When you are dealing with the buying and selling of properties on a regular basis, it’s easy to make a few legal mistakes along the way. Many of these are made because the investor simply does not know they are mistakes. Below are some of the most common legal mistakes made by investors when buying and selling real estate. This information can help you avoid the hassle you would no doubt experience should you find yourself trying to correct one on down the line.

Let’s face it, investing in real estate presents some unique legal and financial risks. These can affect you, your assets,  your business, and yes, even your family. It is important to remember that all investors, novice and experienced, can make these mistakes.

Possessing and using poor legal forms is one of the most common mistakes an investor can make. Necessary contracts can be purchased from a variety of places to include: discount office supply stores, through the Internet, and from friends who use them. Remember, every real estate deal is only worth its contract. Before purchasing any type of contract it is a good idea to seek the advice of an attorney. If you do not have the money to pay someone to draw up the legal forms for you, consider talking to another investor who has been in the business of buying and selling real estate for a long time and knows the legalities. That person will be able to provide you with the right forms or help you draw them up. It’s still advisable to ask an attorney to look at them for you. Remember, once you sign a piece of paper, you are bound to it good or bad. Know what each term means. This will help you protect yourself even further. Ignorance is no excuse when dealing with the law.

Avoid legal discrimination. As a land lord, you are not allowed to refuse a potential renter on the basis of gender, race, ethnicity, or disability. Use good business sense when drawing up your contracts and make sure they don’t read in a way that could be construed as discriminatory. Such law suits are all too common these days and you want to avoid them as much as possible.

Know your local laws. This is another common mistake made by many investors who aren’t as up on the laws as they should be when selling or renting property. Knowing what you can and can’t do, and how to properly draw up an agreement will help you immensely along the way. Also knowing your rights as a land lord will further protect you when dealing with tenants.

Stay up-to-date with the laws. Keep in mind laws do change and you will need to be aware of those changes. This will provide continued protection for you and those you sell or rent to in the future.

Bookmark With

You have found the perfect rental property, it is close to work, the schools are great and the rent is acceptable.  But due to some unforeseen circumstances you are no longer able to afford the property or you need to find something in another area you may find yourself faced with having to break your lease agreement.  The lease you signed is a legally binding contract between you and the landlord, but more often than not, it is possible to break the lease and do it on good terms.

If you find yourself in the situation where you need to break your lease the first thing you need to do is review the terms of the lease agreement.  Look for any opt-out clause that will allow you to terminate the lease early in exchange for a pre-determined fee.  Depending on the terms of the lease, if the fee is acceptable and not over the top it may make sense on your part to use the opt-out clause.  If your lease does not contain an opt-out clause you should contact the landlord or property management office and be honest with them.  Explain how your situation has changed and that you would like to break your lease.  By showing the landlord or property management company that you are willing to work with them to settle the matter easily it may work in your favor.

By accepting that you are legally responsible for the loss of rental income for the remainder of your lease it may make sense to offer the landlord assistance in finding another tenant who can move in as soon as possible.  This will reduce their need to advertise the vacancy and can keep them from losing any income by having a vacant unit sit for months.  You can also offer to advertise the property online or in local newspapers, show the property when an interested party inquires and keep the property as clean as possible for these showings.  If you find a new tenant that meets the qualifications of the landlord or property management office you may have found a solution to your problem without spending any additional money on your part.

There is no guarantee that your landlord will accept this scenario, but it is a place to start.  The best thing you can do is be honest with your landlord and keep the lines of communication open.  Offer any assistance you can offer and do your best to make the situation easier on you and your landlord.  You may be surprised at how willing landlords are to work with tenants these days.

Bookmark With

Many homeowners tend to only have their home appraised when they are refinancing or decide to list the home for sale.  If this sounds familiar you should be prepared because the appraisal process has undergone some changes in the last couple of years.  To help you be better prepared when you have your home appraised we are going to share with you three key things you should be aware of before you begin the appraisal process.

One of the first things that you should be aware of is that the relationship between lenders and appraisers is a thing of the past.  Lenders and appraisers no longer work together; in years past it wasn’t uncommon for your lender to have a relationship with certain appraisers.  This resulted in home values either appraiser higher or lower depending on how the lender wanted it to go.  When the Home Valuation Code of Conduct went into effect on May 1, 2009; it changed how lenders chose their appraisers.  Appraisers were no longer chosen because of personal relationships but lenders must now choose an appraiser through appropriate channels.  This ensures that homes are valued fairly and there is no deception on the part of the lender or the appraiser.

The next change to take place is the quality of the appraisal you will be receiving.  Since the appraisal field was taken over by appraisal management companies the quality of appraisals being done has suffered.  Not only are appraisers making less per appraisal today than they had in years past, but they are expected to perform these appraisals under unrealistic time frames.  Because of this, appraisals are suffering.  The quality and level of experience of many appraisers working today is not what homeowners have come to expect.  What this means to you is that the appraisal you receive may have been done hurriedly and you may not receive the value that you assumed you would get.  If you are unhappy with an appraisal you can always request another one, but you may have to pay for it out of your own pocket.

The final thing that you should be aware of is that the amount of cancelled contracts has risen considerably.  Experts believe that the high amount of cancellations can be attributed to low appraisals.  But that is not the only reason why a contract can be cancelled, many cancellations are due to problems that may have been discovered during an inspection, or the buyer may have recently experienced a change in income.  It is also common for a seller to cancel a contract if they feel that their home didn’t appraise well.  Whether you’re a buyer or a seller, contract cancellations is something that you should be prepared for.  

Bookmark With

It is a common misperception among first time homebuyers that once you start dealing on a home, you cannot walk away from the deal. It may seem intimidating to say yes and sign an offer if you have never done so before.

For many people, it seems so difficult to stop the process. Yet, the deal is not done until the process is totally complete. There are times you will want to look closer, and there are other times you will want to turn away and run.

Look Closer

1. It seems too good to be true.

Perhaps it is too good to be true. Perhaps you are being sold a bill of goods. If so, then go ahead and walk away. However, you will not know this to be the case unless you find out more. Find out more about the issues that seem too fantastic to you. Find out about the owner. There may be some perfectly good reason she wants to sell her beautiful home at a reasonable rate. Give it a chance before you write off the deal.

2. The real estate agent seems unreliable.

An unreliable real estate agent can make you feel very nervous. It may seem like he is trying to hide something, or that he is not proud of the home in his listing. Step back and consider the entire situation. The real estate agent may not be a good indication of the value of the home. If you are extremely unhappy with the agent, but you like the home, ask the agent if you may work with someone else on the home. He may send in one of his associates. It is not always possible, but it might be worth a try.

3. The loan documents have been misrepresented.

Often, when people take out a real estate loan, the documents are misrepresented to them before the signing day. There is an easy solution to this. You have a right to have a copy of the papers and to have your lawyer look them over before you sign. Do it.

Walk Away

1. The foundation is cracked.

It is a monumental task to repair a foundation adequately. The best policy is to avoid any home with a cracked foundation. Look the home over personally to satisfy your own mind. Then, have a professional home inspector do his job. Make it a point to ask her about the foundation. She will make sure your prospective home is intact.

2. There is major and unresolved termite damage.

Why buy a home with termites roaming the structure and causing damage day by day? There are plenty of homes for sale that are termite-free. Look at that inspection report yourself, and walk away if there is any sign of runaway termite infestation.

3. The seller has not met your agreed upon demands by closing time.

Whatever you have agreed upon is what the seller has to do for the sale to be completed. The only way around that is for you to settle on a new agreement. If the seller does not meet your demands and you want out, walk away. 

Bookmark With

It is all too easy to get a home equity loan. Sometimes, you seek out a line of credit based on your home equity. Other times, loan companies will pursue you, sending you a barrage of offers to tempt you. It all seems like such a wonderful plan: you use money you have built up in your home to buy something you want or need. It is your money, after all. All you are doing is borrowing from yourself. It seems so reasonable.

Do not be fooled. If you were actually borrowing from yourself, you would not be paying interest, would you? As long as you remember that this is definitely a loan and that it may cause you to lose all equity you have in your home, you will be on the right track.

Start by considering your reason for the home equity loan. Is it worth jeopardizing the gains you have made in paying off your home? Do you want to put your equity on the line for an extravagant vacation or shopping spree? Examine your motives thoroughly before you even begin to consider taking out that home equity loan. You may decide it is not the wisest decision.

Sometimes, though, there are very good reasons to take out the loan. Perhaps your roof needs to be replaced and you need the money you have built in equity to do the job. This is an investment into your home. It makes sense to keep your home in good repair. If you cannot get the funds any other way, a home equity loan might be your best option.

In this case, your primary concerns will be about getting the best deal on a loan. Make sure you are dealing with a reputable loan company first of all. It is a good idea to go to a loan company you are familiar with, rather than buying into the advertising of the first one that approaches you with an offer.

Make sure you do not take out more of a loan than you need or can afford to pay back. Many people get into trouble because the money is so easy to come by. They never think about how difficult it might be to make the payments. Do not fall into that trap.

Understand the terms of the loan fully before you sign the papers. You might have payments that seem too low to be real, and then discover that they are followed by a huge balloon payment after a certain period of time, for instance.

Getting a home equity loan should never be your first knee-jerk reaction to life’s difficulties or your money problems. Make sure it is your best option before you pursue it. Then, if you do, get all the details and choose the loan company and the loan package wisely. You will be glad you did.

Bookmark With

Whether you are a buyer or a seller your real estate agent is someone you are going to be spending a lot of time with.  Buying or selling a home can be one of the most stressful times in your life, having an agent that is not helping to alleviate that stress is not good.  Your agent should be aware of your needs, what you are looking for in a new home or how acceptable an offer is.  There are many things that your real estate agent should do to help the process easier on you not harder.  If you are unhappy with your real estate agent we are going to offer you some advice on how to let your agent go.

If you are unhappy with your agent, whether you’re a buyer or seller you should probably move on.  Knowing when to move on to another agent can be tricky; you may feel obligated to stay with the first agent you began working with.  Never let your agent feel that you are under any obligation to stick with them until you have finalized a deal.  You are always more than free to move on and choose another agent who is more than willing to make your experience a happier one.  After all, you should be enjoying the time you spend viewing properties not dreading another meeting with your agent.  When choosing an agent it is important that you find someone who you feel is compatible with you, if you have an uneasy feeling with someone always move on to the next.  There are plenty of agents to choose from, find one that keeps your needs in mind when they are working with you.

If you are a seller who has become less than happy with the way that your agent is representing you will need to ask the agent to cancel the listing.  If for some reason your agent refuses to cancel the listing, you can then move up the ladder and contact the agent’s broker and request a cancellation from them.  If the broker also refuses to cancel the listing you can then ask them to assign another agent to you.  However, this is rare and most brokers will cancel the listing upon your request.  This helps keep their name from become sullied among other sellers. 

There are many reasons why your relationship with your agent may sour, they may refuse to listen to your needs or show you homes in areas that you are not interested in.  Communication is important when you are working with an agent.  Always be sure that they understand your needs and never let them talk you into anything you don’t feel comfortable with.  Be firm in voicing your opinion about homes you are viewing and make the agent aware of any problems that you are having with them.  Often, they will take this into consideration instead of losing you as a client.  

Bookmark With

The internet has opened up a new market to help get your home sold.  There are many ways to use the internet to help get your home the attention of thousands of sellers who are also using the internet to find their next home.  With the proper marketing technique used by your listing agent you will likely sell your home faster if the appropriate listing techniques are used online.  The internet is becoming more relevant in the process of buying and selling homes than it ever has been before.  With some helpful tips you and your agent will be able to successfully market your home online.

• The first thing that you and your realtor should do is determine the price that your home will be listed at.  To determine the price it is common for realtors to use comparable report that will list the prices of properties that have recently sold in your neighborhood.  This will help determine the asking price of your home.
• Next you should ask your realtor if they will be listing your home on the internet using the common websites that are used to list available homes for sale.  If your agent is reluctant to list your home online, you may want to choose another agent who is more comfortable listing homes online. 
• Once you and your agent have agreed to list your home online as well as locally, the next thing you will need to do is to choose the listing package that will allow you to reach as many possible buyers as possible.  This is typically a paid service and you should choose a listing package that fits your budget.
• The next step is to get your home listed online.  This will involve filling out a form that includes information about your house such as size, price and extras.  You should always include photos of your home both exterior and interior.  Buyers are more likely to view listed homes that offer multiple photos.
• It is important when listing your home online that you ask your realtor about listing expiration and renewal dates.  You should keep track of these expiration dates so that you know what to expect and when to expect it. 

The internet is a great way to bring potential buyers to your door; it has the ability to get your home noticed by thousands of buyers who may not normally see your home.  Listing your home on the internet will likely help you sell it fast and get the asking price.  If more than one party is interested in your home you may even experience a bidding war which will increase the amount of money you make on the sale of your home.

Bookmark With

Many people jump into real estate investments without a real plan in place. Real estate investments, other than your own home, should be made with a goal in mind and a plan in place. You should know exactly how the investment you are looking at making will impact your ultimate goal. If it doesn’t, you should pass it up and look for a better deal.

Many people underestimate the power of planning. Planning ahead and making sure that each deal you make fits into that ultimate plan is what will make you successful as a real estate investor. A lot of people think that the more deals they make the more money they will have, and therefore the more successful they will be. However, success isn’t all about the money, and people who just make one deal after another with no goal in mind could find themselves with tons of properties and debt and no way to unload it all.

The first step in making a plan is to consider your financial limits. You need to have a full understanding of how many deals you can afford to make at one time. You also need to know how you are going to get your money back on the deals you make. Are you going to buy repossessed properties and flip them for a profit? Or are you going to buy up properties and rent them out for a profit? Whichever the case may be, you will want to make sure that your plan allows you to have positive cash flow.

The next step in making a plan is to consider your goals. What are you trying to achieve? Don’t just put dollar signs on your goals. You want to achieve real success, so what does success mean to you? Start small and work your way up. Change your goals as your plan progresses so that you are constantly striving to achieve something. For example, your first goal could be to own the house you live in outright, with no mortgage. Once that goal is accomplished, you might make a new goal to buy a bigger or better house in a nicer location.

Finally, you have to stick to your plan. If you have done it right, your real estate investing plan will be a detailed map of how you are going to achieve your goals. You have to stick to that plan, or whatever looked good on paper will never be a reality. It is important to be flexible as well, however, as some deals may not go as planned. You cannot always control all factors in an investment opportunity. Therefore, some flexibility is required. Keep this in mind when making your plan, especially when considering the financial ramifications of deals gone wrong.

Bookmark With

Suppose that you get behind on your mortgage payments and your lender threatens foreclosure. If you do not have access to enough money to catch up, it is a time of uncertainty, stress and worry. You do not know what will happen at this point. A deal may be in the works for a short sale or repossession. In the meantime, you have to face the practical aspects of your life.

You cannot face the day-to-day effectively if you are stressed and anxious. You need to do things to calm that anxiety. It is natural to let your mortgage crisis take over every moment of your thinking and being. Instead, take back some of your time for family moments, simple activities or meditation. You will be much better equipped to make the decisions you need to make.

It is also difficult to manage your life if you let your health go. It is easy to fall into poor health and fitness habits when you are consumed with thoughts about losing your home. Take the time to plan nutritious meals and eat at home. Exercise by jogging around the park or lifting those weights that are sitting in your closet gathering dust. You will not spend any more money, and you will be stronger and more alert to face whatever you have to do to address your mortgage problems.

Sleep is essential. Making decisions and filling out paperwork on no sleep is a good way to give up any rights or advantages you might have. Do what it takes to sleep regularly and adequately. Many people find that it is helpful to write lists of things they need to do about the impending foreclosure. Some write in journals to express their feelings. These two activities often release tension and allow the people to drift off to sleep much easier.

Be positive. It may sound impossible, but there is rarely if ever a time when being positive will not help you. Certainly look at the process you going through with clear vision. Be aware of the seriousness of the problems you face. However, do not let the negative aspects of the situation overwhelm you. Make a commitment to resolve the matter in the best possible way with the most advantageous outcome possible.

Living a grounded and healthy life will keep you prepared for everything that is happening and yet to come. At the same time, be proactive about the process you are in. Do research to learn more about your situation, and if you do not understand something, find someone trustworthy and knowledgeable to ask. Stand your ground as long as you can, wherever you can. Make the most of a bad situation. If you do, you can recover and eventually bounce back.

Bookmark With

One of the biggest concerns for property owners and real estate investors is how to secure a property that is vacant. There are a great many things that can happen to an unoccupied property. And, if that property is on the market, you want to make sure that none of those things happen in order to keep the property ready for a sale.

The most common things to happen to vacant properties is that people will break in and use the property as a squatter. Even if it is only for one night, these individuals will undoubtedly do damage to the home. There will be damage from the forced entry, as well as liter and possibly other damage in the home.

Another thing that commonly happens today with unoccupied homes on the market is that people will break in and tear into the piping or wiring in order to harvest the copper from them. This has become more common in recent years. It is highly damaging to a home, and could be extremely costly to repair.

Finally, you have the average vandals who cause property damage simply because they think they can do it and get away with it. This could be troubled teens or older drunken groups. Whatever the case, vandalism can also be expensive, and can greatly hurt your chances of selling a home.

So how do you protect the unoccupied home on the market from these disasters? There are several ways you can increase security for unoccupied homes to make sure that these things do not occur.

The first thing that you should do is visit the property routinely. If people see that someone is routinely at the property, they will be less likely to do anything to it or break in. Another thing you can do is get to know the neighbors on either side and across the street from the property. This will allow you to get some more eyes on the property so that if anything does happen police will be notified sooner rather than later, decreasing the amount of potential damage.

Finally, if you are really concerned about security, you can ask the local police to patrol the block your vacant property is on during the night. This will deter people from messing with the property. Alternative, if the police will not oblige, you can hire a private security company to do drive bys occasionally so that people are less likely to break in or vandalize the property.

Overall, there is not too much you can do about securing an unoccupied home on the market without installing a security system. This is of course another option, although a costly one. However, you may get the money back from the investment due to the increase in value of the house with the system installed. 

Bookmark With