Avky Inc: How Sellers Prepare for Closing

avky inc

The following is an extended-length guest post from Avky Inc.

Avky Inc: How Sellers Prepare For Closing

Closing Date

Sellers All written contracts should have a closing date. The closing date is the day where everyone signs and the sale becomes a “done deal”…right? In theory, yes, that is right. In reality, that date is actually a “target” date to sign the paperwork. I can’t specifically recall any contract that has actually closed on the actual closing date. You see, most prepared contracts also provide for an automatic extension of that date to finalize contract terms and contingencies. Additionally, addendums are available allowing for more time to close a sale. With that said, every effort should be made to aim for the contract specified closing date. Ever, that if something does not fall into place that does not mean the entire sale is lost. Agreement of the parties is the key to determining the actual closing date.

Again the warning, make absolutely sure the agreement of the parties is in writing. This is, in particular, the time when the practice of getting things in writing seems to become lax. You have limited or no recourse if you allow the contract to expire without obtaining an extension in writing. Protect yourself!

Sellers Focus

The buyer will have to satisfy the lender requirements, review title policy, obtain insurance, etc… You do not need to pre-occupy yourself with the buyer’s responsibilities other than to get reassurance that they are being fulfilled. The details of their financing is of no importance to you. This book focuses attention to the sellers, so you need to pay attention to your duties. All too often sellers are so nosey finding out how much down payment the buyer is having to make or what interest rate they are getting that they fail to fulfill their own obligations. Unless the seller is owner financing, this information is useless to you.

What exactly are the responsibilities you need to focus on? Let’s discuss some of the basic ones. When you go to closing you will be reviewing, among other forms, a HUD1. This is a standardized forms that discloses all credits and debits to the buyer and seller. I have provided a blank sample for you to familiarize yourself with.

Loan Payoff

If you have a mortgage on your property how much is your payoff? It is generally not the amount that is shown on you monthly stub. That amount represents the payoff if you were to pay your loan in the time frame it was originated. You will need to call or fax a note to your lender requesting the payoff . They will need the name and address of the closing agent and the closing date

The closing date? Oh no, what happens if you don’t close on the closing date? Don’t fret, typically the mortgage company will add ten days or so of interest to the quoted payoff allowing for transaction and courier time. If you close on time you can expect a refund for a few dollars of interest. Other lenders might give a payoff for the actual closing date and instruct the closing agent to add a per day amount to cover the interest for each additional day past the quoted closing date.

It may seem petty for the lender to be so sticky about a few dollars here and there but I assure you they are not pleased about losing the long term interest they would have made had you kept your loan through the original term. They’re going to get every penny they can at this point.

Escrow Amounts

Many mortgages contain escrow clauses allowing the lenders set aside a monthly account to cover insurance and taxes. In these cases a portion of your payment is placed in this account. “Many people do not realize this. It is easy to take for granite that your lender pays your property taxes and insurances–not realizing that you are the one actually paying for them”, notes Avky Inc. co-founder Kyle Uchitel.

Since taxes and insurance may not be paid at the same time depending on your loan specifications (taxes are paid in arrears, insurance in advance) you will most likely have an amount due you from your escrow account.

Some lender will take this amount into consideration when supplying your loan pay-off to the closing agent and give you credit. Others will wait for a written request from you. It is your responsibility to determine which type of lender you have. I suggest that you request the status of your escrow account in writing at the same time you request your loan pay-off. Also at this time include a stipulation that if the lender does not provide credit at the time of closing they need to issue a refund check.

Taxes

Good news with the property taxes! Other than checking for accuracy you can leave the work to the closing agent. Depending on what time of the year you close on your sale you will either receive a credit or deduction for your taxes, states Avky Inc.

If you close on July 7th and taxes for the year have not been paid the closing office will estimate your taxes from January 1st through July 7th (the seller pays through the closing date) and charge that amount to you. That is, you will be have that amount deducted from your proceeds

Here’s the confusing part. The buyer will have that amount credited to their settlement costs. This means that they will have to come up with less funds at closing. However, when the tax bill becomes due the buyer will have to pay for the entire year, not just July 7th to December 31st.

This is really very simple but it sounds so confusing. Just remember taxes are paid at the end of the year (in arrears).
Now, for example, if you close the sale of your home in November, say November 12th, and your taxes were paid in full on October 31st the tables are turned. You have already paid the buyers portion of the taxes due (the amount from November 16th through December 31st so the buyer will have a charge on their closing statement for their pro-rated portion of the taxes and you will receive a credit. Remember, either way, the seller pays for the closing date.

Credits and More

These credits and deductions are irregardless of your status with your escrow account. You will have to get the refund from them, if applicable. The closing agent deals directly with the buyer and seller to issue tax credits and will not accept any lenders promise to pay taxes. Title can not be transferred with taxes due as the title insurance will not accept a tax lien on the property from an existing owner. Late taxes and penalties will also be taken from the seller proceeds.

A word of warning to the seller. It is not unheard of for a seller to have to come up with money to close a sale. If you are in a predicament where you have not paid your taxes in a few years you could find yourself in quite a bind come closing time. Those penalties add up fast! You can try and get a reduction from the taxing entity by begging but don’t count it as a sure thing! Some areas have laws prohibiting this. Don’t be embarrassed at closing time and expose yourself to liability. If you fall in this hole check out your financial ability to sell your home before placing it on the market.

Insurance

Unlike taxes, insurance policies are paid in advance. That means, depending on when your policy is issued, you have a full year of coverage. Say, for example, you paid your policy from April 1st to the next April 1st. If you close your sale in July you will be due a refund from the insurance company of a portion of the policy.

Avky Inc is a distribution company based out of Phoenix. Avky Inc can be reached on Twitter at @avkyinc.

Alex Vasser: Buying a Home in a Slow Real Estate Market

alex vasser

The following is a guest post from real estate economist and expert Alex Vasser, based out of Manhattan.

Enter Alex Vasser

If it’s a sellers market or a buyers market, it doesn’t matter. There are solid fundamentals that should be considered before buying a home. This is an unofficial list of the 5 most important things.

Get Preapproved from a Good Lender

A pre approval letter is simply numero uno when buying a home. All the other things are a moot point if a person can’t get the money to buy the home. A good lender, will not only get a competitive rate, but will spend the time and look at all the income and worth, to determine what can be afforded.

“Lenders aren’t giving away money anymore,” cites Arline Wong, a residential Real Estate agent in the Seattle area.
“It means something to get lender approval. Thsi shows you sat down and brought paystubs, W-2’s, and you worked to get that pre-approval letter. It shows you’re serious.”

Just remember, when submitting an offer, most will ask for an approval letter from the lender.

Hire a Qualified Buyers Agent

Not just any agent but a buyer’s agent. Like doctors, or lawyers, Realtors also specialize. Some just do listings or just concentrate a certain neighborhood. Don’t just hire the agent with the television commercials and all the signs around town. Make sure you get one that specializes in buyers.

“A good buyer’s agent will help you do everything you need to buy the home,” says Sue Brodie, , Prudential NW Realty’s VP and Managing Broker. “They’ll make sure you’re approved, tell you about the neighborhood and everything that comes with it. Even if they don’t have all the answers, they are qualified to find the answers you’re looking for. Realtors are held to a higher standard”

Prioritize Needs

The husband wants to be closer to work, the wife wants a good school district and the kids want to a big backyard. But what’s the most important? As buyers, be on the same page and prioritize the needs.

“So much falls under this category,” explains Brodie. “Whether it’s location, schools, or being close to work, it’s important the decision makers are in agreement. If they’re not, it’s like they’re working against each other.”

The 5 Year Plan

Especially in a slow market, plan on being in the home a minimum of five years. There is no such thing as flipping the houseanymore.
“I tell all my people to prepare to live in the home for at least five years,” says Joseph Ho, a commercial and residential agent of 25 years. “To build equity and recapture your investment, you’ll have to be in it for a while. There’s really no way around it these days.”

Brodie adds, “It’s not a short or a long term investment. It’s a moderate investment. You can’t flip things now.”

Stay within Spending Limit

It happens all the time, people try and buy big when it comes to the new home. The lender says you can afford a $300,000 home, and the buyers stretch it to a $325,000 home.

“It’s called being house poor,” according to Brodie. “When all you can do is feed the house payment, and there’s no money left for anything else. You don’t have to have everything right away. The first home is usually not the dream home.”

Alex Vasser can be reached on Twitter at @alexvasser2.

Aleksandr Vasser – The “Must Have” List Can be Harmful!

aleksandr vasser

The following post is a guest post from the other Avky Inc co-founder, Aleksandr Vasser. Aleksandr is a chemical engineer, real estate expert and entrepreneur in Phoenix.

Enter Aleksandr Vasser

“My home must have…”

This is something I hear so many people rattle off. That long list of “must haves” in regards to their house hunting wish list. Things such as this make me wonder if these people are really planning to find a home! Sure, it’s preferred to have an idea of some things you want to find in a home. Remember, though, that items carved in stone can cause the whole stone column to crumble.

A good way to handle your wish list is by listing items that are necessary (separating wants from needs). Examples of this are the numbers of bedrooms and bathrooms, or if your home should or should not be one story. If you plan on having pets, or wanting a pool, or a large yard, this would also be considered a necessity.

If you are disabled or can’t tolerate the thought of stairs, you may want to consider only single-story floor plans in your area. Other things may include access to schools, public transportation, cooling systems, and more.

Separating Wants from Needs

On another paper, you might list options you would like, but can live without. These are your wants. Things like green wallpaper in the kitchen (these things can always be changed). An extra room for a computer, gym, or sewing machine. A built-in entertainment center, a self-cleaning oven, and landscaped yard, the list goes on. These are all things that can be changed with very little effort on your part. They shouldn’t be the final deciding point in whether or not you buy a home! However, they can be the deciding point on which of several homes you can choose from.

The point being made here is that it is a bad idea to eliminate homes based on a lack of one or two luxury must-haves. I can tell you that I have a friend who has sold countless homes to people who, at first glance, would not have even looked at the home if they would have mentioned “there’s no pool” or “the basement is unfinished”. It’s incredible how many other plusses can eliminate a must-have. Keep an idea of what you want in a home, but keep the ideas very separate from actual must-haves, and also the two lists have surprisingly little to do with one another.

Maintain an open mind in regards to house hunting. Always remember that cosmetic choices can always be modified to fit the family.

Aleksandr Vasser can be reached on Twitter at @aleksandrvass1.

 

Kyle Uchitel: Unemployment Claims, Market Not Disasters

kyle uchitel

Though investors are still waiting on a couple more pieces of the puzzle (namely the new home sales stats for August, which comes from the Census Bureau), enough of February’s real estate data has been posted over the last couple of weeks to make a meaningful assessment of the real estate market’s – housing mostly – overall health. The following is a guest post from Avky Inc co-founder and Phoenix native Kyle Uchitel.

While far from ‘great’, the gloom-and-doom chatter and worries that the “real crash is yet to come” appear to be off-base as it stands right now.

A chart of all the critical data speaks for itself…. almost. A couple of details need to be highlighted.

Kyle Uchitel Presents Unemployment Highlights

One, starts (single-family as well as multi-unit structures) are technically trending higher now. These facts are made even more amazing in that this is the time of year when starts have already tapered off.

Two, there has yet to be any heavy inflow of ‘shadow inventory’. Part of that may be simply because so-many would-be sellers still know it’s going to be very difficult to sell a house. These people are simply sitting on the sidelines. Some if the lack of inflow of inventory may stem from the fact that the phantom inventory isn’t there.

While that’s the minority opinion to be sure, these same forecasters are rightfully reminding investors they are judging facts known to be true, rather than judging facts that are only assumed to be true. In other words, there’s no real evidence that the shadow inventory is looming out there, but there is evidence that the home market is off of life support (though that’s about it).

On the flipside – and this may well be the cause of the thus-far missing phantom inventory – home prices are still dropping. This indicates a lack of demand and/or a desire to scale down home sizes. New home sales are also still trending lower, which doesn’t necessarily bode poorly for the real estate market as a whole, but does bode poorly for the construction industry. And yes, it’s in conflict with the recent upturn in building starts.

News In The Economy

The only other significant news on the economic front wasn’t even all that significant – new unemployment claims pushed higher again. The reading of 465K was above expectations, though it was not an unusual reading for the last several months. Right in the middle of the range, in fact.

Continuing claims actually sank a bit, to 4.489M. Bear in mind that the continuing claims data was from the week before initial claims numbers above are considered.

As has been the case for quite some time, this is neither bullish not bearish for stocks. This is despite much of the media’s insistence that even the slightest misstep means Armageddon is around the corner. Weak? Yes. Disastrous? No.

Kyle Uchitel is a chemical engineer and co-founder of Avky Inc. He can be reached best on Twitter at @kyleuchitel.

Minnesota Real Estate – The Quick Sale

Minnesota Real Estate – The Quick Sale

A quick sale in the state of Minnesota can get fairly involved; the seller’s bank also wants a say in things, and the buyer can treat the transaction pretty much like a typical home buying opportunity, using a realtor and receiving a loan for the property. A quick sale, however, is not all flowers and butterflies. This way of trading realty can carry some risks and should be well researched, as it is a gamble.

Minnesota: The Risks of a Quick Sale for the Buyer

The Minnesota-based buyer must put down earnest money which increasingly is not returned, even if the property is not awarded to them. Typically the only ways that earnest money can be salvaged is if the appraiser finds that the home is not worth as much as the seller claimed, or if the title to the home cannot be found. Otherwise, the money is gone forever; thus the gamble.

Another side of the gamble is whether the tenant has left the property or not. Often people facing foreclosure tend to take it out on the house when they leave. The buyer may find that appliances, wiring, etc are torn out of the building, requiring much more work up front. The upside to that situation is that if the buyer has an agent and is getting a loan such as an FHA loan, certain rights are afforded to them.

Rights of the Buyer under FHA and Other Loans

To be able to sell the home to someone with an FHA loan in the state of Minnesota, for example, the seller has to ensure that the home is livable, and the basic appliances are left for the new owner. Railings and fire exits also need to be in good condition. The FHA will send out an inspector who looks for different things than a private inspector, and often the loan is not approved until those things are fixed.

The gamble here is that the seller’s bank has no interest in meeting this code and the seller has no incentive to improve the home and likely is not in a position to do so. The buyer may need to figure out a way with the realtor to make the home meet the requirements of the loan. On the upside, many realtors will assist and help with this when the house is vacated, and some sellers are responsible enough to work on the home a bit to avoid the foreclosure by the bank.

The Waiting Game

Once the buyer puts in an offer, the gamble becomes a waiting game. The bank can accept the offer in 2 days, or up to 5 months from the offer, so the buyer cannot continue to shop for homes until the bank has returned an answer. Typically, a quick sale is held in what is called a “redemption period,” where the bank has notified the tenant of foreclosure and they have 6 months to redeem themselves. Typically the only way to do this is to sell the property, thus the quick sale has become a term in realty.

The bank may accept the offer, but typically will not pay for closing costs, like in a typical transaction. They may cover up to 3% of the sale price to go toward closing, which almost invariably means the buyer needs to come up with more money.

The Closing and Buyer’s Responsibilities

The closing is typical of any real estate closing; the buyer has had an inspection at their expense, the buyer has proof of the first year’s insurance paid, the buyer signs all the paperwork and gets the keys to the property. It is then they go to the property and find out if their gamble paid off; there really shouldn’t be any surprises, because if the tenant has destroyed things, the loan wouldn’t go through in the first place, if the buyer used an FHA loan.

The stakes get higher when other loans or cash are used for the sale. If the buyer has cash, it may be better to wait until the home goes into foreclosure and buy it for an even smaller amount. However, that carries a set of risks with it as well, especially in the state of Minnesota.

A quick sale can be a good gamble; when the risks are worth the investment, it could be a great thing. There are many variables that could increase the risks, and any first time home buyer should really use the services of an agent to advocate for them, preferably one from a different company than the seller’s agent, to avoid a conflict of interest on the agent’s part.

A good realtor will be an advocate for the buyer and also ensure that the buyer is well informed of the risks. A realtor who works for the company selling the home will be an advocate for buyer and seller, with loyalty to the seller.

Making A Profitable Real Estate Investment

Making A Profitable Real Estate Investment

Investment in real estate appears lucrative, but it needs an in-depth understanding of the realty market. A realtor will always encourage prospective investors to buy the properties that are readily available. But it is important to enter the market at the most opportune time, and buy the right location at the right price. Property investments are large-sized, illiquid in nature, and not easily reversible. Therefore, a judicious decision can payoff hugely, while a wrong decision can set back the investor badly.

Clear Goals for Investment

Before the investment exercise may commence, it is critical to have clear investment goals. It is not the kind of investment where just because there are plenty of homes for sale at low prices, so a home should be bought. A person who does not own a house of his own should ideally aim for a residential property. That serves a dual purpose of investment as well as self-use. Where as, a person who is keen on creating a regular income from real estate, should look at a commercial investment. Commercial properties tend to fetch a high return on investment in terms of rental income. Residential properties tend to appreciate more in capital value terms.

Evaluate the Realty Market Prices

It is important to assess the general economic trends, and study the forecasts of analysts regarding the real estate market prices. This is most important particularly when the property is to be purchased purely for investment purposes. When the property prices at their peak, it may not be the best time to buy for a shrewd investor. Real listings and price patterns should be analyzed to make a decision regarding the best time to enter the market.

Location, location, location

The age-old mantra of “location, location, location” still holds true as ever. Realestate is a fixed investment, in the sense that the location cannot be moved once it is made. The basic infrastructure and facilities, quality of neighborhood, availability of public transport and ease of connectivity are external factors that are not in the control of the property owner. This is equally true for commercial and residential investments. In case of built-up properties, the condition of the property should also be a key consideration while deciding on the investment.

Property Management and Maintenance Costs

Whether it is a commercial or residential property, the quality of the property management and the professionalism of the managing agency must be considered. Another crucial factor that tends to get ignored sometimes is the monthly or annual maintenance charges attached to the property. The charges must be reasonable and this point should be carefully evaluated before signing the deal.

Costs of Financing

Just getting attracted by a house for sale opportunity is not enough reason to make the investment. If the investor is going to raise finance from the market to fund the investment, the costs of financing and the terms and conditions must be evaluated judiciously. Even a good investment that will pay off in the long run may cause a loss. This is especially true if the financing is very expensive. It is also true if the investor is forced to sell the investment prematurely due to financial miscalculation.

Scrutiny of the Property Title

In case of a real commercial, residential or land investment, the property title and ownership must be scrutinized carefully. Preferably, the property documents should be reviewed by an experienced real estate attorney. The title should be absolutely clear, and if any liens are attached to it, everything should be transparent and understood before signing on the dotted line.

Property In Turkey – Understand The Basics

Property In Turkey – Understand The Basics

Turkey: Investing in Property

Turkey is quickly becoming a hot spot for quality real estate deals. With other currencies rising above the Turkish Lira, the region is seeing a lot of investments in property, especially from international clients. While there are definitely various properties in Turkey worth investing in, the challenge is finding the right property that offers complete value for the cost. If you want to ensure quality returns on your investment, you need to understand some basics before proceeding.

Lay Proper Groundwork

Before purchasing property in Turkey, it is important to do thorough research to discover information about the developers, and whether or not they are credible and trustworthy. Also look for the most lucrative regions of the country in terms of real estate. It is not wise to be hasty, as you risk losing your hard-earned cash reserves. Time spent researching critical details can save you a lot of heartache in the long run.

Consider Various Factors

Look out for places in Turkey that are showing steady growth in infrastructure and have easy accessibility. These are two important factors that contribute to increase in property prices in the long run. Investing in property in such areas will quickly prove to be worthwhile. Purchase property in a region that has easy access to all amenities and essential services. Proximity to airports and primary railroad terminals are an added bonus.

Types of Property

You should ensure that you realize the reason you are choosing to buy property in Turkey. This will help you choose the right investment option. If you are looking for property that you intend to rent out to tourists and visitors, then look for the properties that come equipped with pools, and are located in the vicinity of major tourist attractions.

Beach resorts are good investment options if you intend to come to Turkey during summers for a little bit of sun. If you want to either rent out the property or leave it locked until your next visit, a good apartment in the city is a wise choice. For people who are looking for property that they can renovate and resell, investing in some traditional homes in Turkey will reap rich rewards. You can opt for large villas that come equipped with all amenities if you intend to set base in this country.

The Search Begins

With the groundwork in place, it is now time to embark on searching for the right property. It is not possible for everybody to go to Turkey and look for proper investment options. This is where Turkey’s online real estate marketplaces come into play. There are plenty of websites that have extensive lists of various properties on sale in Turkey. Take a look at the options and decide on the one you would like.

Pay A Visit to Turkey

Once you have chosen the property you would like to invest in, the next time to pay a visit. Do not pay any money upfront before you see the property! While most websites are credible, there are a few out to make a few quick bucks and disappear into the oblivion. Inform your online agent about your interest in their property and your impending visit.

Engage Legal Representation

By this point, you have reached Turkey and have taken a look at your property. You are happy that you made the right choice. Now what? From this point, the process gets slightly complex. You will need to engage the services of a good property lawyer who can assist you with the process of buying property in line with legal requirements. While some people prefer to go with the lawyer recommended by their agent, it is always better to opt for an independent legal representative. The lawyer will take a look at the legal paperwork for the property and stay with you until you get the title transferred to your name.

Irrespective of if you want to purchase villas in Turkey or any other type of property in Turkey, ensure you follow all these steps to safeguard your investment and make it worthwhile.

Texas Foreclosure Resources and Information

Texas Foreclosure Resources and Information

Staying on top of the latest Texas foreclosure news and market conditions can be a daunting task. Here are some ideas of some quality resources that will provide you with up to the minute news on Texas foreclosures.

Visit State-Sponsored Websites

There are several state sponsored websites that detail the latest news associated with foreclosures within the state of Texas. These websites provide people the latest information on legislative changes and other policies that effect the foreclosure process within the state.

The Texas Department of Housing and Community Affairs offers information on their foreclosure task force. This foreclosure task force releases news and other information for homeowners trying to stave off foreclosure and stay in their home. The Texas Attorney General is another quality resource for finding out news and information.

Read Local Newspapers

Another great resource when looking for Texas foreclosure news is to read newspapers found throughout the state. There are several newspapers that are popular including The Dallas Morning News and Houston Chronicle. Be sure to check out the “Business” or “Local” section of these newspapers. You can also check out the “Real Estate Section.”

Read Websites Dedicated to Texas News

In a world that is completely connected, another great resource for gaining info on the latest Texas foreclosure news, are websites that cover the news around the state. MyDallas is a quality resource, as is the website TexasOnline. Also, both of these websites cover the housing market in detail within the state of Texas.

Locate Realty Websites on Texas Foreclosure News

When it comes to investing in real estate, it is helpful to use real estate websites as a resource. Many real estate websites provide in depth information about the latest market trends in a given area. Both of the websites Trulia and Realty Trac are quality resources that provide, charts, graphs and hard figures about the latest foreclosure trends within the state of Texas.

Find Federal Resources that Cover News about Texas Foreclosures

The United States Department of Housing and Urban Development is a fantastic resource for Texas foreclosure news. They detail a section on their website that provides local news. The site also contains information on local Housing and Urban Development offices, common questions and much more. Also, take the time to read the United States Department of Housing and Urban Development website to stay up to date on the latest federal statutes and changes that affect the local foreclosure market within the state of Texas.