Read these 12 Real Estate Tips tips to make your life smarter, better, faster and wiser. Each tip is approved by our Editors and created by expert writers so great we call them Gurus. LifeTips is the place to go when you need to know about Real Estate tips and hundreds of other topics.
Multiple Listing Service (MLS) is a clearinghouse for real estate listings. Any Realtor who is a member of MLS can list the properties they have for sale, and view other Realtors' property listings. While MLS listings used to be the purview of Realtors only, the public can now get access to these listings through www.MLS.com, www.Realtor.com, and others.
"Flipping property" is as legal and ethical as the person doing the flipping. It can be potentially lucrative if you know what you are doing. Potential buyers looking for the perfect house will not care that the house was purchased for less if the work and repairs were done in a professional manner. Many people do not have time to "fix-up" houses and prefer one that they can just move into without any hassle, as long as the house is not overpriced for the area. A vacant house with fresh paint, new kitchen, bathroom, windows, roof, etc., will give the buyer a better picture on how they want to decorate and arrange their own prized possessions. "Flipping" is when an investor buys a piece of real estate and then quickly resells it at a higher price, either a few days or months later. It has gotten a bad rap, though, for several reasons. In order to succeed, some investors have been known to commit fraud, often through the use of stretched appraisals that improperly push up the value of the property. There are also many honest investors who make good money by flipping properties, without disrupting their local markets. The strategy is to find properties that are underpriced with values that can reasonably be marked up after they are fixed or repaired before they are resold.
Just be aware of the risks, which are considerable. If you plan to flip a property, there's a good chance you will have to pay a 6% realtor commission to sell it. That means if you are selling a $200,000 home, you will need to make $12,000 in profit just to offset your fees. You also have to factor in repair costs for the home, which can be substantial, plus all the time and labor you put into the process.
Much is said and written in real estate circles about 'buyer's markets' and 'seller's markets,' and with good reason. It's always helpful to know what you're up against in terms of supply and demand, especially when making a major purchase like a home. If you're a first-time homebuyer, you want to buy during a 'buyer's market' if you can. You'll have a lot of homes to choose from, and more negotiating power to get a better deal. Once you've bought your first home and are moving up (or downsizing), the type of market becomes less important. When you are both a buyer and a seller at the same time, it doesn't matter as much what the market is doing. It may influence your timing for putting your house on the market (e.g., before or after you've found the house you want to buy), but otherwise, it's a wash, so to speak.
The dynamics of the real estate markets are constantly shifting based on the number of houses currently available for sale, interest rates, and a myriad of other factors. If you are buying a home, this can impact how you negotiate the terms of the sale. When a market is said to be a "seller's market," that means that the buyer has less leverage--or power, if you will--than the seller. How? In a seller's market, local real estate companies are generally under-stocked with inventory, which means there are fewer homes for buyers to choose from and selling prices are generally higher. The fewer houses there are for buyers to choose from, the more competition there is among buyers. This frequently leads to bidding wars between buyers with houses often selling for more than the original asking price. Buyers in a seller's market need to understand the markets they are buying in so they do not pay unreasonably high selling prices. In the hot markets seen throughout the U.S. over the past couple of years, many buyers have begun using the services of a buyer's broker. Buyer's brokers work for you exclusively looking for the best property to meet your needs at the best selling price.
Relocating to an unfamiliar area can be unsettling, so it's a good idea to work with a relocation specialist. Many real estate agencies have agents who specialize in providing relocation services, including finding temporary or permanent housing in your new community. To find a relocation specialist in the area you are moving to, check with the local real estate agent you used to purchase your existing property. Your agent may refer you to an agency at the other end or may help co-coordinate your relocation services. Another resource when relocating, assuming you are doing so for job-related reasons, is the hiring company's human resource department. If it is a medium or large company, chances are the human resources staff has given many an employee referrals to local services. For example, if you were relocating to New York City, the hiring company may refer you to the Manhattan Board of Realtors to find a relocation specialist who will comb the real estate listings to help you find a new home.
For most people, their home is the single largest investment they will make. Some people take the concept of real estate as an investment to the next level. They buy property, and either fix it up and sell it again, or rent it out for an income stream. If you want to use real estate as an investment, you'll be best off if you're able to make improvements to the property yourself or at a very reasonable cost (if you have a brother-in-law who's a plasterer, for example). You'll also need to decide if you're cut out to be a landlord, knowing that you'll get the call about the broken water heater at 5:00 a.m.
The process of buying a second home or vacation home is much like the process of buying a first home (or 'primary residence' in mortgage parlance). Some considerations are different. First, if you're planning to rent out the vacation home for a part of the year, there are implications to the size of the mortgage you'll qualify for. Second, whether you rent it out or not, there are tax implications. Only the interest on your primary mortgage is deductible on your income taxes, so you won't enjoy that deduction on the mortgage on your second home.
Not every home that's sold is listed in the Multiple Listing Service. In fact, many homes are sold privately, with or without the help of a realtor. If you want to move within your own community, or have ties in the community you want to move to, it often pays to establish a relationship with a realtor who is well established in the area. It's also helpful to let your friends and family know where you want to move to and what type of house you're looking for. You never know who might 'know someone who knows someone' who is selling just the type of house you want.
The dynamics of the real estate markets are constantly shifting based on the number of houses currently available for sale, interest rates, and a myriad of other factors. If you are buying a home, this can impact how you negotiate the terms of the sale. When a market is said to be a "buyer's market," that means that the buyer has more leverage--or power, if you will--than the seller. How? In a buyer's market, real estate companies are generally well-stocked with inventory, which means there are plenty of homes for buyers to choose from and the selling prices are generally lower. The more houses there are for buyers to choose from, the more flexible sellers have to be to sell their homes. For example, in a buyer's market, sellers may offer to split points with the buyer or return a certain amount of money to the buyer at closing to put toward home repairs. Buyers in a buyer's market hold more leverage than sellers, and should use that leverage to their advantage to negotiate more favorable sales terms.
FSBO (pronounced "fiz-bo") stands for "For Sale By Owner." Thanks to the hot real estate markets throughout the U.S.over the past few years, more and more FSBO real estate property listings are popping up in classified ads all over the country. Why? It's been a seller's market in many markets in recent years. Houses are being snapped up by buyers sometimes before the for-sale sign is even in place. If a particular house is especially desirable, very often there is a bidding war buyers and the house sometimes sells for more than the original asking price. On the surface, it appears the real estate agent has done little or no work to sell the property--and in some cases, that may be true. If you are considering buying a FSBO property, you should hire a real estate attorney to represent you in the transaction. While licensed real estate agents are required by law to adhere to certain regulations regarding disclosures about the property being sold, homeowners selling their own property are not. If you are considering selling your home yourself, you too need to hire a real estate attorney to ensure that you are fulfilling your obligations to the letter of the law in order to avoid potential legal problems down the line.
The recent "hot" real estate market has inspired many to become real estate investors. If you are thinking about investing in real estate, you will need to establish your goals first. Do you want to buy fixer-uppers and then sell them after you have improved them or do you want to buy homes that can be turned into rental properties?
Everyone is familiar with the idea of buying property that is in need of repair, fixing it and selling it for a profit. What most fail to calculate is the cost of the materials, repairs, holding expense (monthly payments, utilities and insurance for a vacant home) and closing costs associated with the future sale. If a property is not purchased at a price far below its potential market value for the neighborhood - it will result in a loss once the project is complete.
To avoid losing money, the down payment, closing costs and mortgage must be added to the cost of repairs and labor as well as to the fees for selling the home to determine basis. If the market will not exceed the total of those expenses, you will not make any money. If the market does exceed the total; you can evaluate if it exceeds the total by enough of a profit to make the project worth doing.
The second form of investing is to purchase homes that you will convert to long-term investments or rentals. In this instance, you are collecting monthly rental that should equal or exceed your principal, interest, taxes and insurance for the property. In stable markets, the appreciation for the property should be in the range of 3-5% (higher in some markets) and the tenant's rent will make the payment. The challenge to owning rental property is in finding good tenants who are rent-worthy and the role of becoming a landlord who is subject to constant repairs.
Whether you're looking for real estate listings in your backyard or on the other side of the country, turning to the real estate page of the nearest metropolitan area's daily newspaper can be a tremendous resource. For example, if you're looking for Boston homes for sale, you could check out the Massachusetts real estate listing section at the Boston Globe's Web site. Here you'll find not only residential listings, but also commercial real estate listings and links to mortgage lenders and community profiles that include information on taxes, schools, and local amenities.