Kristen Meleedy, CBR's Blog
Where do you start when you first consider purchasing a home? Buyers who are new to the real estate market may not know exactly what they want in a house or where they want to live. While the dream homes found online, in magazines, and on your favorite television show are great resources for design and style, visiting open house events will help you to hone in on features that will best serve your household.
When visiting open houses, follow these tips to make the most of your time:
Allow plenty of time for each house on your list. If the home appeals to you, take a few moments afterward to drive or walk around the neighborhood.
Create a list of must-haves’, likes, and dislikes to help you evaluate each property. Add ideas that appeal to you during each open house experience.
Sign in when you arrive but let the hosting agent know if you’ve already selected a real estate agent.
Dress comfortably. You might climb stairs, descend into basements, visit attics, or walk from house to house in the neighborhood so be sure to wear appropriate clothing and shoes.
As you tour, create a list of questions for your real estate agent to address with the selling agent if you plan to submit an offer.
Do not peek into closets, cupboards, pantries, or drawers if the hosting agent indicates are off-limits. Your agent can arrange an in-depth viewing if you’re the property is one you’d like to pursue.
Take note if you smell deodorizers and air fresheners. They could be masking pet odors or could indicate something more serious. If you’re interested in making an offer, ask your agent for help identifying the source before moving forward.
Respect the seller's privacy by not taking photos without the host’s permission.
Questions related to making an offer and other negotiations should be funneled through your real estate agent. If you’re interested in the property, ask your agent to arrange a follow-up viewing. Make a list of all your questions and follow up with your agent as soon as possible especially if you want to make an offer on the property.
If you've heard people talk about "subject-to" real estate, you might be curious what that means and if it would be a good investment for you. Briefly, "subject-to" real estate means you're buying the property but the loan on that property stays in the name of the existing seller. You're making your purchase "subject-to" the existing mortgage or lien.
Why Would Someone Buy Real Estate This Way?
When you buy a "subject-to" property, you don't have to get a mortgage in your own name. That can be perfect for people who don't want to tie up their credit or funds. It also works well for those who might not be able to qualify for an existing mortgage. Since you're not putting your name on anything that involves the mortgage, you're free and clear from that standpoint. But you'll own the house, and you'll make the mortgage payments.
Is This a Good Wealth-Building Tool?
This can be a great tool to build wealth when it's used correctly. It's very important that you continue making the seller's mortgage payments on time, and that you get everything in writing. But since you don't have to qualify for a mortgage yourself, you can choose great properties that people really want to sell. Often, this is because the owner is in foreclosure. By buying the property "subject-to", the owner doesn't have to go through foreclosure proceedings and have that on their credit report.
How Much Risk is Involved in This?
As with any type of investment, there is always risk. The biggest concern is that the seller of the property will file for bankruptcy. When that happens, the house could be included in that filing and would be foreclosed upon by the lender. You could lose your investment, since you aren't the one who has the property's mortgage in your name. Another risk is the due-on-sale clause in the seller's mortgage. Almost all mortgages have these, but they're often not enforced. Still, if the lender wanted to enforce that clause, they could demand that the entire mortgage be paid if the deed transfers into your name.
How Many "Subject-to" Properties Can Someone Own?
Theoretically, there's no limit to the number of "subject-to" properties that you could own. As long as you can make the payments, you can keep buying these properties. You don't need any credit to get started, and you won't really need much cash, either. You'll simply have to be willing to take a little bit of risk to build up your real estate portfolio. With that in mind, though, it's not a bad idea to have an attorney help you, at least right at first, to be sure you're protecting yourself and the seller as much as possible.
Understanding how much your home is worth is important for a number of reasons. For one, when you go to sell your home, you’ll have an idea of how much equity that you’re working with. You may need to either refinance your home, take out a loan, or line of credit. Knowing the current market value of your home can give you a good idea of your finances and what to expect. Many people believe that their home is worth more than it actually is. In reality, your home is only worth what people will actually pay for the property in a certain time frame.
Some websites offer basic ideas of how much your home is worth. You can also use the Internet to search for comparable properties and see what has been sold, how much it has been sold for, and how much other homes that are similar to yours in the neighborhood are worth. You’ll need to be sure that the comparing properties include the same types of features as your own home in order to get a good estimate.
Consult A Realtor
Experienced realtors in your area are great resources for helping you to determine your property’s value. Many agencies offer free market value analyses, which can help you to see where your home would fall in the current real estate market. Realtors don’t get paid unless your home sells. They can use their many resources to work with you on the sale of your home and help you to price it appropriately.
Hire An Appraiser
If you want to dig a bit deeper in the pricing of your home, you’ll need to shell out a bit of cash. You could hire a certified appraiser who will dig deep into your property to determine the value. Once you find a buyer, another appraisal will happen on the property. The buyer pays for this. If you really want a good idea of how much your home is worth, hiring an appraiser beforehand is key. Keep in mind that appraisers may come up with slightly different estimates for the same home.
Know The Key Things That Affect Home Value
There are a few big factors that influence just how much your property is worth. While you may love your big kitchen, it goes a lot further than that. Factors that contribute to how much your property is worth include:
- The amount of land that you have
- The neighborhood your home is in
- The schools your home is near
- How many square feet your property is
- The condition of your home
- Any updates that have been made to the home
- The types of appliances you have
- Has the home ever been foreclosed on?
- Is your home energy efficient?
Based on all of this information, you’ll be able to get a good idea of what your home is worth. Beware of things that can cause a major financial setback on your home’s value like an urgent need for roof replacement, dated windows, or an unknown crack in the foundation. Getting an idea of what your home is worth is a great way to keep on top of your own assets whether you’re prepared to sell or just curious about numbers.
If you are in hot pursuit of your dream home, it is important to do everything you can to gain a leg up on the competition. That way, you can acquire your ideal residence as quickly as possible.
Now, let's take a look at three tips to help you gain a competitive advantage over your homebuying rivals.
1. Keep Track of the Local Housing Market
The top houses sell immediately, and as such, you may need to act fast to find and purchase your dream residence. If you keep track of the local housing market, however, you will be better equipped than other buyers to instantly acquire a house that suits you perfectly.
Monitor the housing market in cities and towns where you want to reside. Then, if you find a house you may want to buy, don't hesitate to set up a showing. And if you like what you see, you should submit a competitive offer to purchase this residence.
2. Get Your Finances in Order
Entering the housing market with pre-approval for a mortgage usually is a good idea. Because if you know how much you can spend on a residence, you can tailor your house search accordingly.
To get pre-approved for a mortgage, you should meet with a variety of banks and credit unions. Find out what mortgage options are available, and learn how different types of home financing work. Next, you can select a mortgage that enables you to begin your house search with a budget in hand.
Of course, if you have any concerns or questions about home financing, you should address them right away. If you speak with mortgage specialists at a bank or credit union, you can get the insights you need to make an informed mortgage selection.
3. Employ a Real Estate Agent
A real estate agent is a difference-maker, particularly for a homebuyer who is shopping for a residence in a fierce housing market. Typically, a real estate agent will work with a buyer to craft an in-depth property buying strategy. A real estate agent and homebuyer then will work together to put this plan into action and streamline the property buying journey.
In addition, a real estate agent offers guidance at each stage of the homebuying cycle. He or she first will help you hone your home search to a select group of cities and towns. A real estate agent next will keep you informed about houses that become available that match your homebuying criteria. If you find a house you want to purchase, a real estate agent will help you submit an aggressive property buying proposal. And if your offer to buy a home is accepted, a real estate agent will make it simple for you to finalize your house purchase.
As you get ready to pursue your dream residence, you should devote plenty of time and resources to prepare. Thanks to the aforementioned tips, you can prep for the homebuying journey, gain a competitive advantage over rival buyers and accelerate your house search.
If you know you’d like to buy a home in the future, you’ve probably thought about saving money for all of the upfront costs that buying a home can bring. Saving the sizable amount of money that it takes for a down payment can be seemingly impossible to do. It’s impossible without making yourself seem miserable for a time, at least. You can save money creatively without sacrificing everything. Below, you’ll find some tips for saving money that work for your life.
Put Your Money Somewhere Safe
While investing in the stock market may seem like a good idea to put your savings on hyperdrive, it’s risky. When it comes to your savings, try high interest savings accounts and CDs. The latter is a particularly good option because you won’t be able to touch the money for the time period that the CD will mature. You’ll also earn a bit of interest on the funds that are in there.
If you plan to keep adding to your savings (which you should) a traditional savings account is best. You should have a dedicated account that’s solely for the house fund. Do some shopping around for the savings account that will have the best interest rate and be the easiest option for you. Remember that as boring as a savings account seems, it’s a safe bet for your money.
Apps Can Assist You
There are plenty of budgeting apps and apps that help you to set aside spare change. You should make use of these tools to help you reach your savings goals. Whether you need some help with budgeting or need to find ways to put your spare change to good use, there’s an app for that. You can even find apps that will reward you for good behavior. These apps may “tip” you a few bucks for going to the gym or completing a project on time. You’re saving money and doing good for yourself at the same time! Saving money for your future home can be fun if you find the right tools to help you.
One reason that many people don’t save a lot of money is that they lack specific goals. If you sit down and look at your budget, you’ll see where you can cut expenses. Then, you’ll be able to have clear cut goals of how much you can save on a weekly or monthly basis. With your eyes on the prize of homeownership, you should be motivated to save where you can. Having specific numbers in mind can be a big help in reaching your long-term goals.