House Flipping

House flipping is when real estate investors buy homes, usually at auction, and then resell them at a profit months down the road. Can you make money doing this? Yes. Can you make a lot of money doing this? Yes.
1. Familiarize yourself with how to buy a home or condo. If you’ve already done that, then you already know the process and it’s second nature. If you have not ever purchased a home, then consult with a realtor and a financial adviser. There are a few steps involved when purchasing a home so you need understand that process, such as: placing an offer, getting a mortgage, removing conditions and taking possession.
Placing an offer: Since verbal offers don’t constitute a legally enforceable sale, you need to draft a written offer and give it to the owners and/or realtor. The offer stipulates price as well as the terms and conditions of the sale. If the offer is accepted, the offer becomes a legally-binding sales contract.

Getting a mortgage: Unless you have heaps of cash handy, you’ll need a mortgage. There are dozens of kinds of loans out there, so examine the ones that might work for you and talk to a mortgage broker if you have any questions. Some mortgages (ARMs) have special “teaser” interest rates that stay low in the beginning and raise up significantly after a certain period of time.[1] These might be attractive if you plan on selling the home quickly.

Removing the conditions: This is usually what the buyer does once the seller has accepted their offer.It is a legal move that the buyer (usually) makes in order to communicate that any obligations entered into by both or either parties have been met.

2. Understand the risks of flipping a home. Flipping a home can be risky. You’re incurring a large amount of debt for a potential payoff in the future. Except sometimes, that payoff doesn’t materialize, or it doesn’t materialize as quickly as we might have liked. You could be sitting on a property for longer than expected, paying a mortgage, property taxes, and continual upkeep. Sometimes, you will need to sell a home for less than you bought it for. Often, you’re at the mercy of a quivering housing market.
The amount of physical effort required is also a potential risk. How fit are you and how willing are you to do a lot of the DIY work involved in flipping the house? If you’ve never done renovations or fixes before, it will be a steep learning curve and the less you know, the longer it’ll take to flip the house.

3.Educate yourself about the real estate market in which you’re investing. Read magazines such as Forbes, Entrepreneur, and Money; these often have articles about real estate. Begin to understand how the real estate market works, what constitutes a good and a bad deal, and how to anticipate future growth or contraction in the future.
The housing market is like the stock market. It has both bull cycles (meaning optimism, growth, and high demand) and bear cycles (meaning pessimism, contraction, and low demand). The difference is that the housing market can take many more years than the stock market to switch from one cycle to another.
After talking to at least three realtors and doing some investigation, if you find that the market is in low demand and everyone and their dog seems to be trying to liquidate homes, housing prices are going to fall and profit margins will fall with them. These kinds of market conditions would make it more challenging to flip a home.

Try to wait for a bull market. Wait to buy until the real estate market has turned back around and more people are trying to buy than sell. This will create better conditions for you to start flipping.

4.Look for a home that can be substantially improved with the least amount of time and resources. You’re not trying to live in this house; you’re trying to buy it, improve it, and sell it. Try not to get attached to the home. Instead, view it purely as a profit-making exercise.
A home with room for improvement might have a run-down yard, an old carpet, a good spot for a carport, or other things that can be fixed with a little money and some hard labor. These types of fixes often provide an excellent return on investment (ROI) when flipping a home.

Some people look for distressed properties. Those are ones that the seller is “desperate to sell” for reasons such as: divorce, bankruptcy, death, poor condition of the property, late on payments or other. These give the buyer an inherent advantage over the seller.

Look for homes that sell in the middle to upper range. What that means is the amount where the average family would be able to afford it. Generally that means between about $200,000, and $500,000 depending on your area. You want that price range because these tend to sell the fastest — you have the largest population density looking for these mid range homes. It could be much less or much more but that’s about the average. The home generally have 3 or more bedrooms and at least 2 full bathrooms.

Find out what is preferred by residents in the area you’re looking to buy into. Simple things like easy access, off-street parking, no-through roads and a quiet neighborhood can make or break the attractiveness of a property.

5.Obtain a loan for at least several thousand dollars more than the price of the property you wish to flip. You’ll need this money for repairs and improvements. Negotiate a purchase of the property and buy. In the offer, be sure to have multiple ways out of the contract. The most common method is to simply put “subject to financing by [such and such] date.” If you can’t make the financing by then, ask for an extension on the condition date.
  

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6 Reasons You Should Never Buy or Sell a Home Without an Agent 

It’s a slow Sunday morning. You’ve just brewed your Nespresso and popped open your laptop to check out the latest home listings before you hit the road for a day of open houses.You’re DIYing this real estate thing, and you think you’re doing pretty well—after all, any info you might need is at your fingertips online, right? That and your own sterling judgment.
Oh, dear home buyer (or seller!)—we know you can do it on your own. But you really, really shouldn’t. This is likely the biggest financial decision of your entire life, and you need a Realtor® if you want to do it right. Here’s why.
1. They have loads of expertise

Want to check the MLS for a 4B/2B with an EIK and a W/D? Real estate has its own language, full of acronyms and semi-arcane jargon, and your Realtor is trained to speak that language fluently.
Plus, buying or selling a home usually requires dozens of forms, reports, disclosures, and other technical documents. Realtors have the expertise to help you prepare a killer deal—while avoiding delays or costly mistakes that can seriously mess you up.
2. They have turbocharged searching power

The Internet is awesome. You can find almost anything—anything! And with online real estate listing sites such as yours truly, you can find up-to-date home listings on your own, any time you want. But guess what? Realtors have access to even more listings. Sometimes properties are available but not actively advertised. A Realtor can help you find those hidden gems.
Plus, a good local Realtor is going to know the search area way better than you ever could. Have your eye on a particular neighborhood, but it’s just out of your price range? Your Realtor is equipped to know the ins and outs of every neighborhood, so she can direct you toward a home in your price range that you may have overlooked.

3. They have bullish negotiating chops

Any time you buy or sell a home, you’re going to encounter negotiations—and as today’s housing market heats up, those negotiations are more likely than ever to get a little heated
You can expect lots of competition, cutthroat tactics, all-cash offers, and bidding wars. Don’t you want a savvy and professional negotiator on your side to seal the best deal for you?

And it’s not just about how much money you end up spending or netting. A Realtor will help draw up a purchase agreement that allows enough time for inspections, contingencies, and anything else that’s crucial to your particular needs.
4. They’re connected to everyone

Realtors might not know everything, but they make it their mission to know just about everyone who can possibly help in the process of buying or selling a home. Mortgage brokers, real estate attorneys, home inspectors, home stagers, interior designers—the list goes on—and they’re all in your Realtor’s network. Use them.
5. They adhere to a strict code of ethics

Not every real estate agent is a Realtor, who is a licensed real estate salesperson who belongs to the National Association of Realtors®, the largest trade group in the country.
What difference does it make? Realtors are held to a higher ethical standard than licensed agents and must adhere to a Code of Ethics.
6. They’re your sage parent/data analyst/therapist—all rolled into one

The thing about Realtors: They wear a lot of different hats. Sure, they’re salespeople, but they actually do a whole heck of a lot to earn their commission. They’re constantly driving around, checking out listings for you. They spend their own money on marketing your home (if you’re selling). They’re researching comps to make sure you’re getting the best deal.
And, of course, they’re working for you at nearly all hours of the day and night—whether you need more info on a home or just someone to talk to in order to feel at ease with the offer you just put in. This is the biggest financial (and possibly emotional) decision of your life, and guiding you through it isn’t a responsibility Realtors take lightly
   
 

How important is Home Staging ? 4 Tips to get it Right!

Home Staging 

Home staging is the act of preparing a private residence for sale in the real estate marketplace. The goal of staging is to make a home appealing to the highest number of potential buyers, thereby selling a property more swiftly and for more money. Staging techniques focus on improving a property’s appeal by transforming it into a welcoming, attractive product that anyone might want.

Bye, Bye Clutter

The most important thing you can do to prepare your home for sale is to get rid of clutter. Make a house rule that for every new item that comes in, an old one has to leave. One of the major contributors to a cluttered look is having too much furniture. When professional stagers descend on a home being prepped for market, they often whisk away as much as half the owner’s furnishings, and the house looks much bigger for it. You don’t have to whittle that drastically, but take a hard look at what you have and ask yourself what you can live without.

Furniture Groupings
There’s a common belief that rooms will feel larger and be easier to use if all the furniture is pushed against the walls, but that isn’t the case. Instead, furnish your space by floating furniture away from walls. Reposition sofas and chairs into cozy conversational groups, and place pieces so that the traffic flow in a room is obvious. Not only will this make the space more user-friendly, but it will open up the room and make it seem larger.

Home Lighting

One of the things that make staged homes look so warm and welcoming is great lighting. As it turns out, many of our homes are improperly lighted. To remedy the problem, increase the wattage in your lamps and fixtures. Aim for a total of 100 watts for each 50 square feet. Don’t depend on just one or two fixtures per room, either. Make sure you have three types of lighting: ambient (general or overhead), task (pendant, under-cabinet or reading) and accent (table and wall).

Neutral and Appealing

Painting a living room a fresh neutral color helps tone down any dated finishes in the space. Even if you were weaned on off-white walls, take a chance and test a quart of paint in a warm, neutral hue. These days, the definition of neutral extends way beyond beige, from warm tans and honeys to soft blue-greens. As for bold wall colors, they have a way of reducing offers, so go with neutrals in large spaces.  

3 Tips For First Time Home Buyers

Credit Score-The homebuyer’s credit score is among the most important factors when it comes to qualifying for a loan these days.

Evaluate Assets and Liabilities –So you don’t owe too much money and your payments are up to date. But how do you spend your money? Do you have piles of money left over every month, or are you on a shoestring budget?

A first-time homebuyer should have a good idea of what is owed and what is coming in.

Organize Documents –When applying for mortgages, homebuyers must document income and taxes.

 Typically, mortgage lenders will request 2 recent pay stubs, the previous 2 years’ W-2s, tax returns and the past 2 months of bank statements — every page, even the blank ones.
  

Tips for Buyers & Sellers

  
Buyer Tips 

Step 1

Get Pre-Qualified. Contact your lender or your mortgage broker. They will pre-qualify you and let you know how much money you can borrow, what your down payment will be, and how much your monthly payment will be. If you don’t have a lender or mortgage broker call us, we can recommend a good one for you. We will need a pre-qual letter from your lender when we get ready to write up and present an offer. Most real estate listing agents will not accept an offer without a pre-qual letter attached. If you are paying cash we will need a “proof of funds letter” from your bank. Again most real estate listing agents will not accept a cash offer without “proof of funds”. Real estate agents are advised not to show properties to prospective clients that have not been pre-qualified.

Step 2

Find a Home. With pre-qual letter in hand you are ready to begin the home finding process. Contact your real estate agent or go to their website and start shopping for your dream home. Your agent will set the appointments for you to see the inside of the property or properties that you have selected. When you have found the perfect property your agent will write up a purchase contract that you will sign, and submit it to the listing agent.

Step 3

Making an offer. The contract will be negotiated between you and the seller, through the agents. Once the contract is agreed upon and executed, inspections can be ordered as well as the lender ordering an appraisal. If everything checks out ok closing can be scheduled.

Step 4

Closing. Closing is the process of going to the title company and signing the necessary papers, deed, note, settlement statement, etc. upon funding the property belongs to the buyer.

Sellers Tips

Step 1

Determine the Market Value of your home. Contact your real estate agent and have them prepare a Comparative Market Analysis on your home. Your agent will have access to the MLS and can compile a list of the recent home sales in your neighborhood. This data will assist in determining a fair market value on your home.

Step 2

List your home. Your agent will provide the necessary paperwork to list your home. Agent will then take pictures of the home, put a sign in the yard, lockbox on the door, and add the listing to the MLS. Your home will be “on the market”.

Step 3

Prepare your home for showings. Once you are on the market prospective buyers and their agent will be coming over to view your house. Try to keep it neat, clean and de-cluttered. Some prospective buyers cannot see past bold colored walls and family portraits, it is usually wise to re-paint with neutral colors and to remove family pictures. Offensive odors (cigarette smoke, cat and dog odors) turn most buyers away, so shampoo carpets and deodorizing are essential.

Step 4

Negotiate the Offer. Buyers that are interested in the property will submit a purchase contract that you and your agent will look over. Once accepted by both parties a closing will be scheduled. The seller then goes to closing signing the necessary papers to convey the property to the buyer, and collect any funds due. 

 

What You Need to Know About Home Appraisals

When you think about buying a house, you think about the plentiful cabinet space you hope to find in the kitchen, or ample bedroom size. You probably aren’t thinking about the home appraisal.If you’re selling a home, you’re probably daydreaming about the home you plan on moving into next. You’re probably wondering how much you can sell your home for, too.But whether you’re selling or buying, you probably aren’t thinking much about the home appraisal process. It isn’t one of the most glamorous parts of buying or selling a home, and yet if home appraisals disappeared tomorrow, the real estate market would come crashing down.So if you’re about to buy or sell a home and know little about appraisals, it’s time to change that.What are they? A home appraisal is a very educated guess as to how much your property is worth.

Why are home appraisals important? No credible financial institution will lend you money for a house without an appraisal.

The appraisal lets a bank or lender know what the loan collateral will sell for in a worst-case scenario.In other words, to go with an extreme example, the bank doesn’t want to be stuck with a home they lent the borrower a million dollars for but can only sell for $100,000 because that’s all it is worth. The home buyer shouldn’t want that either, of course.

So appraisals exist for good reason, but what can make them a tense time for all parties is that they’re conducted after you’ve negotiated a price, agreed to buy or sell the house and signed the contract. So it’s in everyone’s best interest that the appraisal is close to the price that both seller and buyer have agreed on.That said, if it turns out you’re about to buy a house for a wildly inflated price, that doesn’t necessarily mean you’re obligated to buy the house. But if you aren’t careful, it could mean just that.

The sales-and-purchase agreement should address the possibility that your appraisal comes in below the purchase price, and allow you to terminate the contract or renegotiate the price.

If not, you could be obligated to cover the difference for a lowball appraisal, and that could mean you’re on the hook for thousands.Who pays for the home appraisal? Usually, it’s the seller who pays for it at closing, which can be as high as several hundred dollars. The national average cost for a property appraiser is $309, according to data compiled by HomeAdvisor.com.

How do home appraisals differ from home inspections? The two often get confused, but they aren’t the same thing. Both an appraiser and inspector will walk around the house and take a good look at it (usually, the inspector comes first), but they’re each at the house for different reasons. The appraiser is looking at the value of the home; the inspector is looking for any defects with the home that may cause you financial grief later.
Of course, if the appraiser notices a problem, he won’t ignore it. If the appraiser spots a leaky sink or some loose wiring, he may request an inspection.

How long does the appraisal process take? It used to take a couple of days, but in recent years, ever since the recession – when federal guidelines changed the appraisal process – it’s more often a week or two. Underwriters can request more information about the house than they could in past years, and gathering that data and photos can take time for the seller and real estate agent, which can mess up the closing date, putting everyone on edge.

What factors go into deciding the worth of a house? Plenty. The appraiser is looking at the key characteristics of the property including square footage, number of bedrooms and bathrooms, condition of the home, current recently sold comparable’s that are close in proximity and health and safety issues.

That said, most real estate agents will tell you that it’s the recently sold comparable’s – that is, houses that are similar to your own – that are the main factors in appraising a home. It’s all about property values.

If you’re a homeowner, what can you do to improve the process? Nothing, once it starts. You’re powerless during the appraisal process, but before the appraiser comes by, you can take these common-sense steps.

It’s important to have the property look as good as it possibly can. You want to help the appraiser see your property’s potential so they will possibly reconcile a value closer toward the upper end of the range.After all, appraisers are only human. You could have a really cool house easily worth between, say, $300,000 and $325,000, but if it’s junkie, it’s easy to imagine the appraiser coming down closer to $300,000.

The day the appraiser comes, the lawn should be mowed, the landscaping weeded and the bushes trimmed. Clean the house. Get out the air freshener. Turn on the lights and open the blinds.It’s also very helpful to sit down the day or night before the appraiser arrives and make a list of repairs and improvements that have been done to the house over the past several years.

So if you’ve put on a new roof or bought a new hot water heater, let the appraiser know. Note anything you can think of – the appraiser will decide what is important to the value. It does not have to be formal or detailed. Just thoughtfully note everything so you can give it to the appraiser before he or she leaves.

But don’t get too excited if you’ve spent a lot on repairs and renovations. Your $30,000 kitchen remodel may help the appraisal, but it won’t automatically mean your house is worth an extra $30,000.

What a good real estate agent will do. If you’re selling the home, your agent will be there to meet the appraiser and share the home improvements you’ve jotted down – and offer other data as well.In the past, we would just meet the appraiser to open the door so that they could view the home. Now agents will come armed with a folder of information on comparable homes that justify the sale price.

We even call around to other brokers to ask what other properties that have not closed yet are currently under contract for since they are often slated to sell for a price well above asking, and it’s critical that the appraiser has this information.
The more information a seller and their agent can give an appraiser that they can’t find out just from checking the listing and walking through the home, the better.appraisal

Home Inspections

For most of us, purchasing a home is the biggest investment we will ever make. The process of purchasing a home is both rewarding and often times stressful. Dealing with contract negotiations, mortgage loans, and mountains of paperwork can be quite overwhelming. The last thing a home buyer needs to worry about is an unforeseen problem with his or her investment. This is why taking the time and investing in a professional home inspection is so important.

Every home has its secrets. A thorough home inspection will not only reveal these secrets, but provide the home buyer with a degree of confidence in the purchase. In addition to the home appraisal, required by most mortgage lenders, the home inspection will help justify the selling price of the home and, in fact, can be a large factor in negotiations.

Unlike a home appraisal, which only provides a cursory market value for the property, a home inspection offers a detailed analysis of the home’s condition. These inspections, when performed by professional contractors, should include an analysis of the home’s major mechanical systems such as furnace and air conditioning systems, plumbing and electrical components, as well as an overall analysis of the roof.

A home inspection will alert the buyer to any safety concerns or potential threats with the property such as the potential for mold, lead-based paint and asbestos. A qualified home inspector will be able to suggest actions for remediation in these instances. In addition to these environmental concerns, a home inspection will single out any code violations that may be present. This type of problem is quite common in older homes which were “grandfathered” in prior to changes in the local building code. It is important for the home buyer to be aware of these deficiencies and possible hazards.

A home inspection is a great tool for future planning, especially when purchasing an older home in need of upgrades. A detailed home inspection will provide the buyer with a “life expectancy” for certain items such as roofs, furnaces and appliances. A local home inspector will be able to inform the buyer of any local codes as they pertain to fencing laws, the addition of decks, etc. so that the home buyer may plan accordingly for future home improvements.

There are several avenues to finding a reputable home inspection company. Your real estate agent as well as your mortgage lender will undoubtedly be able to recommend one for you. Although you can typically trust a Realtor to provide you with a reputable contractor, you will also want to be aware of the source. The home inspector should be a licensed contractor in the state in which you are purchasing your home. They should be able to provide you with references, other than real estate agents. Other good sources for home inspectors include local Builder Associations, trade unions, the Chamber of Commerce- even your local hardware store may have a contractor advertising section. Home inspections will range in price according to the size and value of the home. Typically the average price for a home inspection is around $300. The emphasis should be on “professional” when looking for a home inspector. Though family members have good intentions, trusting a relative who “knows a lot about houses” is not a wise decision when dealing with your investment.

A home inspection is quite common in the real estate industry today. The majority of home purchase contracts will call out a home inspection as a contingency on the sale. Buyer beware, however, you must request this contingency as it is not an automatic clause. When purchasing a home it is a wise decision to invest a few hundred extra dollars in a home inspection. This small investment will help provide peace of mind when investing your life savings in a home.

Content provided by Helium Inc. This information is provided for your convenience; it is not indented as insurance advice. The views, opinions, and advice expressed in this article are solely those of the author and not those of Homesite Group Incorporated.

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