Real Estate Information Library
is important to know how much you can afford before you begin
looking at homes in Orange County, California. You should also
talk with a lender and get pre-approved for a loan. This puts you
in a stronger negotiating position with a seller.
rule, your monthly housing costs should not be more than 28% of
your monthly pre-tax income, including the mortgage payment, real
estate taxes, and insurance. If you have long-term debts, such as
student loans or car payments, your monthly payments, including
your housing costs, should be less than 36% of your pre-tax
monthly income. Some loans, such as VA and FHA loans, are more
flexible with these basic guidelines.
on which type of mortgage you select, you can consider houses in
various price ranges. An adjustable-rate mortgage will usually
enable you to qualify for a higher loan amount. Your Realtor can
help you make the basic calculations. And remember, buying at the
top end of your price range gives you more time to outgrow your
home, and can save you money in the long run.
The Realtor calls with great news! Your offer has just been
accepted. Congratulations--you are about to become a homeowner!
Your initial euphoria may be
short-lived, however, as you begin to have second thoughts about
the purchase. First, it's the mortgage. It seems like so much
money, and it will take thirty years to pay for it. You look over
the cash you will need for the closing and feel like you will
never be able to afford to dine out again! Finally, you stare at
the inspector's report and convince yourself that the roof will
blow off and every major system will fail the day after you move
in. You're in a frenzy. You ask yourself, "What have I gotten
The best thing to do if you begin
having "second" thoughts is just relax! These feelings
are so common that they have even been given a name--"Buyer's
Remorse." "Buyer's Remorse" is almost always a
temporary malady, but call your Realtor if you are having an
extreme attack. We have experience in helping our clients through
the home-buying jitters.
There is probably some kind of small, leggy creature that makes
its home with you. Whether they are termites, fleas, roaches,
ants, or spiders, it is a good idea to serve them with an eviction
notice before you put your home on the market. If home remedies
like ionized boric acid don't work, paying a professional
exterminator will be money well spent.
Most standard sales agreements
require that a property be inspected before the closing and
treated for termite infestation, if necessary. It is a good idea
to check for insect problems as soon as you sign a listing
agreement, so that they don't become an issue of contention in the
sale. Some insects may not physically damage the house, but may
reduce its chances of selling for top dollar. Constantly having to
push back spider webs while touring the house or seeing roach
antennae tweaking could seriously undermine a prospective buyer's
ability to fully appreciate your house.
When you decide it is time to move, it is important to engage your
children in the process. Depending on the reason for the move and
the distance, moving can cause some concerns for children that
parents may not pick up on right away. It often means going to a
new school, leaving favorite playmates, and a lot of uncertainty
about what the new neighborhood will be like.
Things will go a lot easier if your
children support your efforts to get your current home sold. It is
important to engage the children in keeping their toys and clothes
picked up. Teenagers may be especially touchy about strangers
invading their space, and may resist keeping their room in
"showing" condition. It is also important for the family
to stay out of the way when the house is being shown.
How can you get the whole family
involved in the sale? Include everyone in the discussions about
the move and invite the children to participate in house-hunting
trips. Work with a Realtor who is comfortable with children and
can remain sensitive to your children's needs and concerns.
You have probably figured out how much you will need at the
closing for your down payment, but don't forget about the closing
costs. These additional costs can add up to a significant amount.
Closing costs will vary, depending
upon the financing costs and the time of the month that you close.
Your Realtor will be able to give you an estimate of all these
costs, including the points on your loan, private mortgage
insurance (if required), the title search, title insurance,
attorneys' fees, and any transfer taxes or recording fees changed
by local government agencies. There may also be property taxes,
homeowners' association fees and insurance that must be prepaid.
The final closing date is usually an important item in the
negotiation of the purchase agreement on a home. This is the day
when the buyers get their ownership papers and the sellers get
their money. It is important to remember that most standard
contracts don't pinpoint a specific date, and closings can be
delayed due to factors beyond the buyer's control.
The closing will usually be set as
soon as the title search and lender's paper work can be completed,
however, anything can upset the closing schedule. Questions can
arise about liens that were paid, but not properly recorded.
Something in the buyers credit history may have to be cleared up.
These situations rarely cause the transaction to fall apart, but
they can wreak havoc with your moving schedule. Your Realtor will
keep you up to date on the progress of your closing in order to
avoid delays and minimize the inconvenience, if one occurs.
To take much of the guesswork out of your consideration about
whether a particular property in Orange County, California is a
good investment, you can check on the actual selling price of
similar homes in the neighborhood.
Some sales information, such as the
selling price, the financing terms, and the transaction dates, is
public information. Your Realtor will have record of all recent
sales. You can find out how properties have been appreciating,
based on actual sales, rather than from the neighbors (they could
be wrong!). Driving by comparable homes can give you an idea about
how they compare with the property you are considering. Your
Realtor may have seen these homes and can give you additional
information to help you make a decision.
Sellers may be reluctant to accept an offer that is contingent on
the sale of another property. However, such a sale can be
structured to minimize the risks.
The seller should put a limit on
the amount of time that the buyers have to accept an offer, and
they should keep their home on the market. They should also
reserve the right to require that any contingencies be met within
a short period of time, (24-48 hours), if they get a second offer.
This is called a "First Right" contingency.
Contingent sales can work well for
the sellers. The buyer is not in a position to ask for concessions
on price or terms and may be able to get interim financing. Each
situation is different, however, so go over the terms with your
Realtor before accepting a contingent offer.
When you are faced with multiple offers on your home, how do you
choose the right one? Your Realtor can help you compare and
contrast the terms of each proposal.
First, there is the price. Consider
the closing costs you may be asked to pay, and be sure that you
understand any other terms that might reduce your net profit. Can
you work out a mutually agreeable date for you to move out and for
the buyers to move in? How "clean" is each offer? Do the
buyers have another property to sell before they can close on
yours? Can you get reasonable assurances that the buyers will be
able to qualify for the financing they will need?
Your Realtor can help you weigh the
relative merits of each offer, so that you can accept--or
counter--the best one, and line up one as an alternative.
What is the best price for a piece of real estate? Mortgage
lenders, appraisers, and real estate brokers use what is called
the "fair market value" (FMV). FMV has been defined as
"the price that a buyer is willing to pay and the seller is
willing to accept, when both parties are knowledgeable about the
property and neither is under any time pressure to buy or
sell". Sounds great, but how is this price determined?
The starting point for determining
a fair price may be an opinion of the value or "competitive
market analysis". Such an analysis uses information on
similar properties which are: 1) currently for sale, 2) already
sold, or 3) expired properties (those which did not sell). Local,
national and international trends and market conditions must also
By comparing similar properties in
each of the three categories and the market conditions,
appraisers, lenders and agents come very close to the maximum
price that buyers would be willing to pay for a house.
If you are in default on an FHA-insured mortgage, and the lender
intends to foreclose, you should know about the Mortgage
Assignment Program. You will have to provide certain information
to the FHA to apply for this program. To be considered eligible
for assistance, the home must your primary residence, you must be
at least three full payments behind on the mortgage, and the
reason for your failure to make the mortgage payments must be due
to circumstances beyond your control, such as unemployment. The
FHA must be reasonably certain that you can resume making the
payments at the end of 36 months and that the accrued deficiencies
will be paid back before taking over the loan.
The Veteran's Administration also
has a mortgage assistance program for those who have VA mortgages.
Before you close on your new home, you will make a
"walk-through" inspection to ensure that the property is
in the same condition as it was when the purchase agreement was
Some sellers convey the appliances
and major systems "as is," offering no promise that they
will be in working order. Other agreements require all of the
major mechanical systems, such as heating, plumbing, and air
conditioning, to be operational. It depends on the terms that are
negotiated between the buyer and seller.
During this inspection you should
check the appliances by turning each one on and letting it run a
full cycle. This gives you a chance to make sure that any repairs
that were to be made by the seller prior to the closing have been
made. These details are much easier to work out before or during
the closing than after you have taken possession of your new home.
Selling a home is one of the most complex transactions that most
people are ever involved in. Finding a buyer is often the easy
part! When you find someone who wants your home and who has the
money to buy it, it is still a long way to the closing table.
You must first negotiate a purchase
contract that covers the price and all the terms of the agreement.
How much of a deposit will the buyer put down? When and how will
the transfer of title occur? Under what conditions can either the
buyer or seller back out of the contract? There should always be a
complete home inspection. Having a good agent to handle the
details after a home inspection can make the difference in a
successful transaction or a failure. The buyer must obtain
financing, and the lender's appraiser will have to agree with the
sale price. When clear title has been established, you can sign
all the necessary papers to finalize the sale.
Now that you have found the perfect home and negotiated the price
and terms with the sellers, you come to the most difficult part of
the transaction--finding the perfect loan.
You should do some comparison
shopping among lenders. Your Realtor can refer you to several
reputable lending institutions which should be able to complete
the loan process before your proposed financial approval date. The
loan officer will take your application and have you sign all the
necessary papers to authorize credit and employment verifications.
You and the Realtor should get periodic progress reports to make
sure that all of the details are taken care of. Such reports will
help to ensure that any potential problems are discovered and
addressed before they can threaten the transaction.
Finding a good Realtor whom you like and trust is the first step
in locating your new home in Orange County, California. Call or
stop by a real estate office and ask to speak with the manager.
Describe what type of home you are looking for. The manager can
refer you to an agent who knows that market very well. You might
also use weekend "open houses" as opportunities to look
for a Realtor, as well as a new home. It is really a matter of
chemistry! If you meet someone who is knowledgeable and with whom
you feel comfortable, call that person!
Once you establish a good working relationship with a Realtor,
your agent can show you the homes for sale, even if they are
listed with other companies. Often they can show you a property as
soon as it is placed on the market. (Many of the best homes never
even make it to the weekend classified section of the newspaper).
Are you considering taking out hazard insurance on a property
before you actually take title? It may be a good idea! Even though
you are not yet the owner of record, as the buyer, you have an
insurable interest in a property the moment that you and the
seller execute the sales agreement. As a matter of practice,
however, buyers do not usually take out insurance until the papers
change hands, and it should not be necessary if the agreement of
sale is properly executed.
It is very important to both parties that the agreement states
that the property will be insured for a specific amount. From the
buyer's point of view, it is important that an adequate sum be
stipulated, and that the agreement not read "as now
insured"--which can indicate that the seller may not want to
increase the insurance. As a general rule, the amount of insurance
on the buildings on a property should equal the sales price, less
the value of the lot.
If you have been house-hunting on your own in Orange County,
California, you may have been relying on the classified ads or
driving through your favorite neighborhoods in search of "For
Sale" signs. A good Realtor can save you time and gasoline by
making your search easier and more efficient.
Realtors learn about homes as they go on the market, and the best
values may sell before they are ever advertised! Good Realtors
often beat the sign installation crews to the scene! An agent who
has seen the homes available in the area can save you time and
effort. By using the Multiple Listing Service, an agent can also
show you his or her company's listings, as well as those of other
firms. The agent can also give you any information you need about
nearby public transportation, schools, shopping, and recreational
Odors and Selling
Your dog or cat can pose a problem when your property is listed
for sale. Even if prospective buyers have pets of their own that
smell just like yours, they may be repelled by animal odors. If
you have a pet odor problem, you should remove the offending
furniture or carpets or hire a professional to clean them. Check
the cat box frequently and keep the litter fresh.
Some people have allergies or irrational fears of certain animals,
so it is a good idea to put dogs or cats outside or confine them
to one area when your house is being shown. It is hard for buyers
to appreciate your home through puffy, watery eyes or in between
sneezes! Even if the house is exactly what they want, your chances
of selling it are less if the buyers are afraid of being eaten by
You have just spent the entire day looking at homes in Placer
County, California, and now they have all become a giant blur.
Which house had the great dark room? Was it the same one with the
small kitchen? You saw so much that you can't remember anything!
Realtors have developed little tricks to help them remember the
thousands of properties they see.
Carry a notebook with you when you are house-hunting, and give
each house its own page. At the top of the page, note the address
and price. Write down the exterior construction, style and color,
as well as the color of the living room carpet and walls and any
other major feature that will jog your memory later. You can
nickname the houses--"the white cat house" or
"copper pots house"--anything to help you retain a
mental picture of the property. This will enable you to recap the
day and give your Realtor important feedback that can speed up
your search for the perfect home!
Many purchase offers today have a contingency clause which allows
the buyers to have an inspector or professional expert to inspect
the property. If there is a significant defect in the property,
the buyer can cancel the contract without losing the earnest money
deposit. Such contingencies may make a seller nervous, but they
are an excellent procedure for both the buyer and the seller.
The time period for inspection contingencies is negotiable. In
most parts of the country, the buyers have about a week in which
to cancel the contract if the structural inspection reveals a
serious and consequential defect. The positive side to such
contingencies--the inspection usually addresses--and
overcomes--the buyers' misgivings and confirms their decision to
move ahead with the purchase.
Individuals who invest in real estate are doing very well these
days. The potential for income, appreciation and possible tax
savings makes investment property especially attractive. It is
important for you to get professional advice before you decide to
buy investment property. You may want to start with a personal
financial advisor who can help you set your investment goals. Your
Realtor can help you select a competitively-priced property that
meets these goals and can answer questions about why a particular
property would be a solid investment. What features would make it
easy to rent? What kind of maintenance expenses are you likely to
incur? What will your cash flow be, and how will the tax savings
affect your bottom line? While we cannot predict how much a
particular property will appreciate, we can give you the history
of price trends in our market area.
Many sellers think that the price of their home is determined
solely by what they are willing to accept and what the buyer is
willing to pay. There is one more variable that can complicate the
sale of a home--the lender's appraisal. To protect the interest of
their investors, the mortgage lender hires an appraiser to give an
independent, objective evaluation of what the property is worth.
If the appraised value is lower than the selling price, the seller
will be glad that he has enlisted the services of a professional
Realtor. The agent can give the appraiser information about
neighboring homes that have recently sold that support the
seller's price. If an appeal to the appraiser is not successful,
some delicate negotiations will follow. Both the seller and the
buyer may have to make concessions to make the transaction work.
The bank may ask the buyers to increase their down payment or ask
the sellers for a reduction in price.
Many lenders help prospective buyers get pre-approved for a
mortgage loan before they begin a serious house-hunting effort.
Give the loan officer all of the information about your assets,
income, and debts so they can tell you how much money you will be
able to get under the available loan options. The loan officer
will do a credit check and work with the lender to straighten out
any problems with your credit rating.
Pre-approval from a lender can make you more attractive to the
seller when you find the home you want. Occasionally multiple
offers come in on a house, and you find yourself competing with
other buyers. In that case, it is helpful if you have included a
letter from the lender with your offer stating that you have an
approved loan and are, indeed, qualified to buy. This will also
save you time by eliminating from consideration any homes that you
would not be able to afford.
It is a well-known axiom that location is one of the most
important elements in the value of a property. Let's take that one
step further. A good investment buy would be a sound property in a
"so-so" area that will increase in value in the future.
Buying into an area that is strongly on the comeback is one way to
shorten the odds for success.
Trend is everything. The trick is not to get in so early that you
are one of the earliest pioneers, but early enough that there is
still plenty of appreciation left. Being a pioneer is fine if you
are a gambler with a lot of patience. It is safer to buy into an
area after the restoration trend is unmistakably established.
A neighborhood that is a good candidate for restoration must have
an intrinsic location advantage, such being in a school district
that has high test scores or in a good walk-to-work location. It
must also have good basic homes. Can we help you find a winner?
Today the interest rates charged on fixed-rate mortgages are
almost the lowest they have been in two decades. That's good news
for potential home buyers. Even better news is the fact that the
interest charged on some Adjustable Rate Mortgages (ARMs) is at a
level not seen in four decades. However, you should be cautious if
you choose an ARM.
keep in mind that the ridiculously low rates offered on ARMs
usually are guaranteed just for the first year. You should also be
aware that, because of the potential for volatility, lenders will
usually require that you qualify for a mortgage loan several
percentage points above the actual initial rate charged on the
ARM. This is intended to eliminate marginal borrowers from
becoming overburdened by debt. You should also be on the alert for
lenders who charge special fees or caps that can increase the cost
of the loan to you.
The first step you take when putting your home on the market is
establishing the price. A professional market analysis can help
you determine what the property is worth. Contact a Realtor who is
familiar with your area to get prices on the homes that are for
sale and to see how long they have been on the market.
Your Realtor will be able to provide you with information about
the actual sale prices of homes that are similar to yours. He or
she can also tell you about the features that influence the value
of each property, such as the number of rooms, the overall
condition, and the extras--family room, finished basement,
wall-to-wall carpeting. You can establish a market value for your
home in Orange County, California by putting all of this
information together. If you price your home within 5% of the
established market value, it should sell quickly.
In the last decade Multiple Listing Services have revolutionized
the way real estate is sold all over the country. When listing
your home in Orange County, California, a Realtor enters the
pertinent information about your property into a computerized
Having your home placed on the Multiple Listing Service provides
the most effective advertising available because agents all over
town have immediate access to information about the price,
location, number of bedrooms and baths, the kitchen equipment and
other appliances that convey with the home, as well as the size of
the yard, the type of heating and air conditioning systems, and a
host of other features. The MLS allows agents to feed in their
buyers' basic needs and match them up to the listings of all area
Realtors. When you list your home, you are employing not only the
listing agent to market your home, but hundreds of the agent's
colleagues all over town who will work cooperatively to get your
property sold as quickly as possible.
No matter how much storage space they have, most people feel that
it's never enough. Most buyers put storage space high on their
list of priorities for a new home, and all sellers must face the
minor indignity of having prospective buyers open all of their
closets to determine the size of each one.
Even an enormous closet looks small if it is cluttered. Your
closets should be as organized as possible while your property is
on the market. If you have too many things, have a yard sale, rent
a storage unit temporarily, or make a tax deductible donation to a
local charity. When you finish putting all of your closets in
order, then attack the other storage areas. The areas that you
have for storage will look much more spacious and attractive if
they are neat and well-organized.
If you are considering buying a home in a planned community, be
sure that you understand the owners' association rules. These
covenants usually cover a wide range of subjects, including
exterior paint, where campers can be parked, where you can walk
your dog, and sometimes even the kind of shrubs or flowers you may
Such restrictions are attractive to many home owners because they
don't have to worry about their neighbors doing things that they
find offensive. If you are an individualist, however, and don't
want community interference in your lifestyle, such restrictions
could cramp your lifestyle. Be sure that you read and understand
the rules and regulations governing a planned community before you
make an offer on a property.
Very few people will buy a house because they are attracted by
fantastic bathrooms. Buyers do react to bathrooms that are not
cared for, however, because they view them as a reflection of the
overall condition of the property.
Many buyers know that plumbing repairs potentially represent a
major expense. They get nervous about dripping faucets, loose
tiles, and running toilets. Your pre-marketing preparations should
include making sure that your plumbing is working properly and
that any cosmetic damage caused by former leaks has been repaired.
Keep the bathroom spotless while your home is on the market. Get
out the scouring powder, mildew remover, glass and tile cleaner
and a scrub brush. Re-caulk around the tub and shower, if
necessary. A new shower curtain, bath mat, and nice smelling soap
can help give the buyer one more positive reason for liking your
When you have decided on a mortgage lender, you begin the loan
process by filling out a loan application. You should be fully
prepared to go over your current financial situation and credit
history with the loan officer.
Have a record of all of your current bank accounts, including the
name and address of bank(s), type of account(s), and approximate
balance(s). Be prepared to provide details about outstanding loans
or credit accounts, such as student or car loans and major credit
card accounts. You will also need information about your assets,
such as car title, stocks and bonds, and life insurance policies.
If you foresee any credit problems, discuss them with the loan
officer for advice on how to keep them from interfering with
approval of the mortgage. That person can usually give you a
prompt opinion about your chances for obtaining a mortgage.
After just a week on the market, your Realtor has brought you a
terrific offer to purchase your house--it is less than the asking
price, but more than you expected. The buyers were reasonable and
well qualified. After talking with your agent, you decide to
accept the offer.
After the agent leaves, you start thinking about what you have
just done and feel terrible. You wonder if you acted too
quickly--maybe you could have gotten more! You fear that the
buyers will let your garden go to seed and pull down all the
beautiful wallpaper that you just put up.
These fears are such a common phenomena that they have been given
a name--"seller's remorse"! It is perfectly normal to
feel this way, especially if you are selling a home where you have
lived for many years and which holds many memories. "Seller's
remorse" is almost always temporary. It is quickly replaced
by the excitement of moving into your new home!
Occasionally a seller will be surprised to learn that a
contractor's or mechanic's lien must be paid on their house. To
challenge such a lien, the buyer can release it by posting a bond
pending adjudication. In other cases, a title search may disclose
other claims against the property by an ex-spouse, past heir, or a
former owner. A simple quitclaim deed may be used in such a case.
A quitclaim deed allows the person involved to sign over whatever
rights he or she may have had in the property without laying any
claim to it.
If the seller will not be receiving the proceeds from the sale of
their present home in time to close on a new home, it may be
possible to arrange a swing loan. Most real estate transactions
involve some hesitation and questions on the part of the seller
and the buyer. The real estate agent can provide answers or
alternatives so that matters can be resolved and the sale
Interest rates fluctuate as changes occur in the general economy.
If you purchased your home when interest rates were higher, you
may want to consider re-financing your loan at a lower rate.
You will have to apply for the new mortgage and have your current
income eligibility assessed. Depending on how long you have had
your present loan, a current appraisal may be required. There are
closing costs, such as attorney, title fees, recording and notary
fees, and appraisal charges.
The biggest factor in your decision should be the length of time
you plan to remain in your home. If you will be there for only a
year or two, it may not pay to re-finance. If you will be in your
home longer, re-financing could provide you with lower mortgage
payments. Your Realtor can help you work out the numbers and can
refer you to reputable lenders.
Your family has outgrown your home in Orange County, California,
but you have roots in the community that make it difficult to
leave. Is remodeling the solution?
Get professional advice before you jump into a major renovation
project. Decide what changes you want to make, and get bids from
several contractors. When you have an estimate on the cost of the
project, talk to your Realtor to determine if these changes will
be cost-effective. Over-improving your home may make it difficult
to get your money back if you sell it soon.
It is a good idea to talk with friends who have remodeled to get a
realistic picture about working with contractors and to determine
how disruptive the project will be to your family life. Remodeling
a home is a major undertaking, so be sure that it is the best
solution for you.
For Top Dollar
When you get serious about selling your home, the chances of your
selling it quickly for top dollar will improve considerably if you
list it with a real estate sales professional. If you doubt this,
consider the fact that eight out of ten homes sold today--more in
some markets--are listed with a professional Realtor.
Listing your home places it on the local Multiple Listing Service
that is subscribed to by a majority of real estate sales
professionals. Through the MLS listing, your home is assured of
getting the widest possible exposure to the market place.
Some buyers shop the home market on their own, but most save time
and money by using the services of a real estate sales
professional. Ask yourself which homes the real estate sales
professional is going to show the prospective buyers--homes listed
on the MLS or those that are not?
If you still want to try to sell your own home, you should know
that you will face stiff competition when it comes to attracting
Sometimes the need for a move is obvious. For example, if your
work requires you to transfer to a new city. The impact of other
life changes, like having twins, your last child leaving home, or
a big salary increase, may not be so obvious.
When you notice that your house or condominium in Orange County,
California is no longer serving your needs, it may be time to call
in a professional Realtor for some expert advice. Your agent may
suggest that you remodel your present home or find one that is
more suitable to your current lifestyle.
If you decide that a move is necessary, what should you consider
before listing your present home for sale and beginning the search
for a new one? You will want to know how much you can expect to
get for your present home and what you can afford to spend on a
new one. You will also need information about financing and the
many loan programs that are now available. A professional Realtor
can be an invaluable asset to you as you make these important
Most of our buyers rate a good kitchen very high on their priority
list when they are looking for a new home in Orange County,
California. The layout of the kitchen, the amount of counter space
and storage, and the age and overall condition of the appliances
are all important to them. The kitchen area is basically viewed as
the center of nourishment and as a place where they will share
Take a discriminating look at your kitchen and consider what you
can do to make it a real asset. Repair any plumbing leaks or
broken appliances. Scrub the room thoroughly, paying special
attention to the range and oven. Clean the refrigerator and place
a box of baking soda inside. Little fix-ups can sometimes do
wonders--hang some pretty pot holders over the stove and get some
new curtains. You don't need a brand new, high-tech kitchen to
impress buyers, but do whatever you can to make your kitchen look
as shiny and well-maintained as possible.
Your Own Home
The concept of "do-it-yourself" is "as American as
apple pie". While this approach can pay dividends in many
endeavors, it can cost you unnecessary time and money when you are
trying to sell your home.
The overwhelming majority of homes that sell are listed with a
real estate sales professional. In most markets, over 90% of the
homes sold are listed with a Realtor.
Most people try to sell their own home in order to save the
commission, while those who tend to buy homes that are "for
Sale by Owner" homes also want to save!
Rarely does anyone actually save money by selling their own home.
By listing your home with a Realtor you will save the cost of
advertising your home, the inconvenience of showing, and all the
time you might spend talking to people who couldn't qualify to
buy. Realtors can help you get top dollar for your home and are
experienced in all of the complex legal details involved in
When you are involved in the process of buying a home, it is safe
to assume that you will probably find one that you like, make an
offer, and purchase it. There are many steps along the way, and
more and more buyers in the market today want guarantees.
Inspections by structural engineers and environmental specialists
often turn up something wrong with the property you want to buy.
Many sales have been halted or delayed because asbestos, lead, or
radon was found on the property.
If a problem has been found with the property you want to buy, ask
yourself two questions: 1) Can the problem be fixed? 2) If so,
what will it cost to repair it? Some of the following problems
could keep you from purchasing a property, if: 1) the house rests
on a fault line; 2) the water supply is contaminated; 3) there is
a severe crack in the foundation; or 4) the house is located under
electro-magnetic power lines.
We want the properties we market to look spotless and wonderful.
However, the sellers eventually find that keeping their house in
prime showing condition begins to wear thin after a few weeks for
even the most impeccable housekeepers.
It is a lot of work to keep the beds perpetually made, the kitchen
and bathrooms spotless and closets neat. Is it worth it? It is--if
you want to sell your house for top dollar in a reasonable amount
of time. Buyers often see normal clutter, and what registers is
"this house hasn't been maintained." They see bathtub
rings and think "plumber's bills." Dirt under the
radiators causes them to imagine having to replace the entire
heating and air conditioning system. People are often functioning
more on emotion than logic when selecting a house. You can help
your broker by minimizing the amount of imagination that buyers
will need in order to fall in love with your home.
Buying a home is a good idea for a number of reasons, and one of
the most important is the tax savings. At first glance, it may
look like the monthly costs for your mortgage and taxes are much
higher than the rent for a comparable home.
If you are planning to buy a $200,000 home, for example, with a
fixed-rate 30-year mortgage at 7.5% with annual taxes of $1800,
your monthly cost (principle, interest, and taxes) would be
approximately $1,548. The good news comes when you consider your
tax bracket and calculate the amount you save each month. During
the early years of your loan, almost all of the mortgage payment
and all of your local real estate taxes can be deducted on your
federal returns. If you are in the 28% bracket for Federal taxes,
you can save about $433 each month, bringing your net monthly
housing bill down to $1115. When you take into account your state
and local taxes, you may save even more.
If you are thinking of selling your home and your house has risen
in value since you purchased it, or you have accumulated a lot of
deferred profit from previous sales, the new tax law passed in
August of 1997 could be of tremendous value.
Prior to this new law, when a homeowner moved to a smaller home,
relocated to a less costly area, or made a decision to rent, they
were left with unfavorable tax consequences. The old tax law
allowed people who sold their homes to defer tax on any profit by
buying a replacement home of at least equal value within two
years. At age 55, they could permanently escape tax on up to
$125,000 of profit, but any profit over that was taxable unless a
new home was bought. The good news is, starting with homes sold
after May 6, 1997, homeowners will be able to make as much as
$500,000 tax-free profits on the sale of a principal residence for
joint filers or $250,000 for single filers. The $500,000 capital
gains exclusion will remove taxes as a consideration for most home
sellers by giving them flexibility to trade up or down. It will
also allow them to preserve the savings value of a home when they
sell, provided they used the property as their principal residence
for two of the prior five years. Consult your tax advisor for your
Most of our sellers make a profit when they sell their homes. They
often have questions about how capital gains tax will impact them.
If you are selling your primary residence, you do not have to
worry about paying taxes on your profits if your gain does not
exceed $250,000 as a single taxpayer (or $500,000as a married
couple filing jointly). This new tax law comes from The Taxpayer
Relief Act passed in August of 1997. Regardless of your age, you
are now free to roll from none to all of your gain into another
home without further tax consequences.
Different rules apply when you sell income property. If you sell
one property then purchase another, the taxes will be due for the
year the sale occurred. On the other hand, if you arrange to
exchange one investment property for another, you can defer the
capital gains tax. To ensure complete tax deferment you must
acquire a replacement property which is equal or greater in price
than your exchange property, and move all of your equity from the
old property into the new. It is not as complicated as it sounds,
but you do need professional help. Many Realtors and attorneys
specialize in helping their clients put these1031 tax-deferred
Every purchase of a home involves a certain amount of compromise.
When you are working with a Realtor, it is important that you give
your agent a clear idea which of your criteria are flexible and
which items you really must have in your new home.
If you prefer a specific location, for example, discuss why you
want to live in that neighborhood. The agent might be able to
suggest alternatives areas which offer the same amenities or
convenience to your office. How important is size? Do you really
need four bedrooms or would three bedrooms work, if there is a den
for your home office? How much are you willing to correct with
redecorating or remodeling? Are you willing to expand your price
range by using an adjustable rate mortgage to increase your buying
We ask buyers a lot of questions so that we can use their time
most efficiently and show them only houses that are real
possibilities for them.
You have finally found the home in Orange County, California that
is right for you, but you have some questions about the structure
and condition of the home. A home inspection is the best place to
get answers to your questions. There are companies that specialize
in inspecting new and used homes. Most sellers allow a reasonable
amount of time to have the property inspected after the purchase
agreement is agreed upon and prior to closing. It is wise to have
a home inspection, even if the house is new or everything appears
to be in perfect condition.
The inspector can provide important information about the house.
Where are the gas and water shut-off valves? How do the circuit
breakers operate? What type of routine maintenance should be done
for each system? The inspector's fee is an investment that can
save you money later!
It's the day that you close on the sale of your home, and the
buyers are a little cranky. During the walk-through inspection,
your dependable old dishwasher stopped midway through its cycle,
and the powder room toilet flunked its flush. These situations may
cause some anxiety for the buyers and sellers, but such problems
are quite common and usually easy to resolve.
Most purchase agreements require that the major mechanical systems
and the appliances being conveyed are in working order at the time
of the closing. Defects are often discovered during the structural
inspection, allowing the sellers have plenty of time to have the
repairs made. Occasionally there are last-minute breakdowns or
defects that are not spotted until the walk-through inspection. In
that case, an agreement can be made with the sellers at the
closing to escrow funds for the repair or replacement of the items