important to know how much you can afford before you begin looking at
homes in LA. You should also talk with a lender and get pre-approved for a
loan. This puts you in a stronger negotiating position with a seller.
As a rule,
your monthly housing costs should not be more than 28% of your monthly
pre-tax income, including the mortgage payment, real estate taxes, and
insurance. If you have long-term debts, such as student loans or car
payments, your monthly payments, including your housing costs, should be
less than 36% of your pre-tax monthly income. Some loans, such as VA and
FHA loans, are more flexible with these basic guidelines.
which type of mortgage you select, you can consider houses in various
price ranges. An adjustable-rate mortgage will usually enable you to
qualify for a higher loan amount. Your Realtor can help you make the basic
calculations. And remember, buying at the top end of your price range
gives you more time to outgrow your home, and can save you money in the
The Realtor calls with great news! Your offer has just been accepted.
Congratulations--you are about to become a homeowner!
Your initial euphoria may be short-lived,
however, as you begin to have second thoughts about the purchase. First,
it's the mortgage. It seems like so much money, and it will take thirty
years to pay for it. You look over the cash you will need for the closing
and feel like you will never be able to afford to dine out again! Finally,
you stare at the inspector's report and convince yourself that the roof
will blow off and every major system will fail the day after you move in.
You're in a frenzy. You ask yourself, "What have I gotten into?"
The best thing to do if you begin having
"second" thoughts is just relax! These feelings are so common
that they have even been given a name--"Buyer's Remorse."
"Buyer's Remorse" is almost always a temporary malady, but call
your Realtor if you are having an extreme attack. We have experience in
helping our clients through the home-buying jitters.
There is probably some kind of small, leggy creature that makes its home
with you. Whether they are termites, fleas, roaches, ants, or spiders, it
is a good idea to serve them with an eviction notice before you put your
home on the market. If home remedies like ionized boric acid don't work,
paying a professional exterminator will be money well spent.
Most standard sales agreements require that
a property be inspected before the closing and treated for termite
infestation, if necessary. It is a good idea to check for insect problems
as soon as you sign a listing agreement, so that they don't become an
issue of contention in the sale. Some insects may not physically damage
the house, but may reduce its chances of selling for top dollar.
Constantly having to push back spider webs while touring the house or
seeing roach antennae tweaking could seriously undermine a prospective
buyer's ability to fully appreciate your house.
When you decide it is time to move, it is important to engage your
children in the process. Depending on the reason for the move and the
distance, moving can cause some concerns for children that parents may not
pick up on right away. It often means going to a new school, leaving
favorite playmates, and a lot of uncertainty about what the new
neighborhood will be like.
Things will go a lot easier if your
children support your efforts to get your current home sold. It is
important to engage the children in keeping their toys and clothes picked
up. Teenagers may be especially touchy about strangers invading their
space, and may resist keeping their room in "showing" condition.
It is also important for the family to stay out of the way when the house
is being shown.
How can you get the whole family involved
in the sale? Include everyone in the discussions about the move and invite
the children to participate in house-hunting trips. Work with a Realtor
who is comfortable with children and can remain sensitive to your
children's needs and concerns.
You have probably figured out how much you will need at the closing for
your down payment, but don't forget about the closing costs. These
additional costs can add up to a significant amount.
Closing costs will vary, depending upon the
financing costs and the time of the month that you close. Your Realtor
will be able to give you an estimate of all these costs, including the
points on your loan, private mortgage insurance (if required), the title
search, title insurance, attorneys' fees, and any transfer taxes or
recording fees changed by local government agencies. There may also be
property taxes, homeowners' association fees and insurance that must be
The final closing date is usually an important item in the negotiation of
the purchase agreement on a home. This is the day when the buyers get
their ownership papers and the sellers get their money. It is important to
remember that most standard contracts don't pinpoint a specific date, and
closings can be delayed due to factors beyond the buyer's control.
The closing will usually be set as soon as
the title search and lender's paper work can be completed, however,
anything can upset the closing schedule. Questions can arise about liens
that were paid, but not properly recorded. Something in the buyers credit
history may have to be cleared up. These situations rarely cause the
transaction to fall apart, but they can wreak havoc with your moving
schedule. Your Realtor will keep you up to date on the progress of your
closing in order to avoid delays and minimize the inconvenience, if one
To take much of the guesswork out of your consideration about whether a
particular property in LA is a good investment, you can check on the
actual selling price of similar homes in the neighborhood.
Some sales information, such as the selling
price, the financing terms, and the transaction dates, is public
information. Your Realtor will have record of all recent sales. You can
find out how properties have been appreciating, based on actual sales,
rather than from the neighbors (they could be wrong!). Driving by
comparable homes can give you an idea about how they compare with the
property you are considering. Your Realtor may have seen these homes and
can give you additional information to help you make a decision.
Sellers may be reluctant to accept an offer that is contingent on the sale
of another property. However, such a sale can be structured to minimize
The seller should put a limit on the amount
of time that the buyers have to accept an offer, and they should keep
their home on the market. They should also reserve the right to require
that any contingencies be met within a short period of time, (24-48
hours), if they get a second offer. This is called a "First
Contingent sales can work well for the
sellers. The buyer is not in a position to ask for concessions on price or
terms and may be able to get interim financing. Each situation is
different, however, so go over the terms with your Realtor before
accepting a contingent offer.
When you are faced with multiple offers on your home, how do you choose
the right one? Your Realtor can help you compare and contrast the terms of
First, there is the price. Consider the
closing costs you may be asked to pay, and be sure that you understand any
other terms that might reduce your net profit. Can you work out a mutually
agreeable date for you to move out and for the buyers to move in? How
"clean" is each offer? Do the buyers have another property to
sell before they can close on yours? Can you get reasonable assurances
that the buyers will be able to qualify for the financing they will need?
Your Realtor can help you weigh the
relative merits of each offer, so that you can accept--or counter--the
best one, and line up one as an alternative.
What is the best price for a piece of real estate? Mortgage lenders,
appraisers, and real estate brokers use what is called the "fair
market value" (FMV). FMV has been defined as "the price that a
buyer is willing to pay and the seller is willing to accept, when both
parties are knowledgeable about the property and neither is under any time
pressure to buy or sell". Sounds great, but how is this price
The starting point for determining a fair
price may be an opinion of the value or "competitive market
analysis". Such an analysis uses information on similar properties
which are: 1) currently for sale, 2) already sold, or 3) expired
properties (those which did not sell). Local, national and international
trends and market conditions must also be evaluated.
By comparing similar properties in each of
the three categories and the market conditions, appraisers, lenders and
agents come very close to the maximum price that buyers would be willing
to pay for a house.
If you are in default on an FHA-insured mortgage, and the lender intends
to foreclose, you should know about the Mortgage Assignment Program. You
will have to provide certain information to the FHA to apply for this
program. To be considered eligible for assistance, the home must your
primary residence, you must be at least three full payments behind on the
mortgage, and the reason for your failure to make the mortgage payments
must be due to circumstances beyond your control, such as unemployment.
The FHA must be reasonably certain that you can resume making the payments
at the end of 36 months and that the accrued deficiencies will be paid
back before taking over the loan.
The Veteran's Administration also has a
mortgage assistance program for those who have VA mortgages.
Before you close on your new home, you will make a
"walk-through" inspection to ensure that the property is in the
same condition as it was when the purchase agreement was drawn up.
Some sellers convey the appliances and
major systems "as is," offering no promise that they will be in
working order. Other agreements require all of the major mechanical
systems, such as heating, plumbing, and air conditioning, to be
operational. It depends on the terms that are negotiated between the buyer
During this inspection you should check the
appliances by turning each one on and letting it run a full cycle. This
gives you a chance to make sure that any repairs that were to be made by
the seller prior to the closing have been made. These details are much
easier to work out before or during the closing than after you have taken
possession of your new home.
Selling a home is one of the most complex transactions that most people
are ever involved in. Finding a buyer is often the easy part! When you
find someone who wants your home and who has the money to buy it, it is
still a long way to the closing table.
You must first negotiate a purchase
contract that covers the price and all the terms of the agreement. How
much of a deposit will the buyer put down? When and how will the transfer
of title occur? Under what conditions can either the buyer or seller back
out of the contract? There should always be a complete home inspection.
Having a good agent to handle the details after a home inspection can make
the difference in a successful transaction or a failure. The buyer must
obtain financing, and the lender's appraiser will have to agree with the
sale price. When clear title has been established, you can sign all the
necessary papers to finalize the sale.
Now that you have found the perfect home and negotiated the price and
terms with the sellers, you come to the most difficult part of the
transaction--finding the perfect loan.
You should do some comparison shopping
among lenders. Your Realtor can refer you to several reputable lending
institutions which should be able to complete the loan process before your
proposed financial approval date. The loan officer will take your
application and have you sign all the necessary papers to authorize credit
and employment verifications. You and the Realtor should get periodic
progress reports to make sure that all of the details are taken care of.
Such reports will help to ensure that any potential problems are
discovered and addressed before they can threaten the transaction.
Finding a good Realtor whom you like and trust is the first step in
locating your new home in Los Angeles. Call or stop by a real estate
office and ask to speak with the manager. Describe what type of home you
are looking for. The manager can refer you to an agent who knows that
market very well. You might also use weekend "open houses" as
opportunities to look for a Realtor, as well as a new home. It is really a
matter of chemistry! If you meet someone who is knowledgeable and with
whom you feel comfortable, call that person!
Once you establish a good working relationship with a Realtor, your agent
can show you the homes for sale, even if they are listed with other
companies. Often they can show you a property as soon as it is placed on
the market. (Many of the best homes never even make it to the weekend
classified section of the newspaper).
Are you considering taking out hazard insurance on a property before you
actually take title? It may be a good idea! Even though you are not yet
the owner of record, as the buyer, you have an insurable interest in a
property the moment that you and the seller execute the sales agreement.
As a matter of practice, however, buyers do not usually take out insurance
until the papers change hands, and it should not be necessary if the
agreement of sale is properly executed.
It is very important to both parties that the agreement states that the
property will be insured for a specific amount. From the buyer's point of
view, it is important that an adequate sum be stipulated, and that the
agreement not read "as now insured"--which can indicate that the
seller may not want to increase the insurance. As a general rule, the
amount of insurance on the buildings on a property should equal the sales
price, less the value of the lot.
If you have been house-hunting on your own in Los Angeles, you may have
been relying on the classified ads or driving through your favorite
neighborhoods in search of "For Sale" signs. A good Realtor can
save you time and gasoline by making your search easier and more
Realtors learn about homes as they go on the market, and the best values
may sell before they are ever advertised! Good Realtors often beat the
sign installation crews to the scene! An agent who has seen the homes
available in the area can save you time and effort. By using the Multiple
Listing Service, an agent can also show you his or her company's listings,
as well as those of other firms. The agent can also give you any
information you need about nearby public transportation, schools,
shopping, and recreational facilities.
Odors and Selling
Your dog or cat can pose a problem when your property is listed for sale.
Even if prospective buyers have pets of their own that smell just like
yours, they may be repelled by animal odors. If you have a pet odor
problem, you should remove the offending furniture or carpets or hire a
professional to clean them. Check the cat box frequently and keep the
Some people have allergies or irrational fears of certain animals, so it
is a good idea to put dogs or cats outside or confine them to one area
when your house is being shown. It is hard for buyers to appreciate your
home through puffy, watery eyes or in between sneezes! Even if the house
is exactly what they want, your chances of selling it are less if the
buyers are afraid of being eaten by Fido.
You have just spent the entire day looking at homes in Los Angeles, and
now they have all become a giant blur. Which house had the great dark
room? Was it the same one with the small kitchen? You saw so much that you
can't remember anything! Realtors have developed little tricks to help
them remember the thousands of properties they see.
Carry a notebook with you when you are house-hunting, and give each house
its own page. At the top of the page, note the address and price. Write
down the exterior construction, style and color, as well as the color of
the living room carpet and walls and any other major feature that will jog
your memory later. You can nickname the houses--"the white cat
house" or "copper pots house"--anything to help you retain
a mental picture of the property. This will enable you to recap the day
and give your Realtor important feedback that can speed up your search for
the perfect home!
Many purchase offers today have a contingency clause which allows the
buyers to have an inspector or professional expert to inspect the
property. If there is a significant defect in the property, the buyer can
cancel the contract without losing the earnest money deposit. Such
contingencies may make a seller nervous, but they are an excellent
procedure for both the buyer and the seller.
The time period for inspection contingencies is negotiable. In most parts
of the country, the buyers have about a week in which to cancel the
contract if the structural inspection reveals a serious and consequential
defect. The positive side to such contingencies--the inspection usually
addresses--and overcomes--the buyers' misgivings and confirms their
decision to move ahead with the purchase.
Individuals who invest in real estate are doing very well these days. The
potential for income, appreciation and possible tax savings makes
investment property especially attractive. It is important for you to get
professional advice before you decide to buy investment property. You may
want to start with a personal financial advisor who can help you set your
investment goals. Your Realtor can help you select a competitively-priced
property that meets these goals and can answer questions about why a
particular property would be a solid investment. What features would make
it easy to rent? What kind of maintenance expenses are you likely to
incur? What will your cash flow be, and how will the tax savings affect
your bottom line? While we cannot predict how much a particular property
will appreciate, we can give you the history of price trends in our market
Many sellers think that the price of their home is determined solely by
what they are willing to accept and what the buyer is willing to pay.
There is one more variable that can complicate the sale of a home--the
lender's appraisal. To protect the interest of their investors, the
mortgage lender hires an appraiser to give an independent, objective
evaluation of what the property is worth. If the appraised value is lower
than the selling price, the seller will be glad that he has enlisted the
services of a professional Realtor. The agent can give the appraiser
information about neighboring homes that have recently sold that support
the seller's price. If an appeal to the appraiser is not successful, some
delicate negotiations will follow. Both the seller and the buyer may have
to make concessions to make the transaction work. The bank may ask the
buyers to increase their down payment or ask the sellers for a reduction
Many lenders help prospective buyers get pre-approved for a mortgage loan
before they begin a serious house-hunting effort. Give the loan officer
all of the information about your assets, income, and debts so they can
tell you how much money you will be able to get under the available loan
options. The loan officer will do a credit check and work with the lender
to straighten out any problems with your credit rating.
Pre-approval from a lender can make you more attractive to the seller when
you find the home you want. Occasionally multiple offers come in on a
house, and you find yourself competing with other buyers. In that case, it
is helpful if you have included a letter from the lender with your offer
stating that you have an approved loan and are, indeed, qualified to buy.
This will also save you time by eliminating from consideration any homes
that you would not be able to afford.
It is a well-known axiom that location is one of the most important
elements in the value of a property. Let's take that one step further. A
good investment buy would be a sound property in a "so-so" area
that will increase in value in the future. Buying into an area that is
strongly on the comeback is one way to shorten the odds for success.
Trend is everything. The trick is not to get in so early that you are one
of the earliest pioneers, but early enough that there is still plenty of
appreciation left. Being a pioneer is fine if you are a gambler with a lot
of patience. It is safer to buy into an area after the restoration trend
is unmistakably established.
A neighborhood that is a good candidate for restoration must have an
intrinsic location advantage, such being in a school district that has
high test scores or in a good walk-to-work location. It must also have
good basic homes. Can we help you find a winner?
Today the interest rates charged on fixed-rate mortgages are almost the
lowest they have been in two decades. That's good news for potential home
buyers. Even better news is the fact that the interest charged on some
Adjustable Rate Mortgages (ARMs) is at a level not seen in four decades.
However, you should be cautious if you choose an ARM.
in mind that the ridiculously low rates offered on ARMs usually are
guaranteed just for the first year. You should also be aware that, because
of the potential for volatility, lenders will usually require that you
qualify for a mortgage loan several percentage points above the actual
initial rate charged on the ARM. This is intended to eliminate marginal
borrowers from becoming overburdened by debt. You should also be on the
alert for lenders who charge special fees or caps that can increase the
cost of the loan to you.
The first step you take when putting your home on the market is
establishing the price. A professional market analysis can help you
determine what the property is worth. Contact a Realtor who is familiar
with your area to get prices on the homes that are for sale and to see how
long they have been on the market.
Your Realtor will be able to provide you with information about the actual
sale prices of homes that are similar to yours. He or she can also tell
you about the features that influence the value of each property, such as
the number of rooms, the overall condition, and the extras--family room,
finished basement, wall-to-wall carpeting. You can establish a market
value for your home in Los Angeles by putting all of this information
together. If you price your home within 5% of the established market
value, it should sell quickly.
In the last decade Multiple Listing Services have revolutionized the way
real estate is sold all over the country. When listing your home in Los
Angeles, a Realtor enters the pertinent information about your property
into a computerized inventory bank.
Having your home placed on the Multiple Listing Service provides the most
effective advertising available because agents all over town have
immediate access to information about the price, location, number of
bedrooms and baths, the kitchen equipment and other appliances that convey
with the home, as well as the size of the yard, the type of heating and
air conditioning systems, and a host of other features. The MLS allows
agents to feed in their buyers' basic needs and match them up to the
listings of all area Realtors. When you list your home, you are employing
not only the listing agent to market your home, but hundreds of the
agent's colleagues all over town who will work cooperatively to get your
property sold as quickly as possible.
No matter how much storage space they have, most people feel that it's
never enough. Most buyers put storage space high on their list of
priorities for a new home, and all sellers must face the minor indignity
of having prospective buyers open all of their closets to determine the
size of each one.
Even an enormous closet looks small if it is cluttered. Your closets
should be as organized as possible while your property is on the market.
If you have too many things, have a yard sale, rent a storage unit
temporarily, or make a tax deductible donation to a local charity. When
you finish putting all of your closets in order, then attack the other
storage areas. The areas that you have for storage will look much more
spacious and attractive if they are neat and well-organized.
If you are considering buying a home in a planned community, be sure that
you understand the owners' association rules. These covenants usually
cover a wide range of subjects, including exterior paint, where campers
can be parked, where you can walk your dog, and sometimes even the kind of
shrubs or flowers you may plant.
Such restrictions are attractive to many home owners because they don't
have to worry about their neighbors doing things that they find offensive.
If you are an individualist, however, and don't want community
interference in your lifestyle, such restrictions could cramp your
lifestyle. Be sure that you read and understand the rules and regulations
governing a planned community before you make an offer on a property.
Very few people will buy a house because they are attracted by fantastic
bathrooms. Buyers do react to bathrooms that are not cared for, however,
because they view them as a reflection of the overall condition of the
Many buyers know that plumbing repairs potentially represent a major
expense. They get nervous about dripping faucets, loose tiles, and running
toilets. Your pre-marketing preparations should include making sure that
your plumbing is working properly and that any cosmetic damage caused by
former leaks has been repaired.
Keep the bathroom spotless while your home is on the market. Get out the
scouring powder, mildew remover, glass and tile cleaner and a scrub brush.
Re-caulk around the tub and shower, if necessary. A new shower curtain,
bath mat, and nice smelling soap can help give the buyer one more positive
reason for liking your home!
When you have decided on a mortgage lender, you begin the loan process by
filling out a loan application. You should be fully prepared to go over
your current financial situation and credit history with the loan officer.
Have a record of all of your current bank accounts, including the name and
address of bank(s), type of account(s), and approximate balance(s). Be
prepared to provide details about outstanding loans or credit accounts,
such as student or car loans and major credit card accounts. You will also
need information about your assets, such as car title, stocks and bonds,
and life insurance policies. If you foresee any credit problems, discuss
them with the loan officer for advice on how to keep them from interfering
with approval of the mortgage. That person can usually give you a prompt
opinion about your chances for obtaining a mortgage.
After just a week on the market, your Realtor has brought you a terrific
offer to purchase your house--it is less than the asking price, but more
than you expected. The buyers were reasonable and well qualified. After
talking with your agent, you decide to accept the offer.
After the agent leaves, you start thinking about what you have just done
and feel terrible. You wonder if you acted too quickly--maybe you could
have gotten more! You fear that the buyers will let your garden go to seed
and pull down all the beautiful wallpaper that you just put up.
These fears are such a common phenomena that they have been given a
name--"seller's remorse"! It is perfectly normal to feel this
way, especially if you are selling a home where you have lived for many
years and which holds many memories. "Seller's remorse" is
almost always temporary. It is quickly replaced by the excitement of
moving into your new home!
Occasionally a seller will be surprised to learn that a contractor's or
mechanic's lien must be paid on their house. To challenge such a lien, the
buyer can release it by posting a bond pending adjudication. In other
cases, a title search may disclose other claims against the property by an
ex-spouse, past heir, or a former owner. A simple quitclaim deed may be
used in such a case. A quitclaim deed allows the person involved to sign
over whatever rights he or she may have had in the property without laying
any claim to it.
If the seller will not be receiving the proceeds from the sale of their
present home in time to close on a new home, it may be possible to arrange
a swing loan. Most real estate transactions involve some hesitation and
questions on the part of the seller and the buyer. The real estate agent
can provide answers or alternatives so that matters can be resolved and
the sale concluded.
Interest rates fluctuate as changes occur in the general economy. If you
purchased your home when interest rates were higher, you may want to
consider re-financing your loan at a lower rate. You will have to
apply for the new mortgage and have your current income eligibility
assessed. Depending on how long you have had your present loan, a current
appraisal may be required. There are closing costs, such as attorney,
title fees, recording and notary fees, and appraisal charges.
The biggest factor in your decision should be the length of time you plan
to remain in your home. If you will be there for only a year or two, it
may not pay to re-finance. If you will be in your home longer,
re-financing could provide you with lower mortgage payments. Your Realtor
can help you work out the numbers and can refer you to reputable lenders.
Your family has outgrown your home in Los Angeles, but you have roots in
the community that make it difficult to leave. Is remodeling the solution?
Get professional advice before you jump into a major renovation project.
Decide what changes you want to make, and get bids from several
contractors. When you have an estimate on the cost of the project, talk to
your Realtor to determine if these changes will be cost-effective.
Over-improving your home may make it difficult to get your money back if
you sell it soon.
It is a good idea to talk with friends who have remodeled to get a
realistic picture about working with contractors and to determine how
disruptive the project will be to your family life. Remodeling a home is a
major undertaking, so be sure that it is the best solution for you.
For Top Dollar
When you get serious about selling your home, the chances of your selling
it quickly for top dollar will improve considerably if you list it with a
real estate sales professional. If you doubt this, consider the fact that
eight out of ten homes sold today--more in some markets--are listed with a
Listing your home places it on the local Multiple Listing Service that is
subscribed to by a majority of real estate sales professionals. Through
the MLS listing, your home is assured of getting the widest possible
exposure to the market place.
Some buyers shop the home market on their own, but most save time and
money by using the services of a real estate sales professional. Ask
yourself which homes the real estate sales professional is going to show
the prospective buyers--homes listed on the MLS or those that are not?
If you still want to try to sell your own home, you should know that you
will face stiff competition when it comes to attracting qualified buyers!
Sometimes the need for a move is obvious. For example, if your work
requires you to transfer to a new city. The impact of other life changes,
like having twins, your last child leaving home, or a big salary increase,
may not be so obvious.
When you notice that your house or condominium in Los Angeles is no longer
serving your needs, it may be time to call in a professional Realtor for
some expert advice. Your agent may suggest that you remodel your present
home or find one that is more suitable to your current lifestyle.
If you decide that a move is necessary, what should you consider before
listing your present home for sale and beginning the search for a new one?
You will want to know how much you can expect to get for your present home
and what you can afford to spend on a new one. You will also need
information about financing and the many loan programs that are now
available. A professional Realtor can be an invaluable asset to you as you
make these important decisions.
Most of our buyers rate a good kitchen very high on their priority list
when they are looking for a new home in Los Angeles. The layout of the
kitchen, the amount of counter space and storage, and the age and overall
condition of the appliances are all important to them. The kitchen area is
basically viewed as the center of nourishment and as a place where they
will share many meals.
Take a discriminating look at your kitchen and consider what you can do to
make it a real asset. Repair any plumbing leaks or broken appliances.
Scrub the room thoroughly, paying special attention to the range and oven.
Clean the refrigerator and place a box of baking soda inside. Little
fix-ups can sometimes do wonders--hang some pretty pot holders over the
stove and get some new curtains. You don't need a brand new, high-tech
kitchen to impress buyers, but do whatever you can to make your kitchen
look as shiny and well-maintained as possible.
Your Own Home
The concept of "do-it-yourself" is "as American as apple
pie". While this approach can pay dividends in many endeavors, it can
cost you unnecessary time and money when you are trying to sell your home.
The overwhelming majority of homes that sell are listed with a real estate
sales professional. In most markets, over 90% of the homes sold are listed
with a Realtor.
Most people try to sell their own home in order to save the commission,
while those who tend to buy homes that are "for Sale by Owner"
homes also want to save!
Rarely does anyone actually save money by selling their own home. By
listing your home with a Realtor you will save the cost of advertising
your home, the inconvenience of showing, and all the time you might spend
talking to people who couldn't qualify to buy. Realtors can help you get
top dollar for your home and are experienced in all of the complex legal
details involved in transferring title.
When you are involved in the process of buying a home, it is safe to
assume that you will probably find one that you like, make an offer, and
purchase it. There are many steps along the way, and more and more buyers
in the market today want guarantees. Inspections by structural engineers
and environmental specialists often turn up something wrong with the
property you want to buy. Many sales have been halted or delayed because
asbestos, lead, or radon was found on the property.
If a problem has been found with the property you want to buy, ask
yourself two questions: 1) Can the problem be fixed? 2) If so, what will
it cost to repair it? Some of the following problems could keep you from
purchasing a property, if: 1) the house rests on a fault line; 2) the
water supply is contaminated; 3) there is a severe crack in the
foundation; or 4) the house is located under electro-magnetic power lines.
We want the properties we market to look spotless and wonderful. However,
the sellers eventually find that keeping their house in prime showing
condition begins to wear thin after a few weeks for even the most
It is a lot of work to keep the beds perpetually made, the kitchen and
bathrooms spotless and closets neat. Is it worth it? It is--if you want to
sell your house for top dollar in a reasonable amount of time. Buyers
often see normal clutter, and what registers is "this house hasn't
been maintained." They see bathtub rings and think "plumber's
bills." Dirt under the radiators causes them to imagine having to
replace the entire heating and air conditioning system. People are often
functioning more on emotion than logic when selecting a house. You can
help your broker by minimizing the amount of imagination that buyers will
need in order to fall in love with your home.
Buying a home is a good idea for a number of reasons, and one of the most
important is the tax savings. At first glance, it may look like the
monthly costs for your mortgage and taxes are much higher than the rent
for a comparable home.
If you are planning to buy a $200,000 home, for example, with a fixed-rate
30-year mortgage at 7.5% with annual taxes of $1800, your monthly cost
(principle, interest, and taxes) would be approximately $1,548. The good
news comes when you consider your tax bracket and calculate the amount you
save each month. During the early years of your loan, almost all of the
mortgage payment and all of your local real estate taxes can be deducted
on your federal returns. If you are in the 28% bracket for Federal taxes,
you can save about $433 each month, bringing your net monthly housing bill
down to $1115. When you take into account your state and local taxes, you
may save even more.
If you are thinking of selling your home and your house has risen in value
since you purchased it, or you have accumulated a lot of deferred profit
from previous sales, the new tax law passed in August of 1997 could be of
Prior to this new law, when a homeowner moved to a smaller home, relocated
to a less costly area, or made a decision to rent, they were left with
unfavorable tax consequences. The old tax law allowed people who sold
their homes to defer tax on any profit by buying a replacement home of at
least equal value within two years. At age 55, they could permanently
escape tax on up to $125,000 of profit, but any profit over that was
taxable unless a new home was bought. The good news is, starting with
homes sold after May 6, 1997, homeowners will be able to make as much as
$500,000 tax-free profits on the sale of a principal residence for joint
filers or $250,000 for single filers. The $500,000 capital gains exclusion
will remove taxes as a consideration for most home sellers by giving them
flexibility to trade up or down. It will also allow them to preserve the
savings value of a home when they sell, provided they used the property as
their principal residence for two of the prior five years. Consult your
tax advisor for your particular circumstance.
Most of our sellers make a profit when they sell their homes. They often
have questions about how capital gains tax will impact them.
If you are selling your primary residence, you do not have to worry about
paying taxes on your profits if your gain does not exceed $250,000 as a
single taxpayer (or $500,000as a married couple filing jointly). This new
tax law comes from The Taxpayer Relief Act passed in August of 1997.
Regardless of your age, you are now free to roll from none to all of your
gain into another home without further tax consequences.
Different rules apply when you sell income property. If you sell one
property then purchase another, the taxes will be due for the year the
sale occurred. On the other hand, if you arrange to exchange one
investment property for another, you can defer the capital gains tax. To
ensure complete tax deferment you must acquire a replacement property
which is equal or greater in price than your exchange property, and move
all of your equity from the old property into the new. It is not as
complicated as it sounds, but you do need professional help. Many Realtors
and attorneys specialize in helping their clients put these1031
tax-deferred exchanges together.
Every purchase of a home involves a certain amount of compromise. When you
are working with a Realtor, it is important that you give your agent a
clear idea which of your criteria are flexible and which items you really
must have in your new home.
If you prefer a specific location, for example, discuss why you want to
live in that neighborhood. The agent might be able to suggest alternatives
areas which offer the same amenities or convenience to your office. How
important is size? Do you really need four bedrooms or would three
bedrooms work, if there is a den for your home office? How much are you
willing to correct with redecorating or remodeling? Are you willing to
expand your price range by using an adjustable rate mortgage to increase
your buying power?
We ask buyers a lot of questions so that we can use their time most
efficiently and show them only houses that are real possibilities for
You have finally found the home in LA that is right for you, but you have
some questions about the structure and condition of the home. A home
inspection is the best place to get answers to your questions. There are
companies that specialize in inspecting new and used homes. Most sellers
allow a reasonable amount of time to have the property inspected after the
purchase agreement is agreed upon and prior to closing. It is wise to have
a home inspection, even if the house is new or everything appears to be in
The inspector can provide important information about the house. Where are
the gas and water shut-off valves? How do the circuit breakers operate?
What type of routine maintenance should be done for each system? The
inspector's fee is an investment that can save you money later!
It's the day that you close on the sale of your home, and the buyers are a
little cranky. During the walk-through inspection, your dependable old
dishwasher stopped midway through its cycle, and the powder room toilet
flunked its flush. These situations may cause some anxiety for the buyers
and sellers, but such problems are quite common and usually easy to
Most purchase agreements require that the major mechanical systems and the
appliances being conveyed are in working order at the time of the closing.
Defects are often discovered during the structural inspection, allowing
the sellers have plenty of time to have the repairs made. Occasionally
there are last-minute breakdowns or defects that are not spotted until the
walk-through inspection. In that case, an agreement can be made with the
sellers at the closing to escrow funds for the repair or replacement of
the items in question.
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