Real Estate Mirror - Your Real Estate Partner

Buying a house is the most expensive purchase you will probably ever make and there are many considerations you have to think about before you actually buy it. Think towards the future. Everything should be carefully thought out when determining what your "ideal house" will be. Perhaps some of the following ideas will help you make your decision.
Saving for you “dream home” or setting expectations too high for your first home. Often, the way that people afford their “dream home” is by building equity in a “starter home” first, not by trying to save money while renting.When looking for a home, there are other misconceptions to watch out for. Be realistic about living downtown vs. the suburbs vs. the country and what fits your personality.

Also, be realistic about how much money and work you can invest in a new home, especially in the first few years. Especially if this is your first home, it may be a financial challenge for you to buy your first starter home; you are probably buying as much house as you can possibly afford. In that case, you just aren’t going to have the time and money to spend on a “fixer upper”. And if you have kids too, forget about it. They’re taking all your time and money.

Here are some steps to Avoid Mistakes when Buying a Home

There are many mistakes which buyers naturally come across when purchasing a home, but they can be very easily avoided with a bit of research and planning.

If you are thinking of seeking advice or doing it yourself, there are a few things you should be informed of before you waste valuable time and money. Remember, buying a home whether it be for your family or someone else’s is one of the biggest investments you will make in your lifetime. Don't get caught up in financial stress: the tips below will get you started.
Make sure you know your limit and be ready for the buy.
Don't sugar coat reality and a bad credit rating.
Don't assume your assests substitute your income.
Make sure you choose a qualified advisor.
Understand your mortgage options.
Never underestimate the costs involved in buying a property.
Make sure you adequately research or check out the home first hand.
Take the time to figure out your mortgage repayment strategy.
Decide whether you are buying for living or buying for investment.

Real estate economics is the application of economic techniques to real estate markets. It tries to describe, explain, and predict patterns of real estate prices, building production, and real estate consumption. The closely related fields of housing economics is narrower in scope, concentrating on residential real estate markets as does the research of real estate trends focus on the business and structural changes impacting the industry. Both draw on partial equilibrium analysis, urban economics, spatial economics, extensive research, surveys and finance.

A social science that studies how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants. Economics can generally be broken down into: macroeconomics, which concentrates on the behavior of the aggregate economy; and microeconomics, which focuses on individual consumers.

The main participants in real estate markets are:

Owner/User - These people are both owners and tenants. They purchase houses or commercial property as an investment and also to live in or utilize as a business.

Owner - These people are pure investors. They do not consume the real estate that they purchase. Typically they rent out or lease the property to someone else.

Renter - These people are pure consumers.

Developers - These people prepare raw land for building which results in new product for the market.

Renovators - These people supply refurbished buildings to the market.

Facilitators - This includes banks, real estate brokers, lawyers, and others that facilitate the purchase and sale of real estate.

The owner/user, owner, and renter comprise the demand side of the market, while the developers and renovators comprise the supply side. In order to apply simple supply and demand analysis to real estate markets a number of modifications need to be made to standard microeconomic assumptions and procedures.

A mortgage is a method of using property it may be real or personal as security for the performance of an obligation, usually the payment of a debt. A special form of secured loan where the purpose of the loan must be specified to the lender, to purchase assets that must be fixed property such as a house or piece of farm land. A debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses wishing to make large value purchases of real estate without paying the entire value of the purchase up front.

A debt instrument that is secured by the collateral of specified real estate property and that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses to make large purchases of real estate without paying the entire value of the purchase up front.

Mortgages are also known as "liens against property" or "claims on property".
In a residential mortgage, a home buyer pledges his or her house to the bank. The bank has a claim on the house, should the home buyer default on paying the mortgage. In the case of a foreclosure, the bank may evict the home's tenants and sell the house, using the income from the sale to clear the mortgage debt.

Shopping for the best home loan or mortgage will help ensure the best financial deal. A mortgage - whether a home purchase, a refinancing, or home equity loan - is a product, just like a vehicle, so the price and terms may be negotiable. According to the Federal Reserve Board, consumers should compare all the costs involved in obtaining a mortgage. Doing so may help save thousands of dollars during the life of a loan.

To begin, consumers should look into all loan options. For example, home loans are available from different types of lenders - thrift institutions, commercial banks, mortgage companies, and credit unions. These lenders may quote different prices, so it's important to contact several lenders to ensure the most competitive price. Home loans are also available through mortgage brokers. Brokers arrange transactions rather than lending money directly; in other words, they find a lender for the buyer. Brokers generally contact several lenders regarding an application, but they are not obligated to find the best deal unless they have been contracted to act as the agent. Consumers might consider contracting more than one broker, just as one might do with banks or thrift institutions.

Sometimes it's not easy to differentiate between lenders or brokers. For instance, some financial institutions may act as both lenders and brokers. So be sure to ask whether a broker is involved as they are usually paid a fee for their services that may be separate from, and in addition to, the lender's origination or other fees. A broker's compensation may come in the form of points paid at closing or as an add-on to the interest rate, or both. Borrowers should always be prepared to negotiate with brokers and lenders.

Before beginning negotiations, it's important to know how much of a down payment one can afford and to determine all the costs involved in the loan. Knowing just the amount of the monthly payment or the interest rate is not enough. Borrowers should keep their comparisons consistent by securing different lender quotes for the same loan amounts, loan terms, and type of loans.

Well-informed borrowers may choose to engage these types of questions and considerations when meeting with each lender and broker:

1. Ask each lender and broker for a list of its current mortgage interest rate and whether the rates being quoted are the lowest for that day or week.
2. Ask whether the rate is fixed or adjustable. Typically, when rates for an adjustable-rate loan go up, so does the monthly payment.
3. If the rate is quoted for an adjustable-rate loan, ask how the rate and loan payment will vary, including whether the loan payment will be reduced when rates go down.
4. Inquire about the loan's annual percentage rate (APR). The APR takes into account not only the interest rate but also points, broker fees, and certain other credit charges one may be required to pay, expressed as a yearly rate.

Home loans usually involve a variety of fees, including loan origination or underwriting fees, broker fees, transaction, settlement, and closing costs. A lender or broker should supply an estimate of its fees, as many are negotiable. In some cases, the money needed to pay the fees can be borrowed, but this will increase the total costs and loan amount.

Once a borrower knows what lenders have to offer, it's time to negotiate the best deal possible. On any given day, lenders and brokers may offer different prices for the same loan terms to different consumers - even if those consumers have the same loan qualifications. Loan officers and brokers are often allowed to keep some of all of the difference as extra compensation. It's imperative the lender or broker write down all the costs associated with the loan. Then, the borrower may ask if the lender or broker will waive or reduce one or more of its fees or agree to a lower rate or fewer points. One caution is ensuring the lender or broker isn't agreeing to lowering one fee while raising another.

After a negotiation and an agreement on terms, a borrower may obtain a written lock-in from the lender or broker. The lock-in should include the agreed upon rate, the period the lock-in lasts, and the number of points to be paid, as there may be a fee for locking in the loan rate. Lock-ins protects consumers from rate increases while the loan is being processed. If rates fall, however, one may end up with a less favorable rate.

The newspaper and Internet are good places to start shopping for a loan. Information on both interest rates and points for several lenders can usually be found. Since rates and points can change daily, it may be wise to check the newspaper often when shopping for a home loan. The newspaper does not list the fees, so that is something to ask lenders about. Above all, borrowers should not be afraid to make lenders and brokers compete with each other by letting them know that the best deal is being shopped.

An interest in real property, which is held for the duration of the life of some certain person. It may be limited by the life of the person holding it or by the life of some other person. A form of estate giving a beneficiary all property rights except the right to sell. The right to the estate is terminated upon the death of the beneficiary. A life estate is a term used in common law to describe the ownership of land for the duration of a person's life. In legal terms it is an estate in real property that ends at death. The owner of a life estate is called a "life tenant".

A life estate is typically used as an estate planning tool. The use of a life estate can avoid probate and ensure an intended heir will receive title to real property. For example, A may own a home and desire that B inherit the home after A's death. A can effectuate that desire by transferring title to the home to B and retaining a life estate in the home. A keeps a life estate interest and B receives a vested fee simple remainder interest. As soon as a dies, the life estate interest merges with B's remainder interest and B has a fee simple title. This avoids the use of a will and the probate process. The danger to A though, is that the grant to B is irrevocable. "Beneficiary deeds" have been statutorily created in some states to address this issue.

Everyone should consider an estate plan to properly manage assets during their lifetime; as well as control their disbursements after death.

A will is a legal document which indicates how a person's estate is to be distributed after their death. The person executing the will may provide for equal or unequal division of their property amongst their heirs or anyone else they choose. Without a properly drawn and executed will, the person's estate would pass to their heirs. Most often this is not what testator desires. All wills must be approved and allowed after the testator's death by the Probate Court for the city or town where they resided.

A trust is a legal relationship in which one or more person’s transfer’s assets to an individual or institution for the benefit of certain persons or institutions.

A living trust can provide for whose benefit your assets are used during your lifetime and to whom they are distributed after your death. This provides continuity of control and immediate access to assets, without the expense and delay of probate. A living trust will eliminate the need for a guardian of your estate if you become incapacitated. Unlike a will, a living trust does not have to be approved by a probate court. This practically eliminates the possibility your estate plan will be contested by an unhappy child or other heir.

A freehold interest that expires upon the death of the owner or some other specified person.
Example: A retired couple purchases a life estate in a retirement village apartment unit. Upon death of both husband and wife, ownership of the unit will revert to the owners' association, who may then resell to another couple.

Land registration is a system by which the ownership of estates in land, is recorded and registered, usually by government, in order to provide evidence of title and to facilitate dealing. Land registration is record listing a plot of land's registered owner and any legal charged attached to it.

Our societies and economies need good laws on how we use land. Where people own land, proof of ownership is critical, and land registration is often a key part of this proof. Land registration tends to focus on proof of ownership. It tends to let the rest of the law deal with what kinds of rights people can have in land.

It is based on the English "common law," which is used in many places. These include much of the United States of America and many places that have been part of the British Commonwealth.

Under the common law, a person usually proved ownership by showing that the person, and people from whom the person acquired the land, had used the land as owners for a period. Transfers of the land, and other dealings, were usually reflected in writing, and so the person partly proved ownership through documents. In practice, the period covered by these documents usually began with what appeared to be a good transfer of at least a fixed age, say, 60 years. This kind of proof isn't reliable or easy to check.

Under the first kind of land registration, called "document registration," the government keeps a record of the documents. The law usually says that buyers and others are usually subject to all registered documents, and not usually to unregistered documents. This encourages people to register their documents. And it simplifies the task of buyers and others in finding out what documents they need to check. But they still need to track the ownership through the registered documents.

Under the first kind of land registration, as time goes by and land is divided, the register gets longer and bigger. The law usually tries to limit the period covered by the proof. It does so by saying that good proof beginning with what appears to be a good transfer of at least a fixed age, say, 30 or 40 years, gives good ownership, as far as ownership depends on documents. Conversely, any right not shown by that proof ceases to be valid. In the United States of America, these laws are called "marketable title" laws. There's a good "uniform law" for them that many states have used as a model. Despite the first kind of land registration, and "marketable title" laws, proving ownership still wasn't easy. If the land was dealt with often, buyers and others were repeatedly checking the same documents. The register could be simplified if there was a separate register for each piece of land, but often there wasn't a separate register, perhaps because it depended on being able to describe the land accurately, for example, through plans prepared by land surveyors.

Commercial Real Estate is the property that is solely used for business purposes.Examples are malls, industrial parks, gas stations, convenience stores and office towers.

Commercial real estate commercial real estate investment is like any other investment. You have an end goal of making more money than you spent. The processes, and setting your objectives, offer a great deal of latitude in how to turn your initial investing dollars into a solid profit potential. The essence of this is asking the right questions before you acquire the property, not only about the property and seller, but also about your objectives with it.

The risky way to make money on commercial real estate is to flip the property to invest in one, do renovations, or bring in new long-term tenants, and then sell it for more than you paid for it. This requires a decent understanding of your local commercial real estate market, market timing dynamics, and a lot of research. In many cases, it’s best to start lining up the buyer before you line up the property to sell. Other times, it’s simply a matter of having a piece of property at the right place and right time when an investor comes through, or when a city is expanding.

The more conventional approach to commercial real estate investment is a "buy and hold" strategy. You buy the property, invest in improvements, and bring in tenants who bring a good revenue stream with them. A general rule of thumb is that the revenue stream should be at least 20% greater than the monthly costs of maintaining the property, including labor, periodic fixes for damages, expenses incurred in moving tenants in and out, plus any finance charges on your money and depreciation and wear and tear.

Once your basic ownership strategy is in place, the next questions are about the property itself, and its neighborhood. First and foremost - are you buying a property that’s in a growth area? Is your local demographic young and adding jobs, or older? These both influence the decisions for buying commercial real estate properties.

What’s the worth of property today? Don't just take the listing price; take an average the selling prices of the six most similar properties in the six months to a year, weighing them for different neighborhoods and demographic areas. Combine this with the demographic questions above, and you'll have a decent baseline for whether or not to do a buy-and-hold or a buy-and-flip strategy.

Before committing to the property, look into the repairs that need to be done. If you haven't done property renovations before, take the time to run some preliminary back of the envelope quotes for time and money. Sinking a lot of money into repairing a property can make sense if it lands you an anchor store or two, in an area where the municipality is growing.

In a related vein, don't forget to ask why the seller is unloading the property. In some cases, this will be obvious; a death in the family has resulted in the commercial property needing to be liquidated for the heirs. In other cases, it may have more to deal with tax issues and regulatory burdens.

Both the fixer question and the seller’s motivation question tie into the acquisition calculation.What can the property be acquired for? Does the property have accumulated equity that you have to handle, or existing tenants that are either elevating or deflating its asking price? All of these are factors to consider when looking at acquiring a property.

Finally, look at cash flow. When all other details are factored in, current cash flow and future cash flow are the keys to making a buy-and-hold strategy work, and it 's worth it to pay more for a property now with greater cash flow potential later, particularly if you're planning on using your commercial real estate income stream as your retirement income, or seed money for other projects.