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Tips to Follow When Buying New Construction Real Estate
New home communities offer beautiful homes, open-floor plans, new appliances, and much more. Plus, new homes often offer easy purchasing through an on-site sales agent. The problem is that they can also tally up to significant losses. To buy your new construction home the smart way, follow these tips:
1) Use a Realtor Who Has New Home Sales Experience
New homebuilders will sometimes put pressure on you to use an on-site agent plus a pre-approved lender, insurer and title company. It’s a mistake not to get your own realtor. A realtor can protect your interests and can ensure that all costs and interest rates are within industry standards. Realtors with new home experience know the homebuilder community and this can ensure that homebuilders are very cooperative – after all, they don’t want to tarnish their reputation.
2) Don’t Sign ANYTHING Until You’ve Negotiated Every Detail
Always assume that nothing is agreed upon until it is in writing. Once it’s in writing, don’t assume that it can be changed or negotiated. Don’t fall for the “write up the contract so that no one else can get your house” ploy. Instead, make sure that the contract you sign has everything you negotiated in writing before you sign.
3) GET A HOME INSPECTION!!!
Many people assume that home inspections are for older homes that may have asbestos, structural problems, and other liabilities. This is not true! While many new constructions come with full warranties, those warranties usually only last 12 months and many problems surface only after that first year. An independent, professional inspector can help you avoid very costly repairs a few years down the line.
4) Don’t Use Their Lender
Many builders who build entire communities are now publicly traded corporations. These companies make a lot of money by financing – not just building and selling – homes. As a result, many builders will offer you enormous incentives or pressure you to use their lenders. The problem is that the builder’s lender will usually have higher interest rates and higher closing costs than a traditional lender. In most cases, you can have the stipulations removed so that you can choose your own lender and enjoy some incentives. After all, the builder will not make any money if you refuse to buy a home. If a builder insists that you use their lender, walk away and find another builder. It makes no sense to pay many thousands of dollars
extra.
5) Research the Builder
Most builders are responsible and take care to protect their built neighborhoods. Still, make sure that you research your builder. Specifically, make sure that your builder has a reputation for good quality homes. Make sure that the company limits investor purchases – these can result in rental properties that depreciate neighborhood value. Also, determine whether the builder will build equal or greater value homes in the surrounding area. If they do not, the new homes will instantly devalue.
6) Choose An Appraiser
Lenders require you have an appraisal anyway, so you may as well research a good appraiser yourself. Ask for a copy of the appraiser’s findings as well – it can contain information that will give you better insight into what you are buying.
7) Research City Plans
New neighborhoods are often built on the outskirts of town, where land is available at a lower cost. Be sure to ask your realtor or do your own research into what the city has in mind for the area. Research roads, zoning, public transportation, parks, and schools – all will determine the future value of your new home.
New homes are very appealing to buyers. If they’re appealing to you, be sure to hire professionals and do your research so that your new home remains a positive experience for years to come!
What to Examine Before Buying Real Estate Foreclosure Properties
Are you interested in buying real estate foreclosure properties with the hopes of turning them into investment properties and making money with them? If you are, you need to be familiar with real estate foreclosure properties. Not only do you need to know what they are, but you also need to know the best ways to go about finding and buying them.
When it comes to finding real estate foreclosure properties, there a number of different approaches that you can take. For instance, you can use the internet. There are a number of online real estate foreclosure listing services that you can use to browse through or search for foreclosures. You can also find real estate foreclosure properties by keeping an eye on your local newspapers or by examining the public records at local county clerk offices.
Now that you exactly how you can go about finding real estate foreclosure properties, your focus should then switch to buying the properties. Before buying any real estate foreclosure properties, you are advised to examine the properties in question, as much as possible. There are some instances where you may be required to make a purchase decision without actually seeing the property in question, but, with an address, you should at least be able to get a look at the property in question. Look for any signs that may indicate that repairs or updates may need to be made. Any additional money that you will have to invest in a real estate foreclosure property is important, as it should impact how much you are willing to pay for the property.
In addition to the real estate foreclosure property in question, you are also advised to examine its surroundings. For instance, is the real estate foreclosure property located in a good neighborhood? Are there many fun, but safe activities and attractions nearby? If there is, you have a better chance of turning a profit. Real estate investment properties are those that are later sold for a profit or rented out. You need to not only make sure that the real estate foreclosure you are interested in is marketable, but you also need to make sure that the area in which the foreclosure property is as well.
Of course, you will also want to look for real estate foreclosure properties that are being sold at great prices. Many real estate foreclosure properties are sold at prices which are less than the fair market value. This is what makes real estate foreclosure proprieties highly sought after, particularly with real estate investors. As stated above, when examining the cost of a real estate foreclosure or the bidding price if it is being auctioned off, you need to take any possible updates or repairs into consideration. This is important because you will want to invest in good real estate foreclosure properties, but you also want to try and limit your investments, if you can do so. The less you invest, the easier it is for you to make a profit.
The above mentioned points are just a few of the many that you will want to keep in mind, when looking to find and buy real estate foreclosure properties. For additional information, you may want to think about taking a real estate investing course, particularly one that places a large focus on real estate foreclosure properties
The Recipe for Real Estate Success… Finding Motivated Sellers
In real estate there is a saying that you don’t make your money when you sell, you make your money when you buy. The name of the game is finding amazing deals and then keeping them for the long term or turning around and flipping for a handsome profit. Of course, if great deals were that easy to find, everybody would be doing it. The forces of supply and demand would inflate the price of properties to the point that there would be no deals left! Naysayers claim that this is true of today’s housing market, but in reality, there are endless deals to be found almost anywhere at almost anytime. Finding these deals takes experience and talent, but this article serves as a head start for novice investors, or a refresher course for old pros.
Distressed Owners Make for Distressed Properties (And Vice Versa)
What is a great deal? Quite simply, it’s when you buy a property for well below its actual value and/or with favorable terms. The only way this can happen is for the seller to be ignorant of the market, completely uninterested in profit motives, or extremely motivated to sell. Your chances of making a career out of finding homes owned by people who don’t know any better or who don’t care are slim, so it’s best to concentrate on identifying motivated or “distressed” sellers. After all, only someone who absolutely needs to sell is going to price his or her home well below market value and/or accept unusual financing arrangements. These are the ingredients of a great deal!
So what makes a person a motivated seller? Divorce, death of a relative, job transfer, and serious financial distress are the items that top the list. While you might feel guilty for “taking advantage” of people in such a situation, you shouldn’t. After all, they need to sell - you are helping them! You and the seller are finding a mutually agreeable price point and terms. You are getting a great deal and they are unloading a headache. It’s a win-win situation.
How to Find Distressed Sellers
The first place to look is the newspaper. Don’t bother searching through the fancy ads with pictures placed by real estate agents; go right to the classifieds instead. Look for listings with “for sale by owner” in the text, or that appear as though they are being sold without an agent. Technically, real estate agents must state that they are agents in all advertising materials, but the less scrupulous ones frequently disobey this rule. Also look for key phrases such as “must sell, fix-up, needs work, vacant,” and of course, “motivated sellers” (although agents often advertise “motivated seller” when in fact their client isn’t all that motivated!). Be prepared to make a lot of calls and not to spend much time with each seller - finding deals is a numbers game, and you have to make a lot of calls to find that one special deal.
But you shouldn’t limit yourself to FSBOs (homes that are “for sale by owner”). Instead, draft a letter on professional letterhead and fax it to all of the real estate offices in your area. Explain that you are a real estate investor looking for distressed properties and that you can close quickly if the price is right. This way, you can have an entire army of real estate agents working for you, free of charge. If one of them finds a property for you, the seller of the home will pay the agent’s commission. You owe them nothing, it comes off the seller’s side.
Another idea is to call the owners of rental properties and offer to buy. Many income property owners are reluctant landlords and will certainly entertain the offer. If they say no, leave them your name and phone number and tell them to call you if they’re ever interested in selling.
Finally, you can place your own classified ad. A simple headline like “We Buy Houses for Cash” works best. Don’t worry that other investors use the same ads, it’s a numbers game. Sometimes people will sell to you because they like the way you sound or they trust you over your competitor. How many advertisement do you see in the paper for mortgage companies, car dealers and retail stores selling the same product? There’s enough business to go around, and so long as you get the phone ringing, you’ll learn to get good at converting them into deals.
By knowing what you’re looking for - distressed owners - and following these strategies, you will already be way ahead of most beginning real estate investors. It takes work, and lots of it, but the rewards are worth it.
Things to Check Out Before Buying A House
If you’re thinking about buying a house, you’ll have a number of things that you’ll want to specifically look into before you do. This article will give you a number of suggestions about exactly what factors to look into before you make the big plunge into being a homeowner.
First, always ask around among the neighbors before you buy. You’ll be surprised about what might turn up. If there’s been bad blood, a neighbor might be willing to reveal every problem they know about with the house. They’ll also be able to clue you in to things that may not be a problem with the house in particular but may be with the neighborhood in general. This can include a number of things. Remember to ask about: whether the house or the neighborhood is in a flood zone, whether there are any problem neighbors nearby, whether they know of any previous damage, and whether there is a crime problem. You can probably think of about a dozen other things to ask - talk with several neighbors, and if you find the local gossip, you’ll be in on everything you need to know. Always make sure that you document what representations the owner makes to you about the house - it could come in handy later, especially if there are major undisclosed problems with it. Do a little searching on the internet - you can always do a search for the name of the homeowner and see if anything interesting comes up. If there’s something shady or they’re untrustworthy, you want to know about it. By the same token, you can often easily see if they are legitimate that way. Make sure that you’ve had a title search done - your real estate agent will probably take care of it, but it’s a must-have. Hire a handyman to inspect the place if you aren’t good with that sort of thing - or just get someone you trust to look around. It doesn’t take much to make sure that your house will be a good investment.
10 Things You Must Do Before Buying a Home
Buying a home is often the largest personal finance transaction a person makes in his or her life. So it’s critical that you make the right preparations and do the proper research. Regardless of unique situations and special circumstances, there are ten things you must do before buying a home.
1. Study the home buying process.
This will allow you to make better decisions and act confidently. Home buying lingo is a big part of this, so be sure to read through a few home-buying glossaries before you get into the thick of things.
2. Obtain your credit report.
Get a copy of your credit report and review it for errors. You can get copies from all three credit bureaus at once by visiting www.AnnualCreditReport.com. Mortgage lenders will review your credit with a fine-toothed comb, so you should do the same … before they review it.
3. Fix credit errors quickly.
If you find an error on your credit report, go to the company’s website where the report came from (TransUnion, Equifax or Experian) to contest it. It can take time to clean up an erroneous credit report, so get started as soon as you spot the error.
4. Check your debt-to-income ratio.
Mortgage lenders like to see a borrower’s debt at (or below) 20% of net monthly income. If your debt exceeds 20% of your net monthly income, try to pay it down for applying for a mortgage loan. You’ll have an easier qualification process and will likely qualify for a better rate.
5. Determine your budget.
Use an online mortgage calculator to get an idea of how much you can afford to pay each month, and what that equates to in terms of a home price. This will give you a budget to work from, which will help you weed out the homes that are beyond your comfort zone.
6. Start saving your cash.
This is one of the best things you can do before starting the home buying process, for a couple of reasons. First of all, mortgage lenders like to see that you have some cash reserves on hand. Secondly, you’ll need cash reserves for any unexpected fees or costs that might arise (which is common).
7. Get pre-approved for a loan.
During pre-approval, a mortgage lender will review your credit, finances, debt, etc. and conditionally qualify you for a certain amount of mortgage. Sellers will take you more seriously if you have a pre-approval letter, and the process also helps identify any problems with your credit or other qualifying factors.
8. Avoid new lines of credit.
Try to keep your financial situation as “stable” and favorable as possible. It’s a good idea to pay down some debt (see item #4 above) and to save up some cash. But the worst thing you can do is take out a new loan / line of credit. At best, this could make the qualification process take longer. At worst, it could tip the debt scales into the “greater than 20%” zone, which will make it harder to get a loan.
9. Validate the asking price.
It’s called an “asking price” for a good reason. No asking price is set in stone, and everything in real estate negotiable. So don’t accept an asking price as being reasonable until you validate it through careful research. Compare the home / price to recent sales in the area. Your real estate agent can provide a comparative market analysis (CMA) to help you with this step.
10. Get a home inspection.
It is never — I repeat, never — wise to skip the home inspection. A house is a sizable investment, and the last thing you want is to find a bunch of things wrong with it after you’ve taken ownership. Home inspections are very affordable, and you cannot put a price on the peace of mind you’ll have as a result of your inspection.
