Crestico Realty

Contingencies: Why Are They Important When Making An Offer To Purchase Property?

You've started the process. You made the decision to purchase a home, perhaps even your first one! Now that you have found the one you want, what's next? Your agent will help you, read more for some tips and insight as to how the process works. First, you need to make an Offer. What that is, is basically an expression of your desire to purchase the property and at what price you are willing to do so. Your offer will be the first step in the negotiation process. Just like any other offer you make, it would be highly helpful to take the other party (in this case, the seller) and his/her expectations into consideration when making your offer. The seller has set an asking price for the property, but remember this is not set in stone! Often, you as a buyer, can save lots of money just by starting with the right offer price.

Often, when writing an offer, there will be lots of contingencies involved. Contingencies are basically built-in protections to make sure that your risks are being limited and you are being afforded the most protection possible. Your offer will include information such as: the price you are willing to pay as well as other details that are involved in the negotiation process such as down payment and financing information, inspection information and timetables on the method and manner that you will be receiving legal and physical ownership of the property. Other information included will be whether personal property is included in the purchase, terms of cancellation, any repairs you want performed, which professional services will be used, and how to settle disputes should they occur. Here, we will focus on the topic of Contingencies to give you a better idea of what they are and how they work.

Although in most transactions there may be slight challenges, most will go quite smoothly. However, we want you to be prepared and anticipate potential problems so that if something does go wrong, you will be in a position to cancel the contract without incurring any penalties. These protections are called "contingencies" and should be included when you offer to buy a home.

Often, a buyer will not be making a full cash offer on a property, that is, offering one lump sum as payment in full. As a result, that buyer will seek and need financing to complete the purchase. Obtaining suitable financing can be made a contingency as well. Buyers often do this to protect themselves, should they be unable to secure financing. Another contingency that buyers should consider is that the property should appraise for at least what the buyer agreed to pay for it. Inspections will be performed and reports will be provided before such contingencies are lifted.

Sometimes, a buyer will agree to purchase a home while in the process of selling the home he/she is currently living in. Often, even though an offer has been accepted on the buyer's current home, the buyer and his/her potential buyer may still be involved in escrow, making that transaction a "pending" sale that has not "closed" yet. As such, a buyer would want to make that closing a "contingency" on the offer he/she is making; so that should something go wrong and that sale not close, the buyer would not be forced into a situation where he/she would be responsible for two mortgage payments each month.

Ultimately, contingencies protect buyers just in case they find themselves in positions where they become unable to perform or choose not to perform on a promise to buy a home. Without contingencies, a buyer may find himself/herself forfeiting his/her earnest money deposit.

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What is an REO? REO means Real Estate Owned. Everyone is talking about REOs these days. But before you consider buying one, there are a few things you should know about REOs. These properties are generally owned by banks, credit unions, mortgage companies and sometimes private companies. It has become increasingly common for the news to report foreclosure issues and homeowners losing their houses and other effects of the mortgage crisis. As a result there have been dramatic increases in the marketing of REOs to the general public. It used to be that you could barely get your hands on lenders' foreclosure lists. But these days, everyone is trying to sell REOs.

The people that are being marketed by these REO sellers are mainly first-time and minority potential homebuyers. Fannie Mae works with many companies to help these types of homebuyers realize the American Dream of owning your home using reasonable and affordable loans. There has been a shift in the industry from marketing REOs to those who "flip" houses to first-time homebuyers. The dramatic increase in foreclosures has left many lenders with high inventories of REOs, resulting in potentially advantageous opportunities for individuals who never has access before, to gain access to the real estate market. Additionally, the number of foreclosures is allowing simple real estate investors to diversify and expand their portfolios.

There are many laws regarding foreclosures and the process. Mainly, when the property is in the pre-foreclosure and auction stage, the bank (owner) is only legally entitled to its losses and expenses. This is to say that the bank (owner) is not entitled to gain a profit from the sale. This changes however, after the property has been foreclosed on it becomes an REO.

REOs are often considered to be fabulous starter homes because the sales prices for these properties is generally lower than that of a similar non-REO property. In today's market however, this may not always be the case. This is mostly due to the fact of the number of such properties in the market. Even though a property is an REO, it does not mean that the owner will not make a profit off the sale. Remember, after the foreclosure process, the REO owner is now allowed to make a profit, which may affect the sale price. A buyer will generally be more likely to get a lower price when purchasing a home in the pre-foreclosure or auction stage.

Let's say now you've decided you want an REO. You should know there are risks associated with this "great deal" you are getting. When considering your REO purchase, make sure you have access and contact information for various experts who will guide you in the inspection process.

You will need a Realtor, who can protect your interests and make sure you get the best deal possible. Your Realtor will be able to generate reports for you showing comparable sales prices which will enable you to assess whether the asking price for the REO you are considering is appropriate. There are some statistics that show the average price of an REO is 15 - 30 percent lower of comparable sales prices. However, there are REASONS for this.

REOs are sold AS-IS. This means that what you see is what you get. You will need a qualified home inspector to guide you with this step of your REO purchase process. Only a qualified inspector will be able to reveal latent flaws or issues that you will need to consider before you purchase the REO. You will need to factor in the costs of potentially repairing, replacing or rehabilitating the necessary sections of the property into the price you will be paying.

REOs take longer. When purchasing an REO, you are not dealing with Joe and Jane Smith homeowner, you are dealing with either a Bank or an Investment Company. The decision making and sale approval process in a business takes much longer than with individuals. It could take weeks to get an approval on your offer. Additionally, even though most banks will remove tax liens and occupants (if need be) from the property, in order to protect yourself, you should perform a title search. Now you may not personally be able to do this, which is why you will hire a company to perform such a search for you, and the results may take up to a week to review. Another potentially time-consuming process is getting an appraisal. As a buyer, you should not trust the seller's appraisal blindly, get your own! Any time or money you spend beforehand may well be worth it in the long run. You want to know that you are getting what you are paying for!

With the right amount of patience and knowledge and the care of a Crestico Agent, buying an REO will seem like a breeze. We have agents that specialize in purchasing REOs. When you work with a Crestico Agent, he/she works for you to get all the experts you need! From inspectors, to title searches to appraisers, your Crestico Agent takes care of it all for you!! Call us today!

In an industry like real estate, where being an agent is an unsalaried position and the business experiences so much turnover, which broker you choose to hang your license with becomes an important consideration for your career.

A vital part of your success will depend on your broker and at Crestico we believe, as your broker, we have a responsibility to support your growth and profitability, so that you will do well. Choosing the right broker involves more than supplying leads, or offering the best commission splits and lowest desk fees!

We encourage you to speak to our agents and see that our environment enables you to make real money! Realizing you made the best decision gives you peace of mind. We at Crestico Realty understand that it's comforting to know you'll have support when you need it, in addition to technology, and a market presence with a broker that the public wants to do business with!

For new agents, the industry poses many challenges. Almost 85 percent of new real estate agents "drop out" after less than one year in the business, and 15 percent of the remaining don't renew their licenses. We want to make sure you're not one of these statistics. Successful real estate agents are self-starters and go-getters. The beginning of a real estate career often involves lots of rejection. But it's only temporary. As a real estate agent, you are more than a person who shows properties, you become a trusted advisor and your clients look to you for your knowledge and expertise. Buying a home is the most expensive (for most people) transaction of their lives.

For more info please visit http://www.crestico.com - http://www.cresticorealty.com

Real Estate is an industry thought by many to be highly lucrative and high-paying. But have you ever wondered HOW exactly your agent will be paid? You are often approached by agents trying to convince you to list your home with them, or allow them to show you some nice homes to buy. Read more to find out how your agent will be compensated and from where. As a prospective homebuyer, it would be in your best interest to understand this compensation process.

The standard compensation structure for Real Estate Agents is that he/she will be paid commission, based on the selling price of the property you are interested in. While commission rates are not standardized, the process in which they are disbursed is consistent. When a seller signs a listing agreement, that contract is with a brokerage firm. All fees must pass through that brokerage firm. Typically, the seller's and the buyer's agent will be paid by the listing broker after the transaction closes. When a property is listed for sale, the seller's contract spells out the commission rate that will be awarded to a buyer's agent.

Often, many people often try to avoid using real estate professionals so that they may avoid paying commission fees. However, I would warn against this because of some of the potential pitfalls. Unrepresented sellers (for-sale-by-owner properties) often do not have enough information about how to price the home, and sometimes try to raise the price instead of paying a real estate commission. Also, as an unrepresented buyer, it will be much more challenging and difficult for you to determine if the asking price is reasonable and whether or not you are overpaying. Real estate agents have developed insights that go well beyond simply evaluating data through the Multiple Listing Service (MLS). And if you are overpaying, it will create further complications in securing financing, because of potential lender requirements.

Real estate professionals play a vital role in helping you achieve the dream of owning your own home. Beginning with helping you tour and select properties and then guiding you during the negotiation phase and finally seeing it through inspections, financing and closing, the services your Agent will provide you are priceless. This is especially true in today's market, where alternative buying opportunities, including short sales and REOs make it even more difficult to navigate the choppy waters of the home buying market alone.

For more info please visit http://www.crestico.com http://www.cresticorealty.com

So you've decided to purchase your first home. Here is some advice from the experts at Crestico Realty that will help you make the best decision for you.

Define Your Search Parameters
Almost 80% of all home searches today begin on the Internet. With just a few clicks of the mouse, home buyers can search through hundreds of online listings, view virtual tours, and sort through dozens of photographs and aerial shots of neighborhoods and homes. You've probably defined your goals and have a pretty good idea of the type of home and neighborhood you want. By the time you reach us at Crestico, you are halfway to home ownership.

How Long Should It Take?
At Crestico Realty, we will listen to your wants and needs and arrange to show only those homes that fit your particular parameters. We will preview homes before showing them to you as well. On average, it takes anywhere from two days to six months to find your perfect home.

How Many Homes Will You See?
Studies show that the your memory dramatically improves after consumption of carbs and slows upon consuming sugar. So, layoff the soft drinks and have a hearty meal of carbs before venturing out to tour homes. The average number of homes that we will show you in one day is seven. Any more than that, and the brain is on overload. Therefore, don't expect to see 20 or 30 homes; although it's physically possible to do so, you probably will not remember specific details about any of them.

The "Gold Shoes" Experience
Women will relate to this. Say, you need a new pair of gold shoes. You go to the mall. At the first shoe store, you find a fabulous pair of gold shoes. You try them on. They fit perfectly. They are glamorous. Priced right, too. Do you buy them? Of course not! You go to every other store in the mall trying on gold shoes until you are ready to drop from exhaustion. Then you return to the first store and buy those gold shoes. Do not shop for a home this way. When you find the perfect home, buy it.

How to Rate Inventory
Bring a digital camera and begin each series of photos with a close-up of the house number to identify where each group of home photos start and end. Take copious notes of unusual features, colors and design elements. Pay attention to the home's surroundings. What is next door? Do 2-story homes tower over your single story?

Do you like the location? Is it near a park or a power plant?
Immediately after leaving, rate each home on a scale of 1 to 10, with 10 being the highest.

View Top Choices a Second Time
After touring homes for a few days, you will probably instinctively know which one or two homes you would like to buy. Tell us and we will show you them again. You will see them with different eyes and notice elements that were overlooked the first go-around.

Making the Selection
You will know what you like, and your Crestico agent, because he/she cares so much, will know too. We real estate agents are required, however, to point out defects and should help buyers feel confident that the home selected meets the buyer's search parameters.

From this point, your friendly and trustworthy Crestico agent will call the listing agents to find out more about the sellers' motivation and to double-check that an offer hasn't come in, making sure these homes are still available to purchase.

That's all there is to it! It seems like a lot, but don't worry you're in great hands when you have a Crestico agent to help you.

For More information please visit http://www.crestico.com - http://www.cresticorealty.com