Calling All Landlords | $600 1099 Landlord Reporting Law Repealed

17 04 2011


$600 1099 Landlord Reporting Law Repealed : Speaking of Real Estate.


The IDEAL Formula for assessing Investment Property

15 04 2011
  • Income from Cash Flow – This is is fairly obvious why it’s good, right?
  • Depreciation Deductions – You depreciate real property (not land, but a building) to help reduce your taxable income (not on your primary residence)
  • Equity Buildup – As you pay down your mortgage, you gain equity you can leverage for other properties!
  • Appreciation – The market is not always stable, but generally speaking, Real Estate appreciates.  See The Rule of 72 blog post here….
  • Leverage – If you buy $100,000 worth of stocks, you need $100,000 & you get appreciation on $100,000.  If you buy $100,000 worth of real estate, you need $20,000, but still get appreciation on $100,000.  Nice.  🙂  Yep….that spells IDEAL.

Buy Real Estate in Your IRA | Traditional, Roth, and SEP-IRA

13 04 2011

Online Exclusive: Buy Real Estate in Your IRA.

Second Home Owners | You HAFTA Read This

11 04 2011

If you have a second home, the chances are high that you’ve considered selling it at some point.  Maybe the maintenance has gotten to be too much of a pain, or the taxes you have to pay are ridiculous??

Did you know if you rent your home out for two weeks a year, for two consecutive years (total of four weeks), you’ll qualify for a 1031 exchange and be able to invest in something that might make more sense for you….like perhaps a multi-plex or commercial building??

Now…I’m a Realtor, not an accountant.  Take this info & go ask your Trusted Tax person about it.  It might do wonderful things for your life.

Small Business Community of the Year | Awarded by the Small Business Association

6 04 2011

YAY Billings! 🙂  Yet another feather in the cap!

Contingency for Sale of Buyers Property/First Right of Refusal

5 04 2011

Let’s say you have a home you have to sell prior to being able to purchase another property.  Maybe you already have it listed, and maybe you’re not ready until you find something that motivates you to move…either way, you’d be able to make an offer that had one additional contingency to the “normal” list – a contingency for the sale of the buyers property.

Everything would still be negotiated in the normal fashion, just as if you didn’t have to sell a property first…with the exception of the contingency for the sale of a buyers property.  In the case of the state of Montana, if your offer is accepted in the fashion, the property you are planning to buy would still remain active on the market & available for others to come and view it/make offers.   The difference is you’d have a First Right of Refusal.  There would be private remarks in the MLS to signify to other buyers agents that there is a first right of refusal on that property you’re trying to buy.  If the other buyers want to view it anyway, they have that right.  They also have the right to make an offer.  This has virtually NOTHING to do with your offer.  It does NOT have to be more/better…it just has to be accepted by the seller.  Once the offer is accepted, the sellers agent will notify your buyers agent.  Once notification is complete (usually a phone call), the predetermined set time starts ticking.  Most commonly in Billings, 48 hours is what to expect.  This means you’ll have 48 hours to remove your contingency & continue forward with the purchase.  If you unable/unwilling to remove that contingency, you’ll have your earnest money returned to you & you’ll have no buy/sell in place anymore.  If you do choose to drop the contingency (maybe an offer came in just in the nick of time….or you really could qualify for two properties, but didn’t want to unless forced…or someone decides to co-sign with you), you’ll also have to waive your financing contingency & come up with extra money.  Expect to have to add an additional $1,000 or more to your current earnest money check.  Without the financing contingency, if something goes wrong & the bank won’t end up lending you the money, you’ll lose your earnest money & the property.

Super basic breakdown

1.  You view & like & make accepted offer with contingency/first right of refusal (because you have to sell something first to be able to buy)

2.  You have your property on market & other property stays active, but with a first first of refusal to you.

3.  Other people come look at the one you are hoping to buy & maybe make an offer

4.  Regardless of price/terms/conditions of the buy/sell (yours or theirs), you’ll have a set time to remove your contingency for the sale of your property & move forward with the purchase anyway OR you get your earnest money returned to you & the property gets purchased by someone else.

The Process | Steps in Finding the Perfect House

4 04 2011

Even if you’ve bought a home before, chances are you don’t make a habit of remembering every detail to the transaction….that’s what your Realtor is for….to prep you for what is coming next & to help set expectations & give advice based on experience.

1.  The first step when thinking of buying a home, whether it is your very first one, or you’re upgrading to something different, is to talk to a lender and find out what you qualify for in a mortgage.  I know it seems really scary, but most all lenders are friendly, helpful & prompt.  If you know what you make, how long you’ve worked there, what your monthly obligations are (car, student loans, minimum credit card payments, etc.), it should only take about 5-10 minutes to know what the bank is willing to let you spend 🙂  Specifically ask for a pre-approval letter & make sure to share this with your Realtor so he/she is prepared for when you are ready to write an offer.

1.2  Next, if you own a home currently, call a Realtor you trust (it never hurts to interview a few, unless you loved your last agent) to get a CMA, or Comparative Market Analysis, to help determine the value of your current home so you know how much you’ll have for a down payment on the next place.  This will be helpful in communicating with the lender, also.

2.  Contact a Realtor to help you get set up on the perfect search criteria for you.  This is also pretty quick and painless.  Just be thinking already of what part of town you’d like, your minimum bedroom/bathroom/garage stall numbers & the maximum you want to spend.  If you have your email address ready, the whole setup shouldn’t take more than about 5-10 minutes.  🙂  Feel free, of course, to ask as many questions as you can think of along the way.  For instance, what is the sale to list price ratios.  This will help you determine the max value you should be searching for.  If you live in a market that it’s common/acceptable to chop 10% off the price and it’s likely to get accepted, you may think about searching for a higher value than you really want to spend.  If it’s like Billings, and the average is more like 3%, probably best to stick right at the max you’re comfortable with for pricing boundaries.  There’s nothing more depressing than falling in love with a home you can’t have.  Once I have the info I need to set a client up on a search, they get all the homes that are available for them to review immediately & in the future if any drop into their price range, or newly hit the market, an email is sent with the appropriate link & info!  Pretty darn slick…you don’t have to spend hours on anymore!  WAHOO!

3.  Let your Realtor know which homes are your possibilites/favorites, and pick a time to go view them.  The more time you spend with your agent, the more they will understand what you love (and don’t love) about the homes you go see.  This is helpful so they can start suggesting homes that hit the market in your price range that meet your criteria that you may haven’t seen in your list yet (or maybe it hasn’t even hit the market yet, but they know it is getting ready to).  Don’t be shy with your agent.  It’s a common misconception that all agents work for the seller.  This is not true.  Only the Seller’s agent works for the seller.  If you pick an agent to represent you as a buyer, that’s exactly what they do.  Even if you go see one of your buyer’s agent’s listing (which would make it Dual Agency), if you have a good agent, they will still do everything to make sure the home you buy is the best thing for you right now (and your future plans that you share with the agent), even if that means it’s not their own listing.  No Realtor wants a call from a client who’s mad about their purchase.  The most successful agents have repeat clients who love referring their Reatlor’s name to their friends & family.

4.  Once you find “The One”, sit down with your agent to determine what the best negotiating strategy should be.  Each market/price range/situation is different, so do your best to have an open mind during this phase.  Your agent will be able to help you determine what the average sold prices are for homes that are similar.  Not everything is about the price.  Keep in mind dates, what goes & what stays, etc. all play an important role to both the buyer & the seller.  Maybe a seller is firm on their price, but very willing to help repair and home inspection items, or replace a roof.  This is the time where your agent will fill out all the necessary paperwork for you & you’ll actually write the offer.  It should take about an hour & require an earnest money check (not cashed until there is an accepted offer between you and seller), a pre-approval letter (which you should already have from the lender), and quite a bit of initialing & a few signatures.

5.  This is the due diligence part of the process.  It’s time for you to make a few phone calls.  You’ll want to schedule a home inspector & coordinate that with your Realtor to make sure the seller knows about the appointment & is prepared.  You’ll also want to call and check with an insurance agent to get a quote on homeowners insurance.  It never hurts to call more than one place to make sure your quote is competitive.  I’ve seen HUGE rate differences for the same product.  Be choosy.  Saving hundreds of dollars is worth making a few more phone calls.  Keep in mind – your agent is NOT an home inspector & neither is the listing agent.  Your agent should point things out to you they notice, but if they don’t, it is still your responsibility to discover anything you don’t like prior to purchasing.  A home inspection isn’t required, but it’s VERY much recommended.

6.  You’ll most likely be able to walk through with the inspector after they complete the investigation of the property.  You’ll pay for the report & receive a copy either via email/disk/both.  You’ll have a chance to walk through that with your agent & notify the sellers of any “deal breakers” you may find.  This is a negotiation step.  If you find something you really don’t like, even if it’s fixed (and you’ve made the offer contingent upon the inspection & are within the dates specified in the contract), you’ll be able  to terminate the agreement and get your earnest money back/start searching for a different property.  If you still want the property, but only if a few items are taken care of, you’ll have the option to negotiate with the seller.   There are dates set out in the contract so these negotiations are done in a timely matter and don’t stretch out for months.

7.  Assuming your successfully negotiated the home inspection items (or there weren’t any deal killers), the next step is to notify the lender to order the appraisal.  This will probably take 1-2 weeks to complete.  The appraiser assigned will be random & you won’t be able to have contact with them.  They’ll give their unbiased report to the lender of what they feel the value of the property is & if there are any repairs necessary prior to closing/lending of the money.  If the appraiser  feels the property is worth more than what you and the seller have agreed to, good for you (the seller can’t change the price)!  You’ll have a bit of instant equity.  If it appraises for the purchase price (most often this happens), all is well.  If it appraises for less than the purchase price, there is another time period for negotiations.  The bank will only lend a certain % of the appraisal value.  Either the buyer will need to come up with cash to make up the difference, the seller will have to reduce their price to reflect the appraisal, or some combination of those two options.  If no agreement can be made, the earnest money will be returned (provided the offer was contingent upon appraisal and you’re within the negotiation dates).

8.  Your Realtor will review what is called a preliminary title commitment to make sure there is nothing that should stop the sale….ie, the buyers don’t have outstanding tax liens/judgements/back child support & the seller’s don’t have unpaid liens against the property, etc.  Most of the time, if any issues come up, they are easily resolvable.

9.  After all of that, you’re ready to pick a time at the title company to sign all your documents.  In that very first phase when you wrote the offer you, the seller, and the agents would have chosen a target date for closing.  This is a firm & negotiated date that everyone works toward.  Assuming all went smoothly & the process didn’t need to be lengthened for any reason, that will be the day you sign/take possession.  It will take about an hour at the title company to sign all the loan documents.  You’ll need your photo ID & your downpayment in a cashiers check.   After you’re done signing all the papers, you’ll get your keys & the home is yours!  The title company will record the title either that same day, or the next business day.  Success!

Whew….I think I just wrote a novel.  I could have made this a lot simpler/more concise, but I wanted you to get a good feel for what it’s really like.  Keep in mind, if you buy with cash, things get significantly easier/shorter.  Since that is not the standard, I did not highlight that process, but I’d be happy to go over it with you if you’d like.

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