5 Best Ways to Research Your Property History

On August 17, 2014   /   Real Estate News  
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research property

By: Anne Miller for Realtor.com

Property history research gives you a picture of how the history of your property developed through the years. The history may purely serve to staunch your curiosity.

But you may also learn why some things were built as they were and—potentially—learn more information to help you fix or update your home.

If you’re embarking on a remodel, for example, you’ll need to understand the genesis of your home, how it was built and possibly added on to, and what might lie behind the walls or under the carpeting.

Plus, sometimes it’s just fun to know the provenance of your abode.

Property History Research Methods

Ask your inspector: If you’re buying an older home, check with the expert you’re paying to look at all the nooks and crannies—and about the history of those nooks and crannies. For example, an inspector might note a beautiful hardwood floor beneath modern carpeting or know where to look for a historic foundation stone in the basement.

Talk to your neighbors: Maybe also talk to the previous owner and others who used to live in the area—and their relatives. Many will be happy to share memories. Once land records are accessed, your property history search will yield valuable historical information about the house and its original owners, including when it was sold and to whom.

Visit the library: Old newspapers or local history publications may offer insight into events at your address or give you a sense of the neighborhood and town at the time the home was built. Try to go during a slower time of day—not, say, a raining weekend afternoon—and a librarian may have more time to assist you with this research.

Check the deed: You need to know the legal description of the property, the official address and the subdivision lot number. The legal description also includes the section number, portion of the section, township and range of the property.

Deed transactions are also recorded at local county courthouses in the Register of Deeds. These records may be on microfilm, computerized records or other physical publications. Most staff who work with deeds can help you find what you’re looking for off the address.

When you start your search, begin with the most recent deed transactions and work backward to earlier records.

Scour Porch.com: The online clearance center for home projects, design ideas and contractors also encourages owners and others to note a home’s history. You can check out past work permits, local stats, and who’s done what work on the house.

Other resources: The patent records of the Bureau of Land Management’s General Land office will show you when the federal government first sold the land parcel to a private owner and who that owner was.

You can find other documents online or in local archives or libraries. They include census data records, marriage and death records and insurance maps which show how a property changed over time.

There are commercial sites to help you locate and search online databases to get this information. Genealogical research databases can also give you valuable information to help you uncover your property history.

Happy digging!

Updated from an earlier version by Wendy Dickstein.

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What is Dual Agency?

On August 10, 2014   /   Real Estate News  
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dual agency in real estate

By: Chrystal Caruthers for Realtor.com

When a buyer is represented by the same brokerage firm that has the listing, it is called dual agency. When one agent represents both the buyer and the seller in one transaction, it is also called dual agency.

In many states, dual agency is illegal: it can be a conflict of interest that best serves the broker.

REALTORS® have a responsibility to inform clients of potential conflicts of interest. REALTORS® cannot legally work both sides of a transaction without informed consent.

If you are selling your house and you don’t want your REALTOR® also working with the buyer, you have a right to specify that in the listing agreement. The same is true for buyers: a buyer can opt out of a buyer agency agreement if their buyer agent also has a listing the buyer is interested in purchasing.

There are pros and cons to dual agency. Every client has a different tolerance level and different expectations. Here are some ways in which dual agency could work.

Dual Agency Pros for the Seller

  • You already know and trust your listing agent—so you know if he also represents the buyer, your transaction will be handled efficiently.
  • Your listing agent has cornered the market in your neighborhood and therefore gets lots of buyer inquiries. Having your agent work both sides of the deal gives added incentive to sell your house quickly.
  • Your agent brought the buyer to you knowing you’ve been thinking about selling your house—but it’s not on the market yet.
  • Your agent is working with a corporate relocation buyer who needs to find a house quickly—and your house fits the bill.

Dual Agency Cons for the Seller

  • Your agent cannot advise you as thoroughly when acting as a dual agent. Impartial facilitation is required.
  • The opportunity to earn the full commission might tempt an agent to coerce a deal you would not otherwise accept.
  • Your listing agent cannot negotiate the highest and best price for you if also negotiating the lowest and best terms for the buyer.
  • Your agent might inhibit access to your listing by other agents with buyers.

Remember, every real estate transaction is different. The best way to ensure you are properly represented is to clarify your relationship with your agent either through a listing agreement or an exclusive buyer agency agreement.

Once everyone’s roles are outlined, there is little room for surprises—even with dual agency.

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Know the Rules for Buying Property With Your IRA

On August 3, 2014   /   Real Estate News  
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By: Craig Donofrio

Your Individual Retirement Account can invest in more than stocks and bonds—an IRA also can buy real estate.

But it isn’t as simple as finding a property, investing and moving in. Be prepared to do a good amount of research and financial planning before you start signing papers.

How Buying Property With Your IRA Works

First, you need a self-directed IRA fund. As the name implies, all investment decisions using your IRA are made by you, instead of the IRA holder. But while you make all the decisions, you need a custodian to make investments on your behalf.

Custodians are companies “strictly there to manage the transaction, the paperwork and the reporting,” says Denise Winston, financial expert and author of Money Starts Here! Your Practical Guide to Survive and Thrive in Any Economy.

Custodians will also charge fees related to administrative and reporting purposes, and they don’t give direct advice.

“They may have a seminar, a report or some articles to help you be a better investor, but the deal is the liability relies on us, as a consumer,” Winston clarifies.

You also aren’t limited to buying a house with your self-directed IRA. Some investment examples include these property types:

  • Vacant lots
  • Parking lots
  • Mobile homes
  • Apartments
  • Multifamily buildings
  • Small businesses
  • Boat slips

Avoid Pitfalls

Self-directed IRAs can get tricky, and if you’re not careful, you can wind up in a sticky situation.

For example, don’t expect to live in your property until you retire.

“This is not any kind of personal transaction,” Winston says. “This can’t be a primary, secondary residence or a vacation residence. It strictly has to be a business transaction.”

Neither you nor your immediate family can benefit from the investment before you reach the IRA’s distribution age. If you do, you’ll be slapped with a tax penalty and could have your IRA invalidated.

Everything you use to fund an IRA investment property must come out of your IRA. Likewise, money that comes out of the investment property must be given back to your IRA. So if you buy an apartment and rent it out, that rent money must go back into your IRA—not your wallet.

Similarly, if your investment property requires repairs—like a new water heater—you need to use your IRA to pay for it. If your apartment isn’t rented for months, you’ll still have to use your IRA to pay for the taxes.

“If you don’t have a reserve in there, you have a big problem on your hands,” Winston adds.

Tips

A self-directed IRA can be a great choice for some people—provided you’ve done your homework. A rule of thumb from Winston: “Only invest in what you know and you can explain.”

Potential investors should meet with a financial planner, an attorney, or both before investing in a property. Go over all governing rules for the investment and don’t get caught unaware by any applicable taxes or tax implications.

“There are very specific rules, and it’s a very specialized transaction,” Winston says. “Do your due diligence and research before you get too gung-ho.”

When planning, be sure you have enough money in your IRA to cover taxes, emergencies, maintenance and other potential problems. If you don’t, you’ll have to make the maximum annual contribution and hope it’s enough.

“Live ‘as if’ and do it with pen and paper first,” Winston suggests. “Ask, ‘What if this happens? Where would I get the money?’ You’ll quickly see where the gaps are.”

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Buying Unique Homes: What You Need to Know

On July 27, 2014   /   Real Estate News  
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buying unique homes

By: Anne Miller for Realtor.com

Imagine living in a missile silo located in New York’s Adirondack State Park, or at the top pyramid of the Smith Tower, once the tallest building in Seattle. Buying unique homes like these comes with challenges, however.

Buying an unusual house can be the adventure of a lifetime. The character and charm can express your creativity. But that creativity holds its own challenges, from financing your purchase to selling your house.

Unique Homes: Weird and Wonderful

Unique homes elevate your everyday experience. Entertaining guests takes on new meaning under an old barn’s soaring rafters, or as the sun sets behind stained glass.

If you are revamping an abandoned farmhouse or renovating a church, you’ll benefit from the enjoyment of seeing your vision emerge. You may also reap benefits that a more conventional home couldn’t supply. The acoustics of an old church, the lofted space perfect for a home office in reclaimed barn, the hand-carved molding of a cottage that’s almost impossible to find—those are hard to build new, much less a home in a cave or the purple princess Victorian of your dreams.

Other homes may reflect a cutting-edge futuristic village, such as the tiny house movement (which crams a lot of life in a very small footprint) or creating living space out of discarded shipping containers.

Resale Values

If you’re interested in buying a unique house, what you need to know can be summed up in one word: resale.

You may not want to spend your retirement in your houseboat, quarry or renovated submarine—or raise a child in a cave. Whatever the reason, at some point your lifestyle may call for a more traditional home. Finding a potential buyer for your underground abode, dream castle, or haunted house (with or without tennis courts), may prove tough.

You can get lucky. Because your new home is likely a rare find, like-minded individuals could pay a pretty penny if you sell: just look at the missile silo home put up for auction on eBay. After a handful of TV shows worldwide featured the curious abode, a winning bid put $2.1 million in the homeowner’s pocket.

However, just because your strange house is meaningful to you and your creative spirit, don’t count on it being the hottest property on the market.

Uneasy Lenders

How easy will it be to sell the property in the case of foreclosure? This is the main question that looms in lenders’ minds. If the borrower defaults on the mortgage, the lender needs to be able to resell the property within a reasonable amount of time. Because of this risk, buying a unique house may be a challenging process.

Determining the resale value of a house relies on finding similar home sale prices for comparison—but what if no other home is quite like yours? How many converted nightclubs could one find in the same district?

Generally, a larger lender will not want to take a chance on a non-mainstream property. Sometimes small local lenders, familiar with an area’s unusual properties, will offer a loan.

Locating a Lender

To find a lender to finance the unique house you want to buy, consider doing a keyword search online for the best deals—or approaching a mid-sized bank.

Custom builders may be a resource as well, as they often have good relationships with banks, online lenders or other sources of financing. You can consult a broker whose knowledge of lenders can save you precious time so you can move forward with your purchase.

You may receive a high interest rate or need to put down down payment of more than 20% cash, however.

The Downside

Perhaps living in a strange house seems inspiring at first, but the reality is eccentric floor plans can make day-to-day living a more frustrating experience than living in a more traditional setting.

Will your grandmother’s antique dining room table fit in a curved great room? Can that small door accommodate a modern sofa? How do you light a soaring vaulted ceiling?

Try grocery shopping in the Adirondacks—not so easy sometimes. If dusting the tops of your bookshelves is rough now, imagine having to sweep spider webs from the gables of a gothic cathedral.

Consider what life in the unique house of your choice would really require. Calculate how much money it will cost to maintain this place over time.

Finally Home

Whether you dream of living in a lighthouse, having an ice-cream parlor in your living room or enjoying a wedding chapel in your backyard, you can find all kinds of unusual homes for sale.

Whether you decide to market it for resale—or treasure it as your home for the rest of your life—with a little homework you can choose a home to suit your practical needs and creative spirit.

Based on an original article by Mortgagematch.com.

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How to Win the Bidding War on the Home You Want

On July 20, 2014   /   Real Estate News  
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win the bidding war on the home you want

By: Michele Lerner for Realtor.com

If you are buying a home at the height of a citywide seller’s market or simply want a sought-after house in a neighborhood with limited turnover, you may find yourself in the midst of a real estate bidding war.

Competing against faceless prospective buyers may bring out the warrior in you, but before you decide to go all out in your battle, you need to step back and decide how much you really want that particular home.

Should You Compete in a Bidding War?

In the thick of competition you may forget your end goal is a home you love and can afford to own. If your offers have been turned down by several sellers because of competing buyers, then you may feel pushed to make an aggressive offer for the next home you like.

You should stop yourself from competing just because you think the time is right to become a homeowner or to move up into a new place. Instead, think about whether you really want the particular house enough to fight for it.

To guard against making an emotion-fueled offer for a house, take a hard look at your finances. While it may feel good at first to beat out other buyers and to purchase a property, it won’t feel so great in a year or two when you are struggling to make the payments on a house beyond your means. Know your limits before you begin to bid.

Prep for Battle

Your first step before entering a bidding war should be to consult with a lender to understand the maximum amount you can borrow, to evaluate how much cash you have to spend while keeping enough money in a reserve fund.

Next, make sure you hire an experienced REALTOR® who can share information about local market conditions and communicate with the seller’s agent. You should rely on your REALTOR® for advice about how to handle a bidding war, but be sure to do your own research: visit a lot of homes in the area where you want to buy so you understand the value of various properties before you make an offer.

Bidding War Strategies

Your REALTOR® should work with you to craft an attractive offer based on the list price for the home, a comparative market analysis of similar homes, and knowledge gained from the sellers’ agent about the sellers’ motivations and preferences.

In a bidding war, it’s important to work with a REALTOR® who will move quickly to present your offer and any counteroffer, one who is easy to communicate with during the transaction.

While you may assume money is the motivator that steers sellers to one buyer over another, there are other ways to make your offer attractive, such as these ideas:

  • Solid financing: You may be competing against cash buyers, so make sure your loan pre-approval is in place and you have completed all required documentation other than identifying a specific property.
  • Eliminate contingencies—carefully: If you own a home now, you may want to offer to buy another home without making your contract contingent on the sale of your current home. You take the risk of carrying two mortgages for a while, so make sure you can safely handle the payments. You can also decide to have an “information only” home inspection rather than making your offer contingent on the outcome of the inspection.
  • Make the settlement date convenient for the sellers: Rather than negotiating on a closing date convenient to all sides, you can tell the sellers you will work with their schedule or rent back the property to them after the closing.
  • Offer to pay all closing costs: You can reduce the sellers’ out-of-pocket expenses by offering to pay their share of the settlement fees, but before you do this get an accurate estimate of what those costs will be and make sure you have the funds available to pay them.
  • Personalize the transaction: Sometimes the tipping point for sellers who receive multiple offers is something emotional rather than financial. A personal letter describing your love of their home may tilt the scale in your favor.
  • Try an escalation clause: Money talks, too, so you can add an escalation clause to your offer that increases your bid by a certain amount above other offers. Just make sure you set a limit on how high your offer will go.
  • Control yourself: Remember that any offer is subject to an appraisal (unless you waive that contingency, but that’s not recommended unless you have plenty of cash), so be careful not to bid above the market value of any property.
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