Buying Real Estate Steps

Buying Real Estate is part of the American dream. For those who have never been down the “buying real estate” path yet, you just…

1. Get Pre-Approved. Even if you don’t think you can afford it, or are concerned about a down payment, or your credit – the first thing you should do is talk to a skilled mortgage lender. It’s their job to help you fix your credit, tell you how much you can afford, and help make it all happen. They will advise you if a down payment is needed (it may not! Many people arrange to buy a home with nothing down, $500 down, or 5% down), how much your monthly payment will translate to (i.e. tell them you want to spend $X a month, and they’ll translate that into a purchase price of $Y). If you need to repair your credit, they’ll be able to refer someone or give you some tips and help on how to fix it up.

2. Once you meet with a mortgage lender, you’ll get a letter of pre-approval. It looks informal, but what matters is the listing agent (representing the sellers of a house you later want to buy) calling them and doing some research on whether you can in fact close and purchase the property. You then take this letter to a Realtor (R) / Real Estate Agent (note: Realtor is a real estate agent that adheres to a code of ethics; for practical purposes they’re essentially the same, though a Realtor(R) has more accountability and is therefore more highly recommended). This is step 2 of buying real estate.

3. The fun part: Shopping! Step 3 of buying real estate usually involves you looking at a bunch of properties on the internet, driving around some neighborhoods, then when you see some homes you think you might like, just email or call your agent and ask to go see it. Don’t get too hung up on this, and at first, go see some houses even if you know it’s not quite right – just to get some ideas of what you like and don’t like. On paper, or on the computer, a house is just a bunch of numbers – 3 bedrooms, 1873 square feet, etc. – but in person, you’ll find that the “bones” of a house, they layout, and the materials vary widely. On each home, communicate what you like and don’t like to your agent. Ideally, you should do this on each home, and by listing your favorite points, and factors you didn’t like, you’ll help your agent slowly hone in on what you really want. This is step 3 of buying real estate, and it usually turns out to be more work than you expect. By the way, it’s OK if a house or condo or lot seems OK on paper, but just doesn’t feel right. Trust your gut…buying real estate is emotional and you want to feel at home. Usually, if something doesn’t feel right, it’s because it reminds you of some other home, and many times, people ultimately buy a home that feels like a home they lived in as a child and therefore feel at home in.

4. The exciting part of buying real estate comes when you find a home you want. Just tell your agent this one feels right, and you’d like to put in an offer. Let your agent do the negotiating for you, it’s their job, and they get paid by the seller so the service is essentially free. You can call the mortgage lender back now and tell them you’re finally buying real estate, and give them the purchase price you want to offer, along with any other expenses such as taxes and insurance. They can give you a more exact payment on the house, which you’ll then give your agent a range to offer, starting low with a walk-away price. The agent helping you in buying real estate will know the conventions and strategy best for your local market and sniff out competing offers, etc. This offer will then be accepted or declined or counter-offered.

5. The nerve-wracking part of buying real estate is closing the actual transaction. Once your offer is accepted, you then start a 2-way “dance” called “escrow” or “under contract” or “closing”. This means the further you get into the deal, the more committed you are financially, and the more committed the seller is because they’re packing their life into boxes. Expect a bit of buyers remorse – it always happens about a week in, and just remind yourself why you like the house and imagine your life in your new home. Also, expect that the closing date is just a guideline, and it could be earlier by a few days, or later by a few days. Most commonly, people close in about 30-45 days. Depending on your state, you’ll sign a new loan on about day 25 or day 29, and then move in about day 30 (or 45, depending on your contract period). You’ll sign a binding loan and get keys, the seller gets cash (and their old loan paid off, if they have one), and the bank gets an enforceable contract that you make house payments toward. Once it “records” the deal is 100% done, you own the home, and about 6 weeks later you’ll make your first house payment to the bank.

Buying real estate is fun, and can make a big impact in how you live your life. For most Americans, buying real estate is one of the most important financial investments they ever make, and regardless of market it continues to prove a good investment simply due to inflation if not market appreciation. Just as your grandparents paid 15 cents for coffee and bought their first house for what seems like little money, so will your grandchildren (or you in your old age!) look back on buying real estate that first time as “cheap”. Back when people were buying real estate for $5,000 for a home, the average income was only $1200 a year for some… our relationship with money changes over time. Once you cross the buying real estate bridge, you’ll not only build wealth – but you’ll build a home filled with memories as well.

Legal Advice For Those About To Buy Real Estate

Buying real estate can be a good investment if you want to create long-term and sustainable profits. It can also be one of the greatest moments of your life if you buy only one home, because a home not only gives you memories for a lifetime, it can also be the single greatest investment and guarantee you have. your whole life. You buy real estate with the hope of making a big profit or securing your future and that of your children if you want to bequeath real estate to them.

But estate law is perhaps the least unnecessarily complex and tedious of all laws. This is largely due to his words, which most people don’t fully understand due to the legal jargon, as well as the deliberately vague contracts. The result is people being conned or buying property which ends up being a financial liability.

It’s All in the Details When It Comes to Real Estate

Buying is not the only major concern with respect to the complexities of real estate law, as the fields of management, repair, and foreclosure all fall under the vast and complex world of real estate law. Foreclosures are especially difficult to deal with for a number of reasons. First, they bring significant hardship to the family, in terms of financial, emotional and personal suffering. Second, zoning and housing regulations can change regularly, which can result in hefty fines and unnecessary costs, whether you buy, sell, or own a home. The difficulty of this subject is only exacerbated by the fact that housing and zoning codes can be affected by neighborhood, county, state and even federal issues. The end result is a myriad of legal issues that will leave you exhausted and frustrated.

All of these reasons should prompt you to do two things. The first is to take your time, regardless of whether you are selling or buying. Knowing the market is very important. If the market is bad, you should look more into buying, than selling, and if the market is good, you should look more into selling. If you sell or buy at the wrong time, you could end up spending a lot of money on yourself!

The second and by far the more important one to consider, is looking into hiring the services of a company. Given the complexity of legal codes, and market volatility, you’ll want an expert to help you every step of the way. They can help you with everything from codes and regulations, to buying, selling, and even in the unfortunate event of having to foreclose on your home.

Real estate companies are undoubted experts in their craft, and if you make the decision to pay for their services in the short term, you are likely to save a lot of money in the long run. So, if you are looking to buy or sell real estate, contact your local law firm today!

Rent Or Buy Real Estate?

Recently….over the past year, a friend asked me for advice on whether now is a good time to rent or buy real estate. As most of my friends, colleagues and locals know, I consider myself a real estate junkie and have learned quite a few tough lessons, but have had many great experiences professionally and personally to last a lifetime … and I’m only 30 years but this is the age where we can take those lessons and build our future, using real estate as a catapult to financial freedom one day…. Stop reading if you think real estate is a “get rich quick” scheme. I think it was when I was younger. Trust me, it’s not.

I can write a novel on the difference between renting and buying real estate but I will try to make this short yet helpful. All things equal, owning a house far exceeds the benefit of renting a home. The obvious factors are that by owning, you can build equity and write-off your interest payments on your mortgage. This doesn’t mean that everyone in America should be a homeowner. Real estate is local. For instance, property values are still declining in California. In Florida, prices are starting to level off. In New Jersey I can point out 30 different markets where the market conditions are different. If you live in Montclair, the market is different in Clifton, less than 2 miles away.

If real estate values are deteriorating in your neighborhood of choice and your interest rate is not favorable, it could be a good reason to stick with renting for now. Deals don’t go away overnight.

If you have cash saved, some tenants prefer renting so that they can play the stock market which historically return 8-10% per year with a good broker. Real estate values typically follow the rate of inflation over the long term. That being said, home ownership has the best tax incentive. Married couples can earn up to $500,000 in gains on their homes TAX FREE, where singles can earn up to $250,000 in gains TAX FREE. If you played the stock market, those gains would be hit by nearly 50% by Uncle Sam.

First and foremost, you need to find a neighborhood that you absolutely love. If you have kids, it is important to look in their best interest FIRST before yours. Second, look at property values. If prices are declining and homes are sitting on the market for over 180 days, it may be better off to hold off and rent, analyze for the next year, and buy something possibly in foreclosure when you are ready. How do you find out about Days On Market (DOM)? Call a local agent and ask for homes for sale in your preferred neighborhood. DOM is normally listed.

If you do buy, it is best to put down 20%. Avoiding Private Mortgage Insurance is huge today. PMI companies are going broke or already did, and the ones left standing are charging an arm and 2 legs for coverage. Not to mention your closing costs are about 3% higher. Although an FHA loan sounds great with 97% Loan To Value loans, it is quite expensive when you roll things out. Be sure that you understand the pros and cons of FHA versus Conventional financing. I will offer friendly advice to those who ask.

Some pros and cons about renting and buying…Well if you rent, you have the flexibility to move. Leases run month to month, 6 months, and 1 year. Home ownership limits you to the market whether it is a buyer or sellers market. The resale of your home is based off of competitive sales and overall demand, not a lease. Renting allows you to blame everything on the landlord. If you don’t like dealing with broken water heaters, leaky roof, and running toilets, then maybe you are a lifelong renter. OWNING a home allows you a huge tax advantage, potential tax-free capital gains, and emotional satisfaction. With that however, comes property taxes and upkeep.

If you purchase or contract a home by the end of 2009, you are eligible for the $8,000 tax credit from the IRS and can spread this out over 2 years, something Congress passed to stimulate home ownership. All things aside, this is truly a very good time to start shopping for a home. Historically low prices, low interest rates, and real estate provides an amazing tax shelter. Read my article about the tax credit HERE

So a couple paragraphs to conclude, real estate is a very tough and mean industry. If you are not careful, it will eat you up 10 times over. Most people get only one chance and you are done for a long time. Most decisions in life are based off emotion, and in real estate, if you let emotion control your decisions, you are in for a potentially catastrophic ride. Most importantly, let a professional help you with a plan. You can either agree or disagree with their input. But a guy like me can share a wealth of information for those who don’t even know what a home inspection is. Don’t try to tackle buying a home by yourself.

On a side note, most of you that know me know that I have more stories about real estate and business that will even draw a surprised look from Ben Stein. I have learned from the best in the industry though and at 30, I feel I have a great amount of experience in real estate acquisition, construction, and finance. I have shared my stories with investment groups across the country and now speak at forums about risk mitigation. One thing that is so important to understand and I’ll say it again, is that real estate is the biggest catapult to financial wealth, freedom, and stability. Most of our parents made a lot of our upbringing possible by home ownership and equity.

If you are not ready now, don’t panic or feel that you are missing the boat. The nice thing about real estate is that it is tangible. It will always be there no matter what, different than stocks. Think things through, talk to people, and make a smart decision. Once you make a smart decision, your emotions will take over.

Besides my beautiful family, real estate is the most important thing in my life. I strive to make more good decisions than bad ones, and if you understand how I put it, the industry will force you to make both types of decisions. The key is not to jump the gun. Understands everything. Then…one day…everyone will have the opportunity to live a safer life no matter if it’s just buying 1 house or 20 houses.