Top ten tips when buying real estate!

In the current financial climate, real estate remains a strong investment in many areas. Educated buyers will always get the most out of the real estate market. These top ten tips for buying real estate will help you enter your next real estate transaction with confidence.

TIP #1: Hire the right real estate agent!

Hiring the right real estate agent is invaluable. If you’re not familiar with the area, the realtor you choose is your link to important information about schools, zoning, city and county regulations, neighborhood trends, building and remodeling, and rent restrictions and property values. Every city has different laws that determine what can and cannot happen to a home. Sanibel is one of the most beautiful cities in the United States, in part because of its strict building codes and city planning. I have experienced many aspects of real estate transactions on a personal level and understand the situations and concerns of my buyers and sellers. I have been an island owner for many years and have gone through several local real estate transactions myself. From buying and selling lots to building new homes with local builders, to investing in rental income generating properties and using 1031 tax-free exchanges, I don’t just sell island properties; I invest in it because I believe there’s no place in the world like Sanibel and Captiva. Whether you work with me or someone else, finding the right broker is invaluable.

TIP #2: Take advantage of 1031 tax exchanges and save money!

1031 Tax Exchanges are tax-exempt exchanges of real estate investments. Section 1031 of the Internal Revenue Code is one of the last major tax shelters. If you buy an investment property of “similar type” within 180 days of selling a similar type of property and you are willing to increase the amount of debt or the value of the property, your capital gains taxes may be fully deferred. I have just completed a Reverse 1031 tax exchange myself and believe in using this powerful tax shelter. Please feel free to contact me if you are considering a current Sanibel, Captiva, or Ft. Myers property in a 1031 Tax Exchange, or want to purchase an investment property that may qualify for a 1031 Tax Exchange in the future. A reverse tax office 1031 is the same exchange concept as a tax office 1031, except that you first purchased your replacement “similar” investment property before selling the property to be exchanged. Learn more about 1031 Tax Exchanges and how you can use them to your financial advantage. Please note that a neutral party must be a Qualified Intermediary. Real estate can also be bought and sold through your self-directed retirement account. Whether you use a traditional IRA, Roth IRA, SEP, or corporate plans such as 401(k) plans, Keogh, or profit-sharing plans, research your options.

TIP #3: Pre-qualify for funding!

Pre-qualifying for a loan may not seem like a big deal until you find your perfect paradise home at the same time as another buyer. When a property is priced to sell, it will usually attract more than one buyer. Once a seller receives an offer, the two main things they consider are the price and the contingencies. For some sellers, a contract that relies on the buyer obtaining financing makes them uncomfortable with the offer. Eliminate any doubt in a seller’s mind by pre-qualifying the amount you are allowed to spend on the purchase of a home. This is especially important if your dream home has suddenly been reduced in price. When this happens, other buyers may come into the picture, who didn’t look at that property before it went “For Sale”! Often a seller will take a financially solid contract over a higher offer. Be ready to put together a deal!

TIP #4: Location, Location, Location!

“Location, location, location” while often used as a real estate phrase, still is and always should be a big consideration for you as a buyer! If something about a property’s location bothers you, keep in mind that the same location disadvantage will bother any buyer you hope to attract when and if you need to resell the property! It’s important to ask lots of questions, but often it’s hard to know the right questions to ask if you’re not familiar with the community. That is why it is so valuable to choose and hire the right real estate agent to represent your best interests when buying a property.

See also  Protect your real estate investment by purchasing property insurance

TIP #5: Request a home inspection!

Obtaining an inspection report, conducted by a licensed professional building inspector of your choice, can protect you from many hidden defects. Why gamble with such a large financial investment? Have a professional building inspector point out areas that are not obvious and need to be repaired or replaced. A good inspector will give you a comprehensive report on all systems in the home, from electrical to plumbing, roof conditions and structural issues. Once notified, you can renegotiate repairs. Often a seller agrees to make necessary repairs up to a certain financial amount. When a seller is listing their property “as is,” they are letting you know that they are not willing to repair or replace any part of the property. If you are interested in a property “as is” and do not intend to level the structure and build new, it is still in your best interest to obtain an inspection report. Don’t rely on the building inspector to look for termites and other harmful pests. Although an inspector will see pests, it’s best to have a separate termite inspection done by a licensed company that understands pests and can eliminate them.

TIP #6: Get Survey and Title Insurance!

Surveys will show easements, encroachments and boundaries of a property. By examining a property in an established neighborhood, you can be sure that property boundaries have been maintained. As homeowners expand their properties over time with fences, sheds, docks, garages and other structures, boundary lines can be crossed by placing part of their structure on your property, or vice versa. Surveying vacant land is also important for the same reasons as a home, and a survey will help determine the size of the home or the amount of coverage the lot allows.

Property insurance protects your investment against another party claiming ownership interests in your property. Searches for titles will reveal liens placed on a property by sellers, or errors in previous transfers of the title. The last thing you want to discover when you’re in the back end of a transaction is that there are encumbrances on the property, such as tax liens, undisclosed owners, easements, or leases. Should a claim arise after purchasing a property, the title insurance company is there to protect your ownership interest in that property.

TIP #7: Be realistic!

“Wants” and “Needs” are very different when it comes to real estate characteristics. If every home you see has the upgrades you “want” but are over the price range you “need”… be realistic. Who wouldn’t love a large, professionally decorated oceanfront home or condominium, with all the bells and whistles? It’s always fun to look at properties that are out of your price range, but it can be extremely frustrating and distressing. Be realistic by looking at listings in the price range you “need” and keep an eye out for that special property that has the potential to evolve into the dream home you “want”. Always look beyond the furniture, wallpaper and carpeting to the architecture of the house; it is then that you will find properties with potential.

TIP #8: Use contract terms wisely!

Contingencies in a real estate purchase contract are designed to protect you, the buyer! This may seem like a silly thing to mention, but it’s important to remember that you need to work with the seller to get to an agreed upon contract. Valid conditions for a bid are expected by the seller. Common contingencies include building inspections, termite and pest inspections, financing and investigations. Many deals fall apart over small details and easy-to-resolve issues. Remember that sellers are emotional about their property. If you see major repairs or replacements needed due to neglect or age, please factor this into your listing price. The old adage “Anything is negotiable” still holds true unless you upset the seller enough that they refuse to work with you. Try to avoid cosmetic changes that you would like the seller to make as contingencies. Cosmetic changes are subjective, be objective when writing a contract.

See also  Don't let sciatica stop you from playing golf - relief from pain and numbness

TIP #9: Understand regional health and safety issues!

An informed real estate agent will help you understand other health and safety issues to consider when purchasing a home. Safety and health topics may include EIFS (Synthetic Stucco), indoor air quality, mold, radon, and lead paint. Many of these require the seller to sign a disclosure statement, while others may not apply due to the age, type of construction, or location of the property being purchased.

TIP #10: Ask for information!

Do not be shy. When you have hired a real estate agent to work for you, ask them for information. Do you want to view all properties in your price range, with the features you need, or just the properties that a real estate agent wants to show you? You deserve all the information you need to make an informed decision. Can you imagine buying the house you thought was right for your family, only to find out that you never received information about a comparable property that is perfect for all your needs? I offer many services to ensure that my buyers always have information at their fingertips.