out and prepared.
Don't Forget the Essentials Whether or not you are running your real estate projects through a company (i.e. you have set up an LLC or other company for the transaction(s)) or you are doing this individually, these next items are essential in having a successful real estate project/experience.
Accounting – While the extent to which the following applies will vary according the number of projects you have or the complexity of your business, etc., doing it now will save a lot of headaches, especially during tax time and when you go to sell your project. If feasible:
1. Set up separate bank accounts for the project. Alternately, you may want to lump several projects under one account. One way to group these projects is by project type (i.e. rental units, land-only, etc.). It may be best to check with your financial advisor for their suggestions and advise in this area.
2. If you use a financial Software package, where applicable set-up different sub-accounts for each project. For example, if your receive Rent on several projects you would have Rent – Project 1, Rent – Project 2, and so forth. This will help track income and expenses on a per-project basis.
3. Keep your financial advisor aware of your recent acquisition. Hopefully already discussed before the purchase, etc.
4. Keep your financial (and other) advisor(s) aware of planned purchases and acquisitions. They may be interested in purchasing for themselves as well and if it is a great deal, they will be thankful for your passing on the information.
Legal – One of the common issues that comes up with every new purchase is the following. Has the purchase of your new property changed any liability issues that you may have? You should discuss the new acquisition with your legal advisor (once again, if you have not already done so). One of the main topics for that discussion should be if there are any necessary changes to you coverage or liability protection that may be needed resulting from the new project. Here is another instance of where you hopefully are just continuing discussions with your team of advisor that were started before the purchase.
Property Management – if the project has property management built in as part of a preconstruction incentive package (like you may get with a wholesale buying group), make sure that you coordinate with them on issues such as upkeep, maintenance, rent collection, etc. If the management is not part of the incentive package, get some references of Property Management groups that are in the area and do some digging around. If the project is new construction and there is a build out period, you may want to start ironing out the details ~ 60 days before the certificate of occupancy (i.e. before you can put a tenant in place, etc.). With wholesale buying groups, typically discounts can be negotiated if a large enough representation of that group goes with the same Property Manager.
Expenses – now for the fun part. Usually, there are bills associated with any real estate project (i.e. Mortgage, Insurance, etc.). Check to make sure that all bills are being sent to your correct address; make sure that the mortgage payments are being sent to your home/office address and not to a PO Box in, for example, Las Vegas as I have heard may occur from time to time. As a helpful hint, if you need to do an address change the US Postal Service offers a free service to have your mail routed from the incorrect address to the correct address; you need to go to your local post office and fill out the form Vs doing the on-line submission. This will help get any mail that is "sitting in the wrong box" over to you directly while the vendor is correcting the address in their system.
Another thing for you to verify are the numbers. As expenses start rolling in, you may want to verify that the actual expenses are what you had planned for during your initial analysis. If there is a large discrepancy, find out why and also take the actual values into consideration in any of your spreadsheets or project evaluation forms.
Plan for the Future
Phew! Ok, so now the smoke has cleared (or at least, thinned out a bit). You have done all that you can do for the time being with respect to the closing of this project. Do you just sit back and then wait until it is time to exit the project? The answer, as you may have expected, is NO! Based on your own investment strategy (or at least the initial strategy which prompted you to get involved in this project in the first place), plan regular evaluations of the property to make sure that it fits your portfolio and your initial investment strategy. It may be a good idea to have a folder with the rules and thoughts written down as to why you first got into the property, and your initial thoughts for the exit as well. This way, you can revisit these items and re-evaluate the property and or your strategy as well.
Once you do your review, plan on meeting with your advisory team to share ideas with them and to see what their inputs are as well.
____________________________________________________________________
About The Author
Michael C. Zari is a founder of http://www.GetPreconstructionDeals.com , a real estate investor and entrepreneur. His works have been referenced in many venues including the New York Times and USA Today. To continue to get weekly thought-provoking articles, go to http://www.GetPreconstructionDeals.com and sign up today!Photo: Courtesy of www.Pentegra.com
Fix it and Flip it - How I Lost Money on Real Estate
by: Jonni Good
I've known a lot of people who have lost money when they sold their homes. In fact, I'm one of those people, and it's happened to me more than once.
There are a number of factors can cause a financial loss when you sell your house, including the need to sell at the wrong time due to divorce or an impending foreclosure, or a downturn in the local real estate market. However, it's also common to lose money simply by making too many expensive changes to the house before putting it on the market. This is how I lost money on real estate, before I wised up.
My most resounding failure in the fix it and flip it market was a house I bought in Spokane, Washington. Knowing what I know now, I would have restricted myself to replacing the carpets and the kitchen and bathroom fixtures, painting inside and out, and buying new appliances. I probably would have replaced the old-style windows, too, to make the place look nicer and appeal to the energy-conscious buyer. These fixes could have been done easily within the two years I needed to live there to avoid capital gains taxes.
Since I didn't know what I know now, I made major renovations, which included moving the bathroom. I did most of the work myself, but the materials alone cost more than I could get back when the house was sold. With the exception of repairs done to the house to make it eligible for an FHA loan and watering the grass, I doubt that any of my major projects really helped me sell the house or increased its value.
If a house is actually sound, with no structural damage or insect problems, the biggest reason it will sell for less than its worth is usually cosmetic. This was certainly true of the house I bought in Spokane. Dirty carpeting, and a wall in the living room covered with mirror tiles, kept most buyers from going any further into the house. I could see past the cosmetic problems and see the home's full potential - but my imagination went a bit too far.
The floor plan was odd, and slightly inconvenient, but leaving the bathroom where it was would have been far more rational, financially. Why didn't I do that? Because my emotions and my nesting instincts took over, pushing aside all thought of future gain or loss.
Let's face it - most people don't buy their own homes with the intention of making a profit, although they certainly hope the house will be a good investment. In fact, the emotional stress caused by the process of buying a house and moving into it can be enough to completely erase any thought of moving again a few years later. However, I know several families who have made a very good living by buying underpriced homes, living in them and fixing them up, and then selling them when the IRS will allow them to do so without paying extra taxes. Clearly, these folks don't make any changes to these houses without carefully considering the bottom line.
After my Spokane adventure, I decided to learn from my mistakes, and find out how to stop losing money on houses. I read books by authors who are experienced in fixing and flipping houses - and then read them again. When I saw that most remodeling projects almost never recoup their costs when the house is sold, I was a little shocked, because I had been guilty of almost every mistake on the list at one time or another. I know many people who have also made the same mistakes, even when they started those remodeling projects with the intention of increasing the value of their homes.
When I bought my next house, I kept that list very firmly in mind. For instance, my kitchen was badly in need of a major overhaul, (or so I believed), and it was far too small. I pored over the latest home decorating magazines, and ideas came flooding into my head. I thought about knocking out some walls, and I even tried to imagine adding on to the house to make the kitchen bigger. New cabinets would be needed, and new appliances...
In the end I painted the kitchen cabinets and replaced the sink with a new one I purchased at Ikea. I covered the chipped orange Formica counters with printed cotton fabric, and coated it with many layers of water-based Verathane that was intended to protect wood floors. The complete "remodel" cost less than $400, as opposed to the thousands of dollars that I would have spent if I followed through on my idle dreams of a "perfect" kitchen. Since the house sold at a very good price within two weeks of listing it, my buyer obviously didn't mind that the kitchen didn't meet my idea of perfect. Because I kept my costs down, I made a handy profit on the sale.
Would I have been able to sell the house for more money if the kitchen had been remodeled and expanded? Perhaps, but not enough to cover the cost of the remodel. Although the National Association of Realtors lists a kitchen remodel as one of the projects that will increase a house the most, they still advise that you should expect to get back only 80% of the costs. If your new kitchen is far fancier, bigger, and more expensive than any other kitchen in the neighborhood, the returns will be even less. A full kitchen remodel can cost thousands of dollars, so the 20% you don't get back can be a big chunk of change.
Does this mean that you shouldn't make changes to your home that would make you happy? Not at all, especially if you intend to live there for many years. But it does pay to sit down with your spouse or partner before you start making your remodeling plans, determine exactly how long you'll be staying in the home, and then think about the full financial implications of the remodeling project. Even if you don't think of yourself as a professional house flipper, it might pay to slow down a bit and find ways to improve the home without spending money you'll never see again. As a bonus, your family might be able to avoid the stress and disruption of all that remodeling mess.
____________________________________________________________________
About The Author
Jonni Good is the author of a new report that shows how she used these fix it and flip it ideas - and how the profit allowed her to buy her next house with cash. Visit - http://www.BuyAHouseWithCash.comPhotos: Courtesy of www.H3Renovations.com and www.AcmeJoinery.com.au
Who Should Hire the Real Estate Appraiser and Why?
by: John Harris
Everyone involved in the sale of real estate has a vested interest in the results of a real estate appraisal. The outcome affects the seller, the buyer, the lender, and even the realtor.
A too low valuation of the property by the appraiser could mean a seller must lower the asking price. For a lending officer, it could mean a lesser commission or none at all. A too high valuation means the buyer could be paying more than the property is worth. For the realtor, his/her commission could go higher or lower, which is based on the purchase/sell price of the real estate.
An appraiser, who should be licensed by the state, performs the real estate appraisal. It is best to hire someone local with years of full-time experience in order to get a more accurate appraisal. The appraiser and appraisal are governed by the minimum standards, published periodically in the Uniform Standard of Professional Appraisal Practice by the Appraisal Foundation. The Foundation is chartered by Congress.
The recent real estate bubble, unfortunately, brought problems for appraisers and many involved in real estate transactions. According to Realty Times in their April 2006 issue, appraisers have been routinely asked by lenders to inflate real estate values to keep up with the ever-rising real estate market. One real estate appraiser in San Diego quit and turned in his license to the state, after being fired three consecutive times for refusing to inflate his valuations. Now, real estate appraisers across the United States are under a microscope from federal financial regulators and Congress.
The real estate appraiser may be hired by the seller to determine an accurate selling price or by the buyer to ensure the accuracy of the purchase price and mortgage; but generally, the lender does the hiring or uses their own in-house appraiser. Though buyers may assume the lender has their best interest, mortgage lenders have their own best interest at the forefront, especially some not-so-scrupulous lending officers who may be targeting a higher commission.
If I were a seller, I would hire my own real estate appraiser to ensure I was getting the most for my property. As a buyer, I would put the money out upfront to hire an independent and objective appraiser with no connection to anyone within the real estate transaction. This ensures that I do not contract for a mortgage, based on an inflated appraisal valuation, that will give me a new home with a lower or negative equity. The lender still may require a different appraiser.
If five different real estate appraisers evaluated the same property within the same timeframe and under the same conditions, it could result in five different and varying real estate valuations. Why? There is no set checklist or established value for each property feature and amenity. Though appraisals are based on prescribed standards, it is a subjective process.
If there is more than one real estate appraisal and they disagree significantly, you have options. If the value is too low for the seller, renovations may raise the value — or you can decline to sell. If the lender insists on its appraiser’s value, which disagrees with your real estate appraiser’s value, as the buyer you can look for financing elsewhere — or decline to purchase the real estate. There also is the option to bring the appraisers together to come to a common agreement on the value.
Remember, the person looking out for your best interest is yourself. Ensure the appraiser in your real estate transaction is reputable, objective with no connections to anyone in the transaction, local and experienced.
____________________________________________________________________
About The Author
John Harris is an expert researcher and writer on real estate topics such as economics, credit improvement tips, home selling advice and home buying preparations. For more on San Diego Homes for Sale visit http://www.twtrealestate.com.Photo: Courtesy of www.StockXpert.com
Why Do You Need a Real Estate Appraisal?
by: John Harris
Anytime you buy or sell real estate, you need a real estate appraisal. The primary purpose is to find out exactly how much your property is worth. Banks and similar lending companies also require it, before a buyer can obtain a mortgage.
A real estate appraisal develops an “educated and trained opinion” on the value of the property. It also, in some circumstances, may ascertain the best use of the property, garnering the best selling price. For example, a long-time residential property may be in an area that has been rezoned for limited commerce, which could potentially bring in a higher sales price than marketing the real estate to potential residential buyers.
An appraiser differs from an inspector, who is looking for things that need to be corrected, repaired or replaced — things that are required by law to be completed before the property can be sold or to enhance your sale price. Though an appraiser will look at these same things, he/she is only interested in developing the value of the property.
A real estate appraisal is based on the highest and best use of real property — what use of the property will produce the highest possible value? The final appraisal must be both profitable and probable.
The real estate appraisal includes a definition of the type of value that is being developed — whether it is a market value (what most sellers need), a condemnation value, quick sale value, and so on.
The Process
The appraiser looks at each property individually, beginning with an objective inspection of the interior and exterior of the home or building, as well as driving through the surrounding neighborhood. The appraiser looks for the assets, as well as the detriments, of the property. For homes, gross living space, quality of construction, location, layout, the number of bedrooms and bathrooms, the lot size, condition of the home and land, central air conditioning, landscaping, number of fireplaces or the lack thereof, decks, pool, fencing, recent renovations, amenities provided by the surrounding neighborhood, and crime statistics of the area are all considered by the real estate appraiser.
Living space is calculated by measuring the outside of the home. It does not include such areas as the garage, porches, sheds, and so on. Basements are generally calculated separately from the living space. The contributory value of basements is determined by the local market, government regulation, if it is finished or not (and the quality of the finish), and so on.
The real estate appraiser usually only considers permanent buildings within his/her appraisal. Fixtures that can be relocated, such as above ground pools and sheds, are not included in the appraisal.
If you are the real estate seller, you should point out any features, amenities or improvements of your home that are not readily discernable.
Next, the real estate appraiser analyzes the available market data for your area and the surrounding neighborhood, including current and historical comparable sales, current offers for comparable homes, pending sales, and proposed improvements. The appraiser gathers data from a variety of sources, as well as his/her own personal knowledge of the local market. The appraiser then compares your real estate to the broader market.
Each real estate appraiser has his/her own process of analyzing, collecting and reconciling the needed appraisal data. If you get five different appraisals for your real estate, you may receive five different appraisal opinions. They should, however, all be within a similar value range, if they are completed within the same timeframe and under the same conditions.
Though the real estate appraisal is not for public consumption, it may be shared with all parties concerned. For instance, a buyer has offered $150,000 for a home, but the buyer-side, commissioned appraisal value is only $146,000. Sharing this appraisal with the seller means that the owner can do needed improvements to bring the price up or offer the real estate to the buyer for the appraisal amount.
For the highest appraisal possible, real estate sellers should have an inspection and appraisal done before putting the property on the market. First, the inspection in order to make any needed repairs or renovations. Then, get the appraisal to ensure you are getting the most for your real estate.
____________________________________________________________________
About The Author
John Harris is an expert researcher and writer on real estate topics such as economics, credit improvement tips, home selling advice and home buying preparations. For more on San Diego Homes for Sale visit http://www.twtrealestate.com.Photo: Courtesy of www.RealEstateDiggers.com
Real Estate - Buy New Property With Ease Through Loan
by: Tim Kelly
Real estate is perhaps the most beneficial if you are looking around for investing money. However buying a highly costly property is not that easy for everyone. So a loan for buying property becomes inevitable. Loan for real estate has gained importance and popularity amongst the property buyers.
Real estate loans are especially meant for buying a highly priced property like a commercial building or any property you think is fit for investment. Real estate loans are secured loans that require the borrower to place a highly valued property like home, business or papers as security. On having the security in place, the lender will shower benefits on the borrowers. For instance you can borrow greater amount under real estate loans. the main requirements that the lender would like to ensure before approving reap estate loans are that you must be having a sound repaying capacity, your past credit history should be good and the property you are going to buy.
You should be having a great bank balance and should have a convincing loan repayment plan in place. You would be immediately investing the loan in buying the property. So the lenders surely want to know your source of income for timely repaying the loan installments. So keep all the relevant documents ready before applying for the loan.
An advantage of real estate loan is that it comes at lower interest rate as it is secured loan. Also you can repay the loan installments with easy as you have the option of paying off the loan in larger duration of say 30 years. Thus while you have bought the property, the loan itself is easier to repay.
And do not worry about your bad credit. As you offer valued property as security, the lender’s risks are reduced substantially. So despite your past bad credit history, the lender is ready to approve real estate loan, though interest rate may be a bit higher. You can apply for real estate loans to online lenders who have cheaper rates. But first take their rate quotes so that you can compare lenders for a suitable deal.
____________________________________________________________________
About The Author
Tim Kelly is an expert in finance having completed his LLM in Finance (Master of Laws in Finance) from Institute for Law and Finance at Frankfurt University. He is currently working with business loans as a financial advisor. To find Real estate, Commercial real estate loan, Commercial real estate loan rate, Private real estate money loan, Online real estate loans visit http://www.commercialrealestateloan.co.ukPhoto: Courtesy of www.MTGFoundation.com
Helpful Team Players for Your Next Real Estate Purchase
by: Jeff Hammerberg
Buying a house is a major financial and legal process that typically encompasses a wide range of smaller transactions along the way. A single real estate sale – no matter how simple – will usually involve a smorgasbord of different specialties, professions, and areas of expertise, not to mention the potential for myriad emotional and psychological demands and reactions. For most consumers a real estate purchase does, in fact, represent the most comprehensive and complex deal of an entire lifetime.
Those who venture into such undertakings can help ensure their success by enlisting the support of a talented and educated team of pros, and here is a recommended list to use as a starting point when recruiting help for your big home purchase project:
• Real Estate Brokers and Mortgage Lenders
Ask friends for recommendations, and when you interview potential brokers and lenders ask them about their experience and track record. Also find out what particular area of real estate and neighborhoods they specialize in, because this can be incredibly important. If you’re buying a downtown condo, for instance, you want someone who knows that market, not somebody whose experience is primarily in listing and selling suburban houses or mountain lodges. Communication is essential, so only choose those with whom you have a comfortable rapport. If the interpersonal chemistry doesn’t feel right, keep looking.
• Building Inspectors
Just as when you have a question about your car you go to a trusted mechanic, when buying a house or condo you should have a reliable building inspector on your team. But keep in mind that there are different kinds of inspectors. You’ll want one to check for termites and other pests, and another to check for environmental hazards such as radon gas and asbestos. For a general inspection, you’ll hire a licensed general building inspector to study the mechanical and structural components of the house, such as the electrical system, appliances, foundation, roof, and plumbing.
Building inspectors are also the best source of information about how to properly maintain your home. Follow them around as they check your home, and ask them to teach you how to do your own routine inspections after you move in, to look for potential problems before they happen.
• A Real Estate Attorney
Real estate is a specialized legal field, and when buying a house you should enlist the services of someone who only practices real estate law.
• Contractors
Contractors are the ones you’ll call to actually get repair cost estimates and do the work. Folks such as house painters, carpenters, landscapers, and plumbers can help you estimate how much to negotiate with the seller for repairs, and they can also provide insight into how to approach any improvements, updates, or remodeling projects that you might envision.
Get competing bids, but remember that the cheapest bid doesn’t always guarantee the best work. The main thing to look for is a stellar reputation for exceptional quality and attention to detail, and your contractors should all carry appropriate insurance to cover themselves in case they are injured while working on your premises.
• Chimney Sweeps
If you have a chimney, you’ll also need a certified chimney sweep to check it for cracks, leaks, or potentially dangerous build-up of flammable residue. Thanks to modern tools, those in this old-school trade can now snake a tiny video camera into your chimney and make a thorough visual examination of every nook and cranny, no matter how ancient or narrow the air passageway may be. The best chimney sweeps also have powerful vacuum cleaners – often mounted on trucks – that are especially designed to let them capture dust, ashes, and soot without letting any of it escape and settle on your fine white rugs and draperies.
This list is by no means complete, and you may or may not need all of these experts for your particular purchase. On the other hand, you may need to add to the list to bring others on board. For instance, if you are buying property in an historical neighborhood, you might need to hire someone who knows old-fashioned plastering techniques. If you’re looking at farmland, you could need a well digger or an agricultural consultant. Buying a cool urban warehouse loft? You may very well need to call that guy in town who knows how to fix antique elevators or the woman in the neighborhood who sells steam radiators that come in different Crayola crayon colors.
Buying a home can – and typically does – have significant repercussions that last far into the future. A house purchase influences the personal and financial lives of both you and your partner, so it is always wise and prudent to approach the event with as much information, guidance, insight, and reliable professional support as possible.
To find great help when you buy your home, visit www.GayRealEstate.com. This global network of Realtors and Lenders offers solid expertise and demonstrated proficiency in all areas of real estate and specializes in services to the GBLT community. Or contact them toll free by calling 1-888-420-MOVE (6683).
____________________________________________________________________
About The Author
Commitment, passion and dedication to changing what you perceive as a social injustice and prejudice was the drive that encouraged Jeff Hammerberg to create a monumental service to the American LGBT community, one that he had envisaged for a quarter of a century. 2004 was a significant year in realizing his dream, as Jeff Hammerberg, founder of the largest LGBT real estate marketplace in the world, reaped the rewards of his vision that had been nurtured for 25 years.During the 1990s, Jeff Hammerberg worked in residential real estate, and observed first hand the "quiet homophobia" that pervaded the industry and silently but effectively hampered the lives of LGBT consumers nationwide by placing barriers between them and home ownership. By 1997, with little more than foresight, a strategy, and zealous fortitude, Hammerberg broke away from the traditional real estate community to create the first virtual real estate marketplace for LGBT clients.
Beginning with http://homelounge.com, an Internet company dedicated to assisting home buyers and sellers in the USA, Hammerberg gradually added services and sites, while adhering to a strict personal commitment to donate proceeds from his businesses directly into the LGBT community.
By 2004, he had created http://www.lesbianhomes.com, http://www.gayrealestateplanet.com, and http://www.gaymortgageloans.com, which are all ground-breaking companies in terms of concept and adherence.
Photo: Courtesy of www.DigitalRealEstateTeam.com
