Knowledge Is Important When Buying A Home
by Kevin and Darlene Jamison, RE/MAX First, Philadelphia, PA
When you are spending hundreds of thousands of dollars for a home, you need to make sure
that what you are getting is well worth it. No home is absolutely perfect. You can always
expect to have to spend something on your new home. The average is $6,000 within the first six months, according to industry experts. In a time when you should be looking at paint
samples and new furniture, why would you want to spend your time on repairing what you
just bought?
A professional home inspection is key to truly understanding the home you are purchasing. You want to turn to a reliable inspector that is a member of an association that establishes strict requirements for membership, such as the American Society of Home Inspectors and the National Association of Home Inspectors.
The inspector should provide you with a list of what the inspection will result in. For example, some inspectors will not inspect for termites or termite damage, indoor air quality or the potential of mold to cause illness. The inspector should remind you that the inspection report is not a guarantee. The inspector is not liable for any repairs as a result of his or her performance.
But even though you hire an inspector, you are still responsible for doing a little investigating yourself. For example, even if your lender doesn't require it, hire a termite inspector. But have the inspector look for all pests. Termites aren't the only pests that cause damage. So do carpenter bees, rats, squirrels and scorpions.
You may have received a disclosure form with the signed contract for purchase. Many states require that the seller fill out this disclosure. But don't let yourself rely only on this report. Many issues are forgotten about or not considered major by the owner. Yes, the basement got wet twice in the last ten years, but they could forget about it or not consider it a problem.
Disclosure issues usually arise because buyers expect the disclosure to hold more power than it really does. Make sure that your inspector has a copy of the disclosure and will look at any issues brought up by the seller.
When it comes to buying a home, you need to know everything you can about the home, neighborhood, market conditions and mortgage options. Your knowledge will give you an added negotiating tool when dealing with agents, lenders and sellers. Make sure that you have a full understanding of each step.
Posted 9/20/09
Welcome to Real Estate Central
Education and Resources for Homebuyers, Sellers and Investors
The Home Inspection Process
by Darlene Jamison, Realtors
As a home buyer/seller or real estate professional, you have the right to know exactly what a typical real estate inspection is. The following information should give you a better understanding of exactly what your inspector should or shouldn't do for you during the course of a home inspection.
A home inspection is an independent visual examination of the physical structure and systems of a house of an apartment, including all sections from the roof down to the foundations. Having a home inspected is akin to giving it a physical check-up. If problems or symptoms are found, the home inspector may recommend further evaluation.
First and foremost, an inspection is a visual survey of those easily accessible areas that an inspector can clearly see. No destructive testing or dismantling is done during the course of an inspection, hence an inspector can only tell a client exactly what was clearly in evidence at the time and date of the inspection. The inspectors eyes are not any better than the buyers, except that the inspector is trained to look for specific tell-tale signs and clues that may lead to the discovery of actual or potential defects or deficiencies.
Inspectors base their inspections on the current industry standards provided to them by their professional societies. These Standards tell what the inspector will and can do, as well as what the inspector will not do. Many inspectors give a copy of the standards to their clients. If your inspector has not given you a copy, ask for one, or go to the American Home Inspector Directory and look for your home inspectors association.
The Industry Standards clearly spell out specific areas in which the inspector must identify various defects and deficiencies, as well as identifying the specific systems, components and items that are being inspected. There are many excluded areas noted in the standards that the inspector does not have to report on, for example; private water and sewer systems, solar systems, security systems, etc.
The inspector is not limited by the standards and if the inspector wishes to include additional inspection services (typically for an extra fee) then he/she may perform as many specific inspection procedures as the client may request. Some of these additional services may include wood-boring insect inspection, radon testing, or a variety of environmental testing, etc.
Most home inspectors will not give definitive cost estimates for repairs and replacements since the costs can vary greatly from one contractor to another. Inspectors typically will tell clients to secure three reliable quotes from those contractors performing the type of repairs in question.
Life expectancies are another area that most inspectors try not to get involved in. Every system and component in a building will have a typical life expectancy. Some items and units may well exceed those expected life spans, while others may fail much sooner than anticipated. An inspector may indicate to a client, general life expectancies, but should never give exact time spans for the above noted reasons.
The average time for an inspection on a typical 3-bedroom home usually takes 2 to 4 hours, depending upon the number of bathrooms, kitchens, fireplaces, attics, etc., that have to be inspected. Inspections that take less than two hours typically are considered strictly cursory, "walk-through" inspections and provide the client with less information than a full inspection.
Many inspectors belong to national inspection organizations such as ISHI, ASHI, and NAHI. These national organizations provide guidelines for inspectors to perform their inspections.
All inspectors provide clients with reports. The least desirable type of report would be an oral report, as they do not protect the client, and leave the inspector open for misinterpretation and liability. Written reports are far more desirable, and come in a variety of styles and formats.
The following are some of the more common types of written reports:
1. Checklist with comments
2. Rating System with comments
3. Narrative report with either a checklist or rating system
4. Pure Narrative report
Four key areas of most home/building inspections cover the exterior, the basement or crawlspace areas, the attic or crawlspace areas and the living areas. Inspectors typically will spend sufficient time in all of these areas to visually look for a host of red flags, telltale clues and signs or defects and deficiencies. As the inspector completes a system, major component or area, he/she will then discuss the findings with the clients, noting both the positive and negative features.
The inspected areas of a home/building will consist of all of the major visible and accessible electro-mechanical systems as well as the major visible and accessible structural systems and components of a building as they appeared and functioned at the time and date of the inspection.
5/9/10
The Power Of Appreciation
by Darlene Jamison , RE/MAX First
Learn how to have all that you have ever wanted. There is a very strong principle at work in the universe, and understanding this principle is the key to everything you desire.
If you truly want to bring into your life everything that you desire, then start with appreciating all that you have now. Here’s how it works – you bring into your life whatever it is that you focus your thoughts upon. So, if you focus on all the lack in your life, you get more lack. But if you focus appreciation on all that you have, you get more of what you want.
Of course the question is “But how can I appreciate not having something?” The answer is to appreciate the things in your life right now. Enjoy where you are right now. Then think of the things you desire, but look at them with the thrill of expectation. Think of it like this: when you plan a vacation, it’s has not happened yet, but you are filled with excitement anticipating the thrill of all you’ll see and do. You’re not depressed because you are not on vacation now. You know it is coming.
That’s how the Power of Appreciation works. Appreciate the now, and be thrilled with the anticipation of obtaining all that you desire, and more will come into your life.
Just like your goal is not to complete your vacation – it is to enjoy it. The same is true with all of your desires. You always have new desires. You’ll never fulfill them all, because no sooner is one fulfilled that ten more are born. It’s what keeps you alive. Can you imagine living each day with the thought that you have already fulfilled every desire? That there is nothing else to achieve? Of course not. There would be no purpose to life. So desires are not the lack of something; they are the promise of what is yet to come. How exciting! All that you want - you’ll have.
Knowing that there is no lack – only desires yet to be fulfilled, you can relax, appreciate, and enjoy all that is already in your life. If you want to be happier, and fulfill your desires even quicker, try this exercise: take a few moments several times a every day to notice and appreciate some of the things in your life that you would miss if they were no longer in your experience. For instance, you might appreciate the home in which you live, the electricity which powers your house, the softness of your bed, the laugh of your loved ones, the sounds around you, the multitude of colors, the smell of Thanksgiving dinner cooking, the PC on which you’re working. When you realize the importance these experiences play in your life, and the void their absence would make, it is easy to feel appreciative of all that you have.
Don’t mistake that I’m saying settle for what you have. To the contrary, I’m saying enjoy what you have, while fully anticipating the fulfillment of all you desire. The point is to fully appreciate everything you have, which will lead to experiencing everything you want.
Best of Success & Abundance,
Posted 11/3/09
Vacation Condos, A Great Investment
by Kevin Jamison, RE/MAX First, Philadelphia, PA
The advent of the condominium has created a great investment opportunity for savvy investors. Vacation rentals has become one of the more thriving aspects of the real estate industry as high-priced hotels and resorts have caused vacationers to seek a more cost-effective solution for accommodation. This is a trend that is becoming more and more popular, not only in the typical vacation locations around the continental U.S.A. such as Arizona, Florida, and California, but also in highly desirable winter locations like Colorado and Utah. This is also a trend that is making great money for investors who buy internationally in some of the world's most popular vacation areas.
One of the aspects that makes a vacation condo rental so popular is the relatively low level of upkeep that is necessary. Cleaners can be easily contracted to keep the interior of the unit in pristine condition and the owner fees see to the condition and maintenance of the exterior of the building as with any condo complex. However, investing in a vacation rental condo requires some real legwork and investigation into the area you are investing in and the building that you have chosen. One major concern is the fact that many condo developments have rules against rentals. So you must be sure to find a building where this is not the case. Also, you will need the assurance that you can easily get information about the state of your investment from wherever you reside. This can be easily done by communication with the condo association for the building or by a property management service.
As with any investment make sure that you take certain measures to protect your interests. This will include proper contracts for people staying in your condo, user agreements so to speak. Also make sure that you have the correct insurance for vacation rentals. The final step is to find a place where you can properly advertise your rental, websites are a great solution for this. If you do your homework and plan properly, a vacation rental condo can be a fantastic investment.
Posted 9/27/09
The Basics Of Estate Planning by The Jamison's
Estate Planning may be a word that is encountered by many citizens especially the elderly. What is Estate Planning? What benefits does it provide to people?
Estate Planning is a method of arranging and considering alternatives that will satisfy specific wishes and goals to prepare for things that may happen to a person and the people he finds special to him.
Estate Planning includes organizing properties and not just putting them in a simple Will. It also lessens the taxes and fees that may possibly be charged to these properties. Estate Planning also includes contingency preparation to ensure that ones wishes regarding health care and medications will be followed.
An estate plan may be described as good if it financially coordinates with the future of the home, business, investments, insurance and other benefits if ever the person becomes sick or will pass away. A good estate plan also sets directions to bring about personal wishes regarding health care in preparation for the when the person becomes disabled.
It is very important to identify the real definition of the term "estate" before someone can really perform estate planning. Estate means all the properties a person owns or has control of. This is regardless whether if the property is solely named after him or is in managed in a partnership. This may include real properties, accounts, bonds and stocks, cash, buildings and establishments, jewelry, collections, all types of businesses and even retirement benefits.
Typically, those who really need to have an estate plan are parents who have minor children, people who have valuable properties and have sentimental values for them, and also people who are concerned about their medications and health care. However, people can still acquire an estate plan whether they have these categories or not. As long as they have all the things that are covered by an estate plan, then they can avail of it.
While a person is alive, it is important to prepare an estate plan and at the same time implement it. This is the perfect time for a person to perform and have legal capacity to come up with a contract. There may be challenges that could occur if an estate plan is implemented when a person is already disabled. Others may judge the lack of capacity and the person may be prone to fraud, abuse and coercion.
Estate Plans may include wills, power of attorney for health care, living wills, living trusts and limited partnerships. When entering into a contract, it is very important to make use of the services of a lawyer. Lawyers are the only certified people who practice these fields. They are also the only ones who can supply a person with all the legal requirements and advice needed in the estate plan. An attorney will be able to answer legal questions regarding the estate and they will also be able prepare the person on the cost of the estate plan and other finances the come with it.
Estate Planning involves sensitive decisions and legal matters. It would only be beneficial if the person will always consult with legal advisors and also seek financial and medical advice. It is important that before a person will enter into estate planning, he should already have a strong understanding of the process so that things will not be difficult for those who will be left behind.
3/9/10
This page was last updated: August 16, 2010
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The Quitclaim Deed. You Can Sell A House That You Don't Own!
by Darlene Jamison, Realtor
Normally, when you put your property up for sale, you have to present a document, called a warranty deed, which states that you are the legal owner of the property and that the title you have on hand is the original copy. But what if you don’t have the title of the property yet you have the legal rights to it? What document can you, then, present to prospective buyers? For situations such as these, the appropriate form to use is the called the Quitclaim Deed form.
A Quitclaim Deed is a document which states that, although you may not own the property in question, nor have its title in your possession, you do have the legal right to use it and are authorized to dispose of it (through sales). Quitclaim deeds are used you acquired the property in question through other means such as receiving it as an inheritance or when you became a co-owner by virtue of marriage. Quitclaim deeds are also for properties owned by the state but you are authorized to use through leasehold.
Quitclaim deeds are fairly straightforward. A quitclaim deed should include the names of both the buyer and the seller, the amount the buyer and seller agreed the property is worth, the location of the property, and of course, a notation wherein the seller waives or releases all his rights, interests and claims on the property. In addition to these basic information, for a quitclaim deed to be considered legal, it should bear the signatures of the parties involved, those of the witnesses and, must also carry a notarial seal and signature.
In the past, home sellers had to request lawyers or real estate agents to prepare quitclaim deeds for properties they want to put up on sale, but this has all changed now. In recent years, several real-estate related sites have been established and these sites assist those involved in real estate transactions by providing not only great tips on selling or buying a property; but also the necessary documents that will be needed to formalize any real estate arrangement.
Most real estate websites carry all sorts of real estate related documents and these can easily be purchased and downloaded by web users. The format and content of these forms have been well researched to ensure that these will be recognized by local, state and federal agencies. In each site, there is a listing of standard / generic forms but there are also forms that follow the requirements and content of specific states.
If you need real estate documents, real estate websites usually give you the option to either download forms by bulk or set, or you can purchase forms on a per piece basis, buying and downloading as the need arises. In addition, these downloadable forms, although these conform to a certain format, can easily be modified to suit your requirements. Should you wish to include more or limit the information on your Quitclaim Deed, for example, you can easily do so.
10/9/09
A Bit About Mold
by Kevin Jamison, RE/MAX
There are a number of little things to look out for when purchasing a new home. Normally the things to consider includes such things as location, wiring, the condition of the house itself, and several other factors. One of these factors that the home buying public is becoming more concerned with is mold. There are many different types of mold that can occur in a home and lead not only to structural damage, but some health concerns as well. Mold is difficult to find in many homes as it grows exclusively in dark and moist areas that are usually hidden somewhere in the structural areas of the home such as attics and basements. By the time mold shows up in the actual living areas, chances are that it is all through the home.
One of the most likely places for mold to form is anywhere that moisture is improperly vented. Another area of concern is if a home has ever flooded and was not completely or properly cleaned and dried after. Leaky plumbing and basement crawlspaces are other likely candidates. Mold can be a difficult thing to completely get rid of as the only thing it needs to continue growth is an organic material such as wood, and moisture. Both of these items are usually abundant in any home. The most likely was that moisture finds its way into the home is through faulty or leaky roofs and foundations. Both of these areas should be checked over by an experienced mold inspector on a fairly regular basis if there is any worry of mold beginning to grow, or if these has been mold in the past. Mold can be an expensive problem to deal with so be pro-active about looking for it, it can save you money in the long run.
Posted 11/3/09
Home Security Advice
by Kevin Jamison, REMAX
When the topic of home security springs to mind, most people seem to think of burglar alarms and little to nothing else. Alarms can be a great way to protect your home, although they are only a small part of what makes up an effective home security system. Burglar alarms are a key to protecting your home – although there are other things you’ll need as well.
Believe it or not, the windows are actually the key to home security. Homes that have poor constructed windows tend to get broken into a lot more than homes with secure and sturdy windows. When you are dealing with your windows, you should make sure that you have tough glass and locks that fit to the windows. When you are away from home, you should always make sure that your windows are locked. Even though some windows may be hard to reach, you should always lock them. Burglars make a living out of stealing – and they will normally find a way in if they see the opening.
Along with the windows, doors are also known to be a weakness of security around the home. Doors should always be strong and sturdy, complete with tough locks that aren’t easy to force open. If you have a spare key, you should be careful where you leave it. Losing your keys can also make you a target, especially if you have anything on your key ring that reveals your home address.
To better protect their homes, most people choose to invest in a home surveillance system. These systems are great for monitoring the home, as they can record video and keep it stored for you to view later. If you travel a lot, a home surveillance system can be an ideal way to keep a check on your home while you’re away.
Guard dogs are also common with home security as well. A guard dog can protect your home from burglars, thieves, and other types of trouble. Guard dogs can be very handy to have around, as most dogs are more than capable of scaring away trouble with their bark. The only downside to guard dogs is the fact that you’ll need to train them and ensure that they always have food and water.
Last, but certainly not least are burglar alarms. Burglar alarms can be effective to an extent, although they are primarily good for scaring thieves away. If you put an alarm in a visible location from the outside of the home, most burglars won’t even attempt to enter your home. Even though burglar alarms are great for scaring off thieves – you’ll still need to have other areas of your home safe and secure as well to get the most of your home security.
6/1/10
GREAT QUOTES
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"Every failure, ostacle and hardship is an opportunity in disguise, in many cases failure is the success turned inside out."
Gary Comer, Founder Lands End
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"I failed over and over again. That's why I succeed."
Michael
Jordan, NBA Hall of Famer
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"The only place you'll find success before work, is in the dictionary."
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"You can play the role of success, dressed in the custom of failure."
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"The journey is more important than the destination."
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"Nothing worth having comes easy."
7 fast fixes for your credit scores
If you're dragging around bad credit scores, you'll pay more for car loans, credit cards and mortgages. Here's how to turn them around in a hurry. Plus: 4 credit mistakes to avoid.
So you've had a few problems getting the bills paid lately, and you're wondering what you can do to repair the damage.
You've got plenty of company. There are more than 30 million people in the United States with credit blemishes severe enough (and credit scores under 620) to make obtaining loans and credit cards with reasonable terms difficult.
Or maybe your credit is OK, but you'd like to make it better. After all, the better your credit, the lower the interest rates you can secure car loans and credit cards. And these days, having high credit scores is the one sure path to homeownership.
Know the score
In order to improve your credit scores, it's important to know where you stand currently. The three-digit numbers, which range from 300 to 850, are the key to your borrowing costs. See "How to get a credit report for free" to learn how to get a copy.
Now you're ready to take the seven steps to speedy credit repair:
1) Pay down your credit cards. Paying off your installment loans (mortgage, auto, student, etc.) can help your scores, but typically not as dramatically as paying down -- or paying off -- revolving accounts such as credit cards.
Lenders like to see a big gap between the amount of credit you're using and your available credit limits. Getting your balances below 30% of the credit limit on each card can really help.
While most debt gurus recommend paying off the highest-rate card first, a better strategy here is to pay down the cards that are closest to their limits.
2) Use your cards lightly. Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month.
What's typically reported to the credit bureaus, and thus calculated into your scores, are the balances reported on your last statements. (That doesn't mean paying off your balances each month isn't financially smart -- it is -- just that the credit scores don't care.)
You typically can increase your scores by limiting your charges to 30% or less of a card's limit. If you're having trouble keeping track, consider using a check register to track your spending, logging into your account frequently at the issuer's Web site, or using personal finance software like Microsoft Money or Quicken, which can download your transactions and balances automatically.
3) Check your limits. Your scores might be artificially depressed if your lender is showing a lower limit than you've actually got. Most credit-card issuers will quickly update this information if you ask.
If your issuer makes it a policy not to report consumers' limits, however -- as is the usual case with American Express cards -- the bureaus typically use your highest balance as a proxy for your credit limit.
You may see the problem here: If you consistently charge the same amount each month -- say $2,000 to $2,500 -- it may look to the credit-scoring formula like you're regularly maxing out that card.
You could go on a wild spending spree to raise the limit, but a more sober solution would simply be to pay your balance down or off before your statement period closes. Check your last statement to see which day of the month that typically is, then go to the issuer's Web site about a week in advance of closing and pay off what you owe. It won't raise your reported limit, but it will widen the gap between that limit and your closing balance, which should boost your scores.
4) Dust off an old card. The older your credit history, the better. But if you stop using your oldest cards, the issuers may stop updating those accounts at the credit bureaus. The accounts will still appear, but they won't be given as much weight in the credit-scoring formula as your active accounts, said Craig Watts, an executive at Fair Isaac, one of the leading credit scorers. That's why Ferguson often recommends to her clients that they use their oldest cards every few months to charge a small amount, paying it off in full when the statement arrives.
5) Get some goodwill. If you've been a good customer, a lender might agree to simply erase that one late payment from your credit history. You usually have to make the request in writing, and your chances for a "goodwill adjustment" improve the better your record with the company (and the better your credit in general). But it can't hurt to ask.
A longer-term solution for more-troubled accounts is to ask that they be "re-aged." If the account is still open, the lender might erase previous delinquencies if you make a series of 12 or so on-time payments.
6) Dispute old negatives. Say that fight with your phone company over an unfair bill a few years ago resulted in a collections account. You can continue protesting that the charge was unjust, or you can try disputing the account with the credit bureaus as "not mine." The older and smaller a collection account, the more likely the collection agency won't bother to verify it when the credit bureau investigates your dispute.
Some consumers also have had luck disputing old items with a lender that has merged with another company, which can leave lender records a real mess.
7) Blitz significant errors. Your credit scores are calculated based on the information in your credit reports, so certain errors there can really cost you. But not everything that's reported in your files matters to your scores.
Here's the stuff that's usually worth the effort of correcting with the bureaus:
•Late payments, charge-offs, collections or other negative items that aren't yours.
•Credit limits reported as lower than they actually are.
•Accounts listed as "settled," "paid derogatory," "paid charge-off" or anything other than "current" or "paid as agreed" if you paid on time and in full.
•Accounts that are still listed as unpaid that were included in a bankruptcy.
•Negative items older than seven years (10 in the case of bankruptcy) that should have automatically fallen off your reports.
You actually have to be a bit careful with this last one, because sometimes scores actually go down when bad items fall off your reports. It's a quirk in the FICO credit-scoring software, and the potential effect of eliminating old negative items is difficult to predict in advance.
Some of the stuff that you typically shouldn't worry about includes:
•Various misspellings of your name.
•Outdated or incorrect address information.
•An old employer listed as current.
•Most inquiries.
If the misspelled name or incorrect address is because of identity theft or because your file has been mixed with someone else's, that should be obvious when you look at your accounts. You'll see delinquencies or accounts that aren't yours and should report that immediately. However, if it's just a goof by the credit bureau or one of the companies reporting to it, it's usually not much to sweat about.
Two more items you don't need to correct:
•Accounts you closed listed as being open.
•Accounts you closed that don't say "closed by consumer."
Closing an account can't help your scores, and may hurt them. If your goal is boosting your scores, leave these alone. Once an account has been closed, though, it doesn't matter to the scoring formulas who did it -- you or the lender. If you messed up the account, it will be obvious from the late payments and other derogatory information included in the file.
4 other credit mistakes
Other actions to beware when you're trying to improve your scores:
•Asking a creditor to lower your credit limits. This will reduce that all-important gap between your balances and your available credit, which could hurt your scores. If a lender asks you to close an account or get a limit lowered as a condition for getting a loan, you might have to do it -- but don't do so without being asked.
•Making a late payment. The irony here is that a late or missed payment will hurt good scores more than bad ones, dropping 700-plus scores by 100 points or more. If you've already got a string of negative items on your credit reports, one more won't have a big impact, but it's still something you want to avoid if you're trying to improve your scores.
•Consolidating your accounts. Applying for a new account can ding your scores. So, too, can transferring balances from a high-limit card to a lower-limit one or concentrating all or most of your credit-card balances onto a single card. In general, it's better to have smaller balances on a few cards than a big balance on one.
•Applying for new credit if you already have plenty. On the other hand, applying for and getting an installment loan can help your scores if you don't have any installment accounts or you're trying to recover from a credit disaster like bankruptcy.
By the way, all these suggestions work best if you have poor or mediocre scores to begin with. Once you've hit the 700 mark, any tweaking you do will tend to have less of a positive impact.
Good Luck and most importantly, stay focused and disciplined!
1031 Exchange
Section 1031 in the Internal Revenue Service is a boon for a prospective investor, selling an investment property and wanting to make a profit by reinvesting in a similar property elsewhere in the country. This wonderful concept works on the principle of gain rolling from the old to the new.
There is widespread ignorance on the modalities about this exchange; as a result, 30-40 percent of property owners end paying tax during the sale. Exchange 1031 not only fructifies into essential tax savings, but also makes possible the swapping of property in the fairest manner at places of choice. No wonder that the 1031 Exchange excites the property market so much.
The new income-generating replacement property gives the investor the double gain of added income and savings from tax that would have otherwise gone to the IRS coffers.
Besides saving the buyer from a huge tax burden coming in the guise of capital gains, the instrument offers maximum immunity and flexibility in reinvesting the money gained from the sale in a replacement property within a given period.
The exchange being time-bound is no kid’s play either. In every exchange of this kind, Qualified Intermediaries (QI) plays a crucial role connecting the buyer and seller. The Federal Tax Code makes service of QI mandatory since 1991 in any exchange.
The federal nature of the 1031 Exchange regulations make the Qualified Intermediary play a wizard in guiding and structuring the exchange, satisfying all parameters and suiting the goals of the clients. It is the QI who does the paperwork required by the IRS to document the exchange. The QI carefully prepares all documents and serves the parties with copies of the exchange agreement, novation agreement and escrow instructions.
The Exchange Agreement reads like a contract between the Exchanger and a Qualified Intermediary. The Exchanger explicitly agrees to transfer his old property to the Intermediary, in lieu of a new property to be supplied by the latter within 180 days. The contract outlines all terms and conditions under which the exchange of properties should take place.
For a 1031 Exchange to take effect, both the old property as well as the new property should be in the category of investment property, capable of generating income. The examples could be rental property, bare land, vacation homes or more.
As soon as the old property is sold, within 45 days the seller has to come out with a list containing two or three probable properties fit for replacement. And the whole process of purchasing the new property or replacement property from the list must be over in a period of 180 days.
The exchange becomes bona-fide only when the title stays intact and whosoever held title to the old relinquished property gets the title of the new property.
In between the sale and purchase of property, the seller of the old property would get no access to the money he accrued from the sale, as the money will be vested with the ‘Qualified Intermediary’ till the exchange gets over.
This 1031 Exchange process has matured and had many names in the past including Like Kind Exchange, Deferred or Delayed Exchange, Simultaneous or Concurrent Exchange, Starker Trust or Exchange, Alderson Exchange, Reverse Exchange, Two, Three, or Four Party Exchange and Baird Exchange.
Posted 11/11/09
Credit Bureaus
The Ins and Outs of Bank Foreclosures
by Kevin and Darlene Jamison, RE/MAX First
The term bank foreclosure is one which may seem mysterious to many individuals, especially if they have never experienced one and/or are unfamiliar with real estate terms. Bank foreclosures occur when a current homeowner can no longer pay their mortgage, is deemed to be in default and the bank repossesses the home. There are certain things which all individuals should know about bank foreclosures so that they can be more familiar with the term and prevent this from happening to them.
What the Lender Gains from Foreclosures
The lender will profit in various ways from foreclosing on a borrower’s home. The first profit is repossessing the home and putting a stop to any future losses that may occur as a result of the homeowner’s nonpayment from that point forward. Another way the lender profits from foreclosing on a home is that they will be able to sell the home and try to reclaim what was lost such as loan balance, attorney’s fees, court costs and more.
Condition of Title in the Home
When an individual purchases a home in a foreclosure sale, the prospective buyer wants to ensure that title in the home is good and that there will not be any issue with such a thing should they purchase the house. A good tip to keep in mind is that the lender will bid on a home at a foreclosure auction if title is good but may not do so if title is cloudy. Lenders often bid on foreclosure homes at Sheriff’s sales in order to obtain the property and sell it for a greater amount down the road. They will be less likely to do so if title is at issue.
How Lenders Dispose of Foreclosure Properties
There are a variety of ways with regard to how lenders dispose of foreclosed properties. Some lenders advertise foreclosure sales in newspapers while others retain real estate agencies to advertise the properties for them. The lender wants to choose the most effective yet least timely manner when it comes to disposing of foreclosed properties. With regard to the larger lenders, many of these companies have a department within their financial institution which deals exclusively with handling sales of this type.
Investing in Foreclosed Properties
Some individual investors make their living by investing in foreclosed properties. These individuals scan the market for possible goldmines and try to obtain the property for the least amount of money possible thereby making a good profit when they later sell the same property. A beneficial way for investors to find that perfect foreclosed property for sale is to do some independent research at the local courthouse or peruse the newspaper for possibilities. Once the investor has located some potential properties, that individual should calculate the profit margin by subtracting the default amount from the estimated market value. If the property is a good deal, the investor should go about pursuing the purchase of the property.
There are a few tips for investors who are looking to buy foreclosed property. The first is to always include relevant costs and expenses in the calculations when determining profit margin. Secondly, the investor should inspect the property to be sure that they are getting what they are paying for. Third, make realistic offers as those which are not so will be quickly rejected or bid out by another investor. Lastly, once the offer has been accepted by the lender try to sign the purchase and sales contract as soon as possible to ensure that the property will indeed be yours.
Advantages and Disadvantages to Purchasing a Bank Foreclosure Property
There are certain advantages concomitant with purchasing a property that was foreclosed upon. The first advantage is that the price of the property will be much less than many other types of properties which will allow investors to make a good profit when they resell the property. Another advantage to purchasing a home that the bank has foreclosed on is that many of the problems have been remedied by the lender and should not present an issue for the buyer. Lastly, a lower price obtained on the property will mean a lower monthly mortgage payment and accompanying costs.
As for the disadvantages, there is always a chance that an investor who purchases a property in this manner will have difficulty selling it at a later time. Another disadvantage to buying bank foreclosure properties is that the property may be sold as is and lead to the completion of multiple repairs by the new owner.
Conclusion
Bank foreclosure properties are ones which the bank is anxious to sell and the investor is more than willing to buy. With this relationship in existence, it is easy to see how foreclosure properties get sold as quickly as they do.
Posted 11/10/09
The Decision to Re-Finance
The decision to re-finance a home mortgage is a serious decision which should not be taken lightly. Homeowners should give this decision a great deal of consideration to ensure they are making the best possible decision for their financial situation and personal needs. Some factors to consider when deciding whether or not to re-finance is the type of loan to choose, the lender to choose, the costs associated with re-financing and the hassle of the process.
Consider All of the Options
Homeowners who are seriously considering re-financing owe it to themselves to consider all of the options available to them. They may have a friend who recently refinanced with a specific type of loan but this might not be the solution for all homeowners. Each homeowner should consider their situation to be individual and not likely to closely mirror the situations of others.
Some of the options to consider include the type of re-financing loan. The basic options are fixed interest rates and adjustable interest rates. There are also mortgages which combine these two options. The homeowner may have a specific type of mortgage in mind but the lender may or may not be willing to offer the homeowner this type of loan. Lenders are more likely to offer fixed interest mortgages to homeowners with good credit and adjustable rate mortgages to homeowners with poor credit.
Consider the Lender
Homeowners will also have to carefully consider the lender they select. This is important because not all lenders are going to be willing to offer the same interest rates and terms to the homeowner. Homeowners may have to receive quotes from several different lenders in a short period of time to make an accurate comparison. This is important because interest rates can change without notice and homeowners who wait too long to make a decision may find the rate they were originally quoted is no longer available to them.
When selecting a lender the homeowner should also consider how responsive the lender is to their questions. This is important because a lender who does not pay attention to the homeowner or respond to their inquiries in a timely fashion can make the process of re-financing considerably more stressful than necessary. Selecting a lender who offers slightly higher rates but is more responsive may be warranted.
Consider the Cost of Re-Financing
Re-financing is not cheap. There are certain costs associated with re-financing. These costs are typically very similar to the closing costs associated with securing an original mortgage on a property. These costs may include application fees, loan origination fees, property taxes, appraisal fees and other miscellaneous items. These costs can be quite extensive and homeowners may find they are often left paying more than the benefits they are going to gain from re-financing. In this type of situation the homeowner should make the decision not to re-finance because it is not a financially sound decision.
Consider the Hassle of Re-Financing
Let’s face it; re-financing can be an absolute hassle. The time and energy spent researching different re-financing options and contacting lenders to see who will offer the most favorable rates can be quite taxing. A homeowner should consider the time and effort required for this endeavor in deciding whether or not to re-finance. Simply stated, refinancing is a hassle and homeowners may better spend their time with family and friends rather than running around trying to find the best rates in town.
