The Use Of A Housing Inspection Report

Listed below are some uses of a property inspection report when buying a property:

• List of Defects: First and foremost a home inspection report will list all the defects that a property may be carrying. Some may consider that if a property is defective it will be visible and hence that annuls the need for an inspection. However, this is not always true. Some defects may not be visible to the naked eye. In a lot of instances structural damages and damages relating to faulty wiring and plumbing are not easily detected. Inspection reports can help you unravel this.  Moreover as an investor you would like to know all that is wrong with the property so that nothing all of a sudden seems out of left field.
• Undisclosed Damage: In most cases property sellers in order to be true and fair disclose all damages that relate to a property.  In some cases on the other hand sellers may not reveal all damages to the property. These damages may or may not be major. However, you are entitled to know. In an inspection report, you could easily find out these undisclosed damages and base your decision to buy a property on that.
• Renegotiation Of Price: Once you have gone through the home inspection report, you will notice that all items significant and otherwise have been detailed. In addition to this your home inspection report will also include a approximate cost of repairing or replacing each item on the report. Based on this information you will be able to estimate whether the asking price of the property is fair or whether it is overpriced. While your home inspection report will not tell you whether to but the property or not, it will give you an indication as to the structural and overall integrity of the property. If you are comfortable with what you se you can go ahead and make an offer on the property.
• A Future To Do List: With a inspection report, you can make yourself a list of things to do.  Once in the property based on the priority of things, you can slowly and surely go about repairing or replacing each defect in the house. It might be worth mentioning that should the property have issues with the air conditioning, roof, and plumbing or wiring, it may be advisable to get these fixed as a matter of urgency.

Once you have gone through your home inspection report and in the event that you feel the property has too many problems, you could withdraw your offer. These are some of the uses of an inspection report when you are considering buying a house.

Owning Vacation Home In A Slow Market

When it comes down to buying holiday home, as a generalization there are usually a few common factors. Primarily, people look to get them because that makes up a permanent vacation spot where they could take a vacation as and when they desire. Next, it is a possible revenue stream as they could rent it out to other vacationers while it is not occupied. And thirdly, people usually consider vacation homes good real estate investments.

Having said this we must realize that in a slow real estate market, you could probably buy holiday home in a fairly good area for a reduced price. If you are able to hold on to the property long enough to see the real estate market recover, you might actually be able to sell the holiday home for a higher price, thereby making a profit on the property. However, as a lot of real estate experts would tell you, nothing in the real estate market is a certainty.

Advantages Of Owning A Second Home

Some of the advantages of buying vacation home are as follows:

• Additional Revenue: While a lot of investors do not look at vacation homes as buying an investment property, the fact of the matter still remains that it is a good source of revenue. Investors could easily rent out the property to other vacationers and events coordinators when the property is not being occupied.
• Part Ownership: With buying vacation homes, investors can quite easily get a property by asking another investor to buy into the holiday home with them. This is quite a prevalent practice nowadays. With this investors only get part ownership of the property and they do not need to dig into their equity.
• Future Sale Revenue: If investors do their research well and buy holiday home that will hold it’s market value in the future, upon the recovery of the real estate market, investors could make themselves a good profit, especially considering the fact that they purchased the property at a discount.

Disadvantages Of Owning Vacation Homes

Some of the disadvantages of owing vacation homes in the current economic climate are as follows:

• Selling Could Be An Issue: Given the current real estate market conditions, it has been well professed that this is a buyers market. Hence if investors are looking to sell holiday homes in a hurry, they could find themselves stuck. Slow real estate movements are making property sales more difficult by the day.
• Interest Rates: If you got the property now and are experiencing low interest rates, upon market recovery interest rates will definitely rise. Owing to this, affordability could be an issue. Prior to buying vacation home make sure that you have considered all options and your finances in detail.

These are some of the facts that consumers should be aware of prior to considering buying a vacation home in the current economic environment.

Investment Property Purchase Considerations

• Prices: The first and foremost reason you should be looking at acquiring an investment property is the fact that property prices are at record lows. In addition experts claim that prices are as much as 30 percent below their peaks.  This is also a buyers market and with numerous foreclosures flooding in to the market, buyers could get a property for as much as a 45 percent discount.

• Tax Credit: While the government has extended the first home buyer’s tax credit till the end of the year, it has also expanded its spread by allowing to existing home owners to also take advantage of the tax credit. Existing homeowners can get up to $6,500 from the government in the form of the tax credit, provided they meet the criteria set out.

• Additional Source Of Income:  The best part of owning an investment property is the fact that the investment property can generate additional income for you in the form of rent. For qualified borrowers who can obtain finance from a financial institution, the additional rent generated can prove to be an invaluable help. While there may be a lot of houses on sale, there is still the want for rented accommodation and this may be a god time to cash in.

• Tax: the interest payments on an investment property are usually tax deductible. This would mean that at the end of the financial year when you file your taxes, you would be getting a bigger tax refund from the government. The additional tax refund could go towards paying off your owner occupied mortgage or additional debt that you may have incurred. In addition to this, if you are buying a property in a particular suburb or district, you may get additional tax rebates and reliefs owing to the fact that the government is trying to develop those particular areas and zones.

• Tangible Asset: Unlike shares and other securities, property is a tangible asset and usually holds it’s value much better than securities and investments traded on the money markets.  Property prices are not subject to as much volatility as shares are.

• Diversification: The age old saying of “don’t put all your eggs in one basket”, is truer today than has ever been. With the recent financial meltdown investors have learned not to put all their money in securities and investments. Individuals who invested in property are currently finding themselves in much better situation than their counterparts who went all in to the share market.

These are some of the reason why you should consider buying an investment property. Not only for the above-mentioned reasons but also owing to the fact that property is one of the only assets that you could ad value top yourselves. By making smart renovations and modifications, you could increase the value of your property above the accepted market mean.

Reference:

1. http://investmentinproperty.net/10-reasons-to-buy-your-first-investment-property/

Home Buying Offers:  Common Reasons For Rejection

1. The Home Offer Is Too Low: This is one of the primary reasons why home offers get rejected. Prospective home buyers make the rookie mistake of just throwing out a figure to see what the seller will expect. If your offer is way below the expected market value of the home, you may end up having your offer rejected straight away. Prior to making an offer you must put some thought into it. Check what the average prices of properties in that suburb or area are and then compare it to the asking price of the seller.
2. Emotions:  Once you make a low ball offer on a property which is way below the asking price of the seller, in a lot of instances the seller may feel offended. This gives rise to issues of credibility where the seller starts feeling that you may either not be good for the money judging from your offer on a home or that you feel the sellers property is not worth as much. Either way you do not want negative emotions associated with the purchase or sale of the property as this will eventually lead to the falling through of your offer.
3. Bad Representation: In certain cases your home offer may fall through owing to the fact that your representing real estate agent does not have your best interests in mind. While representing you the same agent may also be representing a competitive buyer and may be undercutting you owing to the fact that he/she is getting a higher commission slice from the other party. Another instance may be where the real estate agent severely lacks social skills and offends either the seller or the seller’s agent. Either way it would give rise to a situation where you end up losing the property.
4. Buyer Did Not Match The Seller’s Criteria: The crux to this situation is a severe break down in communication. A buyer can never know what the seller’s criteria is unless the question has been asked. The seller may have several issues like: wanting a cash deposit, having concerns about the conditions of the house, or may even want to see the buyers’ pre-approval letter etc. Unless you clarify exactly what the seller’s criteria is you can never be sure how to go about getting around pleasing the seller.

In addition to the above mentioned reasons, a very common blunder is where sellers put themselves into a corner by making home offers like “take it or leave it”. This means that you have laid your cards on the table and cannot go any further. While negotiating make sure you use small increments. Never go all in. At the same time do not low ball the seller and remember to make offers on a home which are researched.

A lot of people have recently started to realize that instead to paying rent month after month, they could quite easily afford a place of their own instead. With property prices at more affordable levels than ever before, buying a property can be more easy and close than you thought. A lot of working individuals and couples, who do not have the time to maintain an entire house, find it rather convenient to own an apartment. However prior to buying an apartment, there are a few things that you will need to know. Below mentioned is a list of such things.

Buy Apartment: Tips To Consider

1. Area: Prior to moving into an apartment, make sure that you have decided on the area in which you want to live. This decision may include consideration like distance from work, public transport, public amenities, or if you or some one has a medical condition, distance from a hospital. Do your own research to find out the best suburbs in the area or what the average price of an apartment in the area would be.
2. Criteria: It is essential that you find the right place for yourself. Real estate is not something that you can change everyday. Look at few places before deciding on one. Remember to rate each of them on a scale of 1 to 10, one being the best and ten being the worst. It may also help to talk to local real estate agents in the area and inform them of your criteria. This could save you time as they may be able to screen most places according to your preferences.
3. Noise And Traffic Levels: Before moving in to a place check the locality where your apartment complex is situated. If you enjoy your peace and quiet, you check the proximity of the apartment to clubs, cafes and other entertainment venues. Also be sure to check the amount of traffic that plies in the area on an average day. The last thing you’ll want is to be woken up to the blaring sound of traffic and horns.
4. Age Of The Building: Be very careful about moving into an apartment which is in an old apartment complex. After having incurred the cost of getting a mortgage you do not want to have to spend on renovations owing to the fact that the building is falling apart.
5. Security And Car Parks: In this day and age, it can never hurt to be careful about security. Check what measures has the building got against intruders and what measures does it have in place for security of the building and apartments in general. If you have a car, make sure that the building you are moving into has it’s own parking facility. Make sure that the contract price includes the car spot as well. If the previous seller did not have a car spot, speak to the management of the building to get yourself a car spot.
6. Maintenance Charges: Do not overlook these charges. Usually maintenance charges include municipal, assessment and property taxes. In addition water and normal electricity charges are also included. Ensure that you have found out what charges does your maintenance expense cover. In some cases you may find that car parking charges are additional.

These are some of the things that you will need to know when buying an apartment.

You have just found a house, that you feel comfortable with and are ready to make a home offer. You want to be sure that the home offer you make is accepted and at the same time does not stretch you out and offers you room to breathe. The question is, how do you do this? Making an offer on a house can be a tricky. Prior to making an offer on homes. there are a lot of things that you will need to consider and once the offer is made you will also have to prepare to negotiate in the event of a counter offer made by the seller.

Making An Offer On A Home – Considerations

When making an offer on a house, there are certain factors you must taken into consideration in order to ensure you get the best deal.

How Much?

When considering the amount of money to offer a seller, it may be useful to consider some of the below mentioned points:

• Inquire as to what properties in the neighbourhood have sold for or are selling for. This will give you a fair idea of whether the seller is over or under charging.
• While looking at the median of selling property prices, this will also give you an idea of the how hot or cold the market is. If there are a number of sales in the market and in quick succession of each other you will know that you may need to act fast or lose out to a more willing buyer. On the other hand however, if the sales are few and far between it would mean that you have time to bargain.
• Check the interiors of the house to make sure that it doesn’t have any structural or major damages. This would mean you having to mend the house or carry out interior renovations to make it habitable.
• You may also want to check if the house has the additional features that you want. E.g. A lawn or a studio or a granny flat etc.

Having considered the above make sure to check your finances prior to making a home offer.

Contingencies

When making an offer on a house, be sure that you include contingency clauses in your offer. Do not make an unconditional home offer without certain clauses being satisfied, such as, the house passing certain inspection levels, or your application for finance being approved. Usually contingencies have a time frame of 30 days.

Counter Offers On A Home

Now that you have made a home offer, the seller in most circumstances will come back with a counter offer on the home. This is basically where the seller will accept certain terms of the offer and negotiate or want to change other. The biggest haggling point is usually price. Other issues included in a counter offer could include settlement date, contingencies in the contract etc. If the seller is dissatisfied with the price, you could be rest assured that he/she will reject your offer on the spot. The seller may also come back with the counter counter offer. This process will basically continue until a consensus has been reached and the terms are universally acceptable.  Once the terms have been agreed upon, the two parties enter into an unconditional contract that encompasses the agreed terms.

Once a home offer is made, you can retract it right up to the point where the offer is accepted. If it has been accepted, it creates a legal and binding  obligation on both parties and either party breaching could be liable for a law suit and any damages a court may deem fit. Hence prior to making an offer on a house, make sure that you are completely satisfied with all the terms.

References:

1. The Basics of Making an Offer – Realtor.com
2. Making an Offer on a House – NOLO

If you have been considering a move away from home and at the same time have also been contemplating buying a new home, you might just find that two decisions do not go as hand in hand as you may have expected. Here’s an interesting tidbit, while every man and has dog knows about the government offered first home buyers tax credit, little known fact includes, your state, city, town and local governments also might have programs to help you with the purchase. In addition to this your employer could also help you wit your home buying. Nowadays employers have employee support programs as an incentives and aid to help employees get into their first homes. However, you need to do your research as these programs often change without any prior notice so make sure you have your research spot on. Usually information pertaining to this is publicly available so be prepared to spend some time in front of your screen doing your research or calling up various institutions. These programs are usually tailor made and as a result of which you will need to discuss your personal circumstances with the agencies, so be prepared for that.  Consumers who take the two pronged approach are often in a much better position than consumers who just rely on the one source. In addition remember that your lender real estate agent and can really sweeten the deal by putting a cherry on the icing.

How To Buy A Home With Help From State Organizations

Certain states offer better home buying help and assistance programs than others. For instance, in spite of the fact that California have had serious budget woes they are offering low to moderate income earners down payment assistance. In certain counties, income earners who earn as much as $81,300 are eligible for help. This loan is a deferred payment loan and need not be paid of until the end of the term of your primary loan. The loan cab be upto 3 percent of the purchase or appraised value of the house, whichever is less. The typical interest rate for one these loans is 3.25 percent. As good as this may sound it is very essential that you do your own research and ensure that you are getting the best deal as in certain cases your bank may be able to offer you a better product.

Homebuyer Help From City & Neighborhoods

Quite often it so happens that cities have funds store away to help buyers or develop certain specific neighborhoods. In the city of Chicago buyers can get as much as 4 percent back on the purchase of their homes in the form of their desired down payment assistance program. In addition to this certain areas offer up to a 20 percent tax credit for the amount of interest paid if you are a first homebuyer or if you buy a property in a certain selected area.  In certain instances you may find that certain city non-profit association collaborate with banks or lenders to help qualified buyers with closing costs.

These are some extra forms of revenue that could help individuals with those much needed additional funds and closing costs for their mortgages. It pays to do your research and ensure that you have tapped every possible avenue when it comes down to finding those few extra dollars to fund the purchase of your home.

References:

1. Local Homebuying Programs – U.S. Department of Housing and Urban Development

With the expansion of the first homebuyer’s tax concession, this is the ideal time to be looking for a home if you are a first home buyer. With the Obama government deciding to extend the tax credit to individuals who earn less than $125,000 and couples who earn less than less than $250,000 combined, this makes it a complete buyers’ market. What is important however is to remember that you should be under contract by the end of April 2010 and close out the same contact by June 2010 in order to ensure that you get the first home buyer’s grant. Now, having done a brief recap on the first homebuyers’ tax credit, it is time to look at a few pointers when it comes down to buying a first home.

First Home Buyer Tips

Expand Your Search Horizon

Being an individual who lives in the digital age could have certain ramifications when it comes down to buying a first home.  With most properties nowadays listed online, most first home buyers do not tend to look beyond the listings on real estate websites, virtual tours and pictures they can find at the click of a button. With your first home it is essential that you take the time out and browse local newspapers, talk to your local real estate agent and drive around neighbourhoods you may be interested in. You never know the next best deal may be just around the corner.

Time Frame

Prudent buyers will know to take advantage of the first homebuyers tax credit and work keeping that time frame in mind. However, it may be beneficial to know that it is more important to find the right house that suits your criteria. In general most motivated buyers could get a house in as few as two weeks. Other luckier individuals might find a house in a matter of days. Being over cautious and over speculative as to prices and housing sector movements could mean that you might miss out on the bargain bus. If you are using a real estate agent, spell out your requirements and make sure that you aren’t wasting your time by seeing properties that do not match your parameters so you can speeden up the process of buying a first home.

When Is It Too Many?

This is probably a great question. It is hard to say when you have seen too many homes. One way of saying this is, if you are seeing 2 or 3 houses a days and have been doing so for a few weeks now, you probably are seeing too many. The thing to remember when buying a first home is that if you find a house that suits your needs and is what you were looking for, step in and buy it. Time wasting will only lead to some one else walking away with it.

Doing The Math

Every house you see, make sure you inspect in detail. Carry a camera with you to take pictures and get abetter idea when you sit back and analyse the property.  Ensure that you are comfortable with the locations and the infrastructure and amenities. Be sure to give it a mental ranking to help you make your final choice.

Once you have seen a few properties and have been able to narrow it down to a select few homes, re-visit them all once prior to making up your mind about buying a first home. This will ensure that you have done all that you needed to do. Remember, do not get pressured by anyone or be swayed by the suggestions of your real estate agent. It is your property and it is important that you are comfortable with it.

References:

1. Tips on Buying A House – Home Buying Institute
2. Buying A Home – U.S. Department of Housing and Urban Development

Supply and Demand

Supply and demand is the cornerstone of property price trends and is a simple concept that applies to any industry. If there is sufficient availability of properties to meet with demand, then chances are that some sellers will cut prices in order to be more attractive to prospective buyers. This trend will spread and with time, property prices decrease. Similarly, in a situation when demand outweighs supply, where there are many potential buyers and too few properties available on the market, the property prices will increase as sellers can ask higher amounts for their property, knowing that buyers are eager or desperate. Supply and demand may impact on property price trends on a national, regional or even local level so while supply may outstrip demand in one area, the opposite may be true in another suburb. All other factors relating to property factors are essentially an aspect of supply and demand even the cliché “location, location, location”.

Creditworthy Buyers

At a time when the global credit crunch is affecting financial institutions, they may be less likely to lend out money. Since financial institutions do need to derive an income from the money they lend, yet want to minimize their risk by being exposed to buyers who may default, they change their criteria for lending. They may only lend to buyers with a higher disposable income or even limit the category of properties that they are willing to finance. Whereas a poor credit rating in the past may have still allowed a buyer to get finance, through careless money lending policies of some institutions, with the global recession, not many banks will continue to do so. Less buyers who qualify for a mortgage means lower demand which ultimately lowers house prices.

Crime, Facilities & Amenities

There is no denying the fact that properties in a ‘bad’ neigborhood sell for less than those in a plush, upmarket area. Incidents of crime, poor infrastructure of the surrounding area, lack of facilities and services will reduce property prices. Similarly, an area with all the necessary facilities and amenities, with a low crime rate and a good image will usually increase property prices. It is important to bear this point in mind, especially when selling. Many sellers hold out for as long as possible to get the best possible price on their property, only to have a shocking crime or wave of urban decay suddenly causing a dip in prices.

Additional Costs of Owning a House

Another important consideration when selling your home is to factor in the costs like property taxes, insurance, gas and heating expenses and so on, which buyers may take into account when deciding on the feasibility of purchasing your property. A middle class home in a cold area may actually sell for less at times, due to the high cost of heating. Even transport costs of getting to and from the nearest shopping mall, school or entertainment area will be an issue for prospective buyers, and if they do not find the property conveniently located or if it will cost them a substantial amount to access these facilities, they are not likely to want to purchase a property in the specific area. Less demand once again translates into lower property prices.

While many sellers enter the market believing that the house valuation price that they were provided is the ideal selling price of their house, identifying and understanding property price trends will allow you to better understand why your house may not be selling. If you are trying to increase your profit by selling your own house, rather than opting for an estate agent, then it is important to do your homework about potential factors that may affect house prices and find ways to counteract it, if possible. If these factors cannot be altered, then look at other methods to increase your property’s value like interior renovations before selling your house. Eventually, if none of these changes improves the property price, then you should consider settling for the money you are able to get immediately rather than waiting longer and watching property prices drop further. Similarly, if you are aware of changes and developments that will definitely increase your property’s value, then you should wait until you can secure a better selling price.

Mortgage Liability

An asset is any item or investment that either brings you a regular return or grows in value so that when you do sell, you will reap a profit from the sale. If you have purchased your home through a loan, then the mortgage is actually a liability and the property, which you do not own until the loan is paid off, is the bank’s asset. In this case, your house is definitely not an asset. However at some point through the period of your mortgage, selling your home will derive you a sufficient sale price to pay off the outstanding loan amount while gaining a profit in your hand after settling your home loan. At this point, your home is essentially an asset.

Free Hold Property

A free hold property is when you have complete ownership of your house after paying off your home loan. It is usually seen as the house being your asset once this has been achieved. However, according to some financial gurus, your house is still a liability. Since you have to pay property taxes, home insurance and maintenance costs for your house, it is still draining money from you, without any return on investment. Many will argue that a home is essential and renting would mean losing money as well with no return for the money spent. So how can a free hold property be a liability in comparison to other options for housing you and your family?

House is not a Financial Asset

By the principles of money management taught by certain financial gurus, your house may not be an asset in this context. However in terms of financial stability of the average person and family security, your house should be seen as your greatest asset. Even if you house costs you money every month, the fact that those four walls is in your hands, houses your family and can be retained for decades on should translate into an asset. Not all home owners can run a business from their home so as to generate an income through a portion of their house or use their home as a tax write off for business purposes. Your house, once paid off, is the single greatest asset, both in financial and sentimental terms that you will ever possess. If you are able to work from home or derive an income from a home based business then your house puts money in your hand and in the context of certain money management principles, it is once again an asset.

Deciding whether your home is an asset or not should not hinder your decision to purchase a property especially if you are losing money through property rental. Do not let these ‘experts’ in the field of money management confuse you. At the end of the day, even if you are losing money to the bank in terms of interest, the return of seeing your family happy and safe in a house, without the risk of eviction, is a sufficient return to most home owners, even if not in monetary terms.