Top 10 Critical Mistakes Homebuyers Make and How to Avoid Them (Part two)

6.Waiting for the ?bubble? to burst. Hot markets come and go. Cold markets come and go. Markets become over-priced, then over-time become under-valued. If you are waiting for a severe correction in real estate prices, pull up a seat, because you might be waiting a long time.

Homes, unlike other investments (the stock market for example) are valuable in two ways: 1) Psychological value - homes have value because everyone thinks they should, and 2) ?real? value (people, homeowners and renters, need shelter).

Because homes are valuable in both respects, home values historically will usually only level out after a hot market. Sometimes homes will lose some value but not very much. St. George homes lost about 5% of their value after the last hot market in 1995?sort of like a balloon deflating because it took several years for this to happen.

If I were looking to buy a home I would be more concerned with interest rates and less concerned with playing with bubbles.

7.Not choosing a real estate agent carefully. In our town about 75% of real estate agents have been in the business one year or less. I suspect that this is true nationwide. The hot market of 2005 caused everybody and their brother to want to get their real estate license. When you contact a local agent, you probably have a 3 out of 4 chance of getting an agent who is severely under-qualified to represent you in the purchase of $250,000+ investment?your home.

You?ll want to contact at least four agents to make sure you are getting the best one you can find. Ask questions and then trust your instincts as to which agent is the best one for you.

8.Not having a home inspection done by a Professional Home Inspector. A good, experienced Home Inspector will catch problems in a home that most homebuyers would miss.

I have seen all of these items missed by a potential homebuyer, but caught by a home inspector:
a.A dryer vent, venting into the attic
b.A ground fault interrupt breaker not working (this can kill you!).
c.Evidence of termites
d.Aluminum wiring
e.A roof leaking into the attic, but not into the main part of the home (yet!).

Several years ago I became aware of a transaction in our real estate office where the buyers decided not to have a professional inspection on an almost new home they were buying. They ?inspected it themselves? to save the $300. Too bad they didn?t catch the fact that some of the basement windows leaked badly when it rained. The water stains were clearly visible had they known to look. That turned out to be a huge mess involving lawyers, threats and grief. This could have been avoided by paying the $300 to have a Professional Home Inspection.

9.Not receiving a home warranty at closing. It?s 3:00 AM. You wake up hearing water running in your newly purchased home. It keeps running. And running. You get up to check it out and find your basement floor covered with water from the broken water heater. Luckily the damage from the water is minimal. You go to look for the Home Warranty confirmation in the documents you received when you bought your home the previous month. You know that the home warranty company will replace your broken water heater for only $55. Suddenly, you slap your hand to your forehead and make the Homer Simpson ?Douhhh? sound as you realize that you didn?t get a home warranty because the seller wouldn?t pay for it and you certainly didn?t want to pay for it.

Lesson learned, always get a home warranty you buy a new home, even if you have to pay for it. It is money well spent. I would never buy a home without purchasing a home warranty. I never sell my own properties without a warranty for the buyer. It just makes good sense.

10.Not meeting the neighbors before you make an offer. Don?t you really hate it when your neighbors suck? Don?t you think it would be a good idea to do a little door knocking before you buy your new home? How about going online to look at your state?s website for registered sex offenders?

I did a little door knocking before I bought a foreclosed home in St. George. I was buying the home for my personal use and as part of the ?due-diligence? I decide to meet the neighbors. I asked which house was the ?bad house? on the street. I came to find out it was the home I was buying because the previous owners were noisy, rude, dirty, and didn?t care for their home. I changed that by buying the home and moving into it.

There you go; 10 simple steps to keep yourself, as a homebuyer, out of hot water. Violate any of these steps and you may end up losing a little or a lot of your hard earned money. Now go out and find the home of your dreams!

About Me:
I have lived in beautiful St. George, Utah since 1998. I have been a real estate agent here (Washington County, Utah) since 1999. I have survived terrible housing markets and thrived in amazing markets (38% home appreciation in St. George in 2005). For more interesting articles, or to sign up for receiving my weekly St. George foreclosures email please visit my website: DonGlasgow.net. I also provide homebuyers with instant access to the Washington County MLS. I have gotten tons of compliments on my website, so make sure and check it out!

The Dangers Of Overvaluing Real Estate

We all have done it at one time or another.

When short of listings, the Realtor goes out and ?buys' one. The process of buying a listing is as old as Real Estate itself. The agent shows up at someone's doorsteps and inflates the value of the property by more than $30,000, $40,000 or even $50,000 over and above the actual market value. I know of agents who have actually listed properties for $200,000 more than what those properties were in fact worth. The owner happily signs the listing agreement with those dollar signs sparking right in the eyes, and the Realtor happily sticks up a sign right in the front lawn. Of course the house subsequently does not sell because it is overpriced, but it doesn't really matter.

Or does it?

All the way back in 1988, in a legal case entitled Basic Inc. v. Levinson, the United States Supreme Court endorsed a theory known as ?fraud on the market', which in turn relies on another theory known in Economics as the Efficient Market Hypothesis. The Efficient Market Hypothesis postulates that prices of traded assets like stocks, bonds, or real property, already reflect all known information and therefore are unbiased in the sense that they reflect the collective beliefs of all investors about the value of the underlying asset and enable investors, therefore, to assess future prospects.

In essence the Efficient Market Hypothesis, which was developed in the 1950's and 1960's, states that subject to certain conditions the market price of a traded asset fully and accurately reflects all the available information relevant to its value. Under this Hypothesis, in an efficient market the only reason as to why a price changes is that new information comes to light.

Because market prices reflect all available information about an asset, reasoned the Supreme Court, misleading statements as to the integrity of price will affect and negatively impact the decision-making process of investors, who rely on those statements as the primary guide to finalize a purchase. Which is tantamount to ?intentional deceit', more vulgarly known as ... fraud.

That ruling has proven a goldmine for American trial lawyers, who have won fortunes by suing firms for damages when new financial information, often in practice a restatement of their balance sheets, is followed by a sharp fall in stock prices of the same firms. The fall is treated as proof of overvaluation due to the initial, wrong statements.

This decision of America's highest Court has now crossed the border with Canada and has spilled into Real Estate. A case involving a Seller, a Buyer and a Real Estate Agent acting in a position of dual agency is now pending in front of the Supreme Court of Ontario. The Agent first grossly overvalued the subject property at the time he took the listing, then actually found a Purchaser ready, willing and able to buy at a price close the grossly inflated asking price. As the transaction was being financed through an institutional lender, the underlying case initially also involved an appraisal firm, which subsequently has settled out of Court with the disgruntled Purchaser.

The decision of the Supreme Court will have an enormous impact on how real estate is practiced in Ontario and possibly throughout the whole country, and it will be interesting to see what the outcome will be. The Buyer bases his case on the Efficient Market Hypothesis arguing that he reached the decision to purchase on the integrity of the asking price and claims, furthermore, that the dual Agent knew or should have know that the asking price was grossly over and above the market value of the subject property. The Buyer is claiming damages both as against the Agent and the Seller.

The line of defence is that the true meaningful value of an interest in land is given by its ?objective value', defined as the price that the property will fetch in an open and fair market, given sufficient time to find a Purchaser, the amount of advertising involved in the marketing of the property, the relationship between the parties and the terms of financing. The additional argument of the defence is that the truthfulness of the Efficient Market Hypothesis is actually being disputed by Economists even in its original field of application: the Stock Market. More specifically, the defence argues that even highly developed financial markets such as the New York Stock Exchange are not efficient enough to allow Courts to calculate the financial damages caused by fraud, and that estimates of damages based on the Hypothesis will be necessarily overstated.

The Realtor in particular contends, furthermore, that at no time the thought of earning a double commission ever crossed his innocent mind (he was walking the dog one day and ...).

All of which goes to prove once again the point I have been making for years - that is sellers, buyers, realtors, lawyers and judges invariably make an explosive mix.

Luigi Frascati

Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real Estate Chronicle at http://wwwrealestatechronicle.blogspot.com where you can find the full collection of his articles on Real Estate Economics and Finance. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton-Centre Realty in Burnaby, BC.

Luigi is very proud to be an EzineArticles Platinum Expert Author. Your rating at the footer of this Article is very much appreciated. Thank you.

Real Estate for Sale in Arizona

If you are looking for real estate for sale in Arizona, you may want to check the Internet for listings or consult with a real estate broker.

If you are looking for a top custom builder of homes, the Dalton Ross Homes may just be what you?re looking for. On the other hand, La Costa Homes is a premium property found in Kingsman, Arizona. Its builders put a premium on quality. Additionally, Esmay Construction showcases quality properties. They has open floor plans and customized features with a flair for architecture. They have new homes in Kingsman, Arizona, and in Lake Havasu City along with the popular Valley Vista Gold Course.

If you are interested in a family-focused Scottsdale community, there is a modern and luxurious estate in Paradise Valley. Perhaps you are looking for a quaint ranch in Carefree or a custom house with a creatively designed golf course or even a downtown loft. You can search for these homes online with the help of agents.

Some online real estate firms offer first timers and veteran home purchasers valuable knowledge to guide them in their decision-making process. They provide real estate reports online, articles on available properties and a monthly newsletter with informative features on the Arizona real estate environment.

If you are the seller, remember not to utilize traditional methods of selling properties such as open houses and advertisements in magazines. Make sure that the agent maximizes exposure of your home to command a good price.

Since the selling strategies of properties have undergone dramatic changes, a proactive approach is necessary. These include agent-to-agent selling, marketing through the Internet, and other new techniques so your property will fetch a handsome amount.

So keep these things in mind to guide you in your search for estates in Arizona.

Arizona Real Estate provides detailed information on Arizona Real Estate, Tucson Arizona Real Estate, Phoenix Arizona Real Estate, Arizona Real Estate Agents and more. Arizona Real Estate is affiliated with Arizona Vacation Rentals.

Short Sales: How to Deal with Rejection

Buying houses by means of a short sale can be a great way to make significant amounts of money, but they're not for everyone. You have to find a seller who will work with you to persuade the lender to sell the home rather than allowing the foreclosure process to continue. Then you have to submit an offer that's low enough to make a profit, yet not so low as to be rejected altogether.

If a lender does reject your offer, all isn't lost. The first thing to do is to try to determine why your offer was rejected. There are many possible reasons, and if you want the sale to go through, you must job find out exactly what the lender wants in order to make the sale happen. Here are possible reasons.

First, your offer may simply have been too low, which meant the lender would be taking too big of a hit by accepting it. They also may believe they can do better once the foreclosure has been completed, or since loans are often sold to investors, it's also possible that the holder of the note wouldn't accept the loss.

Perhaps the borrower's financial difficulty wasn't stated strongly enough to make a persuasive case for a short sale. If that's the case, the lender might want to work out an alternative payment schedule with the homeowners rather than entering into a short sale.

Since most lenders will require a broker's price opinion (BPO), make sure your offer is somewhere near that figure. Otherwise, a lender will be convinced that they can do better on the open market once the foreclosure is complete.

There may be other reasons, but the number one reason short sale offers are rejected is simply because they're too low. After all, lenders are in business to make a profit, and even when appears there's no profit to be made in a particular home; they want to cut their losses as much as possible. So don't get greedy. You'll rarely be able to steal a home, but you can often get a substantially lower price than you would on the open market.

One of the best ways to avoid coming in too low is simply to ask the lender how much they hope to net from a short sale. They may not tell you, but you'll never know if you don't ask. Even if you don't get an answer in the beginning, you'll have another chance to ask before they make a counteroffer. Be courteous, but emphasize that you're really hoping to make the sale happen. Again, you may be surprised by the figure you receive, and if it's acceptable, jump on it. Don't kill your sale by being too greedy.

If your short sale offer is rejected, don't give up. Probe for more information about why your offer didn't fly and then try to satisfy whatever they ask for before making your counteroffer. You won't be stealing the home, but there's often plenty of profit to be made.

Copyright ? 2006 Jeanette J. Fisher

Learn how to fix houses for flipping or higher rent with the Design Psychology edge.

Author Jeanette Fisher teaches interior design psychology, home staging, and real estate investing.

http://www.doghousetodollhouse.com

Tennessee Home Buying

Maybe you?re buying your first home in Tennessee, or perhaps you?re relocating to Tennessee from another state. Either way, it?s important that you educate yourself on Tennessee home loans before shopping for a home and mortgage. This article explains what you?ll need to know before buying a home in Tennessee:

The price of homes in Tennessee varies widely between zip codes. For example, in Nashville, Tennessee, the median price of a home in the summer of 2005 was $209,000; however, the median price of a home in Knoxville, Tennessee, was $175,000. Overall, the median price of a home in Tennessee in between July 2004 and July 2005 was $166,400.

Tennessee has a very active housing market, and home prices in Tennessee appreciate at a rate comparable to the national average. Between July 2004 and July 2005, home prices in Nashville, Tennessee, rose by 9.5% from the previous year. However, the rate of job growth in Tennessee during the same year was only half of the average national job growth rate.

Many Tennessee organizations banded together to create the Tennessee Home of Your Own Program -- a program to help people with disabilities purchase their own home. Through this program, Tennessee residents with disabilities can get technical assistance with the home-buying process and assistance with down payment and closing costs. Additionally, this program offers home-ownership classes to people with disabilities.

Before closing on the purchase or sale of a home in Tennessee, buyers and sellers need to be aware of a Tennessee law that prohibits the use of personal checks in amounts greater than $1000 for costs associated with loan closing. If loan-closing costs are going to be greater than $1000, the buyer or seller will have to pay by a cashier?s check, wire transfer, or cash.

Jessica Elliott recommends that you visit Mortgage Lenders Plus.com for more information about Tennessee Mortgage Rates and Loans.

How Much Equity Does Your Home Have?

When it comes to real estate, there are few things more important than equity. All of the advice given to first-time homebuyers centers on how much equity they are likely to build in the time they will be living in the home. Additionally, when it comes to getting a home equity loan or selling the house, knowing how much equity you have built up is quite important. It will determine how much cash you end up with. And that is no small consideration.

A Definition of Equity

Most of the time, equity refers to the amount of ?ownership? you have in a particular piece of real estate. A set amount of cash is the main expression of the equity in your property. Equity is usually built by a combination of two things:

1. Making mortgage payments
2. Increases in the property?s value

The longer you have the real estate, and make payments on it, the more equity you are going to build up in the property. And if you live in an area where the home values are increasing, you will find that helps with your equity as well. This is the reason that the general advice is to buy only if you plan to stay in a home for at least five years. This gives the property time to appreciate, and it allows you the time to pay down some of your property loan?s principal.

Determining Your Real Estate?s Equity

It is usually very simple to figure out how much equity you have built in your real estate. First, you need to find out what the current market value of your home is. You can do this by talking to a variety of real estate agents, mortgage loan officers, and appraisers. Next, you subtract the amount that you still owe from the market value of your home. The result is your equity. Here?s an example:

You bought your home 11 years ago with a loan for $115,000. Now, however, the property at current market value is worth $135,000. And you have paid down some of your loan, still owing about $75,000. To figure your equity, you subtract the $75,000 from the $135,000 for a total of $60,000. This is about how much you could expect to pocket if you sold the home at current market value, or the amount of money you would have access to with a home equity line.

Visit Home Equity Wise to view our Recommended Home Equity Lenders online. Also, visit Home Equity Wise to find information about obtaining a Home Equity Loan Online.

Home Staging Can Help You Sell Your House Quickly

Real estate prices have hit record levels in the United States during the last five years. In some parts of the country, prices have tripled. For those selling houses in the first half of the decade, business was very good, indeed. Rising interest rates and sticker shock have slowed the market down, however. In some parts of the country that used to be hot, sales have slowed to a crawl. In those markets, people who want to sell houses are now waiting months when homes used to sell in days or weeks. What can a homeowner who wishes to sell as quickly as possible do to accelerate the process?

A relatively new service called home staging may be the answer. Staging a home essentially means setting it up so that it makes its best possible presentation to the market. Professional home stagers will, for a fee, come to your house, examine your property, and make recommendations as to what you might do in order to make the house as sale-friendly as possible. In some cases, they will simply recommend a coat of paint, a bit of landscaping, or some new drapes. In other cases, more dramatic help may be needed.

It is often difficult to sell a home that has been vacant for a while. Buyers have a hard time imagining what their belongings might look like in an empty house. A good staging company will have in their inventory a selection of different types of furniture, lamps, decorative accessories and more so that a vacant home can look like a showcase. A fully and tastefully decorated home is much easier to sell than a vacant one.

The service isn?t necessarily inexpensive. Homeowners might expect to pay several hundred dollars for an initial consultation as well as a fee of several times that amount for the first month of a fully furnished, professionally decorated home. Rates for subsequent months tend to be lower than for the initial month, but many homes that have been professionally staged aren?t on the market much longer than a month. In fact, studies have shown that staged homes often sell in half of the time of other comparable properties.

Having your home professionally decorated in order to sell it isn?t something that everyone needs to do. But in markets with slowing real estate sales, staging a home may be the difference between selling the house this week and selling it three months from now. For many sellers, the investment is more than worthwhile.

?Copyright 2006 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.HomeEquityHelp.net, a site devoted to information regarding home equity loans, mortgages and lines of credit.

Financing With A Home Equity Loan

by: Joseph Kenny

If you have good credit, a homeowner, your mortgage is paid on time every month and you are thinking about borrowing money, the home equity route may be the way to go. What this allows is suppose your home is worth substantially more than your current mortgage, for example, your mortgage is for £100,000 but your home is worth £200,000, you will have an equity of £100,000 in the value of your home that you can borrow against.

A home equity loan can be used for many purposes:

-Paying off other debts;

-Taking a holiday;

-Paying for university;

The loan is secured over your home, and therefore, the interest rate will generally be lower than for other types of credit that may be available. This makes them a good option for paying off higher interest debts, so long as you don’t rack them up again, or taking on a larger project such as a house extension. It is often a good idea to use a home equity loan to renovate your house, as the house value increases as a result, and often by more than what you pay to renovate it. You can also receive a tax credit on the interest paid on the loan.

However, it must be remembered that such loans are not appropriate for everybody in every situation. They should generally only be used for large projects of long term needs. For smaller loans, it may be better to look at other options such as personal loans. The rate and terms, as with all loans, will vary depending on your payment history and the amount and length of the loan.

The loan can be offered as a lump sum or as a credit line. The lump sum gives you the whole amount of the loan all at once and interest is payable on it immediately. With a credit line, you only use the money as needed, up to an agreed maximum, and interest only accrues on the amount you use.

You should always carefully review your finances before taking on more debt, especially if it is to be secured on your home. Using your home as security means that if repayments aren’t made on the loan, you could lose your house. It is therefore important that you are comfortable with the amount you are borrowing. You should also look at the differences in costs between a lump sum and a line of credit and decide carefully which one better suits your needs.

About The Author


Joseph Kenny writes for the loan comparison sites, http://www.ukpersonalloanstore.co.uk and also http://www.selectloans.co.uk. The latest loans are reviewed in detail at the Loan Store.

Home Equity Loans: Abusive Lending And How To Avoid It

by: Dan Johnson

Home Equity loans were initially designed to allow individuals who had not yet paid off the full amount of their home, the ability to borrow against what portion of the home they had paid for. So for example, a couple who had been making monthly payments for many years on their 30 year lease, could use the money they had already put into their home as collateral when they needed a loan to send their child to college. So, while the initial intent of the loan is regarded by some as noble, in practice it has served as a free-for-all for unscrupulous lenders and other scam artists.

Explaining Sub-Prime Lending

Home Equity Loans fall into a broad category known as sub-prime lending. Unlike prime lending, which is heavily regulated and offered to those living in good neighborhoods with fair to good credit, sub-prime lenders target those in bad neighborhoods with worse credit ratings. Because they offer loans to individuals who otherwise might have difficulty finding a loan, they were and are able to justify to the government the need to have greater free reign when it comes to setting the interest rates and finance charges associated with their loans.

This window, combined with the deep pockets of Home Equity Loan firms able to grease the campaigns of politicians, has prevented the industry from coming under the heavy scrutiny and regulation of prime lending. Consequently, what is seen in this industry is widely varying interest rates, and charges that are completely disproportionate with the risk incurred by the lending institution.

How to Protect Yourself

For the investor interested in taking on a Home Equity Loan, there are a few measures which can be taken to radically diminish the chances of being taken advantage of. The first precautionary step is to request a copy of the loan a full week before you sign it. The lending institution is required by law, to provide you with a copy of the loan many days in advance of you signing it. It is a rather simple task to ask for the loan, and the lending institutions response often reveals much about the quality and legality of the loan. If the lending institution says, that either the loan paperwork is not yet ready, or otherwise fails to produce the paperwork inside of a week prior to the signing, you should walk on the loan.

The catch-22, and consequently the reason why Home Equity Lenders are able to take such advantage of borrowers, is that often they are facing foreclosure and desperately need the loan. While your need may be very real, signing a sub-standard loan will ultimately put you in far worse shape than you ever were before.

Recognizing the Hidden Charges

The second, and potentially most important technique to prevent predatory lending, is to demand that all loan costs not be rolled into the APR, but be listed and paid by you up front. What predatory lenders do to entice individuals into taking a loan, is to soak up the equity in a home and offer you a small kickback on the side. So, taking the example of our couple above, let us imagine that they have $50,000 in equity in their $100,000 home and have a fixed mortgage rate of $650 a month. They then go to a Home Equity Lender who tells them that upon signing the loan they will get $20,000 in cash and their new interest rate will be $580 per month. What they do not tell the borrower is that they have also cashed out the other $30,000 dollars in equity and paid it to themselves in "refinancing fees." In addition, the new mortgage they receive may either be variable, meaning that as interest rates climb so will their new payment, or be back loaded, meaning that by the end of the loan the payments may reach $1,200 a month.

Can Home Equity Loans be useful? Yes, but only under ideal circumstances. By and large, they are a product designed by unethical lending companies to take advantage of those desperate for a little cash now. If you plan on applying for a Home Equity Loan, it is vital that you take the two steps outlined above as well as have an experienced independent third party go over the loan and its convoluted terms with you.

About The Author


Dan Johnson enjoys writing about home equity loans. Visit http://www.homeequityloanlowdown.com/ to learn more.