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Don’t End Up Temporally Homeless

Unfortunately, real estate transactions fall apart every day for a variety of reasons. Many times deal killer scenarios could have been avoided if the real estate agent had just educated their buyer clients as to the process before the first purchase contract was ever written. Don't be afraid of giving your buyer clients an early education on challenges that might be encountered, how they generally get resolved and your role in that process. Negative surprises in the emotionally charged, time sensitive home purchase process can be avoided in many cases by going through a checklist of instructions to buyers.

1. Don't End Up Temporarily Homeless

There are so many inter-dependent activities involved in a Collin County real estate closing, so it's not that unusual for there to be last minute delays that move a closing a few days back. Often this is due to mortgage documents, as the lender wants to see the appraisal, survey, title and other documents first. If any of these are things are delayed, then the closing may be later than expected. Though it can't always be avoided, make sure that your client doesn't arrive at closing with all their furniture with no place to live or the money to pay the movers for van storage because they can't move in for three or four days.

 

2. A Really Low First Offer Can Backfire

In the Denton County real estate market and Tarrant County real estate market with a rising inventory many times encourages buyers to make low ball offers just to test the sellers motivation. In some markets it's not very unusual and sellers come back with a high counter offer to draw the buyer higher to an acceptable price. Your buyers could pay up if they are not careful about this aggressive offer approach. With first-time sellers who've cared for and loved their home for many years, a very low offer can offend them.

 

3. If You Beat the Sellers up on Price, Don't Expect Concessions

Everybody wants a great deal and working a motivated seller into a low ball price is the goal of many buyers. Make sure to talk to your buyers about how this will influence the process in almost every aspect through to closing. Tell them that getting a seller to their rock bottom price will usually insure that they will not agree to any concessions for repairs to correct inspection problems. As long as you have educated your buyers to this, you will hopefully avoid the transaction falling apart because of sellers' remorse or inspection correction negotiations.

 

4. Do a Comparative Market Analysis for You to Prove Your Offer

When the question of "What price should I offer for this home?" comes, tossing out with a number is not the best approach. You should advise your buyers' through a comprehensive market analysis of similar recently sold properties in that area. This should give a range and your buyer can then choose an offering price based on accurate market statistics. If there are other factors that you can give to your client about seller motivation or recent market changes, definitely do that and help them to feel comfortable with the price they choose to offer.

 

4. I'm Not an Expert but I Will Help You to Locate One

Too many real estate agents get into a jam by trying to be helpful to their clients in areas that they shouldn't be. If you're not a home inspector, lawyer, appraiser or an contractor. Don't try to take on their jobs and responsibilities erroneously believing that you're providing service to your clients. Saying "I don't know" is a valid response, especially when it is followed with "but I'll help you to find out." You can actually enhance your value to your buyer by being up front and honest about your knowledge and helping them to locate the appropriate competent professional to answer their questions.

 

5. Don't Buy That New Furniture Before Closing

These days, with many of today's buyers purchasing homes at the top end of what they can afford, there isn't any room left in their debt ratio score. Deals have been lost days before closing because the lender did a final credit check and found a few thousand dollars of new furniture had just been purchased on a credit card. Advise your buyers to make no significant credit changes or purchases in this critical pre-closing phase.

Fixer Upper Home – What is The Real Cost?

Considering buying a home to fix up to call home or to flip? You can save a lot of money, or get yourself in big financial trouble.

1. Determine what work you can do yourself

The TV real estate shows make repairs and improvements of DFW real estate look easy and effortless. In the real world, trying a difficult remodeling job that you really don't know how to do will take longer and cost more than you think. In the end it could turn into a huge loss and a real headache.

• Do you have the skills to do the work? Some of the work, like stripping wallpaper and painting, are relatively easy. Others, like electrical work, can be dangerous when done by non-professionals.

• Do you have the time and drive to do it and get it done? Can you take time off from your job to renovate your fixer upper house? Will you be stressed out by living in a construction zone for months while you complete the house?

2. Determine the cost of repairs and remodeling before you make the offer

• Get a home renovation contractor into the house to do a walk through with you so he can give you a written estimate on the work he is going to do. A contractor who specializes in Dallas foreclosures may be your best bet.

• If you are going to do the work yourself, price the supplies and the tools you will need.

• Make sure you add on an additional 10% to 20% to cover unforeseen problems that will arise with these types of projects.

3. Double your check pricing on the structural work

If your project house needs structural work be sure to hire a structural engineer for cost of about $600 to inspect the property before you put in an offer so you can be sure you covered and budgeted for the total cost to repair the problems. If you make a mistake here you may find yourself sell to a we buy ugly houses companies.

Don't purchase a house that needs structural work unless:

• You know the problems can be fixed
• You are getting the house at a steep discount

• You have a binding written estimate with a contractor for the repairs

5. Confirm the cost of financing

Make sure you have enough money for your down payment, closing costs, and repairs without wiping out all of your savings.

If you're planning to fund the repairs with a home improvement or home equity loan:

• Get pre-approved for financing before you make the offer.

• Make your offer contingent on getting both the purchase money loan and the renovation money loan.

• Consider using FHA's 203(k) program, which is designed to help home owners who are purchasing or refinancing a home that needs rehabilitation. The program wraps the purchase/refinance and rehabilitation costs into a single mortgage. To qualify for the loan, the total value of the property must fall within the FHA mortgage limit for your area, as with other FHA loans.

6. Calculate a fair purchase offer

Take the fair market value of the property (what it would be worth if it were in good condition and remodeled) and subtract the upgrade and repair costs. Example: Your target fixer upper house has a 1970s kitchen, nasty wallpaper, shag carpets, and window A/C units.

Your comparison house, in the same subdivision, sold last month for $180,000. That particular house had a newer kitchen, no wallpaper, had hardwood floors and has a central HVAC unit. The cost to remodel the kitchen, remove the wallpaper, install hardwood flooring and put in a central HVAC system is $40,000. Your bid for the house should be $140,000. Ask your realtor if it's a good idea to share your cost estimates with the sellers, to prove your offer is fair.

 

7. Include inspection contingencies in your offer

Hire pros to do common inspections like:

• Home inspection. Make this mandatory in a fixer-upper house assessment. The home inspector will uncover hidden issues in need of replacement or repair. You may know you want to replace those 1960s kitchen cabinets, but the home inspector has a meter that will detect the water leak behind them.

• Radon, lead-based paint, mold

• Septic and well - if the property is in a rural area

• Pest Inspection

Most inspection contingencies let you go back to the sellers and ask them to do the repairs, or give you a credit at closing to pay for the repairs. The seller can also opt to back out of the transaction, as can you, if the inspection turns up something you don't want to deal with. If that happens, this isn't the right fixer upper project for you. Go back to the top of this page and start again.

Negotiate Your Best Buy On DFW Home

Below are six great tips for negotiating the best prices for homes. Bonus tip: Keep your emotions in check and your eyes on your end goal and you can pay less when purchasing your next home.

1. Ask a lot of questions:

Ask your Realtor for information concerning the seller's financial and selling motivations. Are they facing a divorce, foreclosure or a short sale? Have they already purchased another home or relocated to another area making them open to accept a lower sales price to avoid paying two mortgages? Has the home been on the market for a long time, or was it just newly listed on the market? Have there been other offers? If so, why did they not close? The more signs there are that sellers are eager to sell, the lower your offer can reasonably be.

 

2. Get prequalified for a mortgage

Getting prequalified for mortgage financing helps prove to sellers that you are serious about buying and qualified to buy their home. Even in the hot Plano real estate market it will push you to the head of the pack when sellers are choosing among many offers. They will go with buyers who are a sure financial bet, not with those whose financing may flop.

 

3. Work back from your final price to determine your offer

Know in advance the most you are willing to pay for the home and work back from that number to determine your offer. This can set the tone for the entire negotiation. A bid that is to low may offend sellers emotionally invested in their DFW homes sales price. A bid that is to high may lead you to spend more than is necessary to close the sale. Work with your agent to evaluate the sellers' motivation and comparable home sales to arrive at an initial offer that engages the sellers yet saves money in your wallet. When dealing with DFW foreclosures you won't have to worry about the banks emotions, however.

 

4. Avoid contract contingencies

Usually, sellers will favor offers that leave little to chance or risk. Keep your bid as free of complicated contingencies as possible, such as making the purchase conditional on the sale of your current home. Do keep contingencies for mortgage approval and home inspections typical in your area, like radon if they house has a basement.

 

5. Don't get emotional

The reality is, buying a home is a business transaction, and treating it that way helps save you money. Consider any movement by the sellers, however slight, a sign of interest, and keep negotiating. Each time you make a concession, ask for one in return. If the sellers ask you to boost your price, ask them to contribute to closing costs or pay for a home warranty. If sellers won't budge, make it clear you're willing to walk away, they could get nervous and accept your offer.

 

6. Don't let competition change your plan

Great homes and those competitively priced can draw multiple offers in any market. Don't let competition entice you to go beyond your means or agree to concessions, such as waiving an important inspection, that isn't in your best interest.

 

Determine How Much Mortgage You Can Afford – Tips

By knowing how much mortgage you can afford, you can ensure that home ownership will fit in your budget and meet your long term goals.

1. Factor in Your Down Payment

How much cash do you have for a down payment on DFW real estate? The higher the down payment you can come up with the lower your monthly payments will be. If you put down at least 20% of the home's cost, you may not be required to get private mortgage insurance which costs hundreds each month. This leaves more money for you to put towards your mortgage payment. The lower your down payment, the higher the interest rate, loan amount you will need to qualify for and the higher your monthly mortgage payment will be.

 

2. Consider Your Total Debt

When it comes to buying Plano real estate most mortgage lenders generally follow the 28/41 rule. Your monthly mortgage payments covering your home loan principal, interest, taxes, and insurance shouldn't total more than 28% of your gross annual income. Your overall monthly payments for your mortgage plus all your other bills, like auto loans and credit cards, shouldn't exceed 41% of your gross annual income. Here's how that works. If your gross annual income is $50,000, multiply by 28% and then divide by 12 months to arrive at a monthly mortgage payment of $1,167 or less. Next, check the total of all your monthly bills including your potential mortgage and make sure they don't go above 41%, or $1,708 in our example.

 

3. Use Your Rent Amount as a Guide

The tax benefits of homeownership usually help you to afford a mortgage payment of about one third more than your current rent payment. You can multiply your current rent by 1.33 to arrive at a rough estimate of a mortgage payment. Here's an example. If you currently pay $1,500 per month in rent, you should be able to comfortably afford a $2,000 monthly mortgage payment after factoring in the tax benefits of homeownership. If you're struggling to keep up with your rent however, consider what amount would be comfortable and use that for the calculation instead. Also consider whether or not you will itemize your tax deductions. If you take the standard tax deduction, you cannot deduct mortgage interest payments. Find a Dallas real estate blog that has tools on them to help you calculate these numbers.

 

4. The general rule of mortgage affordability

A good rule of thumb; you can typically afford a home priced about two to three times your gross income. If you earn $50,000, you can typically afford a home between $150,000 and $200,000. To understand how that rule applies to your particular financial situation, prepare a family budget and list all the costs of homeownership, like property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care costs. This takes a little bit of brain power and effort but it is paramount before you go start looking for that perfect home.

Tips For Becoming a DFW Real Estate Agent

The easiest part of becoming a DFW real estate agent is getting the license. While many would be stress out over studying and the test for becoming a real estate agent, their focus is not where it needs to be. Pay attention to the items that follow, as you will pass the test if you try, but you're likely to be in the large group who fail to make it in the real estate business if you don't plan ahead.

Get a successful mentor or choose a broker with a good training program:

If you intend to have a successful Dallas real estate career a mentor is paramount to that success. The test isn't what you need for success when becoming a real estate agent. You need it to get your license, but you need a lot more to make your business a success. Get a successful agent or broker for a mentor, or offer to assist them in their transactions. There is a lot to learn about the process, it's not all about "selling. You will need to understand and explain title insurance, surveys, liens, encumbrances, deeds, and much more. You'll feel much more capable if you've at least seen these documents in the course of a few real estate deals.

 

Have a backup income source:

Either have some money saved up to make it for five to six months or more without a commission, or if possible keep your day job for a while. While becoming a real estate agent part time may not have been your plan, you need to have the ability to pay your bills while you get started. Unless you have some family members or friends ready to buy a home, you can go for many months without an income when becoming a real estate agent. If you are considering being an agent for a We Buy Houses companies or a company that specializes in Dallas foreclosures you should be able to cut down on this time by a month or two.

 

Start building your "book of business":

Some call it working your "sphere of influence." Becoming a real estate agent is just the very first step in a long (you hope) career of working with buyers, sellers, investors, appraisers, loan officers, mortgage brokers, inspectors, title companies and others. Start out right by finding a good contact management system in which you'll enter all of these contacts and prospects. You'll want to follow up over time, and you'll need an efficient way in which to locate information you've filed away on prospects and contacts.

 

Start out right with the internet and technology:

No matter what some of the old timer agents may tell you, you absolutely need the Internet to do business in today's real estate climate. Some with many years in the business can continue to succeed to referrals over the years; you will need to use your website and social networking to get a foothold with today's buyers and sellers. You should budget for a good web presence, however, it doesn't need not be expensive.

 

Becoming a Real Estate Agent Isn't Just Getting a License:

For most would be real estate agents, the courses and the test for licensing turn out to be less fearful than they expected. The rude awakening comes later when they don't find that easy income in the first couple or three months. They thought they had a family member or friend all lined up, but they are taking their time, not buying or listing when the new agent thought they would.

 

Learn from peers, your mentor or your broker about all of the important documents involved. Try to avoid being asked basic buyer or seller questions you can't answer, as it could cost you the prospect. Either ask for past transaction folders and study the documents, or ask to assist an experienced agent in their next transaction. There's no substitute for actual deal experience.

 

The real estate business can be fun, exciting and a very satisfying career. However, you have to make it through that first year or two to make it all happen down the road. Have a plan, build a database of prospects, and work hard to find the keys to success at becoming a real estate agent.

Buyers Clueless or Liars?

This article is about real estate buyers and their agent's status. If your buyers aren't really telling you the truth about what type of home they want or can afford, it could be because they don't trust their agent with the knowledge. Unfortunately, it's true in many cases. If the buyers aren't convinced that you will work in their best interests with full knowledge of their situation, then they won't tell you everything, everything you need to know. Before any homes are shown, your goal should be to build a high level of trust with them that will allow them to be open and honest with you and give you all of the information you need to help them. This isn't always possible, as there are a lot of people out there who don't trust anybody. But, it's best for you and your buyers to get to the highest level of trust possible.

 

Here is an example from a agent selling Collin County Homes who came into the market after being a tire kicker, subscriber and searcher on his website for years. At last, the timing seemed right, but the buyer was in the lowball offer mood, and there was a lot of difficulty in getting him to see the problem unrealistic offers present, even after two had already resulted in hard feelings and burned bridges with sellers. You would think that now this agents blog site was a good one, holding this buyer on his list for more than two years. This agent did a lot of market statistics and commentary that illustrated a great deal of market knowledge. So, what is the problem?

• It took several failed offers before the buyer finally decided that the time wasn't right to buy and he left.
• This buyer had previous poor experience with buyer's agents in other areas.
• He held a belief that all real estate buyers agents were after the commission first, and serving his needs second.
• The market was slow and the real estate buyer refused to believe that this area wasn't full of motivated sellers ready for any offer.
• The buyer's broker tried to gently lead the buyer to the knowledge that would help them to see their interests were at the top of this agent's list.

Was there no real desire for this buyer to buy because he was also interested in Tarrant County homes and Denton County homes as well? This wasn't the case, as it was a long drive to get to this area, and the buyers did some intensive online studying before making the trip out there. It was only because this buyer believed that the agent couldn't be trusted when he was telling them to raise their offers and posting higher earnest money deposits that they would need, and other facts about that specific market and homes that would help them to actually successfully make a purchase. Work on trust first, and you may find it a pleasure to work with buyers who respect your opinion and truly consider your advice. The clueless part isn't just as regards the first time home buyer. Many experienced buyers who have done multiple transactions in their lives will still not have market specific knowledge that can hurt them in their search for a home.

• Even specific knowledge of how certain listing brokers handle their negotiations on behalf of their sellers
• Local custom as to earnest money and offer presentation.
• Market conditions, absorption rates, and local market trends.
• Specific area knowledge that dictates very different home prices in areas not that far apart geographically.
• Quality information as related to specific builders or subdivisions.