Real estate law: Not for you?

Real estate is indeed one of the safest investments and a lot of people use real estate as an investment avenue. Real estate law is not the forte of real estate attorneys and real estate agents only. Every real estate investor should understand at least the basics of real estate law. In fact, a short course or a concise book on real estate law can sometimes be of great help (and is generally sufficient for understanding the basics of real estate law).

What you need to understand is the real estate law with respect to the legal procedures that you need to follow for ensuring a smooth transfer of title to the property you acquire/sell and other related procedures. You need to understand the fee structure (e.g. stamp duty, etc) that you need to take care of as per real estate law. You can also understand the classification of properties and how the basic real estate law applies to them. How the commercial and residential properties are treated differently by the real estate law. The tax laws with respect to real estate are one of the things that would be of most interest to you. So, your study on real estate law should also cover all the aspects related to taxes. How mortgages are treated in the perspective of real estate law is another thing that you should know about. Then again, the real estate law with respect to tenancy should also be well understood by people who wish to rent out their property.

However, you should not overdo that i.e. you should not start becoming hysterical about learning real estate law (lest you end up wasting a lot of time in trying to learn everything about real estate law and be left with no time to evaluate your real estate investment). Leave the intricacies of real estate law with the real estate attorneys (and to some extent real estate brokers who too are taught real estate law as part of their course for obtaining broker license).

Understanding the various legal terms referred to in real estate laws can help you in not only enhancing your understanding of real estate but also help in making your conversations with real estate attorneys/agents really fruitful. You should also note that though some of the basics remain the same, the real estate laws vary across various states. Also, real estate laws (especially the tax related real estate laws) can undergo a change over a period of time, so you need to keep a tab on such changes. Any big changes will anyhow appear prominently in news and you will get to know of them anyhow.
So knowing a little bit of real estate law can really be helpful (and is, in fact, essential).

If you are a first time homebuyer or are in the low to moderate income range, buying a home listed through the Department of Housing and Urban Development (HUD) is an appealing option.  HUD homes are actually available to anyone who can qualify for a mortgage. Although they are popular with lower income families, they are also appropriate for savvy consumers looking for a great deal.  HUD also has special purchase programs for educators and law enforcement officers, which may qualify them for discounts up to 50%. 

If you have fallen on hard times or have less than stellar credit, you may still be able to purchase a home with government assistance.  There are several government programs available to those in need. You can go over your alternatives with a HUD funded housing counseling agency. 

In order to find a HUD home, go to your state’s HUD website.  You will be able to browse the available homes.  When you find a home you like, you should find a HUD approved real estate office to show you the property.  The agency’s website will have a list of approved offices.  Contact them so that they can set you up with an agent.  When you meet with an agent, the process is much like buying any home.  You want to lay out your wants and needs so that the agent knows what you are looking for in a home.  Pictures may not be enough to base your decision on, so you need to have an open dialogue with the agent.

The home buying process is a little different for HUD homes than it is for a regular listing.  If a homeowner with a HUD insured mortgage cannot make the payments, the home is auctioned off after the lender forecloses.  HUD pays the lender for what is owed on the property and takes ownership of the home.  These homes are sometimes auctioned off for less than the appraised market value.  This is why such great deals can be found on HUD homes.  The auction is considered the “offer period”.  Everyone places their bids and the highest bidder gets the house.  You can submit a bid at any time if the house isn’t sold in the offer period.  If HUD approves your bid, your agent will be contacted within 48 hours. 

In the event that your bid wins, your agent will help you with the paperwork. Your settlement date will usually fall within 30-60 days of your winning bid.  It is important to remember that you cannot finance a home through HUD. You need to have your own financing arrangements.  Have everything ready to go at the time you place your bid.   If your bid wins, but you do not close, you may lose your deposit. 

If the home is in need of repairs, the responsibility falls on the buyer.  HUD homes are sold “as is” and do not come with a warranty. HUD will not make the repairs because the price of the home is always adjusted downward to reflect the cost of repairs.  Don’t consider buying a HUD home unless you are willing to absorb the cost of repairs.  The repairs might be minor, so don’t turn your back on good home because it needs a little work.  Before looking for homes, you should determine what your repair threshold is and stick to that.  Some like the challenge of it and others would prefer to keep repairs to a minimum.  It is important to have the home inspected prior to making an offer so that you can figure the cost of repairs into your bid.

If you are purchasing a HUD home for real estate investing, you should be aware that you cannot bid during the initial offering.  Families in need of housing take priority; therefore, the initial offering is only available to buyers with the intent to live in the home.  If no one bids on the home, investors can then place their bids.

If a foreclosure cannot be sold within 6 months, HUD will then sell them to charities or agencies for the purpose of providing housing for needy families.  Either way, the homes are likely going to those individuals that need them the most. 

It has been said that moving and divorce are the two of the most stressful events a person or family can experience. Divorce is a subject for another time. Let’s consider the event of moving and look at some ways to make your house hunting trip less stressful and more effective.

Location is the first factor to consider when planning a move. If you have children, or are planning a family, you will want to know about the schools in the area. How about shopping centers, medical facilities, recreational opportunities and of course how far will you be from your place of employment. If you require public transportation, is there any within walking distance of your prospective new home. What about the crime rate? A check with the local law enforcement agency can either put your mind at ease or give you reason to look elsewhere. And finally, try to assess the quality and character of the people who live in the area. This is obviously difficult to do without interviewing them, but you can get a rough impression from the condition of their homes and properties and from the activities you might observe. As an example, if your prospective neighbor has discarded appliances all over the front yard and their son is roaring around the neighborhood on a mini-bike with no muffler, you might want to take all that into consideration. And remember, a poor location will definitely be a negative factor when and if you attempt to resell the home at some later date.

Once you’ve zeroed in on your preferred location, you can start to think seriously about searching for your dream home. Rather than spin your wheels by looking at houses randomly, you should determine what you really want in a house and let those things help you focus your search. Make a list and start with the obvious: how many bedrooms do you need; do you want a garage; must you have a single story home due to your inability to climb stairs; is a fenced yard an absolute necessity? After listing the absolute “must haves”, think about the things you like and dislike about your current residence and factor those things into your wish list. Making a list will not only save you time, it will be a big help to your realtor in planning your viewings.

Most people don’t really know how much house they can afford. Affordability is based upon income, credit status, interest rates, down payment, closing costs and the type of loan selected. By getting pre-qualified by a lending institution, you will know what you can afford to spend. Often, that figure is quite a surprise to prospective home buyers. In any case, pre-qualification will save you time and trouble by establishing your price range.

Typically, house hunting involves seeing as many homes as possible in a short period of time. Both the house hunter and the assisting realtor have busy schedules and want to tour fast and furious. However, after the first two or three houses, they all start to run together. You need to make notes after each viewing. One effective means of qualifying each home is to make multiple copies of your list of priorities and use it as a checklist to grade each home visited. This little tip will eliminate confusion when trying to make mental comparisons at the end of the day.

Regard your hunt as an excursion. If you were going to the zoo for the day and contemplated a lot of walking, you would dress comfortably and wear comfortable shoes. House hunting is no different; you’ll be walking, climbing stairs, quite possibly going into basements and attics and constantly getting in and out of cars. Dressing to impress homeowners or your realtor should not be your top priority. Dress clean and neat of course, but comfortable is the name of the hunting game.

And last but not least, use your own realtor. When you call the realtor on a “house for sale” sign you’re speaking to the seller’s agent. Keep in mind that he or she represents the seller and will be looking after the seller’s interests. You need your own realtor; someone who is working for you and is looking out for your interests.

House hunting can actually be an enjoyable experience if you take your time and do your homework.

The Jones’ family found their dream home and moved into it with all of the excitement and enthusiasm of a kid on Christmas morning. After a long and hectic day of unpacking, they collapsed into bed anticipating a good night’s rest. Unfortunately, they were shocked and dismayed when they began to hear the very obvious noise of trucks roaring along the inter-state highway situated less than a half mile to the rear of their home. Too late!

This unfortunate situation exemplifies the need to focus on location when contemplating the purchase of a home. A ten million dollar mansion isn’t worth a dime if it’s sitting next to a toxic waste dump. This example is far-fetched and outrageous, but it makes the point that finding the right location is certainly as important as finding the right house.

How do you investigate a potential neighborhood? There are a number of factors and issues to be considered in your evaluation. Some of them can be covered merely through visual observation; others will have to be explored with the assistance of community and government organizations.

One of your first and most significant concerns should be the crime rate. If every other house on the block is being burglarized every other month, you might want to look elsewhere. Talk to a spokesperson of the local law enforcement agency. Ask for a listing of their monthly crime stats and a copy of their year ending report. When talking to the spokesperson about crime rates, ask about their response times in your area. If it’s over five minutes, ask why. If the community has a neighborhood watch group or a neighborhood citizens’ security patrol, attend one of their meetings or speak with their group representatives.

How far is your new neighborhood from your place of employment? How far is too far? Bottom line: check the driving time and traffic patterns, both coming and going, by driving the route you’ll take. Are there any activities or facilities in the area that will make the trip more unpleasant or time consuming on specific days of the week? As an example, is there a bridge that backs up on Friday afternoons as people rush to their weekend retreats?

If you have children, or anticipate having them, you’ll want to check out the schools in the area. Visit the schools and talk to the Principals or school counselors. Ask about class sizes, bus service, curriculum and even school menus. If your child is a gifted student, you’ll want to inquire about accelerated courses. If your child needs special Ed opportunities, ask about them. Knowing about your child’s school is one of your primary responsibilities as a parent.

This may sound a bit picky, but you should visit and evaluate your local markets, shops and restaurants. Do they sell quality products? Is there a convenient place to purchase daily necessities such as milk, luncheon items, coffee, etc.? Do the local restaurants suit your taste? The answers to these questions may not factor substantially into your moving decision, but they are part of the equation and should at least be recognized and considered.

Availability of community services should not be overlooked. Is there a good hospital in the immediate vicinity? Do they have an emergency room? How about parks and a library?

You should visit the neighborhood at various times of the day and night to check for sounds, smells, heavy traffic and the presence of any activities that you might find offensive as a resident. Sometimes the complexion of a neighborhood changes at night. Drive around after dark and look for the presence of undesirables lounging about in public places. Try to get a sense and feeling of the neighborhood.

Finally, you will want to find out if the community has a community association. If so, visit the association and ask about membership dues, restrictions and covenants. If the representative is forthcoming, ask if there are any problems in the area that you as a prospective new resident should consider.

You are about to make one of the biggest financial decisions of your life. Don’t be timid. Ask questions, make notes and weigh all the pro’s and con’s before deciding.

You want to either sell or buy a new home, but you are unsure of what realtor to go with in the process. Understanding the role of a realtor and how they relate to you if you’re a seller or buyer is extremely important. For the first time home buyer or seller you need to be aware of a few facts, and clear out the cobwebs of confusion on the responsibilities and duties of a realtor.

Depending on what state you live in realtors may be committed to act only as the seller or buyer agent. Many times however a realtor may take on a dual role of representing both the seller and buyer, or known as a dual agent. In other words they have a duty to sell the home for the best possible price for the seller, and at the same time are committed to get the best asking price for a buyer. This can be a little nerve racking for many people, but the best defense is being in the know about the legal and moral responsibilities associated with a realtor’s dual agency representation, and how you can feel confident about working with them.

The legalities of the fact for realtors are that in most states they are required to share the knowledge of which party they work for. Most of the time realtors work for the individuals that are selling a home. If you are unclear make sure to ask, so to ease any nervous jitters on your part. Always assume that any realtor is working for a firm that represents both a seller and a buyer, and if you are a buyer, make sure to hold close any information that may affect any deals that are offered for your purchase of a house. Buyer’s agents have a loyalty to the buyer only. This is verified by a signing of a contractual agreement between both the agent and the buyer. The buyer should be aware that agents are held to a legal and moral obligation to not disclose any personal facts not only to the home seller, but to the realtor’s agent. Material disclosure is permissible though about the property, such as any known pest infestations, or problems with the structure itself. A dual agency for a realtor is usually assumed for them if they represent a buyer; make sure to check into the realtor’s status for your own peace of mind. However, contract protection is afforded for anyone that is interested in purchasing a property through an agent that represents a seller’s interest by signing a contract to represent both.

If you are in the market to buy a home you need to expect a reasonable amount of service from any real estate agent that represents you. The goal should be to fully represent your best interests. You need to be informed clearly from your agent if they will require you to sign an exclusive clause contract. This legally binding contract will require you to work with that agent only. Always search for an agent that will allow you to have other realtors working on your behalf. All buyers agents should work diligently to help you sell your home by providing comparisons studies of the in your area, and to handle any inspections, or working with a lender and the loan application process. He or she should be more than willing to consider and respect your wishes when planning an open house for either other realtors or the general public. Agents should always be courteous about general appointment times to meet with you, and should always leave a cell phone in case of unexpected issues surrounding the sale of your home. Your buyer’s agent should clearly explain all aspects of the contract to you. Issues such as contract compensation and their exact fees for selling your home, along with things such as how long you must list your home with them should be covered in a written contract.

Over all the experience of either buying or selling a home should be one that is pleasant for both the seller and buyer. Selling and buying is a serious decision that can affect your financial and emotional well being for years to come – consequences of how informed you are will be long lasting, many years after you have walked away from the bargaining table.