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 How To Not Get Burned In A
Hot Real Estate Market
A buyer should understand initially that real estate transactions are a complicated matter. Many of the potential real estate disasters that occur can be avoided by refusing to enter into "for sale by owner" transactions. The problems that arise from these transactions range from unenforceable contracts to unmarketable titles. These problems can be immediate or they can take years to surface. Usually the cost to correct these problems will far exceed the money that was saved with a do-it-yourself transaction. It can't be stressed enough that a real estate transaction should involve an experienced professional guiding the buyer throughout the process.
When seeking a real estate broker or agent, the consumer should start out by asking the most readily available resources, which are family and friends. Compile a list of potential agents based on recommendations. The buyer should treat this as an interview process with special attention given to qualities such as experience, knowledge of the desired area, and the ability to understand your needs. Certification status of a real estate professional can be found at
http://www.dre.ca.gov. The buyer should be thorough since this is one of the most important factors contributing to a seamless real estate transaction.
Ultimately, the buyer should choose an agent who they believe would represent their best interests in the transaction. Sometimes this duty needs to be specified. Real Estate Agents or Brokers may serve the interests of the seller, and not your interests as the buyer. The most common practice is for the seller to hire the broker to find someone who will be willing to buy the home on terms and conditions that are acceptable to the seller. Therefore, the real estate broker you are dealing with may also represent the seller. The role of the Agent or Broker needs to be clarified before you enter into any written contractual agreement. In many instances it may not be possible to serve the best interests of both parties so the buyer may be best served by avoiding this type of arrangement.
KNOW WHAT YOU'RE GETTING
After you've settled on potential homes, you should then prepare to inquire on the condition of the property. Again, it helps to be thorough. Take notes for as you go through each home, unique questions will probably arise. Ask about maintenance, potential problems, upkeep cost, neighborhood issues, and quality of life in general. The old adage applies when dealing with real estate: The only dumb questions are the ones you don't ask.
When you've settled on a home, a home inspector will then be necessary. The home inspector is generally a neutral third party and is not there for the benefit of the buyer or the seller. The inspector is responsible for checking the status and estimate repair costs for the following subject matter: plumbing, waste disposal, electrical system, water heater, insulation and ventilation, HVAC system, water source and quality, pest problems, foundation, doors, windows, ceilings, walls, floors, and roof.
The choice of inspector should be agreed upon by both parties and the buyer should check credentials before choosing an inspector. Most buyers prefer to pay for these inspections so that the inspector is working for them, not the seller. You may wish to include in your agreement of sale the right to cancel, if you are not satisfied with the inspection results. In that case, you may want to re-negotiate for a lower sale price or require the seller to make repairs. In addition, your lender will require a certificate from a qualified inspector stating that the home is free from termites and other pests and pest damage. You may want to reserve the right to cancel the agreement or seek immediate treatment and repairs by the seller if pest damage is found.
CONTRACT AND NEGOTIATIONS
Here are some the important topics that you will see when discussing your sales agreement and some information regarding them. Be sure to ask your agent if any of the terms of the contract are not clear to you. When dealing with a real estate contract the buyer will likely be presented with a standard pre-printed form. The buyer or the seller can change those terms under the following conditions: the changes must be in writing and both parties must agree to the changes to the contract.
Try not to get distracted by a favorable price. Though, realistically this is the most important factor most buyers would consider in closing. A favorable price might be rendered moot by failure to pay close attention to other factors. The buyer also needs to agree with the seller about how expenses related to the property such as taxes, water and sewer charges, condominium fees, and utility bills, are to be divided on the date of settlement. Unless you agree otherwise, the buyer should only be responsible for the portion of these expenses owed after the date of sale. The buyer can also negotiate which settlement costs you will pay and which will be paid by the seller.
The buyer also needs to ensure the legal ownership of the home. This term is known as "title". The seller should provide title, free and clear of all claims by others against your new home. Claims by others against your new home are sometimes known as "liens" or "encumbrances." You may negotiate who will pay for the title search, which will tell you whether the title is "clear."
In the event that you are not certain that a real estate contract meets your best interests, you should have the contract reviewed by a real estate attorney who will interpret the contract for you to ensure that it meets your needs.
-Milt Younger
HOT TOPIC
Protecting Your Home by Recording a Homestead Declaration
Your home may be protected from creditors by law. There are two types of homestead protection. The first type is automatic with regard to the home that you live in. If your home is involuntarily sold to satisfy a judgment, or if it is damaged or destroyed or acquired for public use, it will allow an exemption pursuant to Code of Civil Procedure Section 704.730 as follows:
"§704.730. Amount of Homestead Exemption
(a) The amount of the homestead exemption is one of the following:
(1) Fifty thousand dollars ($50,000) unless the judgment debtor or spouse of the judgment debtor who resides in the homestead is a person described in paragraph (2) or (3).
(2) Seventy-five thousand dollars ($75,000) if the judgment debtor or spouse of the judgment debtor who resides in the homestead is at the time of the attempted sale of the homestead a member of a family unit, and there is at least one member of the family unit who owns no interest in the homestead or whose only interest in the homestead is a community property interest with the judgment debtor.
(3) One hundred twenty-five thousand dollars ($125,000) if the judgment debtor or spouse of the judgment debtor who resides in the homestead is at the time of the attempted sale of the homestead any one of the following:
(A) A person 65 years of age or older.
(B) A person physically or mentally disabled and as a result of that disability is unable to engage in substantial gainful employment. There is a rebuttable presumption affecting the burden of proof that a person receiving disability insurance benefit payments under Title II or supplemental security income payments under Title XVI of the federal Social Security Act satisfies the requirements of this paragraph as to his or her inability to engage in substantial gainful employment.
(C) A person 55 years of age or older with a gross annual income of not more than fifteen thousand dollars ($15,000) or, if the judgment debtor is married, a gross annual income, including the gross annual income of the judgment debtor's spouse, of not more than twenty thousand dollars ($20,000) and the sale is an involuntary sale.
(b) Notwithstanding any other provision of this section, the combined homestead exemptions of spouses on the same judgment shall not exceed the amount specified in paragraph (2) or (3), whichever is applicable, of subdivision (a), regardless of whether the spouses are jointly obligated on the judgment and regardless of whether the homestead consists of community or separate property or both. Notwithstanding any other provision of this article, if both spouses are entitled to a homestead exemption, the exemption of proceeds of the homestead shall be apportioned between the spouses on the basis of their proportionate interests in the homestead."
To get greater protection, and to discourage creditors from forcing a sale of the home in the first place, some owners file a Declaration of Homestead. By recording a Declaration of Homestead, an owner is also protected when the residence is voluntarily sold. Either way, the proceeds up to the statutory limit are exempt for six months and continue to be exempt if reinvested in a new home.
If your house is protected by a declared homestead, many creditors find that it isn't worth the trouble to force a sale.
You should be aware that a Homestead Declaration affords no protection from involuntary sale resulting from Federal or State Tax Liens or any loan where the property is used as collateral (for example, mortgages), home equity loans or child support obligations.
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