A seller’s goal should be to find the highest offer with the strongest probability of closing. While a near asking price offer may look great after initial review, it may be full of unnecessary contingencies and red flags that may put you in a bad position as the seller. What if you knew what to look for at the beginning of your home-selling journey? What if you knew what questions to ask of an interested cash buyer that would prepare you with the necessary information to make the best decision possible?
In this article, 180 Homes explores some of the markers that you should keep in mind when working with a cash buyer on the sale of your home.
1) Strong Term Offers
A strong cash buyer should be offering to purchase the property “as-is” in its current condition with no expectations of the seller doing any work to the property before close of escrow. Contingency periods should not be unnecessarily long, and should fall in the range of 3 to 10 days depending on the complexity of any necessary due diligence. The earnest money deposit should be substantial and submitted to escrow within 72 hours of offer acceptance or sooner. While cash sales typically close quicker than traditional financed offers, there should be no rush from the buyer’s side to close escrow. In fact, there is a flexibility that should be expected of the buyer to close on the Seller’s timeline!
2) Access to Capital
One of the basic items investors should provide when submitting an offer is a proof of funds letter. This letter is typically from an attorney or lender that shows they have the funds available to to clear their offer amount and close escrow. However, you shouldn’t give this a quick once over and assume everything is ok. There are two important items you need to look at to confirm: the date of the proof of funds letter and where the funds are coming from. The date of the letter is important because, if it is months old, they may have depleted the account. A very outdated proof of funds letter may also suggest the investor is not telling you the full story and could be an indicator of things to come.
It’s also extremely important to note what kind of an account the funds are coming from. If the money isn’t in a liquid account such as a checking or savings account, there could be red tape and hurdles to access it. Without timely access to their funds, an investor may have to jump through hoops to bring funds to the table to close escrow which could risk pushing out the agreed upon close date.
3) Proven Track Record
Credibility may be one of the most important things to confirm in a potential buyer before accepting their offer. Doing so is easy if you know what questions to ask and where to look to confirm a buyer’s track record. Always ask for referrals and reach out to people they have worked with in the past for feedback on how their transaction went. Research the buyer online and dig into their testimonials and get a sense of what other people are saying about them. Look at their social media pages and the comments on their recent posts to see how they interact with their customers and followers. Ask the buyer for a list of active or past projects in your area to get a sense of how active they are and what their local experience is like.
Lack of timely response and bad communication can sour any relationship. This is even more amplified when the stakes are high you’re trying to selling your home in an efficient and stress-free way. Real estate transactions require a significant amount of back and forth, whether it be in regards to offer terms, paperwork questions, deal structuring, signatures, etc. If the buyer and/or their agent respond to a call or text within a reasonable amount of time or return contract changes in a timely fashion, something fishy may be looming. Be aware that there are buyers out there that don’t practice ethics and integrity that may just be spinning your wheels – bad communication can often be a tell-tale sign things are going in a negative direction
All cash offers are not created equal. Look out for both strengths in a cash buyer as well red flags investors include in their offers. Picking the right offer is important, but picking the right buyer can make all the difference in a quick, smooth transaction.
Work with an established buyer that can close! Get a Strong Cash Offer with 180 Homes!!
There are pros and cons to buying flipped houses. The main benefit is that you won’t have to manage any major renovations on your own. It’s the most convenient type of house to buy unless you’re going to buy a brand-new home—but then you’d be paying a lot more.
Of course, there are horror stories. You might have heard about homebuyers moving into a flipped home only to discover that the “renovation” was little more than cheaply applied makeup. A new carpet covers rotting floors, and shiny new kitchen cabinets are hiding clunky plumbing. The homebuyers realize that their “flipped house” is actually still a fixer-upper.
Believe it or not, there’s another way you can reap all the benefits of a flipped home, without any of the cons. Consider pre-purchasing a flipped home.
Why Should You Consider Pre-Purchasing
A Flipped House
A presale home is a property where you can start the home-buying process before it’s move-in ready. Many presale homes are houses that are still under construction. But you can also pre-purchase a home that’s in the process of being flipped.
There are (at least!) four major advantages to pre-purchasing a flipped home:
Let’s dive into each of these benefits.
1: Avoid Open-Market Competition
One of the most difficult aspects of buying a home is dealing with the competition that comes with the open market. There is a limited number of homes on the market with plenty of buyers ready to offer on a good opportunity.
While a house might initially fall within your budget, it could attract interest from several other buyers, and the price could escalate out of your range. A bidding war could ensue and drive an affordable home into unaffordable territory. Inexperienced homebuyers, in particular, mistakenly up their bid when they can’t afford it and wind up purchasing a house that’s far out of their budget. When they finally move into their new home, they’re “house poor”.
But when you pre-purchase a flipped home, you can avoid the open market altogether—so long as you know where to look for the opportunities!
Here at 180 Homes, for example, we manage our off-market inventory of properties that are going to be flipped or are in the process of being totally renovated. While under construction, these properties don’t have traditional listings. If you take the initiative to reach out about one of these off-market properties, then you could potentially secure yourself a deal on a new flipped home without any of the bidding-wars that you’re likely to face on the open market.
2: Contingencies and Protections
A common fear when buying a flipped home is that the home has not truly been flipped. You don’t want to put down six figures on a house only to discover that you paid $100,000 more than what it’s really worth. Inexperienced homebuyers can easily miss red flags that suggest a renovation was done poorly.
But when you pre-purchase a flipped home through an established company, you’ll have all sorts of protections that ensure you’ll be moving into exactly the place that you paid for.
When purchasing one of our presale homes, for example, you are afforded all the normal contingencies that you’d get with a standard home listing:
Virtually all the protections you’d get on a standard home purchase would be available to you when purchasing a presale home by 180 Homes. Furthermore, you can still buy the property using traditional financing, including FHA loans.
Typically, the transaction will begin while the home is still undergoing renovations, but your contingency period and escrow period may not begin until the renovation is complete.
3: Stronger Creative Influence
House flippers may know a thing or two about renovations, but they may not complete the home with the specific finishes you’d like to see. Although it’s nice to have renovation work completed for you, some buyers of flipped houses feel as though they missed an opportunity to give their new abode a personal touch.
When you pre-purchase a flipped home, you may get to have a stronger creative influence on the finished property as long as your chosen design features fit the overall budget and timeline of the renovation. Since you’re starting the transaction while the home is still being renovated, you may get to choose certain design features, like:
4: No Emotional Rollercoaster
Arguably the best thing about pre-purchasing a flipped home is that there’s no emotional rollercoaster.
It’s a tragic but all-too-common story: you fall in love with a home on the open market. You walk through the house and envision your family, your furniture, your future. The house falls within your budget, and you’re able to get the financing that you hoped for. You make an offer, and the seller seems interested…
…and then you’re informed that you’ve been outbid. Desperate, you make a counter-offer
…and it dissuades the other. You rejoice, thinking you’ve won the home…
…only to be informed that you’ve been outbid by a new buyer. And this time you can’t beat the price.
Home buying can be an emotional rollercoaster, especially if you’re a first-time homebuyer or if you’re trying to buy a home for your family. But it doesn’t have to be. As mentioned earlier, when you purchase an off-market home through a company like 180 Homes, you won’t have to compete with other buyers. Nor will you get excited about a new home, only to discover that it’s not the house you thought you were getting.
When you pre-purchase a flipped home, you’ll get exactly what you expected when it comes to home price and home quality. There’s no heartbreak involved.
There are significant advantages to pre-purchasing a flipped home. You can find a house in an off-market inventory and avoid the bidding wars that happen on the open market. You’ll have all the protections that come with a standard home listing, and you may even get to choose certain design features on the property. Plus, deciding to pre-purchase a flipped house can save you from the emotional rollercoaster of the traditional home buying process.
Contact 180 Homes to learn more!!
You can take two main routes when selling a home: listing the property or searching for cash buyers. In today’s fast-moving real estate market, sellers will likely have no trouble with either option. However, there are a few factors to consider before deciding which path to follow.
Cash buyers have become increasingly common in the last few years as more and more people have begun real estate investing. Working with a cash buyer can be tricky for sellers, as they may be unfamiliar with how the home selling process works. Many sellers fear that cash offers are too good to be true, but this is simply not the case. There are several situations where a cash buyer might make the most sense when selling your home.
In this article, 180 Homes explores the pros and cons of selling your home to Cash Buyers vs the pros and cons of selling your home by traditional listings.
Selling Direct To A Cash Buyer
Cash buyers are exactly what they sound like: buyers ready to purchase your home without a mortgage or long-term financing method. They typically buy properties to renovate or rent and are willing to move quickly to land deals. If you are curious about selling your home to a cash buyer, there are a few things you should consider first:
The most significant benefit of a cash offer is the potential for an overall easier transaction. Cash buyers are usually ready to place an offer on the home and close in a very short amount of time. They do not need to wait for a bank’s approval to sign the papers and finalize the purchase of the property. This can save sellers the stress of financing challenges that could delay the sale of the home. For these reasons, cash offers typically result in faster closing timelines. For example, here at 180 Homes, we average a ten-day closing period as opposed to the traditional 30-day closing.
Buyers paying cash will also typically forego a traditional home inspection or appraisal to make their offers more favorable. They are in the business of upgrading, renovating and doing work to add value to the properties they purchase. Many of them anticipate purchasing your home “AS-IS” in its present condition, meaning you’re expected to do absolutely no work to the home before closing.
An additional benefit: Cash buyers will often offer to pay for the Seller’s Closing costs and typically do NOT expect to be paid a commission as a result of the sale. These two benefits in combination can save sellers between five and eight percent of their net profits on average during the transaction. 5-8% is a chunk of change! Not only will selling your house to a cash buyer help save on closing costs and commissions, it will also help maintain your privacy and well-being during the sale. Many cash buyers will not request multiple viewings or extra photos of the property. You will not have to have a horde of people through your home! This privacy can be especially important as many individuals continue to minimize close contact with strangers as a result of COVID-19.
The number one tradeoff for a fast closing and simple transaction is the prices. Sellers will likely find that cash buyers tend to offer lower amounts than a traditional home-buyer would be able to. Many cash buyers are going to rehab or rent the property, and to make that profitable need to minimize their upfront costs. Unfortunately for sellers, this can result in an underwhelming offer. Sellers should also be prepared to handle any negotiations attached to the sale. Investors will typically gather information about the property and even request to speak with you one on one during the process. In a traditional real estate transaction, negotiations are handled by real estate agents. Try not to let this intimidate you! As long as you do the right research and background check the cash buyers you’re considering (google reviews are a great start!) you should not be concerned about the negotiations!
Listing A House For Sale
The most common way to sell a home is to work with a real estate agent and list the property for sale. By selecting the more familiar option, sellers can leave the heavy lifting up to a professional. That being said, there are still some factors to consider before listing a house for sale:
Exposure is one of the most important reasons sellers choose to list their homes with an agent’s help. A real estate agent will list your property and walk you through the marketing steps necessary to bring in offers. These include taking photos of the home, hosting open houses, and listing the property online. These tactics could open the door to multiple interested buyers and increasingly high offers. There is no guarantee that a bidding war will happen, but listing the property with the help of a qualified agent can boost your chances of selling the property for the price you want.
Listing a house for sale can also help you avoid some of the more challenging aspects of a typical transaction. You will not be responsible for reviewing contracts, negotiating offers, or even coordinating viewings of the home. An agent’s expertise can guide you through the home selling process, thus taking away some of the more stressful components associated with selling a home.
Listing a house does have its drawbacks, namely added costs in the form of agent commissions. Sellers are typically responsible for some, if not all, of the fees that help pay both the buyer and seller agents. These costs can range anywhere from five to seven percent of the closing price. Let’s say a property sells for $685,000 — the commission will be between $34,250 and $47,950. Sellers may also be responsible for additional closing costs that could further reduce the takeaway money from the sale.
Another thing to consider when listing a property is the potential for additional contingencies to be added to the sale that aren’t relevant when selling to a cash buyer.. Depending on the property appraisal and inspection, sellers could be responsible for making repairs before they move out of the house. Unfortunately, home inspections often reveal problems about a property that sellers may not even know about. This can invite buyers to request repairs or even de-rail the transaction before the buyers officially close on the property. Together, these factors could undermine the profits from the sale of the house.
Deciding to sell your home is a big decision to make, both emotionally and financially. Prepare yourself for the process by learning more about traditional listings vs. cash buyers. You may find that listing your home relieves some of the stress during this time; however, you may need the speed that only a cash buyer can provide. Each situation is going to be different, but take time to consider how either of the above routes could allow you to maximize your profits when selling your home.
It’s a great time to at least explore the option of selling a home for cash, but make sure you know what to expect. Contact 180 Homes to learn more about our Cash As-IS offer to expedite your real estate experience today!
In many markets, property values have taken off to levels not seen in well over a decade. It may be a great time to explore selling your home. Depending on the condition of your property, the buyer may be a cash buyer. While this is a typical practice, there are many nuances and slight differences when working with a cash buyer instead of a traditionally financed one.
In this article, 180 Homes explores the steps to consider when selling your home for cash, as well as some factors to keep in mind when accepting a cash offer. There are many benefits of selling a house for cash, and 180 Homes is here to help!
The Process of Selling a House for Cash
Selling a house for cash might be a rare circumstance, but you shouldn’t be overwhelmed by the process. Here are the steps for successfully selling a house for cash.
Step 1: Quality Cash Buyers
The first step in selling your home for cash is finding the RIGHT buyer. Most cash buyers are quick and responsive and are happy to submit a cash offer should you be interested in one. Cash buyers don’t need more than 24 hours to get you an offer. When selling a house for cash, it’s always best to get multiple offers if possible. When ready to decide, remember that price is not the only factor to consider. The right buyer should offer the ideal price, inspection period, timeline, and terms that put you in the best possible position to sell your home for cash.
Questions to Ask Cash Buyers
There are many factors to consider when contemplating a cash offer for your property. Here are some questions you should ask before moving forward in the process
Step 2: Compare Offer Terms
Most buyers have specific offer terms to consider before moving forward, even when selling a house for cash. Offer terms protect all parties involved and usually consist of these key factors:
Common Red Flags
Make sure you know every section of your contract before accepting an offer. Take a few minutes and review the common cash offer red flags that investors may include.
Step 3: Accept and Offer and Open Escrow
When accepting offers, you’ll either sign a hard copy version of the offer or use an online contract signing service like DocuSign to execute the contract. Once you and the buyer have signed, escrow and title companies enter the transaction to help research any questions with title and coordinate communication. If the seller is unsure or has no preference for who helps with escrow/title, the buyers might have contacts. Once the offer is accepted, the transaction timeline begins!
Step 4: Monitor Major Deadlines/Complete Paperwork
Sellers often avoid selling solo because of the paperwork associated with the process. The process is simple with an efficient escrow or Transaction Coordinating Company to help execute these documents. Disclosures are always required when selling your home or a piece of property (realtor or not) and give the buyer a clear picture of exactly what they are buying. Work with a local expert to fill out necessary disclosures for your property.
Step 5: Closing Escrow
There are several documents needed to complete the closing. It is always a good idea to enlist the services of a real estate attorney. Not only will they expedite the closing process, but they offer protection. Even experienced real estate investors are not versed in every contractual scenario. With thousands of dollars of EMD at stake as well as potential litigation, it makes financial sense to spend the money on a good real estate attorney.
180 Homes Can Help With the Process of Selling
a House for Cash!
There are many benefits of selling a house for cash but make sure you understand the process! It’s a great time to at least explore the option of selling a home for cash, but make sure you know what to expect. Contact 180 Homes to learn more about our Cash As-IS offer to expedite your real estate experience today!
When buying or selling a home, the topic of closing costs is bound to come on the horizon. It takes a village to purchase or sell a home, with several different people playing a role in the real estate transaction. Buyers, sellers, real estate agents, and inspectors are just a few of the different people who dip their toes in the experience. Closing costs are the fees associated with the various services required to close the sale. But what do these closing costs include and how should buyers calculate them?
In this article, 180 Homes will explore what closing costs include, how to calculate closing costs, as well as some helpful tips for buyers and sellers looking to close their real estate transactions seamlessly. With our helpful guide, you’ll approach your home buying experience with welcomed transparency.
What Are Typical Closing Costs?
Closing costs are the fees associated with finding a home, securing a mortgage, placing an offer, and closing the real estate transaction. Purchasing a home isn’t as simple as choosing the perfect property and grabbing the keys, there are numerous steps along the way that might have fees associated with them. Closing costs will vary widely based on the property type, perceived value, and manner of closing escrow. Let’s explore some of the most typical closing costs:
Does the Buyer or Seller Pay Closing Costs
Some closing costs that sellers might be expected include:
How to Calculate Closing Costs: A Helpful Guide
Understanding how to calculate closing costs is highly dependent on understanding where these closing costs originate. The closing costs we’ve reviewed are only a fraction of the potential fees that can accrue during the transaction. Employing the help of a real estate agent or attorney can vastly improve your ability to anticipate and calculate these costs. These professionals will have a strong working knowledge of the entire process, which can be very helpful down the line.
While each property will vary, the average cost of closing costs is 3-6% of the home’s price. Here are some helpful tips for calculating closing costs so that you’re not blindsided at the end of your real estate transaction.
Gather an Estimate for the Cost
When getting approved for a mortgage, the lender will usually be able to provide an estimate of the anticipated closing costs based on the home’s value, estimated down payment, and mortgage interest rate. Since many closing costs are based on a percentage of the home’s value, an accurate estimate is crucial for securing those funds down the line.
Gather a Full Breakdown of All Costs
Now that you have an idea of the home’s price point, it’s much easier to break down the potential closing costs. These closing costs will include lender services, appraisal fees, and clerical items such as insurance, property taxes, and titles. We also explored numerous other charges that might be included based on the buyer’s experience. Gather a comprehensive breakdown of these services to calculate the anticipated fees.
Research Potential Deductions
While some closing costs are inevitable, such as the mortgage application fees or title insurance, some services can be worked around or potentially deducted. For example, some lenders might include closing costs within the mortgage itself, that way buyers can pay these fees off over time rather than making a lump sum payment.
Refine and Prepare Based on Findings
Once you have a final total for closing costs, make sure that all information you’ve gathered is based on local state requirements and price points. Add up each of the closing costs to determine what will be due at escrow. Another general rule is to always estimate high to avoid unnecessary curveballs. It’s always better to be prepared to pay something and later save cash than not save enough to cover these costs.
Get an easy, no-nonsense cash offer from 180 Homes! Sell to us and we’ll pay your closing costs!
Sell Your Home Fast with Help from 180 Homes!
Whether you’re a first-time homebuyer or you’re simply looking to save money wherever possible, understanding how to calculate closing costs plays a substantial role in any real estate transaction. By anticipating these costs and negotiating when possible, buying a home becomes seamless.
180 Homes can help sellers list their property and have a care-free real estate experience. With cash offers that help sellers move on to the next great investment quickly, 180 Homes can expedite the process of selling your home. Contact 180 Homes today to learn more!
When selling or buying a home, the topic of whether or not a home appraisal should be completed is bound to come up at some point or another. A home or residential property appraisal helps establish a home’s market value, or the likely sales price that the property would fetch if offered in a competitive real estate market. There is value in arranging for a home appraisal as both the buyer and seller – understanding the home’s value can tremendously influence the selling price one way or another. But what is a home appraisal, exactly?
In this article, 180 Homes explores what a home appraisal is and how much it costs, who you would hire to get your house appraised, and some of the benefits home appraisals provide for both buyers and sellers. With 180 Home’s helpful guide, you can approach your home appraisal like a real estate professional and properly anticipate what their results mean for your real estate transaction.
What is a Home Appraisal?
A home appraisal is a certified appraiser’s report of the estimated value of a home. Whenever someone uses a home or other type of real estate as security for a loan, the lender will order an appraisal to be conducted by a third party licensed real estate appraiser. Lenders will typically only lend to a borrower 65-80% of a home’s value on most standard loan products. In order to provide an accurate loan amount, the lender needs to have an accurate idea of the property’s worth. So, to determine the loan amount, the first step is determining the objective value of the property. This step is critical from the lender’s perspective because it reflects the likelihood the property will sell for at least the amount of their investment in it.
A home appraisal is typically centered around the research of comparable home sales nearby. the appraiser’s analysis of the home, and the appraiser’s overall judgment of the property they are inspecting. The reason mortgage lenders will require a home appraisal is to gauge the risks of extending the loan. If the borrower defaults for any reason, the lender seeks to ensure they are still in a strong financial position to get their money back via the sale of the home.
Home Much is a Home Appraisal?
Some might wonder how much a home appraisal costs. A home appraisal’s cost is typically in the $300-400 range but can vary widely based on the home’s location. For example, in some metropolitan areas, the fees and quote for a home appraisal might span between $600-$1000 for a larger property. In terms of who pays for the home appraisal, that depends on if a mortgage is involved. In the case of there being a mortgage, the lender hires an appraiser, with the home buyer paying for the appraisal. Likewise, if a homeowner is refinancing a mortgage, they will front the bill for the appraisal as well.
Once the physical inspection and sale analysis has been completed, the appraisal service will provide a home appraisal report.
What is Included in a Home Appraisal Report?
Appraisers are licensed by their respective states after completing coursework and/or a job internship that helps them become familiar with their local real estate markets. The appraisal process itself begins with a thorough inspection of the property being appraised to determine the true physical condition of the property. The time it takes to complete a home appraisal will vary based on the property size and complexity. The appraiser will look at features like the number of bedrooms and bathrooms to ensure that they really exist and are in good condition. Most important, the appraisal looks for any obvious features or defects as well as recent upgrades, updates, and improvements that would affect the value of the house.
There are numerous factors that an appraiser will consider when completing a home appraisal. Some of the most common factors that will be reflected within the final calculation of a home appraisal include:
Why Would You Get Your House Appraised?
Now that we understand what a home appraisal is and what goes into a home appraisal report, it’s time to explore why home appraisals are so important. We’ve covered that home appraisals are a necessity when buying or selling a home with a mortgage and when refinancing a mortgage because the amount a lender will lend is directly tied to the property’s value. While this is the most common scenario for ordering a home appraisal, there are a few other occasions when an appraisal is appropriate.
Benefits Of Home Appraisal for Sellers
If you’re on the selling side, a home appraisal shows you how much you can realistically ask for your house. The appraised value should not be confused with the asking price, offer price, or sales price. Asking price is what a seller indicates as a fair and reasonable offer for his/her home. A seller is free to set whatever asking price he/she chooses. An offer price is based on the buyer’s discretion and the sales price is the final transaction price.
From the seller’s standpoint, a low home appraisal indicates that the asking price needs to be lowered to realistically sell the property in a timely manner. Gathering information about comparable homes nearby and understanding the details of your home that you might not notice or even know, like a larger lot size or nearby schools. If the neighborhood’s nearby homes are also not selling, speaking to an appraiser may be able to increase the appraised value by their inspection of other attractive features that might drive the value up.
Benefits of Home Appraisals for Buyers
If on the buying side, a home appraisal shows the home buyer a black and white picture of the home’s value. By understanding the home’s appraised value based on the factors we’ve covered above, as a buyer, you can ensure that the price you’re paying is indeed in line with what the banks consider a fair market value. By having a clear picture of a market value, buyers can make an educated call on their offer price. An offer price, on the other hand, is a number that the buyer feels he/she is willing to pay after an appraisal has been completed.
A home appraisal may be an accurate reflection of the true market value of a home, or an attempt by the buyer to purchase the property at a considerable discount. As a buyer, you should always look out for sellers that are asking for a price much higher than the home’s value, because this tremendously impacts the bank’s loan amount. The sales price is what the buyer and seller actually agree upon through negotiations; it generally lies somewhere between the asking price and the offer price.
Contact 180 Homes for All Your Real Estate Needs
As a home seller, you may wonder if there is a way to skip a home appraisal for your home. We have good news! Here at 180 Homes, performing a home inspection or home appraisal is NOT a contingency of our cash-as-is offer! Since we’re paying cash, a third-party appraisal isn’t needed the same way a typical financed buyer would require. If you’re interested in a less stressful real estate transaction, 180 Homes is the trusted resource. Learn more about 180 Homes' simple as-is cash offers TODAY!
If you’re selling your home and wish to forego the home appraisal process, your best bet is to find a cash buyer for the home. 180 Homes can help you skip the home appraisal, with our cash as-if offers on Long Island homes. We can help home sellers achieve their real estate goals and avoid the pesky back-n-forth process of finding a seller and getting to escrow. Contact 180 Homes' today to learn more!
Dealing with an inherited property or a property in probate can be a difficult and time-consuming process. Because of the many laws associated, an inherited property can take months before the title changes hands. When it finally does, you can be left with a property that hasn’t been updated in years and is in dire need of maintenance.
In this article, we’ll describe the process of selling inherited property to better understand how to navigate the real estate market once this situation occurs. With 180 Homes’ help, you’ll be able to sell an inherited property much easier.
Common Challenges When Selling An Inherited
If you are faced with this type of situation, it is important to focus on the high-priority hurdles first. Here are the four biggest challenges to selling an inherited property with deferred maintenance:
Limited Capital to Fix Up
When inheriting property, your money may be tied up in other properties, credit may be maxed, or you not have the capital to do the work the property requires. Buyers almost universally want to buy a turn-key property unless they get a discount. If you don’t make improvements, your buyer pool will be limited and it will be reflected in your sales price. You can try finding capital through credit cards, private lenders, or short-term partnerships, but each option has drawbacks.
High Carrying Costs
The biggest issue with not selling inherited property is the carrying costs. Every month you own the property, you cover property taxes, insurance, utilities, and many other expenses. By not selling inherited property quickly, you can fall behind, forcing more desperation and prompting you to make decisions with the property you normally wouldn’t.
Selling A Property That Needs Work
Without the capital to make improvements, the sale of the inherited property might be in an as-is condition. You essentially defer the responsibility of the improvements to the buyer. Many buyers lack the desire or financial wherewithal to throw money into a new home purchase. Buyers can struggle coming up with a down payment, let alone money for improvements. This leaves you with a buyer pool of investors and buyers looking for a discount.
Lack Of Local Market Knowledge
An inherited property might not come from your immediate family, it could be from an extended family member. This requires a different strategy, regardless of what you want to do with the property. Make the right improvements for the market to maximize the profit and expedite the sale.
The Sale of Inherited Property FAQ
Lets Answer some of the most commonly asked questions about Inherited Properties:
What is the Timeframe for Selling an
Going through probate can be a long and grueling process, even with a will. By the time you take ownership, you can feel drained and beaten down. The last thing you want to do is wait another extended period to complete your improvements and wait for a buyer. If there is an extensive amount of work needed in the property, you have two choices.
Can Siblings Force the Sale of Inherited Property?
If a will/trust exists, one of the heirs will be the executor. The executor is the decision-maker and has the power to sell the property without permission from other heirs. But sometimes, no executor is chosen, which is a challenging situation for the heirs. Three things can happen:
How Does Selling Inherited Property Affect Taxes?
When selling inherited property, you may have to pay capital gains tax if you earn a net profit from the sale. The federal government will tax a portion of the amount you profited. The current capital gains tax rates are 0%, 15%, or 20%, depending on tax brackets. When you sell a home normally, you would pay capital gains tax on what you earned from the sale compared against the original price.
Inherited properties work differently. With inherited properties, the home is appraised after the death and given a market value. Let’s assume that an owner dies and the house is given a value of $400,000. If the house sold for $450,000, the tax basis would be $50,000. This is a stepped-up tax basis, the home’s original value is not a factor.
180 Homes & Properties, LLC is not a tax expert. If you're seeking tax advice, be sure to consult with a certified tax professional.
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When buying a home, the question of what type of mortgage you’d like to select is bound to come up if you’re not planning on purchasing the home with cash. This is when an adjustable-rate mortgage (commonly known as an ARM) or a fixed-rate mortgage comes in. Which type of mortgage is the right one for you? It’s always smart to go into any real estate transaction with a clear idea of what you’re signing up for, and by knowing what an adjustable-rate mortgage is, you can choose the best mortgage for your needs.
In this article, 180 Homes explores what an adjustable-rate mortgage is, some of the pros and cons of adjustable-rate mortgages, and how to determine whether or not an ARM mortgage is a good idea for your real estate needs.
What is an Adjustable-Rate Mortgage?
An adjustable-rate mortgage is a home loan that features an adjusted interest rate over time, influenced by the latest market trends. An adjustable-rate mortgage usually begins with a lower interest rate than a fixed-rate mortgage, which makes an ARM a preferred option for home buyers that are seeking the lowest possible mortgage rate when first owning their home. The main difference between a fixed-rate and adjustable-rate mortgage is that there is more certainty in a fixed-rate mortgage. In a fixed-rate mortgage, the interest rate stays the same for the loan’s lifespan, creating consistent monthly mortgage payments.
Adjustable Rate Mortgages, however, start with a period of a fixed interest rate and then adjust to whatever the market interest rate is at the end of that time period. The duration of this fixed time period is unique to each ARM. For example, some borrowers will see a fixed period of 5 to10 years. Once the introductory fixed period has ended, the monthly payments will begin to fluctuate periodically to be aligned with the market interest rate at the time. It’s important to factor that in before moving forward with an ARM because budgeting for payments is influenced by market trends.
Pros & Cons of Adjustable Rate Mortgages
So now that we understand what an adjustable-rate mortgage is and how they vary from a fixed-rate mortgage, it’s time to go over some of the benefits and drawbacks of an ARM. Naturally, every buyer is different when considering their budget and preferences for making timely mortgage payments. Thankfully, by taking the time to understand how ARM loans work, buyers can better understand how to prepare for fluctuating monthly payments.
Advantages of Adjustable Rate Mortgages
The first and most obvious advantage of an ARM: they are typically LOWER than their fixed rate counterparts. ARMs provide predictable and comparatively low payments for the introductory period. This allows new homeowners to build up their savings, and properly budget for payments that may increase down the line. An ARM also allows for some wiggle room for those who wish to move in a fairly soon time frame, such as for those with a starter home. An ARM’s low monthly payments are great for homeowners that need to move to a new area shortly after buying their property. By moving away before the introductory period ends, they are relatively unaffected by the increase in interest payments down the line. Suppose the homeowner wishes to sell the home before the interest rates adjust. In that case, the adjustable interest rates won’t complicate their budget because the mortgage will shift to the new homeowner.
Lastly, one of the most attractive features of an ARM is its ability to provide increased financial flexibility. If you have other financial goals outside of your home, like investments in other properties, the low monthly payments can help you build savings during the introductory period. While a price jump might occur once the fixed period ends, the time you spend saving during the low-interest period can protect your finances from being negatively impacted down the line.
Disadvantages of an Adjustable-Rate Mortgage
Now that we’ve explored some of the advantages of an ARM, let’s go over some of the potential downsides of this mortgage type. The biggest risk when choosing an adjustable-rate mortgage is the inability to predict what the interest rate will be after the introductory period. This is most important in a RISING interest rate climate. The risk of abrupt and/or unexpected increases in interest rates that are inherent with ARMs could lead to a sudden increase in mortgage payments to the borrower. This of course could lead to financial stress and/or an inability to continue to make payments on the mortgage. Having a confident idea of your financial position might become difficult with fluctuating payments, and that instability might keep some home buyers away from choosing an ARM.
Deciding whether or not an adjustable-rate mortgage is the best move for you will depend highly on what you’re looking for out of your future mortgage payments. If you anticipate that you will not be living in the home for longer than five years, there are relatively no risks to choosing the lowest interest rate on the mortgage, because you can save money for future real estate ventures more easily. But if you’re planning on living in the home for longer than the introductory period, it might be smarter to choose a fixed-rate mortgage if you don’t think you’ll be able to save up money for increased monthly payments. Everyone’s mortgage needs are different, but an adjustable-rate mortgage is a valuable option for first-time home buyers that are looking for affordable monthly payments.
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More often than not, real estate transactions can get tricky, especially if you’re inheriting a property where the previous owner has passed away. Whether a property has fallen into your hands or you’re dealing with the death of a loved one, conveying ownership can tack on several months to the real estate process and become a cumbersome experience. Understanding how real estate is conveyed upon death can help new property owners navigate the real estate experience and help them protect a personal asset they are now holding.
What does Conveyance Mean in Real Estate?
To understand what conveyance in real estate means, let’s begin with its simplest definition. Conveyance is the transfer of ownership of property between the seller/conveyor and the buyer/conveyee. Real estate conveyance is accomplished by using a tool for conveyance, like a lease, contract, or deed. The legal title is transferred to a new owner by executing the document, effectively finalizing the property lien.
Conveyance in real estate is a very important step in any substantial real estate negotiation and is why so many new home buyers will purchase title insurance. Depending on which state you reside in, it may be expected for home buyers to pay a conveyance tax or real estate transfer tax. If you’re buying a home or a property falls into your hands, the conveyance process is the only way to obtain legal verification of the property’s true ownership. Conveyance in real estate clarifies that if one party wishes to break the contract used to transfer ownership, the other party can take legal action to enforce conveyance.
In 180 Homes’ helpful guide, we’ll explore what conveyance in real estate is so that future property owners can know what to expect. Here are some scenarios to help determine how a piece of real estate is conveyed upon death.
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Buying, owning, or selling a property after an unexpected death can certainly have its challenges. Within these challenges, there can be many steps to be followed before a descendant can have the legal standing to sell an inherited property. Luckily by understanding what conveyance in real estate means, navigating challenges can be simplified.
If you’ve inherited a property and are considering selling it, Contact 180 Homes to get a Cash Offer.
As with any financial transaction, there are choices you should and shouldn’t make when selling your home. The sad reality is that the most common mistakes are arguably the easiest to avoid. Preventing these mishaps is especially important if you are selling or thinking about selling your house independently without a realtor or sales agent. Selling a home alone or even with an agent is an involved process. With so many steps involved, making a mistake now and then might be expected. With more awareness of the most common home selling mistakes, sellers can get the most from their sales.
In this article, 180 Homes will navigate some of the most crucial mistakes to avoid when selling your home. While selling a home can be overwhelming at times, knowing what not to do during the real estate transaction can streamline and simplify the experience for all parties involved.
Mistakes to Avoid When Selling Your House
Selling a house is a time-consuming process. There are numerous steps involved between listing the home on the market and closing escrow with the seller. The home must be listed on the market, promoted, inspected, and toured by prospective buyers. Price negotiations and offer reviewals also take up some time, followed by the drafting of the real estate contract. Within each step of the process, you should exercise mindfulness to get the most value from the sale. Here are the four home selling mistakes you should consider avoiding at all costs
Pricing Too High
Anyone that has watched one of the numerous real estate television shows knows about the damage of pricing a home too high. This home selling mistake is a common tactic real estate agents use to get your home sold quicker and create excitement surrounding a property. Unfortunately, inflated pricing can have a legitimate and lasting negative impact on the final sale. In the world of real estate, first impressions are everything. When a new listing hits the MLS, sellers receive instant feedback from agents and buyers. If your home lists too high, agents will scoff at the listing and not give it a second thought. Redeeming the home’s reputation after an exorbitant initial listing price isn’t easy.
You may think that by listing aggressively and trying to squeeze every dollar from the property, you will improve your return on the investment. The exact opposite is usually the case. The demand and consumer interest will be far less than anticipated, and after a few weeks, you will need to act. Responding could mean lowering your price or spending money on staging to generate interest from those who already moved on. You are almost always better off asking a reasonable price for your property that is in line with the market first things first. By fairly pricing the property at the beginning of the sale, sellers can ensure they have a healthy batch of competitive offers.
There is no such thing as a bad offer. Sure, some will be well below the list price, but you should never ignore those offers. Think about how you acquire a property. You try to get the best possible price on any investment. Sellers think the same way and are always trying to get a steal of a deal. If there is a lowball offer, don’t get offended and take it personally. Dismissing an offer is a common home selling mistake, and can be remedied with open negotiations with potential buyers.
Always counter at a number you are comfortable with, even if it is just under the list price. If their counter is still not as high as desired, then you can move on. Making the mistake of blindly ignoring an offer can result in leaving money on the table. Many buyers make low offers to see where the sellers stand. As a seller, you should view any offer as just the start of negotiations and move on from there.
For any real estate transaction, there should be equal giving and taking. The goal shouldn’t be to dominate every negotiation with potential buyers but to get the property sold. You need to always think about the big picture when selling a home because it’s too easy to get bogged down by the little details along the way. It is very rare for buyers to get everything they desire from the sale, but it doesn’t mean they can’t get reasonably close. Unless you are in the right market and have timed the listing perfectly, you need to be willing to make concessions.
Compromise within this scenario could mean slightly coming down on the price, extending the closing date, or changing something in the property. If you say no to everything, your buyer pool may dry up, forcing you to be left with the property for weeks, possibly months, until another buyer comes along. In light of carrying costs, mortgage payments, taxes, insurance, it can sometimes make more financial sense to accept an offer and close sooner, even if it is lower than preferred.
With some properties, doing quality work and encouraging healthy communication may not be enough. Regardless of whether you are selling a freshly finished rehab or a home you have lived in for multiple decades, buyers need to feel welcomed when they arrive at the property. They should feel an instant appeal as soon as they open the front door, so don’t be afraid of adding some personalities within the home decor to assist in the sale. As much as a blank canvas and limited furniture provide options to the buyer, it may not encourage comfort or make them feel like the property is their home.
You should always at least consider staging the property. Sure, staging comes at a cost, but it should be seen as an investment with pending returns. Spending a few thousand on scheduling a few open houses with proper curb appeal and staging can net you five times your investment for the right property. Staging doesn’t work on every home within all real estate markets but for some homes, it can make all the difference.
Tips for Avoiding Home Selling Mistakes
For first-time home sellers, it’s natural to make a few mistakes when selling your home, especially for homeowners selling their property without the assistance of a realtor. Luckily, by understanding the most common mistakes to avoid when selling your home, the real estate experience can be a much less intimidating time for both buyers and sellers. There are many ways to encourage a quick and efficient sale when listing your home on the market without any prior real estate experience. Here are a few tips for professionally selling a home.
Prevent Making Home Selling Mistakes with 180 Homes
There are countless reasons why homeowners might choose to place their property on the market. Knowing how to simplify the real estate process can make or break the seller’s experience in getting the best price possible for their initial investment. The easiest way to create a streamlined real estate process is by knowing what mistakes to avoid when selling your home, from fair pricing to proper staging.
180 Homes seeks to simplify the real estate process even further with competitive cash as-is offers for your home. Get a fair price and expedite your real estate experience with the helpful professionalism found at 180 Homes. Maximize your investments with a real estate company you can trust. Contact 180 Homes today to get started!