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I am a Broker with 16 years of real estate experience and being a Top Listing agent in the Mesa Real Estate market, I have received 100´s of questions about the process of buying, selling, investing or hiring a property manager. I have taken the most frequently asked questions and supplied a source of information and guidance. There will be variations of these questions but you should get the general idea to search further and get a good start in the process of buying real estate.
| TOP QUESTIONS ABOUT BUYING REAL ESTATE: |
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1. When do I start looking for a home? Do I go out and see what is out there and then decide if there is anything that will meet my housing needs or do I get pre approved as my Realtor suggests before I go out into the real estate market? |
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Never "buy in reverse" if you presently own a home since this will hinder you in the ability to negotiate on the new property. An owner would have to jump into the "risk wagon" with you in hopes that your home sells- thus they (sellers) will be willing to do that with a hefty price tag-" Offer full price or we do not risk with you." Is usually the scenario in this case. The worst part about buying in reverse is the fact that if a seller is willing to take the risk with you- you are now backed into corner where you are now "desperate" to sell your home which lots of time- costs you money by having to lower the price or take a low offer so that "dream home" is not lost. Get pre-approved and go out there with your Realtor® and get the best deal possible with no contingencies thus making it a solid offer and the ability to get a better price. |
| 2. Once I´ve found the perfect home, the next step is to make an offer. How do I get the best deal possible? |
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You may have some experience in negotiating especially if you've ever bought a car. But now we're talking about the biggest purchase of your life. Negotiation is an learned skill and art. This is a time when someone with experience and negotiating skills can really help. A Realtor® is trained in the art of negotiations and this is when experience really counts. You should be given the opportunity to review "comps" (previous sales) for the area that the property is located in and discuss the offer options that will be submitted to the seller. Remember that someday- you will be on the other side of the negotiation table ? and how you would feel if someone made you a "low-ball" offer or had unreasonable terms- always put yourself in the sellers shoes and anticipate what the win would be for you and the seller. Come up with an offer that should be a win-win for all parties and have your Realtor®take it from there. Put your trust and loyalty with them so that there is no lack of communication or any sense of apprehension and go out and get that "Dream Home". |
| 3. How long has the house been on the market? |
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This can some times be a concern for a buyer thinking that there must be something wrong with the property since no other buyer has bought it yet? To the contrary, days on the market are affected by the market- the exposure given to the home by the listing agent or a seller who is unrealistic about "the value" of their property. It can benefit the buyer by being able to offer a below list price offer since it appears that a seller might be "desperate" which is not always the case. Make the best offer possible at the advise of your Buyers Agent or Realtor® and see what the seller is willing to do by either generating a "counter offer" of your terms/ price or accepting your offer and now you are on the first stage of being a home owner. Lots of work is still needed like inspections - disclosures-appraisals and closing. |
| 4. Have there been any previous offers? If yes, why weren't they accepted? |
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There can be many reasons why previous offers where not accepted if even was has been any other offers. A seller or his agent will not reveal the existence of any previous offer but should advise your Realtor® is an offer is currently on the table so that you can take that into consideration when making your best offer. Your agent should always check with the listing agent first before writing any offer and ask the status of the listing. If not able to get a hold of the agent ? maybe even call the seller and just ask if they have been informed of any offers pending since your Realtor® has been unable to get in contact with the Listing Agent. Calling the Office of the Listing Agent is not always the best choice since there can be offers out there in the Agents briefcase or car that have not yet been presented and the Office for the Seller would only be informed when an offer has been fully executed (offer accepted by all parties). Remember to always place yourself in the Sellers shoes and you would not want to "tip your hand" to other potential buyers by letting it be known that there had been previous offers and why they were not accepted (usually it will be price). In the art of negotiations everyone tries to have a level playing field and even though buying a home is not a game- the principles in the art of negotiations play a big role and may the best negotiator win. A home sold is a win-win for the buyer since they are getting a property they will call home someday soon and a win for a seller who can now move on to their new adventure. |
| TOP QUESTIONS ABOUT SELLING REAL ESTATE: |
| Why is the Realtor® asking for a 6 month listing when we feel if we give that much time, there will be no sense of urgency and the agent might just sit on our listing and not work as hard if we gave only 2-3 months to sell? |
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The art of marketing a property is time intensive and also cost intensive for a Listing Agent who is worth their weight in gold for they have to generate marketing material, just listed post cards, property flyers, call capture system, pre inspections, virtual tours, schedule open houses and the list goes on and on. Understand that a top Professional Realtor® will "dig in his pocket" for upfront costs to market and expose your property to the world. Think of it this way, if you were hired to do a job but you were asked to pay for your own tools and get the job done quickly and correctly and don´t forget to maximize the bosses profit- How likely would you be to give a short term of commitment when you are not getting a solid commitment back. This is a business and no business person would spend money upfront with any reward in site. Another analogy that I learned a long ago from my mentor and personal hero - Floyd Wickman? "If you knew that it would take a whole tank of gas to cross the desert- would you only leave with half a tank and hope for the best or would you maybe even take some extra to make positively sure that you got to your destination?" Same thing in real estate if your Realtor® shows you that is taking 4-5 months to get the job done- why not give him a little extra to make sure the job and your destination of sitting at the closing table are obtained. |
| Why won´t my Realtor do an open house every weekend or everyday for that matter to get my property sold? |
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This is probably one of the biggest fallacies placed on the selling public. Open houses do not sell houses- Price- Location and condition of the home will sell a property. The only good that comes out of any open house is more business for that Realtor® conducting the open house. Rarely does a person walk into an open house and say, " gosh, I have been looking for a home like this and now I have found it!" A solid buyer- a highly qualified buyer will use the expertise of his Realtor and knowledge of the area to find or eliminate properties that will or will not fit their needs. In this day and age- with the price of gas and the Internet ? why drive around town looking for open house signs and hope you fall into the Dream home. It does not happen and any agent who promises to hold open houses to sell your home is just looking to increase their prospect pool for sales later. |
| Why does the Realtor ask me to stage the property and ask for me to fix certain things and another one just say that everything is fine and the property will sell as-is? |
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If your Realtor® is telling you that nothing needs to be done to make your property more appealing and salable- FIRE them!! A great listing agent will give ideas and suggestions on what would be best for his client and the property to get top dollar and get the property sold in the least amount of time. Just thing of how nice it feels when you go into a new home model and it is stages professionally and smells great. It is designed not like on purpose to trigger your buying or wanting senses. Same thing when you are selling your own property- this is the time to make your property shine. You would not try and sell your car without washing- waxing or detailing it- would you? Same principle in selling real estate. Spend that extra time and effort to declutter and do a deep cleaning of your property and always ask your agent for this professional opinion and if the home is not selling ? ask your Realtor to get some feedback on what the potential buyers are saying about your property? The truth coming from someone who chose not to buy your property will be a real eye opener. Chose a listing agent who is strong and willing to go after valuable feedback. There are many good listing agent out there who have all the tools to market- expose and keep you informed about what people are saying .If you have what I call a "3 P " agent- (Put up a sign, Put it in the MLS, Pray that it sells) ? it might be time for you to be looking for a proven top listing agent in your area. Remember that not all Realtors are created equal. Experience- proven results separates the GREAT ones from the weak ones. |
| Can a home be sold for less than its mortgage? |
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Sometimes. But it is a complicated process and a lot will depend on the lender. This process is called a (short sale), which occurs when a lender agrees to write off the portion of a mortgage that's higher than the value of a home. But, usually, a buyer must be willing to purchase the property first.
A short sale may be more complicated if the loan has been sold in the secondary market. Then the lender will need permission from Freddie Mac or Fannie Mae, the two major secondary-market players. If the loan was a low down payment mortgage with private mortgage insurance, the lender also will need to involve the mortgage insurance company that insured the low down payment loan.
The short sale can keep the homeowner from landing in bankruptcy or foreclosure. But it is not an easy procedure to approve, and it involves as much, if not more, paperwork than an original mortgage application.
Instead of proving your credit worthiness and financial stability, you must prove you are broke. And any remaining difference between your home's value and the balance on your mortgage is considered a forgiveness of debt, which usually means it is taxable income. Always be careful when a Short Sale Specialist who claims to have your best interest in hand- a listing agent or a Realtor who specializes in this type of transaction to communicate with you for you more than likely will receive a IRS 1099 form for the mortgage relief which would be taxable income for the year of the short sale.
You will be filling out a lot of paperwork and so will the Realtor so make certain the the Listing agent has experience in working with a Lender and you have the time and desire to have your finances reviewed with a microscope sort of speak. |
| CLOSING THE REAL ESTATE TRANSACTION: |
| Why don´t I get my keys and allowed to move in when I give my money and sign the paperwork at the Title Company? |
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The closing process, also called settlement or escrow, is a brief process where you sign all of the necessary paperwork to complete the purchase of your home. In Arizona that uses Title Companies- the Title Company is the intermediary between the buyer- seller and lender. Once all the paper work and inspections and appraisals have been completed ? the loan documents are delivered to Title. They must then prepare the settlement statement for review by all parties and if all is correct- schedule "signing".
This is when the Deed is signed for the market property from the seller to you. All monies needed to close the transaction are collected and then the Deed is sent to the County Recorders office for "Recording" Once that is completed ? the listing agent and buyers agent are notified and then you receive the keys to your home and the seller receives payment for the home. Note: The papers you receive here are extremely important. Keep them in a safe place. Your Realtor should be in close contact with you at this critical time to coordinate the release of keys and get you into your new adventure. Other parts of the County I realize use Attorneys and the buyer-seller and agents meet at a closing table and exchange monies and keys but I have no experience in this type of closing since I have never experienced and have only listed and sold homes in the Phoenix. |
| PROPERTY MANAGEMENT: |
| How do I find a property management company where my investment property is located? |
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Like selecting a Realtor® it should be done after interviewing about 2-3 companies and getting the feel if experience and services offered meet your needs. Make sure they give you a detailed list of their menu of services. Make sure there are no hidden fees on top of the management fee or leasing fee for a lot of Companies that look better to a Landord will nickel and dime an owner with surcharges for maintenance and repair costs. Like everything thing else when it comes to choosing a Professional- a referral from someone you trust is the best. Ask around- ask neighbors-friends, family or other investors for a present or past experience with a Realtor® or Property Management or Property Manager that gave them WOW service and responded quickly to their needs or requests. |
| CAPITAL GAINS: |
| I'm am getting ready to sell, but not sure if I want to move up-move down or just not buy at all and spend the equity in my property. How will the capital gains laws affect me and what can I do to save on my taxes when I sell? |
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Tax laws are always changing and though I try to give up todate and correct answers, each person's situation is different. According to the IRS , when you sell your primary residence, you can make up to $250,000 in profit if you're a single owner, twice that if you're married, and not owe any Capital Gains taxes.
Most folks still think that they need to reinvest their gain or profit. A lot of sellers are surprised by a change in tax law, especially if they've been in their homes for a while. That's because before May 7, 1997, the only way you could avoid paying taxes on your home-sale profit was to use the money to buy another, more-expensive house within two years. Sellers age 55 or older had one other option. They could take a once-in-a-lifetime tax exemption of up to $125,000 in profits. And in all instances, there was tax paperwork (Form 2119) to fill out to show that you followed the rules.
A bonus of the new rule- You don't have to buy another home with your sale proceeds. You can use the money to travel to Europe in style, buy an RV or boat and visit all 50 States or buy all those Designer shoes or purses that you could never afford before. In any instance, you no longer need to invest your proceeds and you can use the provisions in this Tax Law every 2 years as long as it is your Primary Residence.
You can, as well and I have done this, is to turn a rental house into your primary residence, making the sale of it eligible for the exclusion. This is accomplished when you meet the IRS use and ownership tests: You own and live in the home for two out of the five years before the sale.
Whatever your situation, make sure to contact your tax adviser on the best possible avenue for you to take. |
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I sincerely hope that these questions and answers shed a little light into the world of buying- selling and investing Feel free to contact me if you have a need for a top proven Professional and if I cannot help you ? I can refer you to a top Professional in your area.
Cecil Duarte - Broker, ABR, CRS, e-PRO, GRI, SRES
Phoenix AZ Real Estate
(480) 444-2211 - anytime
www.cecilduarte.com
cecilduarte@cecil.com | |