Whether you are a first-time home buyer or getting into the Real Estate business, having a Real Estate professional guiding you is vital especially when it comes to finances. Many people consider buying or investing in a property a huge investment. In order to avoid costly mistakes, a reliable Real Estate professional will help you navigate it through. In this article, we’ll explore how a Real Estate professional can assist you in financial aspects in real Estate. Important topics covered include:
Conducting a Comparative Market Analysis
Off market properties
Insurance and Risk Mitigation
Closing costs and fees
Conducting a Comparative Market Analysis (CMA)
Ever wondered how people come up with the price of a given property? Most people have come up with this question often when buying or selling a home. While there are many tools such as Bankrate’s Home Estimation tool which can set the baseline price of your property, A Real Estate professional uses different techniques to come up with accurate competitive prices. Here are the techniques:
A real estate professional identifies properties similar to the one being sold and examines their location, size, age, and amenities for similarities. They usually compare the subject property with similar properties that have sold for the past 3 months.
Another way is to analyze price per square foot, a valuable metric taken from similar properties and applied to the subject property to set the baseline price. Realistically no two properties can be fully identical, a Real Estate professional checks for differences such as upgraded kitchen or improvements in the subject property that would somehow increase the value of the property for accurate pricing.
External conditions can affect the price of a property, they include neighborhood, proximity to amenities and security. A property in an area with high security and is near to amenities such as schools and hospitals may cause a property to inflate prices. New developments such as start-up companies may offer job opportunities attracting people increasing demand for properties.
Market trends also play a huge role in pricing. When interest rates drop, homebuyers find it cheaper to buy homes, and they seize the opportunity to reduce their monthly payments.
OFF MARKET PROPERTIES
Not all Real Estate deals are available to the general public. Finding properties that are for sale but not listed publicly can be difficult for someone getting into the Real Estate game. Real estate professionals on the other hand have networks with other agents, some of them may even know people that are interested in selling but don’t want to list their properties publicly.
Sellers who keep their properties off market have multiple reasons to sell their houses discreetly, this might include financial crisis, privacy or even avoiding the listing hassle.
Many agents and brokers prefer deals involving off-market properties because motivated sellers often want to sell due to underlying reasons, which creates a favorable atmosphere for a sale.
One of the benefits of off-market properties is reduced competition, which allows investors and buyers to negotiate better prices and avoid inflated property prices.
Most cases, off market properties are distressed and require renovations, with a network of home renovators, Real Estate professionals can guide you on the renovation costs and the positive impact they have on the value of the property.
INSURANCE AND MITIGATION
Home buying is one of the biggest investments people make. Since there is potential for the property to appreciate and the prospect for re-sale, most people would want to protect this asset at all cost. Insurance and Risk Mitigation safeguards these assets from potential losses or damages which offers financial securities to home buyers and real estate investors.
1. Homeowner’s Insurance
One of the most common types of insurance is the home-owners insurance. Homeowners insurance is one of the most common types of insurance, especially when a mortgage is involved. Lenders require homeowners insurance to protect their financial stake in the property until the borrower fully repays the mortgage. Homeowners insurance is typically a prerequisite for lenders to approve a mortgage loan
Most lenders mandate that the insurance must cover the cost of completely re-building the property in case of significant damage. Additionally, they include complete coverage of the loan in case of severe damage of the property. This ensures that lenders don’t lose their investments in case foreclosures are not possible.
Real Estate professionals can help you understand the insurance policies, negotiate on your behalf in case the monthly premiums are too high and guide you to avoid foreclosures / losses whether you are the buyer or the lender.
2. Protection with liability Insurance and LLC’s
Nowadays, legal suits have become increasingly common affecting majority of people. To protect their assets, home-sellers use many strategies to shield their properties from such risks. Liability insurance is crucial, it offers coverage against claims that arise from injuries, damages or legal disputes that relate to their line of work. Liability Insurance cover expenses such as legal fees and settlement fees.
Setting up a Limited Liability Company is another effective way to shield assets from losses. An LLC enables real estate investors and businesses separate personal assets from business assets, protecting the business assets in the event of lawsuits. In a lawsuit, many unpredictable outcomes can occur, and the assets held in LLCs are not directly linked to the accused. Most of the lawsuits in these cases are on a personal level.
I once read in Rich Dad Poor Dad that after a car accident occurred, the victim decided to sue, causing the accused to lose their house and business because they failed to register them under a corporation, making the business assets vulnerable. Working with real estate professionals expose you to legal structures that have significant impacts on the safety of your investments. Even though setting up an LLC might be a good idea for most people, consulting with an expert attorney is essential in order to understand the law and tax implications.
CLOSING COSTS AND FEES
Purchasing a property is more than just putting a down payment and paying monthly mortgage payments. It involves a series of procedures and expertise of different professionals. Utilizing the services of these professions come at a high cost and could potentially be a deal breaker since most home-buyers don’t give much importance to the closing costs. Stats show that about 7% of deal breakers in real estate transactions are due to expensive closing costs. This could be painful if a client has found his potential home.
In the real estate transactions, buyers usually cover majority of the closing costs, this includes fees related to acquiring the mortgage, home inspections, appraisals, agent’s fees, attorney fees and title services. On the other hand, sellers usually cover outstanding property taxes due before the purchase of the property, Sellers must also settle any outstanding debts as well, title transfer fee and attorney fees. Do yo want to get started with a real Estate agent? click here.
Conclusion
Working with real estate professionals offers significant advantages. They can provide a complete breakdown of costs, negotiate on your behalf for favorable pricing, and recommend trusted service providers who may offer discounts. Additionally, they can assist with financing options that simplify the sale. Before closing, real estate professionals review the closing disclosure to ensure accuracy and fairness. In the event of discrepancies, their experience enables them to identify issues and suggest effective resolutions.
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