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Do the Research: What to Avoid When Buying a Home

Beginners in real-estate investing and first time homebuyers would often experience blunders when they look for houses to purchase. To avoid such frightful experience, which could lead to loss of time, effort and even worse your money; you would have to learn what common mistakes are made in real-estate and how to avoid them.

Lack of research

When buying properties and houses, you would have to go back to the basics: which is doing some research before proceeding with any kind of purchase. Research is basically asking questions about the house or the property. You could ask questions similar to the following to have an idea about the property:

  1. Reasons for putting the property on sale
  2. Any problems about the house’s foundation that needs to be addressed.
  3. If the former owners have paid for the house and the methods of payment.
  4. If there are any problems in the area where the house and property is located like being near a flood zone, termite problems, etc.
  5. If there are any problems in town area.

Not considering the bidding and maintenance cost

Your research would also include the price. It is a common scenario when a buyer would tend to offer a higher price for a property that would fit their needs and demands. Before bidding for a property, search for similar houses in the area and how much were the sold in the last few months. It is better to look at houses and properties that were already sold than those houses still up for negotiations or sale. Buyers should bid consistently with the other houses’ prices.

Aside from the upfront price of the house or property, buyers would also forget to factor in the maintenance cost of the house. Without considering the maintenance cost, homebuyers would often find themselves buried in debts. Real-estate investors should always keep the expenses in mind when buying property. Since the cost of improving the home would definitely have an impact how they would price their house. Having the home inspected could put a dent on your bank account, but never sacrifice it. Always get a good home inspector even if it means you would be spending more

Too much waiting

There is nothing wrong with waiting for the right house but a homebuyer should be realistic. It is difficult to find for a home that would fit 100% with their needs and demands. Homebuyers who are looking for homes with this method would usually by pass homes that would be meeting nearly all of their standards. Usually, homebuyers who wait around for their perfect homes for sale would not notice that the cost of purchasing properties is constantly increasing. To avoid this, it is important to sort out priorities. Identify the top needs that should be provided for a prospective home.

Without any professional assistance

Another mistake that most homebuyers make is that they think can get a house on their own. There is nothing wrong with buying property and house without any professional help. It is just that it could be very stressful and would take much of your time. Real-estate agents have the resources, contacts, and tools that would be able to help make the search quicker. Aside form the real-estate agent, if you’re planning on investing on this industry then you would also need a home inspector, a lawyer and an insurance representative.

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Getting an Appraisal Before Selling Your Home

Planning to sell your home but clueless about its market value? Getting your home and property appraised would help you get an idea about your property’s value. However, the appraised value should not be confused with comparative market analysis (CMAs). The appraised value is the only value honored by banks whenever you are planning to loan money.

If you are planning on getting your property appraised, then you would have to consider the banks’ preferred appraiser. Usually, the lender or the banks would have contracts with an exiting appraiser and you are required to get the services from them. If the banks or the lender would allow you to get a third-party appraiser, it may take a while before the financing is approved.

Appraisal reports are actually very detailed. They would include details of the property, the status of real-estate market where the property is located, access to the property like roads, flawed characteristics of the property, how long the property would be up for sale, and the type of the neighborhood where the property is located. The appraiser would also include in their notes if the road going into the property is private. The bank granting the loan may require a road maintenance agreement to be signed.

Appraisers should also not be confused with inspectors. Inspectors intend to check the chimney, test appliances, inspect fixtures and recommend repairs to increase the home’s value before putting it up for sale. Appraisers would write down obvious problems in the property and their observation in the area.

When determining the value of the property, appraisers use three approaches. The value could be determined by the sales comparison approach or by comparing the property with other similar properties in the area. It could also be determined by identifying the much needed improvements in the property which is called the coast approach. In the income capitalization approach, the value is determined by the operating income that can be earned from the property.

But are appraiser fees expensive? Appraiser fees depend on the time needed to finish appraising the property. It could also be based on the amount appraiser and the person who needed the service agreed upon. Sometimes, appraisers would state that fees are not final and subject to change based on additional expenses.

Real-estate appraisal is needed when making bank loans, the property needs to be divided to multiply heirs, the property should be appraised for tax reasons, or for estate settlement. An appraisal documents reduce conflict about the property market value during these situations. However, the values stated by the appraiser are not the absolute value.

When getting an appraiser, verify his background and identify if they were able to meet requirements. States would require appraisers to be licensed, while there are others who would require appraisers to be state certified. They also have strict standards and codes to follow.

Without any question and doubt, if you are looking or aiming for your property to be financed by a bank or get a reputable private or corporate buyer to look at your property, then you would have to have it appraised. Real-estate is probably one of your biggest investments and you would like to protect and sell it in its proper value.

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Finding the Best Real Estate Agent

Having a real estate agent to help you out is essential when aiming for a quick and good deal, whether you are buying or selling your home or property. Selling your house is not just about placing a “for sale” sign in your lawn or placing your house in the classified ads. A real-estate agent would be able to help you sell your home for the right price and get the best deal possible.

There are many real-estate agents out there, how do you choose the right person?

Do the interviews yourself

The best way of getting to know an agent is by talking to them personally. You could directly discuss with them what they think about the property, know about their qualifications, ask about their previous transactions, any kind of problems with previous deals and seeing if the personality would be able to match yours. You could directly inform them what kind of communication you are expecting from them and it they would be able to reciprocate that expectation.

Qualifications and history

Check if they have enough experience and expertise, especially in your location. They may have an impressive record in other places but they would have limited knowledge in your area. Also look for any complaints filed against the agent in the State Board of Realtors.

Referrals

Ask your friend, family or relatives if they would be able to recommend somebody. If they would be recommending an agent, make sure to ask about their experience with the person. You could ask about how the agent communicated with the clients and of course, their fees. Before hiring the agent, identify first if they would be able to provide your needs and work with you.

Customer service

Your agent maybe good, but they may be difficult to contact or does not maintain open communication with you. That would surely create problems. If your agent has an assistant communicating with you, it is okay as long as they are present in important transactions and would go over the contracts themselves. How the agent communicates with clients show how they value the property and how serious they are in dealing.

Familiarity

The agent that you should be getting should be familiar with the market in the area where you are buying or selling your property. The agent should have an idea about the competition in the area, the neighborhood’s history of transaction and the usual price range in the location.

Contacts and access to tools

It is great to have an agent that would be able to find contacts that would match your needs as a client. Your real-estate agent should have access to Multiple Listing Service (MLS). This would allow your agent to have access to different properties in different areas to look for houses or properties which would match what you’re looking for.

Attend open houses

Attending open houses would allow you to see real-estate agents while working. You would be able to see how they handle transactions. You could observe how they promote the house (if the house is for sale) and you could even get a few business cards from other real estate agents.

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How to Sell Your Home Fast

Real-estate market is competitive. With the recent downfall in the economy, an increase in the number of houses and properties up for sale was witnessed by the country. But the economy is starting to recover. According to the 2009 Mortgage Choice First Homebuyers survey, the number of people who are in the position to purchase new homes has increased in 19%.

If you have decided to put your house on sale, then it could be a sad and painful experience seeing it remain unsold for a while. Real estate agents and experts recommend few things that will surely help in making your house and property noticed.

Hiring a good agent.

A good real-estate agent, would help in selling your house fast. Of course, it would mean that you would be giving commission to the agent when the sale is concluded. But real-estate agents would have enough contacts and tools that could be used creatively to clinch to deal. When choosing an agent, make sure to check their references, background, and experience. An agent should have knowledge about your neigborhood and its market history.

Name a good price.

Price is always important, it could either make or break the sale of your home. Your real estate agent should have an idea on what would be the appropriate price for your house and the price range in the location. A house which is too expensive may push away prospective clients while a very low price may raise some questions on the credibility of the property. You could ask your agent to do a comparable market analyses (CMA) to get an idea on how much were the houses in your area sold for.

De-clutter

People would want to visit and live in a nice home, not a messy one. Remove clutter and tidy up. Put away things that are not frequently used. If potential buyers are coming over to check the house, it is to put away photos from walls and shelves. Potential buyers are not interested in looking at your holiday pictures, they are more interested in picturing themselves in your lovely home. Make your house look more spacious by getting rid of unnecessary furniture, clearing out cabinets, and removing items on top of tables and shelves.

Home staging

Home staging is another aspect on real-estate marketing. A home seller could get a home stager, the real-estate agent may offer similar services or the sellers could learn how to stage their space for buyers. Home staging is about redesigning or arranging furniture around the home to make it more neutral, homey and comfortable for the clients. Home staging would be able to help the clients picture themselves in the house and eventually purchase it.

Fix things

You could fix minor problems in the house like broken faucets or window treatments. Take note of these problems when you check your house. It would indeed take time and effort, but would be worth it. Simple home improvement repairs could just be small things but buyers would be able to notice them.

Leave the house

When prospective clients will visit your house, it is better not to be there. Of course, you would like to make people see how great the house is, but it would be uncomfortable for both buyer and seller. Buyers would not be able to talk to the agents about their real opinion of the real estate and property. Aside from that, buyers would be able to ask questions freely, if the owner is not present.

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Eco-Friendly Homes: Green Real-Estate

Real-estate developers and investors are now adopting more environmental-friendly practices. Buildings are redesigned; investors and developers would incorporate the goal of achieving greener buildings and properties when doing renovations. The market of clients looking for greener buildings and houses are also increasing. This is just a reflection that people are starting to become more aware of the earth’s environmental concerns.

Aside from the increasing environmental consciousness of those who are house hunting, the government are also implementing regulations making the industry greener. Developers and investors are building and looking for houses that would be able to meet the government environmental standards. International organizations and institutions are also playing major roles in pushing both the private and public sectors in rethinking their environmental actions.

In fact, construction companies which are indispensable to real-estate developers, are working hard to be “green certified.” According to the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED), 5% of commercial construction companies were able to secure LEED certification in the previous year. Aside from that, major companies like IBM, JP Morgan Chase, etc. are moving into green buildings.

According to the McGraw-Hill report, there are developers that would buy houses and properties which they would convert into green buildings and homes. The McGraw-Hill survey reported that green buildings tend to bring 3% and 7.5% higher revenues.
The National Association of Home Builders stated that the market is experiencing increase in demands for eco-friendly homes. As a matter of fact, the American Institute of Architects in their 2006 survey stated that 90% of people are willing to pay $5,000 more just to have a house that uses less energy and earth-friendly.

According to the U.S. Green Building Council, more homes are becoming environmental-friendly due to its numerous benefits. What are these benefits?

  • Greener homes use less energy which means less money on bills. The price of fuel is constantly increasing over the past years. Reducing your energy bills would allow you to allocate your budget for other important things needed in the household. According to Energy Star, a program of the U.S. Environmental Protection Agency and the U.S. Department of Energy, about 15 to 20% of house energy is lost because of poor construction.
  • Better and healthier air quality. Indoor air is two to five times more polluted compared with outdoor air, according to the U.S. Environmental Protection Agency. Indoor air can aggravate allergies and asthma. Using home materials and machines that produce better air quality are those materials (paints, stains, glues) that have low content of toxic chemicals. They could cost more, it would be better for the homeowners’ health, in the long run.
  • Opting for greener homes and buildings means that you are helping save the earth. Homeowners and real-estate developers are reducing waste-production because they are working with materials that would last longer and recycled items. Also, less consumption of energy means you are consuming less fossil fuel, and less carbon footprint.

When thinking about making your real-estate property eco-friendly, you could always coordinate with a local or regional green building organization. They have network of architects and builders who would be able to help you improve your home. There are also guideline when building green houses, so make sure that you are properly informed. Before proceeding with any green real-estate developer or builder, make sure to check their previous works or generate as much information from former clients.

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How Broker Commissions Are Earned

Even if they split commission from the sales of your property, you can place a good bet that brokering real estate is what you most need when putting up your home for sale and finding that best buyer in town. Sure, the broker and the agent will get what they worked for, but at the end of the day, it will be a win-win solution to all of you.

The real estate broker gets paid and his agent. And why do you need them? Simple. They make everything easier and simpler for you. You tell them you want to find a buyer for your property and they will do the rest of the works until it is sold to another individual and you get the payment minus the commission for your agent and broker. Even so, you might want to know and understand where all these commissions are going.

Here is what the commission is for:

The commission the broker and agent receive is based on the total amount of property sale. You have to understand that a real estate agent is working under a real estate broker. The agent gets paid by the broker after a real estate commission is earned from closed real estate deal. Once an agent lists a customer’s property and acquires a buyer for it, the customer will provide commission fees to the broker, from which a percentage will proceed to the agent. The client then signs an agreement with their enlisted broker.

A minimum of 30% of the total earned commission from brokering real estate is given to the agent. As an example:

If the total home sale price amounts to US$100,000, the real estate broker splits 10% commission from it, which amounts to US$10,000. If the broker is giving out 50% to the agent, the latter will then receives US$5,000.

However, in other cases, the agents can receive the 100% of the commission and just pay their broker a desk fee. This is typically applicable to top selling real estate agents.

In conclusion, how much commission an agent can earn depends on three things:

total home sale price
the broker’s sale percentage fee
agreed commission fee from broker’s fee between the broker and the agent.

Others receive commissions via sliding percentage scale. Real estate agencies that do this augment the amount of commissions they receive by having more sales. Also, commercial properties tend to have higher commission percentage than residential properties. However, with the laborious negotiations involved when brokering real estate properties, real estate agents do not always aim for a highest commission possible.

To other people, the commissions spent when enlisting a real estate agent or broker may look over the top, but when they see at the general value, it is well worth it. After all, performing a large number of tasks such as listing and arranging the property, arranging for advertising like open house showing and others, getting help from contracts, inspections, negotiations, and the closing deals are going to take a huge chunk of time as well as effort and money.

Added to that is the effort, money, and time spent when acquiring pertinent information about and around the property, like the home, its community, and even the neighborhood. The agent will also have to learn of the values of the surrounding amenities and nearby homes. These things are tedious enough that the seller himself might not be able to sustain without a help gotten from brokering real estate.

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How to Generate Your Own Home Buyer Leads

In brokering real estate business, it is important to be always updated with fresher marketing ideas to insure you keep your business always on top of the game, even amidst the ongoing economic downturn. And when it comes to marketing strategies, what is the best considered tool to give you opportunity to be always a hit in the market? Of course, having lead generation online!

If you are looking for real estate leads, you can get them from companies selling them. There are even others who break the leads down into seller leads and buyer leads, so you can pretty much take advantage of those companies selling them. However, why not do it on your own if you can? You don’t have to buy, and so you can save your money for something else more worthwhile, right?

But how can you do it?

First, understand that there are different systems and tools you can find online, and which you can use to make your own marketing leads. With simple steps, understanding, and diligence, you can make your very own real estate leads that you wanted.

Step #1: Make contents that are relevant to your business.

If you are not aware of it, there are many home buyers using the internet to search for real information about real estate in a specific neighborhood. If you have a website that has contents relevant to the real estate of the neighborhoods, it will be easier for these home buyers to go to your website and find out what services are you are offering. So, when doing contents, make sure these are for real, and make them think like you are living there. Don’t use canned information. Always write to according to your own perspective so the contents will look genuine. If the home buyers/readers feel that you have that passion, it will be easier for them to feel compelled contacting you.

Step #2: Provide buyer tools.

After making sure step #1 is taken cared of, there are home buyers that are sure to keep learning more from your website. They will want more information which will eventually lead them to what they are looking for. So, in your website, provide a buyer tool where the visitors can use to search for listings and find how much the home they want will cost them. A mortgage calculator is a tool proven very effective to attract home buyers to use your website and eventually see and contact the services you are providing.

Step #3: Put focused ads.

Putting ads focused on the needs of the home buyers is another way to collect the targeted leads. Pay per clicks, available from major search engines and others like MSN, Yahoo, and Google, are another must-have tool to put in your website. Seeing the ads particularly catered to their needs will bring these visitors more interest in finding the properties that they want as they allow them to discover more information to search easily for properties.

Rather than focusing on large scale ads, focus on smaller cities rather than the bigger neighborhoods. The objective here is to find leads that are likely to buy properties, and those who are searching in small neighborhoods are likely to purchase faster; therefore, more income potentials for you.

So, you discover ways now how to make your own generation leads without buying from other companies. All you need is some of your time, maybe a little money put in, diligence to create that website, and your brokering real estate business will never be the same as before.

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