The 3 Steps of a Real Estate Sale

estate-site-banner-5-1209249Step One: Negotiation

This is where offer and acceptance of a purchase price are negotiated between a buyer and a seller, the purchase contract is then signed, and the escrow period begins.

 

Step Two: Due Diligenceestate-site-banner-3-1209262

Here, an escrow account is opened to hold the good faith deposit until closing. The due diligence period is a timeframe allowed for the buyer (and the lender) to conduct a reasonable inspection of the subject property to ensure that it is in marketable condition. This is done by ordering a home inspection, a property appraisal, title search, and a land survey. If financing is involved in the purchase transaction, the lender will begin the loan qualification process concurrently during this period and will issue a “clear to close” when all of the supporting materials for the buyer’s (mortgagor) loan file have been collected and verified.  Meanwhile, the title company will work with the lender to prepare all of the necessary transfer docs: warranty deed, mortgage, promissory note, and escrow instructions (payoff instructions for the seller’s existing mortgage, if applicable) and other closing costs.

 

estate-site-banner-2-1209268Step Three: The Closing

Making it to the closing table is an exciting time for most home buyers. The contract is fully executed,  loan funds are disbursed (usually by wire transfer from the lender),  the buyer pays the remainder of the purchase price and other closing costs  as necessary, illustrated on the Hud-1  settlement statement, and the seller tenders clean title   (and the keys) to the new homeowner. Congratulations!

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4 Common Legal Problems That May Arise Prior to Closing

  • Statute of Frauds

    • The SOF traces back to the original English Statute of Frauds of 1677. It requires certain types of contracts, such as contracts for the sale of land, to meet 3 requirements:
      • Terms of the Contract (Parties, Price, and Property Description).
      • The Contract Must be In Writing (whether it be a formal contract or an informal note handwritten on a napkin).
      • Signature (the contract must be signed by the party accepting the offer – the “offeree”).
  • Marketable Title

    • Almost every contract for the sale of real property, unless the contract specifically expresses otherwise, includes either an express or implied promise that the seller will deliver a merchantable (marketable) title. That is to say that the title will be valid and free of any clouds (encumbrances).
      • Two Types of Unmarketable Title:
        • (a) Less than Fee Simple Ownership (ex: seller has a life estate);
        • (b) Encumbrances on the Title (ex: lot is subject to a “right of way” easement).
  • Equitable Conversion

    • During the executory period (the time between the contract signing and the closing) the buyer is seen as the equitable owner of the property once the contract is signed.  As such, the buyer bears the risk of loss should the property be damaged or destroyed.
    • In order to minimize such risk, the buyer may request a provision in the contract that specified the owner bears the risk of loss should the property be damaged or destroyed prior to closing. (This makes the most sense as the seller typically has property insurance coverage already in place.
    • Another alternative is for the buyer to purchase an insurance policy on the subject property during the executory/escrow period. Generally speaking, the liability runs with the land. In other words, whomever is living in the home usually takes liability of loss or damage.
  • Seller’s Duty to Disclose

    • Most jurisdictions require the seller of residential real estate to disclose all known defects that:
      • (a) materially affect the property value; and/or
      • (b) are unknown to the buyer and are NOT readily observable by a reasonable buyer.

 

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Describing Real Property

 

There are 3 Principal Types of Property Descriptions Used in the Continental United States.

  1. Subdivision Map:  Lot & Block Parcel #’s are recorded in public records.
  2. Metes & Bounds:  Descriptions are based on topographic features.
  3. Government Survey:  Public Land Survey System or PLSS (Section, Township, and Range)

 

 

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Are You the Leader of the Pack?

I created this digital video commercial for my side business, IREM Agency. What do you think about it?

Cheers!

John

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Retirement and Relocation: Destination Florida?

Are You Considering Relocation & Retirement in Florida, But Not Sure Where to Start?

Victoria at Tamaya-large

These 5 Buyer Action Steps can Help Guide You Through the New Construction Home Buying Process.

  1. Get Your Lender Pre-Qualification Letter First. Before you start looking for a home, you should know exactly what your buying power is and know what you’re ideal monthly payment is (and how far you’re willing to stretch yourself without breaking your bank).
  2. Decide on Your Ideal Community.  In real estate, the three most important words are: location, location, location. But choosing the state, city, and neighborhood aren’t the only things to look for. Most buyers are looking for a specific lifestyle that accompanies their new home. What type of amenities are you looking for? What are your favorite recreational activities? How far is the community from those places of interest?
  3. Home Site Selection. Picking the perfect plot can be a pesky proposition! Alliteration intended 😉  While the floor plan you choose will likely have a lot to do with the site options available, you may still want to consider the advantages of a corner lot (typically lots of back yard space, great for families with small children) vs. the benefits of an interior lot (less mowing area). Other considerations include choosing a water or golf view (more expensive) over a view of your future neighbor’s back yard.
  4. The Floor Plan.  This is one of my favorite selections. With many home models, elevations, and structural design options, you’ll probably be stuck trying to decide which style you like more than the others. If you are planning to stay in the home for the long road, you’ll probably want to consider how the home plan will benefit you today, but also how it can accommodate you in 5 to 10 years from now also.
  5. Customizing the Construction. New Home Builders generally have design centers where you can select the final touches for your new home plans, from color options to interior finishes. The task can be daunting, but it’s also very exciting too! My advise is relax, take your time, and enjoy the process. This is your opportunity to vision cast your “ideal” environment.

Finding the right city & community can be a challenge, especially when you are relocating from a different region, state, or even a foreign country.

In closing, having a fully-executed action plan will help alleviate stress and enable you to have fun in the home shopping process. Still, with all of the elements to consider, it may be more beneficial for you to have an expert in real estate to guide you through each step of the process.

As a relocation specialist with Better Homes and Gardens Real Estate Lifestyles Realty, in Jacksonville, Florida, it would be my privilege to assist you in finding your ideal Florida dream home. Call or text me, cell: (786) 327-6326, for more information about how I may be of service to you.

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Change

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success than to take the lead in the introduction of a new order of things”
Niccolo Machiavelli, The Prince (1513)

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Top 5 U. S. Markets for Hotel Investments in 2014

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If you’re considering the purchase of a hotel investment, these 5 cities show positive trends in retail growth, which indicates more discretionary income, and are among the top 15 markets for higher occupancy rates YTD.

1. Los Angeles
2. Houston
3. New York
4. Seattle
5. Orlando

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While Millennials are showing traction towards indie hotels (for a unique experience) the demand is higher for branded hotels. Demand is above supply with the highest growth shown in the upper upscale segment:

Midscale: 48.8%
Upper Midscale: 43%
Upscale: 46%
Upper Upscale: 51%

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The long view: hotels have shown 10+ percent NOI growth for the past 5 years in a row and an average 20% ADR growth since 2010. The arbitrage between Cap rates & the 10-Year Treasury is about 500 bps, and is expected to continue into mid-2018, making hotels an attractive investment!

If you are interested in a feasibility study of a specific market segment, please contact me for a proposal.

Sources: Marcus & Millichap Research Services, Smith Travel Research, LVCVA

Image Source: Freeimages.com
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The Dynamic Nature of the Hospitality Industry

Whatever impresses clients today will be considered boring tomorrow. Take an old “Art Deco” hotel and modernize the interior, like this lobby at The Essex House in South Beach, and you will have reinvented yourself for the present time.

20140711-142048-51648920.jpg By scanning the remote environment for emerging trends, you can pinpoint what customers want and reinvent yourself time & time again. Because the only way to thrive in an overly-saturated hospitality market, like South Beach, is to evolve. The only thing you can always expect to be constant in life – is change.

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A hilarious grammar lesson from puppets

A hilarious grammar lesson from puppets.

 

I’m sharing this because I see these errors all the time! Too funny.

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Cautiously Optimistic Consumers Support Modest Retail Gains; Fed Tapering Will Remain a Wildcard

biz manLittle improvement, but the way to journey from point A to point B without tripping is to take one step at a time.

The Investment Real Estate Research Blog

August 15, 2013

  • Retail sales advanced at a tepid pace in July as consumers maintained a cautiously optimistic stance in the face of mixed economic news. Limited risk tolerance and fragile psyches remain a hallmark of the recession, reiterating that a transition to a consumer-led recovery may still be slow in forming. The positively performing but still-soft retail market will likely weigh on the Fed’s timing as they consider decreasing their infusions into the capital markets. Speculation that tapering will soon begin has already pressured Treasury rates, increasing the 10-year by more than 100 basis points over the last two months. These trends temporarily unnerved the mortgage and auto markets, but rising home values and the strengthening employment market will offset these forces as the “wealth effect” gathers momentum and begins lifting consumption through the remainder of this year.

  • Total retail sales advanced 0.2 percent in July as auto dealers…

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Option One Realty Group – Featured on Houzz

Miami is such a beautiful place to "live, work, play"

Take a look at the amazing ideas you can incorporate into building your ideal home.

Click on the green button below the illustration to see our design book.

miami

Remodeling and Home Design
Miami Home Professionals
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June – a slow month for Home Sales

 (increasing mortgage rates) “…may have taken some of the steam out of the market.”

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After hitting a 3.5 year record high, home sales took a dip of 1.2% in sales to an annual rate of 5.08 million home sales in June.  According to Lawrence Yun, Chief Economist for the National Association of Realtors, increasing mortgage rates “may have taken some of the steam out of the market.”

Nonetheless, there is still a lot of demand in most US cities. The problem lies in the most expensive regions: Hawaii, California, and the New York City metro area:

“We’re still dealing with a large pent-up demand,” he said. “However, higher mortgage interest rates will bite into high-cost regions of California, Hawaii and the New York City metro area market,” says Yun.

Foreclosures and short sales have taken a back seat in the market, accounting for 15% of existing home sales. With these distressed sales clearing the market, home sellers can expect a greater return on their properties as the median home price has increased 13.5% since June, 2012 – a consecutive gain in median home prices for 16 months!

If you are thinking of selling, there is a lot of demand for what buyers consider “good” homes and the conditions (demand) is continually improving, aside from the interest rate increase. But seriously, were we thinking that they’d actually stay that insanely low forever? Seriously? 

Source: Money.CNN.com

http://money.cnn.com/2013/07/22/real_estate/home-sales/index.html?section=money_realestate&

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