Blog Archives

Real Estate Contract Negotiations Between Buyers and Sellers

9/26/2011

"Start out with an ideal and end up with a deal." - Karl Albrecht

Sellers pour their heart, soul and finances into a home expecting a return. Buyers, work hard for their money and want the best deal. And, Realtors advocate for their respective client's interest. Residential real estate contract negotiations are a gentleman's negotiation (or womans). One 'gentleman' is proposing to buy another gentleman's home.

Shopping for a Home without Loan Pre-Approval/Qualification

9/25/2011

Beginning a search for a new home is an exciting one. It's fun to look online at all the homes at various price points, visit open houses or drive around with a Realtor and discover new neighborhoods. But, at a certain point you will want to get serious and unless you are a cash buyer, you must be pre-approved for a home loan. Knowledgeable sellers and experienced agents do not take buyers without home loan pre-approval seriously; resulting in you missing out, particularly in competing contract negotiations.

Getting pre-approved/pre-qualified for a home loan is an inevitable reality check and discovery process ALL (non-cash) buyers must go through. It lets you know what you can afford, current interest rates, terms, your monthly payment, down payment and estimated closing cost. Without this information, you cannot make a wise real estate investment. Smart investors plan. You are about to make two purchases, a home and a home loan. Familarizing yourself with different home loan products will ensure when the perfect house comes along you can quickly move forward with the appropriate loan in place. Getting pre-approved for a home loan sets the rules of the engagement and gives your Realtor insight into what homes will qualify for the loan that you have selected and how to negotiate your contract.

You may know you'll be approved, but this too can be a dangerous assumption. Not all home loan products (mortgages) are created equal. After reviewing your options there is a good chance you will learn about home loan products available that will better suit your financial needs and or you might need to adjust your expectations.

My advice is stay ahead of the game and align yourself for the best outcome; get pre-approved before you begin any home search. Let sellers and Realtors know you aren't just a tire kicker. Show up with a home loan pre-approval and I promise you will be taken a lot more seriously.

Location! Location! Location!

9/24/2011

You hear these words repeated in real estate all the time but what does it really mean? Is it just real estate agents trying to be cute? No. It's single handedly the most important aspect of purchasing real estate. Location, location, location can typically be
identified by one simple element in every city all over the world. Identifying this 'element' takes enormous talent, experience and insight. If you purchase in the best location your property will retain more value and appreciate better over the long term versus the opposite.

Think of it this way, the biggest movie of the year is about to be released in theatres. You've got tickets, waited all day in line, and now you are first in the theatre. What seats do you choose? Most choose somewhere in the middle of the theatre. As the sold out theatre begins to fill the seating selection gets worse. When the first settlers or developers come into a new area, where do you think they chose? Typically it's near water, proximity to passages (roads/waterways), views and/or vegetation. From there community ammenities such as parks, schools, shopping, golf courses, restaurants all begin to be built around these fabulous locations creating very desirable lifestyles for the community members.

Not everyone can afford to buy in the French Riviera or right here in Nichols Hills. Location, location, location is the #1 real estate rule to investing and applies to all price points so don't be disappointed if you can't afford that million dollar mansion in Gaillardia. The best location for your price point is right here in the Oklahoma City Metro or your home town.

Land Title Abstract Urban Legend

9/22/2011

Here is a tale of a real estate urban legend meant to help explain what abstracting is. Enjoy!!!

A New Orleans lawyer sought an FHA loan for a client. He was told the loan
would be granted if he could prove satisfactory title to a parcel of
property being offered as collateral. The title to the property dated back
to 1803, which took the Lawyer three months to track down. After sending the
information to the FHA, he received the following reply:

(Letter)
"Upon review of your letter adjoining your client's loan application, we
note that the request is supported by an Abstract of Title. While we
compliment the able manner in which you have prepared and presented the application, we must point out that you have only cleared title to the proposed collateral property back to 1803. Before final approval can be accorded, it will be necessary to clear the title back to its origin."

Annoyed, the lawyer responded as follows:

"Your letter regarding title in Case No. 189156 has been received. I note
that you wish to have title extended further than the 194 years covered by
the present application. I was unaware that any educated person in this
country, particularly those working in the property area, would not know
that Louisiana was purchased, by the U.S., from France in 1803, the year of
origin identified in our application. For the edification of uninformed FHA
bureaucrats, the title to the land prior to U.S. ownership was obtained from
France, which had acquired it by Right of Conquest from Spain. The land came
into the possession of Spain by Right of Discovery made in the year 1492 by
a sea captain named Christopher Columbus, who had been granted the privilege
of seeking a new route to India by the Spanish monarch, Isabella. The good
queen, Isabella, being a pious woman and almost as careful about titles as
the FHA, took the precaution of securing the blessing of the Pope before she
sold her jewels to finance Columbus' expedition. Now the Pope, as I'm sure
you may know, is the emissary of Jesus Christ, the Son of God, and God, it is
commonly accepted, created this world. Therefore, I believe it is safe to
presume that God also made that part of the world called Louisiana.God, therefore,
would be the owner of origin and His origins date back, to
before the beginning of time, the world as we know it AND the FHA. I hope
you find God's original claim to be satisfactory. Now, may we have our loan?"

The loan was approved.

Never Saw It Coming-What to Expect Right After You Close

9/22/2011

After you buy your first home, you'll inevitably fall into property virgin pitfalls. One of the biggest things to beware of is that your newly signed wet ink deed becomes a matter of public record immediately. Thus, hundreds of companies, salesman and con-artist/scammers watch the new court house filings daily to solicit new home owners with all their wonderful products and services. You'll begin receiving tons of official looking mail, phone calls and door to door visits. Few tips: Never pay to obtain a copy of your deed. The title company will mail you the original one after it is recorded on public record and certified copies can be obtained at the courthouse for a nominal fee. Another offical piece of mail notifies you that a new mortgage company has bought your loan but the current mortgagee doesn't notify you it's been sold. Don't start paying the new mortgagee until the old one verifies this is true. These are two big ones, but there are lots of cons out there trying to take money off of unsuspecting people. When in doubt call your agent, lender and/or title company to verify if it's legit. Here is a recent email I received from an extremely savy client who ignored her better judgment just briefly:

There was an envelope left on my door when we moved in. It said "sorry
we missed you."
Enclosed was a flier that has a guy's phone number, name,
and a weird area code. It also said "Authorized ADT dealer." So I
called him and from that instant i knew he was a salesmen, a really
good one. I wasn't on guard at all, so he went ahead and got all my
information including my ssn and wanted to schedule installation like
right away, I couldn't because of various reasons, and also so I could
shop just in case. The rate was $44 a month no installation fee, no
contracts. Good thing I did, I called TNT, and they had a way better
rate but with installation fee, and 3 year contract.... which is
understandable. I wanted to cancel and didn't have his cell
with me, so I called ADT's 1-800 number and I went through 2 corporate
departments and then to Oklahoma City's managers office, to find out
he was 3rd party. So dug up his cell and called to cancel, he
picked up like he was already mad. I told him I needed to cancel and
he scolds the following words to me "YOU GOTTA BE KIDDING ME." Just
lectured me on how stupid I was for not going with a name brand that
someone knows. He just went on and on. Turns out later, when TNT came
to install, the installer met this guy and said he just seemed like
all sorts of shady and was based out in Moore. So, a lesson learned on
my part. Don't do anything door to door, don't ever buy from a
"fantastic" salesmen (because they are soulless creatures), and never
give out your SSN. I know he's already sold my phone number and email
addresses, I'm getting offers from cruises and Nigerian princesses.
So, if you could educate the next ignorant first time home security
participant maybe we can put him out of business.

Title Insurance

9/22/2011

Most folks have no clue as to why they should buy it and/or why their lender requires it. In most states title insurance is your only option when insuring a clear title to the real estate you are about to buy. (Although, here in Oklahoma an attorney's opinion of title is still used.) Title insurance is something you don't appreciate until you need it. Title insurance policies vary in coverages and offer various endorsements depending on your specific needs. You need to consult with a title attorney in regards to which coverages are best suited, needed and required to your transaction. This post is in laymans terms and for general informational purposes only.

Think of title insurance like any other insurance policy. Title insurance, insures your right to ownership. It has limits of coverages (typically purchase price), exceptions not covered (similiar to flooding on your homeowners) and additional endorsements (such as jewelry on your homeowners). Why title insurance? Because, transferring title (deed) on a property is not just as simple as signing the back of an auto title. A lot is at stake in real property including legal precedence in regards to rightful owners. If a 'cloud' on title is created at anytime during the chain of transferrences it becomes a non-marketable title. What is a non-marketable title? A title that has had a 'cloud' created on it as a result of improper and/or legal right of transferring ownership. Clouds can be created in all sorts of ways during and prior to your purchase that can make your ownership invalidated, such as:

1. undisclosed heirs claiming rights and interests from previous owner (ie: Uncle Bob left me this property 50 years ago and it's not yours)
2. duress in execution of instruments conveying title previously (ie: last minute will changes)
3. rights of divorced parties (ie: he had no legal right to sell you this property behind my back)
4. inaccurate legal property descriptions/boundaries (ie: neighbor claims part of your land is really his land)

The list goes on and on of possible 'clouds' on title getting created. Title insurance protects you against claims from outside parties claiming interest to the property. If a court rules does rule in the favor of the outside interest, and you are out without title insurance, you will be out of ownership and money.

Once you purchase a home along with title insurance, put the policy some where safe. It's a one time pay and stays in effect during the course of your ownership so there are no renewels of premiums. Find a reputable title company and ensure your right to title.

I Want that House at Any Price!

9/21/2011

Many years ago, I had a colleague, 'Bill' who's buyer, 'Jim' was interested in obtaining a very specific home. Jim called my colleague, Bill, and asked Bill if he could find out about a home at '123 Main St' that was for sale. Bill made the appropriate phone calls to the listing agent and was told the home had, "just gone under contract that morning." Bill reported back to Jim that it was already under contract. Jim told Bill to find out who the buyer was currently holding the contract to purchase and offer them $10,000 to assign the contract to him. Of course Bill was blown away since this doesn't happen often in our business.

Real Estate Appraisals

9/20/2011

Appraisals, in my experience, are the most misunderstood real estate instrument in the business including by professionals. Appraisals do NOT determine the value of a property. (This post will not address appraisals acquired by cash buyers, refinances or sellers. Those too are often misunderstood and hold no validity when a new bank calls for their own appraisal.) This entry is written specifically to help sellers and buyers understand the purpose of an appraisal when a buyer's banker orders one.

Suzanne Walker,
Author*

This is my experience, opinion and perspective of the business. I've been in and around all levels of real estate my entire life; all over the world. After many years of telling the same real estate experiences over and over, I started a blog to answer the basic questions the average consumer has about real estate. Feel free to contact me anytime to discuss your real estate needs and goals. *Please see the Disclaimer.

Suzanne Walker,Author*

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Suzanne Walker,
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