Real Estate Information Library
is 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.
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.
on 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 long run.
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
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 prepaid.
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 occurs.
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
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 risks.
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 Right"
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 each proposal.
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
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 determined?
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
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 and seller.
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
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
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
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 efficient.
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 litter fresh.
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 area.
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 in price.
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
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.
keep 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
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
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 property.
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
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
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
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 professional
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
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
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 impeccable housekeepers.
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
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 tremendous value.
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
Most of our sellers make a profit when they sell their homes.
They often have questions about how capital gains tax will
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 them.
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 perfect condition.
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 resolve.
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.