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9 LITTLE THINGS THAT CAN MAKE OR BREAK YOUR HOME PURCHASE

When it comes to buying a home, we always think about the big things: sales price, location, mortgage qualification. But it’s often the little things that rise up to make living in that home a great joy or a huge letdown.

Your welcome to the neighborhood

There are neighbors who bring warm cookies to welcome you to the neighborhood and then there are the Homeowners’ Associations that welcome you with a stern warning to move your storage unit immediately even though it’s only been in your driveway for a few hours and you haven’t even arrived from your cross-country drive (true story).

The friendliness of your neighbors

Beyond your initial impression, is living in your neighborhood going to give you the kind of lifestyle you want? In many cases, you won’t know until after you’ve moved in. Spending some time there and getting to know your potential neighbors/asking questions before you purchase may give you the info you need.

Where to put the dog bowl

Does it seem like a frivolous thing to be considering when buying a home? Only until you move in and realize there’s nowhere to put the food and water bowls that won’t end up spilled, kicked over, or constantly in the way.

Make or Break

Think about it in terms of a car purchase. You might not notice the number/placement of drink holders in the new car you’re buying, but you’re sure going to notice how lacking they are when you’re driving a carful of people around in the 100-degree summer and there’s nowhere to put your Big Gulps. When your pets are a part of your life, considering where they will graze (and sleep and run) may help you make the best decision.

Closet space

Closet space isn’t necessarily a small thing (for many of us, it’s an absolute necessity!). But, it can also be one of those things that is easily overlooked when seduced by a big kitchen or a pool in the yard. If the closet space seems like it may be a problem when you tour the house, it most likely will be a problem when you’re living in the house.

Placement of the laundry

Is it a deal breaker if your laundry room is downstairs and the bedrooms are upstairs? Probably not, but it does make things more challenging. If you’re trying to decide between a couple of homes, this may be one of the little things that helps you finalize your decision.

Commute time to and from work

Your daily commute is something you’ve probably spent considerable time thinking about, especially if you’re considering moving farther from work. But even if you’re moving equidistance from your existing home, the commute could be very different. And it’s not something you want to discover AFTER you’ve moved. Doing a few test runs before you make an offer can help.

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The schools aren’t great

If you don’t yet have kids, or they’re babies, or already grown, or you don’t plan on kids, the quality of the schools may not seem like a big deal in relation to other items on your must-have list. But, you never know how long you might live there. A “starter” home that’s supposed to be a springboard to a large home in a few years may not end up springing you so quickly. And studies show that good schools can help home values, so even if you’re not packing lunches and preparing backpacks, being near people who are might be a good move.

Positioning of the house

Everyone wants a house that’s light and bright, but what you might not want is a sun that sets right in your living room. If you’re in a warm climate, you can plan on being hotter than you’d like to be in that room during the summer and having higher electric bills.

Really high ceilings

This is another feature people tend to want in their home… until they actually have them and realize:

living-room-with-high-ceiling

  • It’s cold in the winter since all the warm air gets sucked up.
  • It’s hot in the summer since conditioned air has a hard time doing its thing in such a vast space.
  • You’ll never be able to paint the room without renting scaffolding
  • Ditto for changing light bulbs

Why Seller Financing Is A Win / Win For Both Buyers and Sellers

There are many benefits for doing an owner-carry installment sale as opposed to conventional financing for both the buyer and seller. Sometimes the advantages inure to the benefit of one or the other, but in most cases the transaction is “Win/Win” for both parties.

Benefits for the Seller

Most sellers of real property insist on the highest price and all cash. Sellers want a fast closing with little hassle. Sellers also want to pay as little taxes as possible on the gains incurred. In many cases, the seller can have most of his needs satisfied by an installment sale rather than a traditional cash sale. Let’s look at these needs one by one.

Highest Price

There is no doubt that a seller can insist on and receive the highest price when offering flexible owner-finance terms. In many cases, the seller can receive more than the fair market value of the property by offering these “soft” terms. People are always willing to pay a premium for non-qualifying financing.

Cash

Nearly ever seller says he wants all cash, but few need it. What the typical seller wants is the most net cash from the deal. Often, the seller has to pay closing costs, title insurance, broker fees and the balance of the existing financing. In addition, there may be capital gains tax due to Uncle Sam. In many cases, the sale of a property by an installment sale (particularly a “wraparound”) will net the seller more future yield than any source from which the cash proceeds were reinvested.

Fast Closing

Nothing holds up a sale more than new lender financing. In some areas of the country, it can take months for a buyer to qualify and close a new loan to purchase your property. Since most standard real estate contracts contain a financing contingency, you may end up back at square one if your buyer does not qualify. Furthermore, if your house is not particularly nice or unique, it may take you some time to even find an interested buyer. Since you are competing with all of the other houses for sale, you may need to spend thousands of dollars in paint, new carpet and landscaping just getting the house ready for the market. There are very few “assumable” loans and few sellers are offering “soft terms.” Thus, an owner-carry sale makes your house unique. Furthermore, an owner-carry transaction can be consummated in a matter of days, since there is no appraisal, underwriting, survey or other nonsense involved. In many cases, you will be able to sell the property yourself, saving thousands in real estate broker’s fees.

Tax Savings

On an installment sale, so you only pay gains to the extent you receive payments each year. This can be particularly advantageous if you have owned the property for several years. Furthermore, you can combine the installment sale with an I.R.C. §1031 Tax-Deferred Exchange for further savings. As you can see, the installment sale provides many advantages to the seller of real property. Let us now turn to the advantages for the buyer.

Advantages for the Buyer

Easy Qualification

The buyer, in many cases, prefers an installment sale to conventional financing because it does not require traditional bank income and credit approval. The buyer may have poor credit because of a divorce or recent bankruptcy. He may be self-employed and cannot prove income. He may be new to his job and cannot meet strict lender guidelines. Even if he could qualify for a loan, the rate will be astronomical if he has poor credit. Furthermore, few conventional lenders offer fixed interest rate loans to people with a poor credit rating. As you can see, there are dozens of reasons why a buyer cannot (or will not) qualify for a conventional bank loan. The installment sale becomes the perfect solution for him.

Credit Rating

An installment sale may give the buyer a chance to improve his credit rating by owning a home and making payments timely.

No Loan Costs

One of the biggest benefits for the buyer is not having to pay the costs associated with conventional loans. Points, origination fees, underwriting charges, appraisal, credit reports, title insurance and the plethora of other “junk” fees charged by conventional lenders can amount to thousands of dollars at closing. The buyer is free from these with an owner-carry installment sale.

Fast Closing

A buyer can close and move into a property within days, since there is no third party lender holding up the transaction. Despite the elevated purchase price and interest rate, there are many benefits to a buyer who engages in an installment sale transaction.

Position Realty
Office: 480-213-5251

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