Buying a home for many people may at first appear to be a fairly simple matter but once a person has experienced the process of buying a house they quickly learn that there is more involved than simply finding the right property, signing the purchase and sale agreement and then proceeding towards closing. There are many different steps involved in buying and home and many buyers often experience uncertainty or even fear during the purchase process. However, an experienced Florida real estate lawyer can carefully guide the buyer through the entire purchase process and look out for the buyer’s best interest. The following describes the various steps in the purchase process and how a Florida real estate attorney customarily assists the buyer during each step.Pre-Contract Negotiation:Although engaging the services of a real estate lawyer is not absolutely necessary during the pre-contract negotiation phase of a real estate purchase transaction, it can be helpful for the buyer to speak with attorney if the buyer has any questions regarding the purchase price and any tax related issues that the buyer may be concerned with. Speaking with an experienced Florida real estate attorney about the buyer’s concerns and questions during the pre-contract negotiation phase will give the buyer the opportunity to address a situation prior to the buyer being bound to a contract to purchase a home and will provide comfort to the buyer regarding certain questions that the buyer may have about the pending home purchase.Contract of Sale:Although in Florida many residential purchase contracts are standard form contracts with “check the box” options such as the FAR contract and the FAR/BAR contract, a contract of sale is not a simple document and should not be viewed as such. It is critical for a Florida real estate attorney to be involved during the preparation of the contract of sale to properly advise the buyer before the buyer becomes forever bound by the terms of the contract. A Florida contract of sale contains many different details associated with the purchase of the home and although the real estate agent is normally the person who prepares the contract of sale, the buyer’s attorney is the one who will sit down with the buyer to explain everything the buyer will need to know about what the buyer is signing and what it means for the buyer. A real estate contract of sale usually includes many important factors such as: what real and personal property are included in the sale, the purchase price, the amount of the deposit which is to be paid, where same will be held in escrow and what the provisions of the escrow are, how many days the buyer has to obtain a loan commitment and what happens in the event that the buyer is unable to obtain a loan commitment, what will happen if any damages to the house are present or any major repairs are required, the requirement of a clear title in order for closing to occur and what will happen if there is an issue that can not be cleared on the title, when the closing date is scheduled to be, what happens if the seller is not ready to close and the buyer is, the allocation of closing costs and expenses, and many other important matters to consider. An experienced Florida real estate attorney’s involvement during this stage to explain the details, requirements and repercussions of the numerous contractual considerations is extremely valuable.Status of Title:In order to close on a property it is necessary that there be a clear and marketable title. A title search report is ordered from a title insurance company and will list any violations or title clouds against the seller and the property the buyer is purchasing. Violations against the seller customarily include judgments and the title clouds that may show up on a house are lis pendens, liens, judgments and fines for municipal code violations. An experienced Florida real estate attorney will review the title search report and the information contained therein to make sure the status of the title is clear before moving forward with the purchase of the home, and will take all necessary actions in order to clear any title clouds prior to closing.Survey:Although almost always required by the buyer’s lender when the buyer is financing his or her purchase, even in all cash transactions it is essential that a survey is ordered for the property and carefully reviewed prior to closing. Knowing where the property lines are and the existence of any encroachments is extremely important when buying a home. A survey will assist to determine whether everything that the buyer is purchasing is within the property lines. The buyer’s real estate attorney will order a survey for the buyer and have it certified to the buyer. The buyer’s real estate attorney will explain all of the findings of the survey and will be able to answer any questions that the buyer may have regarding the items depicted on the survey.Closing:The final step in every real estate purchase that the buyer’s real estate attorney will be heavily involved in is the closing of title. Closing is where the deed to the property is signed and delivered to the buyer transferring ownership of the property to the buyer. Having an experienced Florida real estate attorney present at closing will ensure that all of the closing documents are accurate and properly executed. The buyer’s real estate attorney will answer any questions the buyer may have which relate to the purchase transaction and/or the closing documents. Finally, the buyer’s real estate attorney will make sure that the buyer’s purchase funds go to the right place.The information in this article is of a general nature only and is not intended to be relied upon as, nor a substitute for, specific professional advice. No responsibility for the loss occasioned to any purpose acting on or refraining from action as a result of any material in this publication can be accepted.The hiring of a lawyer is an important decision that should not be based solely on advertisements. Before you decide, ask us to send you free written information about our qualifications and experience.
Purchasing a home or other type of real estate is a sizable financial investment. Making any mistakes during the process can be costly, both in terms of money and your time. Most people are simply not well versed in the many legal details that can be encountered during the purchase of real estate. By working with an attorney, you will have the assurance that these details will be properly attended to, reducing your risk of making expensive mistakes.A real estate attorney can provide many services to the buyer. An attorney can review the purchase contract before you sign to make sure everything is in order. They will also review any other documents that are important to the purchasing process, such as the deed, the title, mortgage loan documents, insurance policies, plat of survey, and any relevant bills of sale that are associated with the sales process. A careful legal review of these kinds of documents will catch any errors such as misspelled names or legal description mistakes that could cause problems during the sales transaction.Although it varies by state in regards to what a real estate attorney can do, in most cases an attorney can revise the language of a purchase contract if necessary. An attorney can also void a purchase contract that doesn’t meet state law requirements. If there are unpaid expenses such as property taxes or utility bills that should be paid to you by the seller, an attorney can help negotiate the payment of these expenses.Of course, there are expenses involved with hiring a real estate attorney. However, the services they provide can save a lot of money in the long run, as mistakes made during the purchasing process can sometimes be costly to fix after the fact. Working with a real estate attorney can also provide the buyer with the peace of mind of knowing that legal details and other complicated procedures are being carefully reviewed by a professional. Attorney fees vary, with some charging an hourly rate and others charging a flat fee. It is important to understand the attorney’s fees, as well as the services they will be providing you, before you agree to work with one.
No study of real estate investing would be complete without a comprehensive understanding of markets and how those markets are affected by economic conditions. Only through an understanding of this critical topic can the Investor properly understand their risk exposure and implement strategic investment planning and effective risk mitigation techniques.Market CyclesThe following section will provide an overview of the four major phases of a real estate market cycle. Although each of these phases have specific characteristics that make them stand apart from one another, unfortunately, the initial transitions in and out of each phase may not be plainly obvious. The four market phases are listed below:- Sellers Market I (Expansion)
- Sellers Market II (Equilibrium)
- Buyers Market I (Decline)
- Buyers Market II (Absorption)Each phase of this cycle can present the Investor with both challenges to overcome as well as opportunities to benefit from. The well informed and action oriented Investor will know what strategies to utilize during each of the phases. The following section will provide an overview on each of the market cycles.Sellers Market I (Expansion)During a Seller’s Market phase I (also referred to as the Expansion Phase), many of the key economic indicators are telling a compelling story that includes the following:Due to the strong economic conditions, builders and developers regain their confidence that new construction now makes sense; significant increased activity is seen in the building permit application process. As construction levels begin to increase, it will also stimulate the need for primary and secondary workers.
The general population feels that times are good and discretionary spending increases; this in turn will help to stimulate the economy.Market sales price and market rents are at the highest levels due to the high demand for housing; this increase in demand absorbs the available inventory and creates sometimes fierce competition among home buyers who are bidding against each other for the same property. This bidding frenzy can result in multiple offers being presented to the sellers and in some cases, bidding up the list price.Investment StrategyThe Investors who have been holding properties coming into this phase will be benefiting from significant appreciation of their real estate holdings; this market cycle could be a great time to leverage your equity by selling at the top of the market and re-invest the proceeds in other perhaps larger properties. In order to maximize your available re-investment capital, an IRC 1031 Tax Deferrered Exchange should be considered.Warning! It is strongly recommended that you seek advice from your Accountant prior to implementing any tax reduction strategies.In a market with high demand, you should expect to pay strong sales prices; the higher demand may also set the stage for sellers to be less motivated in agreeing to creative deals like seller financing, assignments, or Lease Options.In this market, you will also see Investors who are purchasing properties just for the appreciation and are not concerned with the cash flow. For Investors who are considering this approach, it will be critical that they have adequate cash reserves available to them in the event there is an interruption of rental income resulting from vacancies. In addition, not having cash flow could make it difficult to maintain the property effectively in the event repairs or replacement is required.During the Sellers Market Phase I, there will be numerous opportunities to take advantage of the aggressive buying activity that can exist. Outstanding profits can be realized from business models like flipping and wholesaling. This market phase will allow the Investor to get the property turned over without the concerns of a dropping market price. The fact that the property is appreciating will help create a cushion for the Investor in the event the exit strategy does not happen in accordance with the schedule and cost goals established for the project. In fact, if delays do occur, it may be possible that it could relate to more profits in the Investors pockets! At the tail end of this phase, the growth rate will start to cool down.During the Sellers Market Phase I, Lenders will tend to be more lenient with their underwriting and approval ratio due to their confidence in the strength of the market. This can be a double-edge sword, as we have seen leading up to 2006, Lenders were approving loans for people who weren’t really qualified and as a result, when the market started to nose dive, it took many homeowners with it.Sellers Market II (Equilibrium)In a Seller’s Market II (also referred to as the Equilibrium Phase), many of the economic indicators are no longer exhibiting explosive growth and are heading towards national averages with regards to new construction starts, migration movement, sales price, and appreciation. Most people now recognize that the market has peaked and those who didn’t sell in the prior phase will now consider putting their property up for sale. Towards the end of this cycle, added inventory along with diminished economic incentives will reduce the demand and therefore, owners who are strongly motivated to sell will need to consider aggressive pricing strategies and open to creative deal making.Due to the difficulties with owners selling their property, many may have to consider putting the property in rental service; this increase in available supply will drive fair market rents down.Investment StrategyWithout proper consideration of the current declining market, business models like Flipping and Wholesaling can be risky; missed cost and schedule goals can have catastrophic results. For those Investors who are working on tight margins, it will be challenging to make the profits they are accustomed to.If purchasing with a Hold to Rent strategy, strong walk-in equity and cash flow is vital. The equity will allow you have a good cushion in the event there is another reset to the market. Equity stripping techniques are strongly discouraged during this cycle because if you pull out all of your available equity out before a reset, you may actually end up upside down on your equity and make it difficult for you to sell the property unless you are willing and able to reach into your pockets at closing.Buyers Market I (Decline)In the Buyers Market I (also referred to as the Decline Phase), inventory levels and days on the market are at the highest point. Due to the continuing degradation of economic conditions which includes declining employment and little new construction, the rate of foreclosures, Short Sales, and Deed in Lieu of foreclosure will continue to increase significantly and contribute to further reductions in property values that have potentially hit the bottom.The demand side of rental units could actually be strong during this time due to the following factors:
A higher percentage of homeowners are being displaced and may need to rent a home.Home buyers who are able to purchase a home may hold back in fear of not knowing when the market will bottom out.In order for a market to recover from this phase, national and/or local economic stimulus programs must be implemented to help stop the bleeding and to help to restore the confidence in the market.Investment StrategyWhen purchasing in this cycle, it will be vital to ensure strong cash flow and organic appreciation since there is no way of knowing how low the market may go. You should plan for longer hold times in order to ride out the market until it gets out of the decline phase.Wholesaling and Flipping are difficult business models due to the fears of many buyers who are not sure when it is time to pull the trigger and make a purchase; this could result in Sellers getting stuck with inventory that is not moving.During this cycle, it is a great opportunity for Investors to add to their investment portfolio; a strong buyer especially with all cash offers will reign supreme in this market and get the pick of the litter. This is also a great time to implement creative buying strategies and capitalize on the many Sellers who are strongly motivated to sell and will consider deals that may include Options, Seller Financing and other creative avenues.During this phase, traditional Lenders are extremely cautious due to the uncertainty of the market. New loan applicants will be scrutinized and on higher risk loan programs like commercial lending (5 or more units), Lenders will be cherry-picking for the best applicants on the cleanest deals. Underwriting guidelines may be adjusted increased down payment, Debt Service coverage and occupancy percentages.Buyers Market II (Absorption)In the early stages of a Buyer’s Market II (also referred to as the Absorption Phase), the economic conditions are starting to improve. Local stimulus initiatives are underway and some results can be seen. As this phase progresses, confidence starts to be restored. Although at this point there is still only little new construction, builders and developers will eventually be convinced it now makes sense to start to build again. With the economic indicators making a turn for the better, the groundwork for an Emerging Market has been established. As employers see the need for expansion, unemployment rates will start to drop for both the primary and secondary workforce. With the improved economic conditions starting to be seen on many fronts, the oversupply of properties will start to get absorbed. As the demand side of housing increases so will the property values.Investment strategyIn the beginning of the Buyers Market Phase II and prior to the rise in property values, the well informed Investor should accumulate as much in their portfolio as possible. Hold to rent strategies will allow you to reap the benefits of strong cash flow while riding comfortably through a market that will soon be in an upswing.Challenges in Reading the Market PhasesDespite the fact that there are some very specific characteristics associated with each market phase, as each phase progresses in time, there is not a specific event that will give obvious notice that we are at the end of the current phase and moving into the next one. In most cases, the transition of phase to phase will be based upon a number of different key economic indicators changing.It is also important to note that although there are four distinct market phases, each phase can have its own rate of change, amount of change and total duration. Therefore, unlike the mathematical Sine Wave that may have predictable expectations, Real Estate Investors are not so fortunate in trying to anticipate future market trends.It is not just about employment opportunitiesMigration trends although significantly affected by the promise of employment are also affected by other factors as well and are highlighted below:ClimateDemographic studies validate that people will continue to migrate to warmer weather. The southern states will see an influx of new residents coming from cooler areas.EducationQuality of education is a driving force that will affect migration patterns. Those towns and cities that can demonstrate high quality educational opportunities for adults as well as children will set the stage for a higher than national average population growth.LifestyleAnother factor that will affect migration patterns is the lifestyle the area can offer. Many people are seeking areas filled with cultural, entertainment, and leisure activities in order to help balance the high stress society we live in.Single-Industry RisksIn an ideal market expansion model, the economic growth that is occurring is coming from a number of different significant industries that are not reliate on the others. When there are larger employers in a community, smaller sub-contractors will also be established and the large employer may be the only or significant portion of sales to the smaller firms. When the larger company struggles, the smaller ones follow suit. Although there can be extraordinary economic growth when a major industry makes their home in a given geographic area, if changes occur within that industry such as the need for outsourcing or demand decline, it can cause catastrophic damage to the local community; this is very evident in areas like Detroit where the auto industry has virtually crippled the local economy. Another example is the struggle Youngstown Ohio experienced as they worked through a key industry shutting down. Youngstown’s economic foundation was built upon the significant employment from the steel industry; in fact, Youngstown was referred to as “Steel Town”. When the town factory closed in the 1970′s, it created devastating economic conditions.In order for a town to recover from the effects of an economic downturn, local government, community leaders, and the private business sectors must diligently work hand in hand to create a vision for future economic rebirth.The Side Effects of UnemploymentWhen unemployment reaches dangerous economic proportions, there is always collateral damage that will be seen and includes the following:o People will start to leave for the hope of employment elsewhere; in many cases people are forced to abandon their homes and the structural carcasses of the poor economic conditions are clearly evident as you look around the community.
o Tax rolls collected will be significantly reduced due to the exodus out of the area. In addition, there is a larger volume of unemployed people who have stayed behind who will not be able to pay their taxes. When tax collections are reduced, critical services and programs may also be cut or reduced.
o Crime and drug use will significantly increase.Proactive Economic RecoveryMost local governments have established a department or agency whose primary charter is to develop programs with the objective of stimulating the economic growth of the community.Examples of initiatives that will help stimulate the economy can include the following:- Improvements and expansion of roadways and railways making commuting and transportation more efficient- Tax incentives to builders, developers and employers to stay or come in to the area- Loans with better than market terms- Crime reduction programs- Homebuyers assistance programs- Revitalization initiatives of trouble areasMany of these initiatives have been documented in the communities “Master Plan”; it will be critical as a successful emerging market Investor to interpret the “writing on the wall” from these plans. Community Master Plans are usually available to the general public. Contact the local economic development organization or agency for further information on how to receive this valuable dataTypes of economic growthThe effects of economic stimulation and growth can geographically be seen a few different ways as follows:SporadicallyWith sporadic growth there is random geographic visual evidence that new development is occurring; new construction and rehabilitation is seen in various locations of a town. This type of growth makes it difficult to “read” the local sub-market trend because of the lack of concentrated improvement in a given area.Centered around a target area, hub or anchorGrowth concentrated around a hub or anchor is the typical economic growth model and is the catalyst of new construction and rehabilitation. Examples of hubs and anchors are as follows:1. Large universities
3. Industrial complexes
4. Malls and large national retail stores
5. Planned communities
6. Housing projectsIn many cases you will see a “Growth Radius” surrounding a hub or anchor. As the properties located around these “centers” are developed, the radius will continue to expand outward. Investing in these areas not yet started in the transformation process can yield outstanding financial benefits.Along a “path of progress”The third type of growth that can be seen is called the path of progress. This type of growth is typically associated with “Straight Line” development going in specific directions. Perhaps the most vivid example of this type of development can be seen “on the strip” in Las Vegas. Here developers understand the importance of positioning hotels and casinos to provide the best exposure to both car and foot traffic.Another example could be the development of retail and service stores along the path of a main road or highway, development of such stores “off the path” will be minimal.Sub-MarketsOn a national level, all major real estate markets are not created equal, some can be experiencing explosive growth while others are seeing a decline. The same holds true when you narrow the market region down to a local level; in any given city you may have areas that are expanding while other areas are not. These smaller markets contained within regional markets are referred to as Sub-Markets. These sub-markets can be below the radar screen of the national agencies and research companies; therefore, having local knowledge can be very helpful in identifying these growth opportunities.Keep in mind that even in the worst of economic times, there may be markets or sub-markets that are or soon to be hot!Fundamentals of an Emerging MarketAll experienced Investors know the benefits and peace of mind of owning a property with strong equity and cash flow; these characteristics will help set the stage for long term financial security. When you add market appreciation on top of the equity and cash flow benefits, it will supercharge your wealth building engine. This relationship can be illustrated by the following formula:Strong Cash Flow + Organic Equity + Market Appreciation = Wealth SuccessOne sure fire way to utilize the advantage of the wealth success formula shown above is to invest in Emerging Markets. Simply defined, an Emerging Market represents an area that has started or will start to see growth resulting from both private industry development and local government initiatives to attract business and industry. As primary jobs are created from these initiatives, it will cause a change in local demographic trends; people will now start to move there or may stop leaving. With the increase in primary jobs, the secondary job workforce will also be increasing. The secondary workforce will consist of service related businesses to support the primary workforce; examples of these services include the following:- Food service
- Retail stores
- Health careThe secondary industries and workforce is vital in order for an area to be perceived as “family oriented”. This is important to younger families who are trying to establish roots in the community. For each primary job created, it is estimated that it will generate a need for 2-3 secondary jobs!With the increase of employees from both the primary and secondary work force, the need for quality housing will also increase. Explosive profits will be realized by those Investors who “saw it coming.”What makes investing in Emerging Markets challenging for the typical Investor is that unfortunately you will not necessarily see an ad in national newspapers or bill boards stating “Emerging Market coming here soon!” The successful Emerging Market Investor will need to implement comprehensive marketing and research strategies in order to identify and react to the next Emerging Market opportunity they would like to invest in.The following is an overview of the most common strategies you may want to consider in locating a hot or Emerging Market:Purchasing Demographic and Migration data from List Brokers. List Brokers are companies that provide lists based upon search criteria you provide them. The cost of these lists will depend on how many “hits” you want to purchase. Typically, you can expect to pay a few hundred dollars for a small list and up to a few thousand for an extensive list. These lists can include a targeted market that will help you determine the viability of an investment area. Some of these targeted market examples are as follows:- Search by age group
- Income levels
- Educational levels
- People in foreclosure
- Out of area property owners
- Long-term property ownersReviewing the data provided by government and private businesses that create market research data. Reviewing national hard print or electronic newspapers like the Wall Street Journal or New York Times. For a listing of national and local newspapers, look at http://www.newslink.org- National Commercial Real Estate Brokers do have a good handle on market trends and can be a vital source of information to the Investors searching for hot markets; it is strongly recommended to have some of these Brokers on your Professional Team.Family and friends can be a great source of information for things that are happening in their backyard that have not hit the national level of news coverage and below the radar screen of most outside Investors.- Having a connection to various real estate investment organizations and clubs.- Property Management companies are a great source to get a pulse of the local investment trends. Visit http://www.irem.org for a listing of certified Property Management companies in your targeted investment area.
Running ads- Paying Birddog fees for leads to emerging or hot markets and properties.The Early Stages of an Emerging Market does give away some cluesDuring the early stages of an Emerging Market that is about to unfold is the ideal “Strike Time” for Investors to buy into the market. At this point in time, the market may be filled with excessive inventory and motivated sellers looking to do a deal. By focusing on some clues, you will be able to “See into the Future”. Some of the clues are as follows:- Having visibility in the local permitting activities. Remember, the permitting process can take years for major construction projects like highway development, office buildings and factories.- Environmental impact studies underway
Review of the areas “Master Plan” which will provide an insight on the future vision.- Publicized initiatives from Economic Development agencies trying to encourage industry and job growth.- Advertised Government grants or tax credits.
PlanningReview and list your reasons for buying a house at this time.
Review and list your reasons for not buying a house at this time.
Compare your reasons for and against buying at this.
Contact a Real Estate firm and get a home buyers’ guide i.e., the steps to buy a house.
Research and review the basic terms used when buying a house.
Check your credit score.
Correct any errors in your credit report.
Prepare a personal balance sheet listing your assets and liabilities.
Ask a lender what documents and information are needed for a loan application.
Assemble your personal documents and information needed to apply for a mortgage.
Develop and list your personal wants and needs in a house.Prepare Your Realistic BudgetReview and list your current living expenses excluding home ownership.
Research and list all expenses associated with home ownership.
Choose a mortgage payment amount that fits your comfort zone.
Include a cash reserve in your budget.
Calculate your total expense for home ownership.Choose a Trusted AdvisorAsk your friends and business associates for the names of real estate agents they would recommend.
Prepare a list of questions to ask your candidates.
Contact the candidates and arrange for an interview.
Meet with each candidate.
Ask the candidates tough questions, listen carefully, and take notes.
Get references from the candidates regarding their recent clients.
Call the references and ask specific questions.
Make a decision.
Meet with your chosen advisor.
Agree with your advisor on your mutual commitments.
Put your mutual commitments in writing.Get Pre-Approved for a Home LoanResearch the types of home loans available.
Get the names of mortgage sources.
Contact the mortgage sources.
Prepare of a list of lender questions.
Meet with a representative of a mortgage source.
Complete a loan application.
Determine the loan you quality for
Understand your down payment and monthly payment.
Make a decision regarding a loan.Choose Your NeighborhoodChoose a life style – live in the city, suburbs, on acreage.
Choose a house type – new or older, single family, one or two story, condo.
List the activities in your life: stores where you shop, recreation, houses of worship, entertainment, etc.
Contact the schools and ask:
What are the test scores?
Average class size
What % of high school graduates enter college
Do further research on http://www.greatschools.net
Research the neighborhood crime statistics.
Review the local medical resources.
If applicable, review the home owners association’s rules and meeting minutes.
What is the resale demand for houses in the neighborhood?
How many homes are currently listed for sale in the neighborhood?
Walk the neighborhood.
Attend a city council meetingHunt for Your HomeReview and confirm your list of your needs and wants in a house.
Agree with your agent regarding your needs and wants in a house.
Keep score and compare as you visit houses.
Communicate with your agent in a timely and candid manner.
Review the house comparables in terms of prices and features.Your OfferAgree with your trusted advisor on the offer.
Read the contract and understand your offer and commitments.
Make your offer attractive to the sellerThe Negotiation GameDiscuss and agree with your trusted advisor on your counter offers.
Prepare your counter offers.
Control your emotions.
Don’t take it personally.InspectionsDo a thorough personal house inspection.
Consider a sewer camera inspection especially in older, treed neighborhoods.
Read and understand the home inspector’s report.
Ask questions on any inspection item you do not understand.Pre-closingUnderstand the closing process.
Understand all the money numbers
Have sufficient cash for closing.
Get your insurance policy.
Make moving arrangements.
Arrange for utilities to be put into your name.
Review the preliminary title report.
Make your final inspection.ClosingUnderstand what you are signing.
Sign the documents.
Create files for your new home documents.
Contract writing is a paralyzing fear in real estate investing for investors who are buying or selling properties. The usual thought is that if the investor omits something very important, the deal will be lost, may be liable for huge sums of money if the contract doesn’t work, or he will be doing something illegal and not even know it.Overcoming these fears is easy to achieve but must be worked on in their order of importance to the investor, which can be done in minutes or hours. The result will be a rewarding and long career in real estate investing. The following are ways to help overcome these nagging fears for real estate investors.1. The fear of omitting something very important in the contract.
Real estate contracting is as ancient as writing and each state has set some standards or the realtors in that state have set contract standards which they use to write both purchase and sale agreements.An investor can get contracting online, at a local office store or even from a real estate investing guru. It is strongly suggested that you use only contracting approved by your state’s BAR (attorneys association) or your local BOR (Board of Realtors). Generally using the store bought or guru contracts won’t open you to too much liability, but they can have major problems that aren’t obvious until you lose a great deal.Particularly, guru contracts are sold as protecting the investor and often have separate buy and sell contracts. If these contracts are sent to the seller’s attorney for review, they could lose your deal because they are so onerous. You are better off to control the contract that is standard in your state using clauses or addendums that favor your position.2. The fear of huge liability if the contract is done improperly.
Unless otherwise stated in the contract, when you are a buyer, your liability is limited to your deposit amount. If you haven’t given a deposit yet, your contract may not be valid in the first place, so always give the minimum deposit the seller will accept. While it is impressive to other investors give to $1 or $10, if you are in competition with another investor who is offering $100, you could lose the deal.Always put in a clause that your escrow deposit is not due until your inspection period is over and ask for as long an inspection period as possible – with homeowners I ask for and receive 20 to 30 days. This longer inspection period allows me more time to sell the property. You may not be able to use your buyers’ funds to close if he is getting a conventional loan to purchase the property – this is illegal flipping if the closing is not done properly. There are various ways to close the transaction using a cash buyer’s funds.If you are selling a property, your liability is more extensive because you can face a lawsuit called a “Breach of Contract”. This lawsuit claims that the buyer had a valid contract with you and for whatever reason; you decided not to sell it to him. The simplest way to overcome this potential problem is to have an attorney review your contract and have clauses that protect the closing date, such as, the buyer will have to close on or before a specific date”. If the buyer doesn’t, you have a breach of contract by the buyer but your cure is to the limit of his deposit unless you incurred an additional financial loss in the transaction that didn’t close. Always get as large a deposit from a buyer as possible, usually at least 3% to 5% or a minimum of $2,000.3. The fear of doing something illegal and not knowing it.
This can be a well founded fear for newbies. It is best resolved by having an attorney, not another investor, review what you are doing. The benefit to the attorney is that you will put him in as the closing agent. He likely will write the contract for you but this can be burdensome if you are meeting with a buyer or seller and you want to close the deal. Always use an attorney who does real estate closings as his main course of business, not a general practitioner. You will discover that while every deal varies slightly, the actual amount of contract clauses that vary from contract to contract are very small.In summary, your ability to write purchase and sale agreements is very powerful and must be mastered. This first requires you read and understand a standard contract for your state and local municipalities if they are also required. You do not need a realtor to write a contract and it is not illegal for you to write a contract despite what many realtors may tell you. Always have an attorney review what you are doing and pay him by making him the closing agent on the transaction if possible. If the opposing party to the contract is choosing the closing agent, have him shadow the deal and explain that you will use him on the next contract where you control choosing the closing agent.
In this article we will be reviewing and discussing section 4 (DISCLOSURES) of the Arizona Residential Resale Real Estate Purchase Contract.Please note that this article applies only to the Real Estate Purchase Contract in use in Arizona. For information on Real Estate Purchase Contracts in use in other states please check with the Association of REALTORS in each state.Section 4 has 5 subsections:4a. Seller Property Disclosure Statement (SPDS) – states that sellers must complete and deliver a completed seller’s disclosure statement (SPDS) within five days of Purchase Contract acceptance. Buyers should review the seller’s disclosure statement and provide notice of disapproved items within five days or within the inspection period, whichever is later. In Arizona, sellers are required to disclose any and all material facts about the property.4b. Insurance Claims History – also known as the Comprehensive Loss Underwriting Exchange (C.L.U.E.) report. This subsection requires sellers to provide the Insurance Claims History to buyers within 5 days of Purchase Contract acceptance. Buyers should review the report and provide notice of disapproved items within five days or within the inspection period, whichever is later.A C.L.U.E. Report contains the history of insurance claims and losses associated with a property. It can be ordered only by the owner of the property. It provides dates of claims, insurance companies involved, types of policy, whether loss was related to a named catastrophe (hurricane, etc.), location of the loss (on or off property), the amount paid and cause of the loss. Properties with lots of claims and losses are typically more expensive to insure. Buyers should review the C.L.U.E. Report with their insurance agents.4c. Lead-Based Paint Disclosure – for properties built prior to 1978, sellers are required to (1) notify buyers on any known lead-based paint or lead-based paint hazards in the property; (2) provide buyers with any lead-based paint risk assessment or inspections sellers have; (3) provide buyers with the Lead-Based Paint Disclosure document filled and signed by the seller and his real estate agent; and (4) provide buyers with the pamphlet “Protect Your Family from Lead in Your Home”. Buyers are required to return a copy of the Lead-Based Paint Disclosure document signed before close of escrow. Sellers have up to five days to provide the above information to the buyers.4d. Affidavit of Disclosure – if the property is located in an unincorporated area of the county, sellers are required to complete and provide to buyers an Affidavit of Disclosure within five days of Purchase Contract acceptance. Buyers should review the Affidavit of Disclosure and provide notice of disapproved items within five days or within the inspection period, whichever is later.The Affidavit of Disclosure must contain information addressing issues such as legal access, physical access, road maintenance, floods and floodplains, utilities and services, wells, septic systems, percolation tests, zoning deficiencies, and other relevant issues.For more information and for a blank copy of the Affidavit of Disclosure, please refer to the Arizona Association of REALTORS website – http://www.aaronline.com/documents/affidavit.aspx.4e. Changes during escrow – sellers are required to notify buyers on a timely manner of any changes in the condition of the property or changes in the information provided in the seller’s disclosure statement. Buyers are required to provide notice of disapproved items to sellers within five days.
Congratulations! You are a newly-licensed real estate agent and have signed on with a well-known, quality brokerage. You’re even scheduled for some floor time and open house support. Are you feeling a little lost, wondering how to begin marketing your business?Find a mentorTake a look around your new office and notice who are the successful agents and what they do to be successful agents. A mentor knows the local market and can provide insight into its challenges and opportunities. Your mentor can offer marketing strategies and tips, and cheer your successes.
“First, establish a relationship with those you would like to learn from.” Find an opportunity to create a win-win: your real estate career isn’t all about you. Think of what you can do to help your mentor and your clients.
Develop a PlanA solid business plan is your GPS for success. It should include realistic goals for marketing, professional development, expenses, and sales. Review your plan weekly and take note of what works and what doesn’t work in marketing and client building. Your plan should be pliable, adapting as goals are met and projects fail or succeed.
Your mentor may be the best resource for helping you develop a realistic business plan.
Know your marketThis may seem an obvious, even trite statement. But how can you market your real estate services if you don’t know your market?
Consider becoming a niche specialist. You may discover a real talent for marketing and moving short sale and foreclosure homes, condominiums, or light industrial properties. Look to the underserved areas of your local real estate market and how you can become known as a specialist in that particular property market.
Tech savvyYou don’t have to be an IT guru but you should be able to use all current technology with ease. You and your clients need to be able to communicate quickly and easily with each other. More importantly, learn as quickly as possible, how your clients wish to communicate with you – how often, and through which media.Social media can be one of the more cost-effective ways to market your real estate services and build the agent/client relationships that will be important to your success.
All your social media profiles should be updated to include your new real estate company and contact information.
Use social media to post blogs, pictures, videos, and buying/selling tips.
Create brief YouTube videos with tips for selling or buying property.
Write a 500-word article to email to your database; update monthly with fresh content.
Don’t worry about preparing different material for each social media. One theme can be used for all your media, slightly edited to fit the individual media criteria.The BadgeWear your company name badge everywhere. It’s free advertising, isn’t it?There are many simple, cost-effective ways to begin marketing your real estate services. Be creative and give something new a try. If it doesn’t work out, move on.
Real estate, often used interchangeably with real property, is a term which encompasses land and the fixtures and improvements made therein. Thus buildings, for any purpose categorized as residential, commercial, or industrial, and other type of constructions that are permanently fixed within the determined and absolute location of the land are considered as part thereof.The first recorded use of the term “real estate” dates back to 1666, a period to which most members of most royal families and nobility had shown the preference to land as a form and symbol of wealth. The primary basis for distinguishing “personal” property from “real” property is the concept of immovable properties against movable ones. History dictates that the term “real” of the “real estate” had been derived from the “real” which means “royal” and that the concept of taxing any person for the ownership and use of land as first implemented by Kings and the members of the royal family and nobility had primarily followed such etymology.Regulations of land and real estate vary and are primarily based on the three (3) primary and general types of land uses, that is, residential, commercial, and industrial. Allocating the proper and suitable types of activities is prescribed by the zoning regulations that vary among cities of each country. Areas prescribed strictly for residential use would contain only residential or dwelling units. Commercial areas are prescribed to combine a mix of businesses and some units for residential uses. Industrial zones would contain factories, warehouses, businesses, and industrial centers. As industrial zones would mostly host capital-heavy businesses, most zoning regulations do not prescribe residential units to be built within areas that are designated for this type of activity. Though zoning regulations are reviewed and modified to accommodate needs that are unique in an area, the basic and fundamental concept that are prescribed in the designation of areas is hardly variable.According to Rachel Epstein, author of the book “Alternative Investments”, there are four (4) primary ways or means to invest in real estate: buying a house, buying or purchasing rental property, buying land and introducing improvements therein, and buying a land on resale. As there are a number of tax and equity benefits in investing in land, most people primarily invest in buying rights over real estate.Many a number of investors who had been able to build a credible reputation in real estate investments had been able to acquire ownership over real estate without outright cash and through mortgage. Proceeds from rental property and sale of land primarily provide a good passive income to most land owners and investors. Though most land appreciates over time, most investors do not recommend investing in land as this entails higher risk over those that have improvements introduced in it, such as houses and buildings. The 3Ls, “location, location, location”, in investing in real estate or the popular rule of thumb most known by investors persists until today.The real estate industry is composed of a number of service providers that primarily cater the needs of both buyer and seller equilibrium of the market. Some known segments of the real estate industry are as follows, appraisal, brokerages, development, property management, real estate marketing, real estate investing, and even on relocation.
It’s easy to generalize about what real estate agents do. They hold open homes, plant signs in front yards, earn sales commissions from selling home, and mail out mini calendars and other tchotchkes.In reality, a property agent is the quintessential multi-tasker, working on behalf of the seller or buyer, marketing his or her real estate business, developing marketing strategies for clients, completing administrative work, and maintaining industry knowledge.Start with KnowledgeAn agent’s career begins with completion of a course of study in real estate. Successful agents become career-long students of the estate industry. They take seminars and courses to stay current with evolving business practices and legislative changes. Many agents also participate in organizations that influence real estate-related policies and practices.Marketing MastersOne of the more important responsibilities every estate agent has is to market clients’ properties for sale. A successful marketing campaign is built on an in-depth knowledge of the local property market. This knowledge is developed daily as the agent peruses the multiple listing sites (MLSs) to identify which properties are for sale and what are current listing and selling prices.The agent is responsible for listing clients’ properties with relevant listing services, taking digital photos of properties for listing presentations and advertising collateral, staging homes to optimize their sales appeal, and holding open houses for realtors and prospective buyers to view the home.Although it is an “unofficial” role, estate agents often function as therapists and educators who walk their clients through the home selling process and counsel/comfort them over often unsettling stages before the sale is completed.Buyer’s AgentProperty agents also represent buyers looking to purchase a home. Responsibilities to the buyers include researching listings of potential properties that match the client’s needs and interests, planning property showings, and setting appointments for clients to view homes.Once clients have decided on their ideal home, the real estate agent becomes the chief negotiator throughout the purchasing process.Administrative DutiesNothing is done in the real estate business without paperwork. There are a multitude of real estate documents, agreements, and records to be filed with various financial and state agencies. The agent often serves as his or her own admin, making appointments, creating marketing collateral and newsletters, responding to email and phone calls, and updating websites, blogs, and social media profiles.The agent must research each client’s public record information for lot size and dimensions, verify legal description, land use coding, deed restrictions, verify the legal owner(s) names, and review current title information.Above and BeyondAbove and beyond all those responsibilities, modern real estate agents must become and remain knowledgeable in the successful use of technology. Social media and the Internet have changed how people search for homes, how agents market properties, and how they market their real own estate businesses. To become and remain successful in real estate, agents must be able to successfully use the current tools of communication and marketing.Working in Your Best InterestPerhaps the greatest opportunity (and challenge) for a realtor is to successfully represent the client’s best interest whether it is negotiating the purchase or sale of a home. Not only is the agent the chief negotiator, he or she is also a disciplined diplomat navigating the complex waters of the real estate transaction.Consider how many questions you will ask your next realtor (whether you are buying or selling), and all the information you will expect to receive from that agent. The agent does so much to provide service value to you before, during, and after you sell or buy your home.
Zoning is the fascinating study of how cities and towns evolve as well as maintain historical centers, architectural details, noise ordinances, traffic patterns, and many other intricate details of major and minute importance. Zoning is an essential aspect of your town to know if you plan on constructing or opening a business. These rules and regulations will inform you about what kind of business you may operate, how you can go about your construction, and the means by which you must obtain permission.Changing Code EnforcementDid you know that code enforcement and zoning laws change all the time? Did you know that with the help of a real estate attorney you can actually petition to change them? It could be something simple like petitioning the neighbors of your proposed site. If they are interested in the business that you have proposed to construct, such as a coffee shop that sells freshly baked muffins and great coffee in the morning, chances are high that your neighbors will sign the petition.Possible LimitationsSome locations, however, may have more than just neighbors to contend with. Historic district limitations may dictate what can and can’t be done in a particular area. Some areas are limited by parking contingencies or noise restrictions – but they are venture specific, and a real estate attorney can help you determine if this is something that has good potential for a zoning change and what the key parameters might be. Buildings that look empty, abandoned, or underutilized may have title or tax issues that need to be cleared before anyone can move forward with any future plans. To you and your neighbors, it may appear as a confusing waste of space, but a real estate attorney can use their professional resources to research the property and advise if changing the zoning or challenging the title or taxes of an empty space is worth the time and effort.Starting with the assistance of a knowledgeable attorney can get your business plan and timeline on track. Bureaucracy does not have the reputation of being the most expeditious process. While the actual approval may be quite simple, review boards often meet infrequently to make determinations and policy changes, and some determinations even require multiple meetings, permits, and reviews. It is wise to go into any venture with your eyes wide open about every possibility, limitation, and potential hold-up.Give yourself and your great local business idea every possible opportunity for success by hiring a real estate attorney to help you navigate zoning regulations.