Real Estate Tips from Bob Rich

Tip #1 - Defraying College Costs


If your child will be going to an out-of-town college, there is an expense other than tuition to be considered --- living cost. Many students have to rent apartments or rooms in town. That can be as much, if not more, than tuition. Here is an approach to consider.

You could kill two birds with on stone by buying a single family home or condominium for your son or daughter to use as a residence while they are away at college. Your student offspring could sublet extra bedrooms or unit to other responsible students or university personnel. This is one way to help defray all or part of the monthly carrying costs. After four years, the property should have increased by at least 25% and could then be sold at its appreciated value, returning all or part of the tuition costs.

If subletting is out and your child paid you the fair market rent, you would still entitled to all the investment tax deductions including depreciation, taxes, maintenance, insurance, etc.


Tip #2 - Will Liens or Easements Prevent Sale?

An encumbrance is any claim or charge attached to and binding upon real property. It may lessen the property’s value or impair its use, but it doesn’t have to mean that the title cannot be transferred. Liens, easements, licenses or encroachments are among the most common encumbrances.

A lien is a claim upon the property that provides security for repayment of a debt. Liens can be voluntary or involuntary. A mortgage lien would be voluntary. The owner agrees to use the property as collateral for a loan. A tax lien arising when a court attaches a property for non-payment of taxes, is obviously an involuntary lien.

Encumbrances that are monetary, such as liens, are usually paid and released at the closing. Physical encumbrances such as easements (like a power company’s right to cross a property to service electrical lines) are usually transferred with the title.


Tip #3 - Don't be Swayed by One Feature

Would it make sense to marry a lady because you like the shape of her nose --- but only her nose? If you did, chances are you would end up with a pretty nose and a lot of unhappiness.

Yet, this is one of the common mistakes a house hunter can make. All too often, a family will fall in love with an eye-catching feature, such as a rock garden, a chandelier, a built-in radar oven or a fancy fireplace and end up buying the wrong house. This mistake happens frequently and in all price ranges. You have to resist the temptation of paying too much attention to a frill and forgetting the importance of the overall house, location and price.

Yielding to superficial attractions like these can result in your family winding up with a thoroughly unsuitable house. These same, alluring features can usually be added to another house at a relatively small cost, considering the overall purchase price. Buy the whole house --- not one fancy frill.



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Real Estate Tips from Bob Rich-New or Existing Homes?

Considering selling your older home but are worried about competition from new homes, here’s something to think about.




There are tradeoffs in both directions. Older homes usually offer more living space for the dollar and are usually built on larger lots. Because developable land was more plentiful in earlier years, builders had a greater choice of where to build. Therefore, the location of a resale home ,ay be more desirable. Also, there is no guess work in action. Landscaping has matured, neighborhoods have formed and a buyer doesn’t have to be concerned about how the area will develop. It already has.

On the other hand, new homes may be more energy-efficient and require less repair and maintenance and have newer appliances.

How does your older home stack up against new offerings? Your best bet would be to have our office provide you with a current estimate of its market value.

Real Estate Tips from Bob Rich-DO OFFERS HAVE PRECEDENCE?

Good news! A written offer has come in on your property. Because offers must be presented immediately, you might even be notified while out of town. This is a good reason to keep your agent apprised of your whereabouts.

Most homeowners react by immediately asking how much the buyers are prepared to pay. However, if there are several minor provisions or a major one included in the offer, don’t be put off if the agent would prefer to set up a time and place to discuss the offer with you personally and explain the detail and financial elements. What may sound extremely good or bad over the phone may look a lot different when explained on paper.

If several offers come in, it’s best to consider all at the same time. The first one signed by the buyer does not have any precedence. If you have not acted on any offer, you are free to consider all of them and respond to whichever one you choose.

Real Estate Tips from Bob Rich-Comparables Count

When you decide to sell your home, nothing, but nothing, is more important that the sales price you put on it. If you select the right agent, he or she will help you come up with the best marketing price. This is not done by looking into a crystal ball. The most important factor to consider is the price of comparable sales in your immediate area.


These are sales which have already been completed of homes as nearly like yours as possible.

The homes selected for comparison should be geographically near. No one factor determines value more surely than location. The sales should also be recent. Five-year-old sales have almost no meaning in today’s volatile financial market. Also, the homes should be similar in style, size, and condition as your property.

Don’t pay much attention to neighborhood scuttlebutt about selling prices. Sellers often exaggerate the amount received, and buyers often minimize the amount paid.

Real Estate Tips from Bob Rich-Shopping for Dollars

Wouldn’t it be nice if home buyers could dip into a shoe box full of money and count out the purchase price in cash. Unfortunately, that dream has taken the route of other fairy tales. Today, 99% of all real estate purchases require mortgage.

When you look for mortgage money, there are several questions to ask besides, “what is the interest rate?” There’s a lot more to financing that interest. Get a complete estimate of all closing costs involved with your loan. Find out how long the interest rate will remain the same and when the escalator provision will kick in. Is there a limit on the rate of increase. Determine if there is a prepayment penalty. If there is, what are the provisions on the length of time and amount?. If you are using creative financing, make sure you know about any balloon payments that may be required in the future. Have your lender explain all provisions in advance to prevent any surprises later.

Real Estate Tips from Bob Rich-Neighborhood Important Factor

Before you buy a house take a close look at the neighborhood. No matter how attractive the house may be, the neighborhood location is a primary importance from an investment point of view.
Look at the surrounding houses to see if they are well maintained. If there are large tracts of vacant land nearby, ask your Realtor to check with the local planning commission to find out what their future use may be. If you’re buying a house in an attractive residential neighborhood, any commercial development may have an impact on property values.
If you have children of school age, your Realtor can also help by providing information about the school system. Local Realtors are acutely aware of all local conditions that will affect homeowners in the market area. This is just one of the many professional services your Realtor can provide.

Real Estate Tips from Bob Rich-Listing Your Property

There are three common ways to list your property for sale:
OPEN LISTING: The seller agrees to pay a commission if the agent finds a buyer who will meet the terms. The seller can also sell his own home or can have more than one agent sell it. Since the agent can lose the listing at the whim of the seller, don’t expect as much effort on the part of the agent.
EXCLUSIVE LISTING: The property will be sold through a specific office.
Knowing that a full commission will be paid (or half a commission if the sale is made in cooperation with another office) you can be sure of a concerted effort.
MULTIPLE LISTING: You contract with one office which agrees to distribute the listing to all the offices that belong to the local multiple listing service. Even though many office will work on your property, you pay only one commission. Multiple listing is a form of exclusive listing which assures the widest exposure of your property.

Real Estate Tips from Bob Rich-Mortgage, Deed & Closing

OK, Mr. Buyer, it’s time to close the house purchase. There will be two very important documents given to you --- the mortgage and the deed. As the buyer, you will be signing two papers for the mortgage. One is the bond (or note), which is a personal promise to pay back the debt. The other is the mortgage itself, which gives the lender a claim against your house if you do not pay back as agreed. Then the lender will give you a check (probably the largest you’ll ever see). You get to hold it
just long enough to endorse it and turn it over to the seller.

Actual transfer of the property takes place when the seller signs the deed and hands it over to the buyer. After the closing, someone will have the deed copied into the public records. It will probably be sent to you later. If no one is available to record the deed, talk to the county clerk and do it yourself --- immediately.

Recording the deed promptly is of utmost importance.

Real Estate Tips from Bob Rich-Never Too Old

During the next ten years, senior citizens will account for more that 20% of our total national population. Not only are people living longer, they are living “younger” and healthier. That leads to the purchase of homes for older citizens with children. Will there be any problems in your getting a mortgage because of age?

Not if you pass the credit requirements of the bank. The law is on your side. The Fair Housing Act prohibits discrimination on the basis of race, color, creed, or national origin. The Equal Credit Opportunity Act prohibits lenders from any type of bias in the areas of AGE, marital status, sex, income from public assistance programs. You, as a mortgage borrower, are well covered.

Your mortgage must be evaluated on the basis of the property desired and your creditworthiness --- not your age!

Real Estate Tips from Bob Rich-Why Title Search Again?

When you buy real estate, you may wonder why a title has to be searched when it was probably done many times before, especially if it’s an older home. If you are taking out a mortgage, the question is academic. The lender will require a title search to protect its investment. The search will attempt to answer the following question:

1. Is the seller the legal owner of the property? 
2. Is the legal description of the property accurate?
3. Are there any municipal or contractor liens?
4. Does anyone else claim an ownership interest?
5. Are there any easements which could affect property?

The answers to these questions may not always be black and white. To cover gaps, many buyers find it comforting to protect their purchase with title insurance. Title insurance offers protection against court costs and judgments resulting from title defects.

Real Estate Tips from Bob Rich-Why Sell Through An Expert?

Human nature is strange. It is surprising to see some people trying to sell their home, probably their largest life time investment, without the help of an expert --- a Realtor.


For the average homeowner, selling his home is one job that he should never tackle on this own. One mistake could turn out to be extremely costly. For starters, you must have considerable knowledge regarding value. How much do you want for your house? How much do you think its worth? How much will a buyer pay? Three different questions with different answers. If you overprice it, your for sale sign could stay planted in your yard like an ancient oak tree. On the other hand, you might under price and give it away.

Today, the seller must be knowledgeable in the intricacies of financing. If you aren’t familiar with these --- don’t try to sell on your own. Employ the professional experience of a Realtor. It must make sense because some 90% of home are sold that way.

Real Estate Tips from Bob Rich-When to List Your House

The most favorable time to list a house for sale is as soon as you have decided to sell. Six months before the expected move is almost a minimum for best results. Otherwise, you might end up paying on two houses at once for a few months after you move. Even if satisfactory buyers for your home appear promptly, the complicated paperwork involved in mortgage applications, and the dovetailing of your needs and the buyer’s needs, can result in problems if you are pressed for time. If your house is not sold by the time you must leave, keep in mind that a vacant house almost never shows as well as it did with your furniture in place.

Houses have been known to be transferred in a few weeks but this is the exception. It’s best to allow 3 to 6 months where possible. You are most likely to receive the highest price if you draw from the largest pool of possible buyers. An unhurried sale is the best way to accomplish this.

Real Estate Tips from Bob Rich-Don't Be Turned Off So Fast

If you’re looking for a good buy in an older home, and see one in which the housekeeping leaves something to be desired, don’t be turned off immediately. Look beyond the mess. Don’t let your first impression deter you from the IMPORTANT features of a house.

For example, the structure of the house and the general layout may be in excellent condition, easily convertible to your own ideas of decorating and family living. The kitchen may be cluttered and unkempt, but large and well appointed with cabinets, pantry, and other features. A worn and dirty carpet in the living room may be covering a beautiful hardwood floor that you can make sparkle again. Also carpet can be cleaned or replaced.

It takes a good visual imagination to see how a house can be transformed to meet your own ideas of decorating. If the house is sound and has the features you want, you may find that the poor housekeeping will work to your price advantage.

Real Estate Tips from Bob Rich-Pre-Sale Seller Homework

Wouldn’t it be nice if selling a house was like selling a watermelon? Here’s the melon – here’s the money. Couldn’t be simpler. Then there’s real estate. Intricate and complicated financial steps must be taken by Realtor’s who know their business to put together a binding sale in today’s unique mortgage market. Often, it is this financial acumen that is the deciding factor in completing a successful sale of property.

You, as the seller can help even before the for-sale sign goes up. Check with one or more local banks (especially the one that holds your mortgage). Determine from the loan officer the size of the mortgage loan that might be available to a family with a good credit rating. It’s a question that’s sure to be asked sooner or later.

While doing the checking, consider the possibility, if your finances permit, of accepting a second mortgage should a buyer with acceptable credit be unable to raise all the required down payment.

Real Estate Tips from Bob Rich-Checking at Different Hours

The location of a home is a prime factor in any buying decision. If you’ve got your eye on a certain one, you’ve probably seen it many times. However, with an investment of that size, there are many things that should be checked and re-checked.

What time of day or night did you visit your prospective home? Was it always at about the same hour--- at, say, 3pm? If that’s the case, we suggest that you make a point of going there at other times such as early evening, late at night, and even very early in the morning! The reason is simple. Things might go on around there at those other times that may affect you when you’re living there. There may be noises, for example, late at night that could interfere with your family’s sleeping.

When you buy a home, you’ll be there around the clock. Therefore you should see what the place is like around the clock. This could save you much grief later on, when it may be too late.

Real Estate Tips from Bob Rich-Think Like a Buyer

People usually decide within a few minutes whether they like your house. Prospects start forming their opinion before they even walk in your front door. So, Mr. Seller, ask yourself if your house is presentable as it can be for a faster sale at the best price.

The best way to fins out is to imagine that YOU are a prospective buyer. You’ve probably been looking at other homes (especially if yours is already for sale), so approach your present home the way you look at other houses.

Get in your car and drive up to your home the way a prospective buyer would. Give the outside an once-over. Check the lawn, the shrubs, and the paint. Would some flowers by the front door be more inviting? Step inside. Is the living room cluttered?

Are the rooms dark or well lit? Does the condition of the kitchen turn you off? Just remember your own reactions when you inspected other homes. If you want to be a seller --- think like a buyer!

Real Estate Tips from Bob Rich-Holes in the Attic

Holes in the attic are like holes in your pocket. Step into your attic some winter night. Even if it is insulated at floor level, you may be surprised to find it much warmer than the outside air. That means that some of the expensive heat you need downstairs has escaped up there where it won’t do any good.

It is common to find large openings where pipes, ducts, or exhaust fans are cut through the attic floor. But they can be stuffed with foil-backed insulation. Stopping attic by-passes can save from $25 to $100 a year in heating costs. Many people forget the attic door after they have carefully applied insulation to the rest of the attic. The door should be covered with a batt of foil-backed insulation and the edges of the door weather stripped.

Some no-no’s. Do not cover light fixtures directly with insulation as they may cause a fire and if you fill the opening around a chimney or furnace stack, be sure to use fireproof insulation.

Real Estate Tips from Bob Rich-New or Old

If you are in the market to buy a home but haven’t made up your mind whether it will be a new or an existing one, you should let your Realtor help you weigh the merits of each. For instance, you will probably find a wider selection of older homes for sale.

Also, when you compare living space, location, construction materials, and other factors, you may be getting more for your money if you buy an older home.

Older homes tend to be closer to established shopping areas, churches, and other neighborhood attractions. Homes in established neighborhoods also have a more “settled” look, with mature trees and shrubbery. On the other hand, new houses have obvious advantages, too.

When you deal with an experienced Real Estate broker, however, you have already made one of the most important decisions long before you find the house you want to buy.

Real Estate Tips from Bob Rich-Price Negotiations

Let’s face it selling a home is not unlike selling any other negotiable product. Both buyers and sellers expect a little leeway on the final selling price. Often, the house will be sold for somewhat less than the asking price. On the other hand, in today’s strange real estate market, there are houses that are such good buys in good locations that
sell for MORE that the asking price. A lot depends on the reason the seller is selling. If the house has to be sold quickly owners may accept a lower offer to make a fast sale.

Another consideration is the condition of the house. If major repairs are needed,
an owner may be persuaded to reduce the price to pay for the repairs.

Legitimate buyers will normally make an offer within a reasonable negotiating range. Never make an insultingly low offer. If the house is at a fair market price and you don’t want to lose it, don’t play games.

Real Estate Tips from Bob Rich-Figuring Monthly Payment

ou have enough funds for the down payment and you qualify for the mortgage. Now --- can you afford the monthly payments?

To figure out how much you can carry, convert all amounts into monthly figures. If you are paid twice a month, add two paychecks. Incorporate infrequent expenses (vacations, gifts, clothes) by adding them up and dividing by 12. Your total monthly income may include salary interest, dividends, and bonuses. Typical monthly expenses are food, utilities, education, transportation, taxes, insurance payments, etc. Your total monthly income minus monthly expenses will give you the amount available for monthly housing costs.

This total must cover all of your housing expenses, including mortgage payments (principal+interest+taxes+insurance), maintenance and repairs. The higher the down payment and the longer repayment time, the lower the monthly payment will be.