Understanding all aspects of a real estate transaction.
Let’s begin with the term
The word "real" is derived from Latin "res," meaning "thing" and was used in Middle English to mean "...relating to things especially physical property." The law recognizes different sorts of interests, calling such interests “estates.” The type of estate is generally determined by the language of a legal document called the deed, which affirms the right of ownership.
In English common law, the basis of all American civil law, real property was distinguished as a basis of land and anything affixed to it, while personal property was everything else, such as clothing, furniture, and physical money. The conceptual difference can be readily seen: immovable property (land) and movable property (more portable things).
The classification of property as real or personal may vary somewhat according to jurisdiction or, even within jurisdictions, according to purpose, as in defining whether and how the property may be taxed.
Real estate ownership requires claim to a property through a verifiable and legal property description. Early property ownership usually made use of natural boundaries such as seacoasts, rivers, streams, lake shores, and the crests of ridges, or man-made markers such as cairns, surveyor’s posts or medallions (U.S. Geodetic Survey markers), highways, roads, and so forth.
As English common law, the basis of all American civil law, real property was distinguished as a basis of land and anything affixed to it, while personal property was everything else, such as clothing, furniture, and physical money. The conceptual difference can be readily seen: immovable property (land) and movable property (more portable things).
As real property ownership within cities and towns evolved, the latitude and longitudinal markings remained, but added were the "lot and block" system, and eventually the simple street address, with unit number.
Buying Real Estate
There are certain basic steps in the home buying process that make it easy consider after stripping away much of the unnecessary. There are really only five basic steps to buying a home.
Hire a real estate professional
You can go to as many open houses you like and look through the various home sale Internet sites in the quest to be a do-it-yourself home buyer. This is possible, but because there are so many intangibles in purchasing. Mostly, an agent will save you time and watch out for your interests.
An agent can find listings directly from the multiple-listing services (MLS) that best fit your parameters, so you won't waste time looking at listings that are under contract. A good professional often knows of new listings coming up that are not yet on the market. An agent can preview homes that look great in pictures, but have issues with the property itself or with the neighborhood. Most important, an agent can generally spot overpriced and/or properties with issues and advise you accordingly.
Finding a property to buy
Buying a home can be an overwhelming process and emotionally draining. Finding a home that suits your pocketbook as well as your emotional desires is not an easy task. I advise buyers to schedule a maximum of 7 homes at a time because any more than that will make a buyer's head spin.
Educated buyers research possible opportunities on the Internet before ever stepping foot in a home. Buyers spend an average of six to eight weeks, according to the National Association of Realtors©, trying to figure determine a specific area or neighborhood and then choosing a property. But once the neighborhood is selected, most buyers end up choosing a home after two or three home tours.
Getting a loan
It's not always necessary to have a mortgage broker or lender in your back pocket before buying a property, but with loan pre-approval, one becomes a much better prospect. Pre-approval helps buyers become more realistic and sellers more comfortable the deal won’t fall through. Many sellers won't look at an offer if there is no assurance that the buyer can qualify for a loan to cover the selling price.
There are a number of loans available. Real estate professionals can offer a referral to a mortgage broker who will allow you to compare the types of mortgages that may best meet your finances.
Get a home inspection
A home inspection by a reputable inspector is important. Knowing all the flaws beneath the attractive veneer of a property allows a buyer to know how if a selling price is fair. You do not want to be locked in to buying a home that has a faulty foundation, regardless of its curb appeal.
Sellers are generally not required to make repairs if problems are discovered during a home inspection. A home inspection is for the buyer's education. However, issues that arise out of an inspection can be used as a negotiation tool when a buyer requests repair to a seller who doesn't want to blow the deal, and is willing to make a repair.
Negotiating the sale price
Buyers sometimes make the mistake of comparing the sales price of a home to other homes they have seen. It's a mistake to compare sales prices among homes for sale. That's because sellers can ask any price they want. It doesn't mean the home will sell at that price.
An agent can provide comparable sales and examine the pending sales in an area of interest. Recent or pending sales are similar type homes in the same condition and location that has sold within the past three months can give a good indication of fair market value.
You may need to pay over list price in a seller’s market, especially if many buyers are vying for the same inventory. This is where an agent earns the commission…being objective with the comparable properties and give you a reasonable price range and help to manage your expectations. A good buyer's agent knows there is always more to an offer than its price, but price is paramount.
Selling Real Estate
Before selling your home or property or marking dates on your calendar for an open house, it's smart to prepare a home selling plan. As a novice, it is best to seek the help of professional guidance through a licensed real estate agent. Of course you want top dollar, but you could make costly mistakes by undertaking the business transaction of selling real estate.
While enthusiasm is good, you need to be fully prepared to understand the process and procedure before you to run out and display a “For Sale” sign.
Motivation for selling
Explore your reasons for wanting to sell. Everybody could have a reason to sell, but there needs to be a trigger to do so. If you aren't truly motivated or committed to selling, such as awakening one morning with the idea of moving to the other side of town, you haven't completely thought through the reasoning. This could easily set you up for disappointment.
Most people who sell property do so to buy another property, and most likely this is to go from one home to another. If this is your motivation, put together a list of neighborhoods where you may want to live and drive them. Go to open houses. Check out pricing between newer and older homes. Weigh your options and you might find it wiser to stay where you are.
Engaging a Real Estate professional
Don’t go it alone. Talk to at least three agents with expertise in your geographic area you’re interested in and ask for a marketing plan that explains what actions will be taken to market your home. This should include a comparative market analysis.
Therefore, don’t select a selling agent based on a suggested sales price. Some agents will attempt to overbid the market value of the property itself or for its neighborhood just to get the listing.
Preparing your home for sale
You want your house to be “move in” ready. That means you want to eliminate all clutter and debris from all areas of the house and property. If selling just property, remove all material that a new owner would not want. Pare down on your household items; move out bulky and excess furniture.
Repairs before selling
Not all resale repairs will pay off. You don't want to spend a lot of money making improvements, but you do want to repair obvious maintenance issues, if any have been neglected.
You can hire a professional stager. A good “neutral” staging can help increase the sale price, but it also may be a drain that doesn't move the property to sale. Ask your agent if this is a step to take and the expense will pay off upon sale.
This may be the most difficult aspect of selling a property. Owners may have as much emotional investment as financial investment in a piece of property. This clouds judgment, which often results in a delayed sale, if one occurs at all.
Over-improvement to a property during ownership does not always come back in a sale price. The visual and aesthetic improvements owners make for their own taste and comfort many times have no relevance to potential buyers, or in the location of the property.
Buyers familiar with the local market know a fair price for a property, even when considering all the various attributes. A property that sells within a few days/weeks is one that is properly priced, and buyers familiar with a local market know it.
Overpricing a property serves no purpose, even getting to the point of potentially selling for less than market value if on the market too long.
Net profits from the sale
I always prepare two net sheets for sellers, each with a low price and a high price. This way, sellers can be prepared for the worst and hope for the best. If the lowest net price will let you buy the home you want, it's time to find financing.