Wednesday, June 16, 2010
Multiple listing service (MLS)
The Real Estate Dictionary term of the day is, the Multiple Listing Service, is a system that brokers affiliate their selves with to share and coordinate real estate listings with each other. The Real Estate Dictionary has identified an example of this term. Say you tell a real estate agent that you want a house that is under $200,000 that is three bedrooms and two baths with a pool. The broker will look up all the houses in the system shared by the brokers and agents and from this list they compile a list of houses to show the agent. This system is the most vital part of information sharing in the broker and agent community. Multiple listing service joins brokers together. The Real Estate Dictionary believes that this is a very well established an organized program for searching property. HOME
Real estate listing agreements
The Real Estate Dictionary topic of the day is, Real Estate listing agreements are a contract between a buyer or a seller and a real estate broker. The Real Estate Dictionary has identified 3 rules of a listing agreement:
1. Brokers or the agent of the broker (salesperson) are only allowed to offer a property for sale for the amount agreed upon in the listing agreement.
2. All of the instructions or requests made by the owner in the agreement must be followed as long as the requests correspond with laws.
3. All information a seller gives to the agent or broker must be verified as true and must be accurate in order to avoid false advertising.
There are four types of listing contracts for real estate. Remember a listing contract is just an agreement by an owner to have a home sold by a broker or agent on their behalf?
Open Listing: The Real Estate Dictionary has identified the open listing. This is a listing agreement where the seller basically says they have the right to have multiple representatives (brokers) trying to sell the property. This means that whoever sells the house gets the commission. This is the lease desirable listing because you will work to sell the house and someone else could sell it quicker and you basically worked for free. Under this contract just remember who ever is the procuring cause of the sale gets the commission.
Exclusive Agency Listing: The Real Estate Dictionary has identified the exclusive agency listing as a lot better then an open listing but still not the most desired contract. This type of agreement says that only one broker is allowed commission on the sale of the house. This provides protection for the broker. The downside of this agreement is that the owner of the house retains the right to sell the house on their own and not pay a broker commission. Also the broker can work with other brokers and sell the house with negotiated commission splits. A possible scenario that can occur making the agreement not so desired is a broker finds a buyer and then the seller contacts the buyer and says wait until my agreement is expired and I will sell you the house for cheaper since we will not have a commission to pay.
Exclusive Right-to-Sell Listing: The Real Estate Dictionary has identified this type of listing as the mother of real estate listings. This one offers the most protection and offers the greatest incentive for the broker to get the job done. Under this agreement only one broker is allowed a commission on the sale of the house. If anyone else sells the house while under this contract the broker who has this contract gets the commission even if they did not sell the house. This means that no matter who locates a buyer the one with this agreement gets the commission and the best part is that they do not even have to prove they are the reason the home sold.
Net Listing: The Real Estate Dictionary has identified this as a agreement where the seller states the amount they want the house to sell for and the broker or agent gets any amount of money that the house sells for beyond that price. An example is a person selling a house for $80,000and the broker sells it for $90,000, he broker gets $10,000 in commission. Net listings are illegal in most states and the rest they are frowned upon. You will most likely never get to do one of these listings.
In order for a listing agreement to be valid it must contain these items:
1. It has to be in writing.
2. It must contain a description of the property aka legal description.
3. The price it’s selling for (listing price).
4. Date the agreement ends (expiration date).
5. Total commissions to be paid.
6. Which type of listing it is.
7. Terms of listing and conditions of listing.
8. Agreement must be signed by both the seller and the broker.
Listing agreements can be terminated in the following ways?
1. Property sells.
2. Agreement expires
3. Seller or the broker dies
4. Property is eliminated example it burns down/
5. The property is subjected to Condemnation
6. The property is foreclosed.
7. All parties of the agreement mutually terminate agreement.
8. One party decides to cancel the agreement
***In the situation where one party decides to back out of the agreement there is a possibility for the other to take recourse of action ex. lawsuit.
A protective period clause or safety clause provides protection from a seller waiting until a contract has expired to sell the property to an interested buyer. During this timeframe stated the broker is due a commission if they are the cause of the sale even after the agreement is expired.
The Real Estate Dictionary has believes this is everything that you need to know about real estate listing agreements. HOME
1. Brokers or the agent of the broker (salesperson) are only allowed to offer a property for sale for the amount agreed upon in the listing agreement.
2. All of the instructions or requests made by the owner in the agreement must be followed as long as the requests correspond with laws.
3. All information a seller gives to the agent or broker must be verified as true and must be accurate in order to avoid false advertising.
There are four types of listing contracts for real estate. Remember a listing contract is just an agreement by an owner to have a home sold by a broker or agent on their behalf?
Open Listing: The Real Estate Dictionary has identified the open listing. This is a listing agreement where the seller basically says they have the right to have multiple representatives (brokers) trying to sell the property. This means that whoever sells the house gets the commission. This is the lease desirable listing because you will work to sell the house and someone else could sell it quicker and you basically worked for free. Under this contract just remember who ever is the procuring cause of the sale gets the commission.
Exclusive Agency Listing: The Real Estate Dictionary has identified the exclusive agency listing as a lot better then an open listing but still not the most desired contract. This type of agreement says that only one broker is allowed commission on the sale of the house. This provides protection for the broker. The downside of this agreement is that the owner of the house retains the right to sell the house on their own and not pay a broker commission. Also the broker can work with other brokers and sell the house with negotiated commission splits. A possible scenario that can occur making the agreement not so desired is a broker finds a buyer and then the seller contacts the buyer and says wait until my agreement is expired and I will sell you the house for cheaper since we will not have a commission to pay.
Exclusive Right-to-Sell Listing: The Real Estate Dictionary has identified this type of listing as the mother of real estate listings. This one offers the most protection and offers the greatest incentive for the broker to get the job done. Under this agreement only one broker is allowed a commission on the sale of the house. If anyone else sells the house while under this contract the broker who has this contract gets the commission even if they did not sell the house. This means that no matter who locates a buyer the one with this agreement gets the commission and the best part is that they do not even have to prove they are the reason the home sold.
Net Listing: The Real Estate Dictionary has identified this as a agreement where the seller states the amount they want the house to sell for and the broker or agent gets any amount of money that the house sells for beyond that price. An example is a person selling a house for $80,000and the broker sells it for $90,000, he broker gets $10,000 in commission. Net listings are illegal in most states and the rest they are frowned upon. You will most likely never get to do one of these listings.
In order for a listing agreement to be valid it must contain these items:
1. It has to be in writing.
2. It must contain a description of the property aka legal description.
3. The price it’s selling for (listing price).
4. Date the agreement ends (expiration date).
5. Total commissions to be paid.
6. Which type of listing it is.
7. Terms of listing and conditions of listing.
8. Agreement must be signed by both the seller and the broker.
Listing agreements can be terminated in the following ways?
1. Property sells.
2. Agreement expires
3. Seller or the broker dies
4. Property is eliminated example it burns down/
5. The property is subjected to Condemnation
6. The property is foreclosed.
7. All parties of the agreement mutually terminate agreement.
8. One party decides to cancel the agreement
***In the situation where one party decides to back out of the agreement there is a possibility for the other to take recourse of action ex. lawsuit.
A protective period clause or safety clause provides protection from a seller waiting until a contract has expired to sell the property to an interested buyer. During this timeframe stated the broker is due a commission if they are the cause of the sale even after the agreement is expired.
The Real Estate Dictionary has believes this is everything that you need to know about real estate listing agreements. HOME
Sunday, June 13, 2010
Federal fair housing law
The Real Estate Dictionary topic of the day is Fair housing:
The Real Estate Dictionary believes that Fair Housing is the most important aspect of real estate to learn. Fair housing was created in 1968 in response to the overwhelming demand in America for equal rights to buy, rent, or advertise real estate without unfair treatment based on an individuals class.
Classes are simply a grouping of different types of individuals. The following classes or individuals that are protected under the fair housing amendment are race, religion (aka creed), sex, national origin, handicap, and familial status.
Most of these classes are easy to define based on simply the word that describes the class. There are two that are not so simple. The first is handicap. Handicap classification is defined as a person limited because of physical or mental capacity to function or make decisions. In order for a person to be protected under the fair housing they must have the handicap acknowledged by a doctor or a legal court. Handicapped persons are allowed to update a place they are renting at their own financial burdeon.
The second is familial status. In order for to be considered under this classification there must be one adult and one child that is under 18 years of age. Understand that a family can be refused rental if they are trying to rent a property that does not have adequate space. An example of this would be a parent with three kids trying to rent a one bedroom apartment.
There are certain situations where the fair housing laws do not apply. The three situations are an owner with three or less properties, not using a broker, and an owner who not discriminate in advertising. What all this means is that if a person does not buy and sell or rent homes for a living hence the three or less properties, does not use a broker to sell the home, and does not discriminate when they advertise the property for rent or sale, they can chose to rent or sell to whoever they want.
Another type that is exempt from fair housing laws is an multi family unit building of 4 units or less that is owner occupied. A multi family unit is basically one big house that is converted into 4 separate little apartments. Important very important the unit must be owner occupied which makes it less then four properties.
Religious organizations are also exempt from fair housing. In order for them to be exempt they must rent or sell to people only of that religion and the property can not be commercial. What commercial means is opening a restaurant for example and saying only Christians allowed.
Private clubs such as a golfing club are also exempt from fair housing as long as they remain private and are not commercial real estate.
******Multi-family properties that were constructed before the year 1992 must have handicap access defined within the amendment. This is called reasonable access. Reasonable would be something like getting a parking space zoned as handicap not constructing an elevator for a person.
Properties that were constructed after 1992 must have fair access for everyone. This means things such as elevators or access suitable for a wheelchair to enter like a ramp.
Familial status does not have to be acknowledged when the housing is for a retirement community which requires all residents to be over the age of 62 years old. It is important to understand that communities like this require special licenses, and you can’t just decide your only going to rent to people over that age to exclude families or African Americans for example.
Besides the exemptions listed it is 100% illegal to refuse to rent, sell, or even refuse to talk about selling or renting to people of a protected class. It is also illegal to increase the rent on a protected class because they are that class. If you are renting or selling you can not advertise one type of contract and then change the terms for the protected class. A simple example of this would be offering rent at $500.00 per month to everyone and then offering $600.00 a month rent to a protected class.
There are certain activities that are prohibited in fair housing and they have catchy names. These activities are blockbusting, steering, and redlining.
Block busting is convincing owners to sell because a protected class is moving to the neighborhood. An example would be convincing white people to move because of African Americans coming to the neighborhood.
Steering is intentionally not showing real estate to a protected class. This would be say a real estate agent telling a white person they will not be a good fit in Compton, California. So they say lets go look in Hollywood instead.
Redlining is not approving loans or decreasing the number of loans to protected classes within a certain area. An example would be if a bank says we can only give out 5 loans this year for black people in Hollywood.
Fair housing is enforced in three different ways. Federal fair housing laws, state fair housing laws, and local fair housing laws. Federal is managed by housing of urban development (HUD), state is managed by individual state agencies, and local is managed by whatever local entity they have in place.
If you are a protected class that feels these rights have been breached, you can file a complaint with each of the agencies and the agency with the strictest regulations are the rules of that area that must be followed. What this means is that if a state has tighter restrictions on fair housing a person can not just follow the federal law, they are in violation if they do not follow the stricter law. Hopefully by now you have a good idea what federal fair housing is.
The Real Estate Dictionary has discovered a site that you can visit to file a complaint you can go directly to the site by clicking this link to the HUD websiteHome
The Real Estate Dictionary believes that Fair Housing is the most important aspect of real estate to learn. Fair housing was created in 1968 in response to the overwhelming demand in America for equal rights to buy, rent, or advertise real estate without unfair treatment based on an individuals class.
Classes are simply a grouping of different types of individuals. The following classes or individuals that are protected under the fair housing amendment are race, religion (aka creed), sex, national origin, handicap, and familial status.
Most of these classes are easy to define based on simply the word that describes the class. There are two that are not so simple. The first is handicap. Handicap classification is defined as a person limited because of physical or mental capacity to function or make decisions. In order for a person to be protected under the fair housing they must have the handicap acknowledged by a doctor or a legal court. Handicapped persons are allowed to update a place they are renting at their own financial burdeon.
The second is familial status. In order for to be considered under this classification there must be one adult and one child that is under 18 years of age. Understand that a family can be refused rental if they are trying to rent a property that does not have adequate space. An example of this would be a parent with three kids trying to rent a one bedroom apartment.
There are certain situations where the fair housing laws do not apply. The three situations are an owner with three or less properties, not using a broker, and an owner who not discriminate in advertising. What all this means is that if a person does not buy and sell or rent homes for a living hence the three or less properties, does not use a broker to sell the home, and does not discriminate when they advertise the property for rent or sale, they can chose to rent or sell to whoever they want.
Another type that is exempt from fair housing laws is an multi family unit building of 4 units or less that is owner occupied. A multi family unit is basically one big house that is converted into 4 separate little apartments. Important very important the unit must be owner occupied which makes it less then four properties.
Religious organizations are also exempt from fair housing. In order for them to be exempt they must rent or sell to people only of that religion and the property can not be commercial. What commercial means is opening a restaurant for example and saying only Christians allowed.
Private clubs such as a golfing club are also exempt from fair housing as long as they remain private and are not commercial real estate.
******Multi-family properties that were constructed before the year 1992 must have handicap access defined within the amendment. This is called reasonable access. Reasonable would be something like getting a parking space zoned as handicap not constructing an elevator for a person.
Properties that were constructed after 1992 must have fair access for everyone. This means things such as elevators or access suitable for a wheelchair to enter like a ramp.
Familial status does not have to be acknowledged when the housing is for a retirement community which requires all residents to be over the age of 62 years old. It is important to understand that communities like this require special licenses, and you can’t just decide your only going to rent to people over that age to exclude families or African Americans for example.
Besides the exemptions listed it is 100% illegal to refuse to rent, sell, or even refuse to talk about selling or renting to people of a protected class. It is also illegal to increase the rent on a protected class because they are that class. If you are renting or selling you can not advertise one type of contract and then change the terms for the protected class. A simple example of this would be offering rent at $500.00 per month to everyone and then offering $600.00 a month rent to a protected class.
There are certain activities that are prohibited in fair housing and they have catchy names. These activities are blockbusting, steering, and redlining.
Block busting is convincing owners to sell because a protected class is moving to the neighborhood. An example would be convincing white people to move because of African Americans coming to the neighborhood.
Steering is intentionally not showing real estate to a protected class. This would be say a real estate agent telling a white person they will not be a good fit in Compton, California. So they say lets go look in Hollywood instead.
Redlining is not approving loans or decreasing the number of loans to protected classes within a certain area. An example would be if a bank says we can only give out 5 loans this year for black people in Hollywood.
Fair housing is enforced in three different ways. Federal fair housing laws, state fair housing laws, and local fair housing laws. Federal is managed by housing of urban development (HUD), state is managed by individual state agencies, and local is managed by whatever local entity they have in place.
If you are a protected class that feels these rights have been breached, you can file a complaint with each of the agencies and the agency with the strictest regulations are the rules of that area that must be followed. What this means is that if a state has tighter restrictions on fair housing a person can not just follow the federal law, they are in violation if they do not follow the stricter law. Hopefully by now you have a good idea what federal fair housing is.
The Real Estate Dictionary has discovered a site that you can visit to file a complaint you can go directly to the site by clicking this link to the HUD websiteHome
Saturday, June 5, 2010
Eminent domain
Real Estate Dictionary has concluded that eminent domain is a set of words that is commonly heard in media and has caused many lawsuits throughout the history of real estate. The important question that is asked by many or runs through the minds of the person watching the news is what is it and how does it effect me?
Eminent domain is a law that states that the certain entities can take a property from an owner for the greater good of the community. An example of eminent domain is a city having constant traffic and the city needs your property to extend the road from a one lane to a two lane road.
The other question is how is conducted. This rule is conducted by paying fair market value for the property. In other words if your home in fair market value is $80,000 they only have to give you $80,000. The issue that a lot of people have with this is some people spend $40,000 fixing there house up and it could be worth $120,000, meaning the homeowner basically gets the house stolen from them.
There are a couple of entities that can enforce this policy. They include utility companies, military, government, and railroads. The federal government states that each state in the united states has the authority to decide what justifies enforcement. This means that if missouri for example decides that a farm owner would be able to provide cheaper corn to the people and provide it faster if an extension was built. Missouri could realistically decide that the farmer has power under this law. This is an unlikely scenario but very possible under eminent domain. HOME
Eminent domain is a law that states that the certain entities can take a property from an owner for the greater good of the community. An example of eminent domain is a city having constant traffic and the city needs your property to extend the road from a one lane to a two lane road.
The other question is how is conducted. This rule is conducted by paying fair market value for the property. In other words if your home in fair market value is $80,000 they only have to give you $80,000. The issue that a lot of people have with this is some people spend $40,000 fixing there house up and it could be worth $120,000, meaning the homeowner basically gets the house stolen from them.
There are a couple of entities that can enforce this policy. They include utility companies, military, government, and railroads. The federal government states that each state in the united states has the authority to decide what justifies enforcement. This means that if missouri for example decides that a farm owner would be able to provide cheaper corn to the people and provide it faster if an extension was built. Missouri could realistically decide that the farmer has power under this law. This is an unlikely scenario but very possible under eminent domain. HOME
Thursday, June 3, 2010
privacy policy
Privacy Policy for http://realestate-encyclopedia.blogspot.com/
If you require any more information or have any questions about our privacy policy, please feel free to contact us by email at clinton.muehlenbrock@yahoo.com.
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These third-party ad servers or ad networks use technology to the advertisements and links that appear on http://realestate-encyclopedia.blogspot.com/ send directly to your browsers. They automatically receive your IP address when this occurs. Other technologies ( such as cookies, JavaScript, or Web Beacons ) may also be used by the third-party ad networks to measure the effectiveness of their advertisements and / or to personalize the advertising content that you see.
http://realestate-encyclopedia.blogspot.com/ has no access to or control over these cookies that are used by third-party advertisers.
You should consult the respective privacy policies of these third-party ad servers for more detailed information on their practices as well as for instructions about how to opt-out of certain practices. http://realestate-encyclopedia.blogspot.com/ privacy policy does not apply to, and we cannot control the activities of, such other advertisers or web sites.
If you wish to disable cookies, you may do so through your individual browser options. More detailed information about cookie management with specific web browsers can be found at the browsers' respective websites.
If you require any more information or have any questions about our privacy policy, please feel free to contact us by email at clinton.muehlenbrock@yahoo.com.
At http://realestate-encyclopedia.blogspot.com/, the privacy of our visitors is of extreme importance to us. This privacy policy document outlines the types of personal information is received and collected by http://purchaseleaseoptionscontracts.blogspot.com and how it is used.
Log Files
Like many other Web sites, http://realestate-encyclopedia.blogspot.com/ makes use of log files. The information inside the log files includes internet protocol ( IP ) addresses, type of browser, Internet Service Provider ( ISP ), date/time stamp, referring/exit pages, and number of clicks to analyze trends, administer the site, track user’s movement around the site, and gather demographic information. IP addresses, and other such information are not linked to any information that is personally identifiable.
Cookies and Web Beacons
http://purchaseleaseoptionscontracts.blogspot.com does not use cookies.
DoubleClick DART Cookie
.:: Google, as a third party vendor, uses cookies to serve ads on http://realestate-encyclopedia.blogspot.com/
.:: Google's use of the DART cookie enables it to serve ads to users based on their visit to http://purchaseleaseoptionscontracts.blogspot.com and other sites on the Internet.
.:: Users may opt out of the use of the DART cookie by visiting the Google ad and content network privacy policy at the following URL - http://www.google.com/privacy_ads.html
Some of our advertising partners may use cookies and web beacons on our site. Our advertising partners include ....
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These third-party ad servers or ad networks use technology to the advertisements and links that appear on http://realestate-encyclopedia.blogspot.com/ send directly to your browsers. They automatically receive your IP address when this occurs. Other technologies ( such as cookies, JavaScript, or Web Beacons ) may also be used by the third-party ad networks to measure the effectiveness of their advertisements and / or to personalize the advertising content that you see.
http://realestate-encyclopedia.blogspot.com/ has no access to or control over these cookies that are used by third-party advertisers.
You should consult the respective privacy policies of these third-party ad servers for more detailed information on their practices as well as for instructions about how to opt-out of certain practices. http://realestate-encyclopedia.blogspot.com/ privacy policy does not apply to, and we cannot control the activities of, such other advertisers or web sites.
If you wish to disable cookies, you may do so through your individual browser options. More detailed information about cookie management with specific web browsers can be found at the browsers' respective websites.
No money down real estate investment
No money down real estate investing is complex. Throughout the history of real estate, the desire to get rich quick without risking your own financial security is the big question. Every night on many television stations there are many people who advertise how easy it is to make money in real estate without spending money. They offer you the key to financial freedom for 3 monthly payments of $19.99. Every single night people call the 1-800 numbers at the bottom of the screen and purchase the plan failing to realize they just spent money to figure out a way to invest without spending money. The unfortunate fact is that yes there are ways to invest in real estate without spending money, but spending giving 3 payments of $19.99 is not the way. The following is a step by step way to invest without throwing away money on advertising gimmicks.
The first step to investing in real estate is doing your homework. If you are interested in making money in real estate the first thing you have to understand is the real estate market. Without solid research of market trends and the individual property, it will not matter if you pay $1 for a piece of real estate, you will lose money. Here is a list of items that must be considered before you put into effect any no money real estate ideas:
Research a 10 year statistic of the area. Researching the area to find out the crime rate, and property values for the last 10 years will give you the investor an idea as to whether it is smart to invest within that region. If home prices keep dropping and crime keeps rising, the beautiful area is not worth it because this is what potential home owners look at when deciding whether to buy.
After you find an area that passes the 10 year statistics test, the real fun begins. Locating and inspecting properties. The second step is the most vital step in investing.
2. Are there liens on the property (companies or government assigning debt to the property)? This is important because if a lien of $20,000 in unpaid taxes is attached to the property, the debt will become yours when you take possession of the title. If this happens you will not close on the property and if you pay cash nobody will buy it from you due to lack of clear title.
3. Is the property damaged? It is important to understand that a property may look like a good investment but under the beautiful surface may be a defect that can bankrupt the beginning investor. Plumbing leaks, damaged roof, and crumbling foundation
are just a few of many items that can destroy the unprepared investor.
Once you have done your research and found a property that passes the test of the three areas above, it is possible to invest with no money down. A simple reality that get rich quick advertisers and potential investors fail to mention and realize is that without the ability to sell a deal, there will never be a deal. An individual must be able to convince someone that they should trust you to sell the home or turn over rights to the property.
If you have read this article thus far and feel you have done your homework and you can sell a deal, the rest of this article will give you the keys making money, it is up to you to sell the deal.
The one true way to make money from real estate investing using little or no money is by using the option technique. An option is a contract between the owner and the investor granting the sole right of sale to the investor. This may sound confusing but it is fairly simple. The following is a scenario of how it is used.
Investor tom finds a property that is worth about 60% of the value it should be due to cosmetic problems. Investor Tom asks owner Bill if he is interested in selling his house. Bill says yes I want to sell my house. Investor Tom says great, I lack the ability to purchase the home right now but I will be able to purchase the home within a year. Tom asks bill to sign an option to purchase the home for an arranged sum of money to serve as the purchase price of the option.
Once Tom has secured the option to purchase the home he has one year to find someone who will buy the option from him or try to sell the home himself.
While it is possible to make money investing in real estate using an option, you have to be a salesperson to convince the owner to take the home off of the market for a year while you secure financing.
It is important to understand that nothing in this world is free but things can be cheap. Offering the owner $500.00 for a one year option to buy with right of access and an equity position is a realistic way to approach options. What this means is that the investor and seller agree to the option and the seller grants the investor the right to remodel the house and sell the home for an arranged price plus 25% of the equity gained by remodeling the house. For example say the house could be worth 150,000 once it is remodeled, and it will cost $3,000 to remodel. The investor agrees to let you sell the house for $100,000 and 25% of the equity. This deal would cost the investor $3,500 which is the remodeling and the option price combined. The house then sells for $150,000 having a total equity of $50,000. After deducting the $3,500 dollars from the equity the investor is left with $46,500 to be split between the owner and the investor.
There are other methods being offered to buy houses with no money such as lease options but you must understand that either the investor will be paying that rent or the investor will be finding someone to rent the house. Before you consider that to be a great idea ask yourself two questions:
Is paying rent spending money? What if you do not find a renter?
While it is possible to invest in real estate using no money, it is not likely and will require a investor with superb sales ability. A realistic way to approach investing is to think in terms of little money down instead of no money down because nothing in the world is free but things can be cheap. Here is a site with another informational article on how to invest in real estate without money http://www.helium.com/items/1831420-no-money-down-real-estate
The first step to investing in real estate is doing your homework. If you are interested in making money in real estate the first thing you have to understand is the real estate market. Without solid research of market trends and the individual property, it will not matter if you pay $1 for a piece of real estate, you will lose money. Here is a list of items that must be considered before you put into effect any no money real estate ideas:
Research a 10 year statistic of the area. Researching the area to find out the crime rate, and property values for the last 10 years will give you the investor an idea as to whether it is smart to invest within that region. If home prices keep dropping and crime keeps rising, the beautiful area is not worth it because this is what potential home owners look at when deciding whether to buy.
After you find an area that passes the 10 year statistics test, the real fun begins. Locating and inspecting properties. The second step is the most vital step in investing.
2. Are there liens on the property (companies or government assigning debt to the property)? This is important because if a lien of $20,000 in unpaid taxes is attached to the property, the debt will become yours when you take possession of the title. If this happens you will not close on the property and if you pay cash nobody will buy it from you due to lack of clear title.
3. Is the property damaged? It is important to understand that a property may look like a good investment but under the beautiful surface may be a defect that can bankrupt the beginning investor. Plumbing leaks, damaged roof, and crumbling foundation
are just a few of many items that can destroy the unprepared investor.
Once you have done your research and found a property that passes the test of the three areas above, it is possible to invest with no money down. A simple reality that get rich quick advertisers and potential investors fail to mention and realize is that without the ability to sell a deal, there will never be a deal. An individual must be able to convince someone that they should trust you to sell the home or turn over rights to the property.
If you have read this article thus far and feel you have done your homework and you can sell a deal, the rest of this article will give you the keys making money, it is up to you to sell the deal.
The one true way to make money from real estate investing using little or no money is by using the option technique. An option is a contract between the owner and the investor granting the sole right of sale to the investor. This may sound confusing but it is fairly simple. The following is a scenario of how it is used.
Investor tom finds a property that is worth about 60% of the value it should be due to cosmetic problems. Investor Tom asks owner Bill if he is interested in selling his house. Bill says yes I want to sell my house. Investor Tom says great, I lack the ability to purchase the home right now but I will be able to purchase the home within a year. Tom asks bill to sign an option to purchase the home for an arranged sum of money to serve as the purchase price of the option.
Once Tom has secured the option to purchase the home he has one year to find someone who will buy the option from him or try to sell the home himself.
While it is possible to make money investing in real estate using an option, you have to be a salesperson to convince the owner to take the home off of the market for a year while you secure financing.
It is important to understand that nothing in this world is free but things can be cheap. Offering the owner $500.00 for a one year option to buy with right of access and an equity position is a realistic way to approach options. What this means is that the investor and seller agree to the option and the seller grants the investor the right to remodel the house and sell the home for an arranged price plus 25% of the equity gained by remodeling the house. For example say the house could be worth 150,000 once it is remodeled, and it will cost $3,000 to remodel. The investor agrees to let you sell the house for $100,000 and 25% of the equity. This deal would cost the investor $3,500 which is the remodeling and the option price combined. The house then sells for $150,000 having a total equity of $50,000. After deducting the $3,500 dollars from the equity the investor is left with $46,500 to be split between the owner and the investor.
There are other methods being offered to buy houses with no money such as lease options but you must understand that either the investor will be paying that rent or the investor will be finding someone to rent the house. Before you consider that to be a great idea ask yourself two questions:
Is paying rent spending money? What if you do not find a renter?
While it is possible to invest in real estate using no money, it is not likely and will require a investor with superb sales ability. A realistic way to approach investing is to think in terms of little money down instead of no money down because nothing in the world is free but things can be cheap. Here is a site with another informational article on how to invest in real estate without money http://www.helium.com/items/1831420-no-money-down-real-estate
Tuesday, June 1, 2010
Finding Affordable Homes
Real Estate Dictionary has identified how to find affordable Real Estate even though it appears impossible to a significant number of people. The reality of purchasing an affordable home is that it is very simple. There are literally hundreds of ways to find discounted Real Estate. The following are the most common identified by the Real Estate Dictionary:
1. Cosmetically injured.
2. Bank owned.
3. Wholesale.
The first way to find an affordable piece of Real estate is to search for a property that is cosmetically injured. Cosmetically injured is a property that appears to be a property in bad condition. These are properties that need paint, carpet, cabinet refinishing, new appliances, and updated fixtures. Each one of these items can reduce the price of a home when it comes to appraisal. The fact is that most homebuyer’s lack the imagination to see what a home could look like fixed up. It is possible to find homes like this for up to 50% below market value. Purchasing one of these properties and spending a couple thousand dollars is your first way of obtaining the dream home at a decent price.
The second way to find affordable Real Estate at a decent price is to look for bank owned property. Bank owned properties are those that the bank foreclosed on the owner due to lack of payment. The reason it is wise to search for this type of property is because the bank simply wants he amount owed. What this means is that if someone purchased a home for $200,000 in 1990, the amount left on the mortgage is going to be significantly lower. The following is an example without interest being computed:
$200,000 (Original purchase price.)
-$133,000 (Total paid by original owner over 20 years.)
________________________________________________
$67,000 (Amount the bank wants for the property.)
As you can see from the equation above, the potential for the dream home and the dream price is very real and there are literally thousands of them on the market. The only challenge of getting a property like this is finding them. Generally you will not find these on the regular Real Estate market because many banks fear it will scare potential borrowers. The way to these homes is to get a realtor that specialized in bank owned property.
The third way to find the dream home for a great price is to purchase the property wholesale. Whole sales Real Estate are homes that are purchased by an individual who specializes in being a middleman in Real Estate transactions. Generally these homes are purchased for 60% of the market value or less. The whole sale specialist then looks for an investor who is wiling to purchase the home for a couple thousand dollars more then what they paid for it. Once again these homes are cosmetic homes and the only difference is that the home search has been completed for you.
In order to find whole sale properties you have to find he whole sale specialist. Whole sale specialists can be found two different ways. The first way is by doing a simple web search, just look up whole sale real estate. The second way to find whole sale specialists is to search the classified listings on your local newspaper.
There are literally hundreds of ways to find discounted Real Estate. Using the three methods listed in this article will open up new doors to having the dream home. Finding a discounted home is simple, it takes research, ability to imagine a damaged home being beautiful, and persistence. Do not give up your future home is out there, just go find it. Real Estate Dictionary home.
1. Cosmetically injured.
2. Bank owned.
3. Wholesale.
The first way to find an affordable piece of Real estate is to search for a property that is cosmetically injured. Cosmetically injured is a property that appears to be a property in bad condition. These are properties that need paint, carpet, cabinet refinishing, new appliances, and updated fixtures. Each one of these items can reduce the price of a home when it comes to appraisal. The fact is that most homebuyer’s lack the imagination to see what a home could look like fixed up. It is possible to find homes like this for up to 50% below market value. Purchasing one of these properties and spending a couple thousand dollars is your first way of obtaining the dream home at a decent price.
The second way to find affordable Real Estate at a decent price is to look for bank owned property. Bank owned properties are those that the bank foreclosed on the owner due to lack of payment. The reason it is wise to search for this type of property is because the bank simply wants he amount owed. What this means is that if someone purchased a home for $200,000 in 1990, the amount left on the mortgage is going to be significantly lower. The following is an example without interest being computed:
$200,000 (Original purchase price.)
-$133,000 (Total paid by original owner over 20 years.)
________________________________________________
$67,000 (Amount the bank wants for the property.)
As you can see from the equation above, the potential for the dream home and the dream price is very real and there are literally thousands of them on the market. The only challenge of getting a property like this is finding them. Generally you will not find these on the regular Real Estate market because many banks fear it will scare potential borrowers. The way to these homes is to get a realtor that specialized in bank owned property.
The third way to find the dream home for a great price is to purchase the property wholesale. Whole sales Real Estate are homes that are purchased by an individual who specializes in being a middleman in Real Estate transactions. Generally these homes are purchased for 60% of the market value or less. The whole sale specialist then looks for an investor who is wiling to purchase the home for a couple thousand dollars more then what they paid for it. Once again these homes are cosmetic homes and the only difference is that the home search has been completed for you.
In order to find whole sale properties you have to find he whole sale specialist. Whole sale specialists can be found two different ways. The first way is by doing a simple web search, just look up whole sale real estate. The second way to find whole sale specialists is to search the classified listings on your local newspaper.
There are literally hundreds of ways to find discounted Real Estate. Using the three methods listed in this article will open up new doors to having the dream home. Finding a discounted home is simple, it takes research, ability to imagine a damaged home being beautiful, and persistence. Do not give up your future home is out there, just go find it. Real Estate Dictionary home.
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