Buying a house – The realistic approachThis article is not about the secrets of buying a rental property for no money down and half the price of the market value of the house. I am not Tom Vu or Don Lapre and I am not in jail.In Canada, the no money down home did use to exist, but not anymore. Some banks and/or lenders were willing to lend you the 5% down payment so that you don’t have to pay a dime out of your own pockets to purchase a home. However, given the current financial situation with tighter lending restrictions, there will be no bank or lenders who can do that in Canada.The buying home for half price did use to exist as well. At one point, foreclosures in Canada would allow foreclosed homes to be sold at rock bottom prices. The new law, which has been in placed for many years now require the homes be sold at the highest possible price for foreclosed homes or else the lenders could be sued. Hence, sometimes foreclosed homes sell higher because Canadians have the misconception that foreclosed homes are a really good deal causing it to have a reverse affect. There have been many people buying foreclosed homes believing they got a good deal and not doing a thorough check as to the actual value of the home.Now, clearing out the quick money maker myths of buying homes, there are still many things you need to be aware of before starting.If there exist ever an industry with more sneaky sales tactics and money motivated people, it has got to the Real Estate industry. As a buyer, you could be dishing out $350 000 and everyone wants a piece. The Real Estate Agents want a piece. The lenders want a piece. The lawyers want a piece and the sellers want piece. No wonder there are so many scams in this industry.The first thing to be aware of is the Real Estate Agent. A Real Estate Agent is suppose to act on your behalf to buy or sell the home. Both the buyer of the home and seller of the home will have their own Real Estate Agent called a Buyer’s Real Estate Agent and a Seller’s Real Estate Agent.In Canada, each Real Estate Agent gets an average of 2.5% and sometimes 2% for the commission of selling the home. Some Real Estate Agents provide cash back rewards. Canadian Real Estate Agents gets higher commission than anywhere else. In United States, their Real Estate Agents only get 1% of the commission and their homes are actually much cheaper. Even though Real Estate Agents are the least educated of the parties involved in the buying home transaction, they seem to be getting the biggest piece of the pie.Do not listen to their gimmicks on Real Estate Agents are ethical. (http://www.howrealtorshelp.ca) Where do they get the idea any Real Estate Agent off the street is ethical. Their claim is based on these tests that they pass to become a Real Estate Agent. Agents passing a test does not meant hey are ethical. It only means they can remember enough to pass the test.One would believe it should be the Real Estate Agent’s job to help the buyer ensure the home is of value. Rightly so, many buyers depend on the Real Estate Agent to protect them and provide them advice and in my opinion, the ethical Real Estate Agent should do that. However, the true reality is that Real Estate Agents do not make money unless if the home is purchased. The reality is that the Real Estate Agent’s salary is not truly dependent on giving you advice. The Real Estate Agent’s job is to get the buyer to buy a home through them so they can get paid!As a result of this, what ends up happening, are two types of Real Estate Agents with variations in between. The first type is the honest agent with the belief “If I work hard and treat my buyer right, the buyer will come back to buy more homes from me. The second type is the “I need to get the buyer to buy a house quickly so that I can move on to the next buyer (sucker) so that I can maximize my time for profit.” The bottom line is that you are looking for the first type and you want to avoid the second type.We’ll call the first type, the Bad Real Estate Agent. We’ll call the second type, the Good Real Estate Agent.So what kind of characteristics does the Good Real Estate Agent have that the Good Real Estate Agent does not have?1. The first characteristic is Patience. Bad Real Estate Agents will attempt to sell you a home quickly to get the money quickly. Do not buy a house without spending a lot of time looking at several different homes. Be careful of tactics such as Real Estate Agents claiming it is the perfect and acting like a salesman rather than providing you information.2. The second characteristic is information. A good Real Estate Agent needs to provide you all the information to let you make the informed decision and we are not talking about their opinion. Real Estate’s opinion does not matter. Real Estate Agents have data such as the history of the house being sold at, homes being sold near the area and type. A Real Estate Agent should be able to provide you with a compilation of official documents that tells you these kinds of data to let YOU make an informed decision.3. The third characteristic is care. You will know this during the actual signing of the contract to purchase the home at a certain price. Once you become interested in a property and want to buy the property at a certain price set by YOU, you have to write up a contract. The contract consist at least three conditions that will null the sale of the home and a security deposit.The common three conditions are, buyer can get financing, the home passes inspection and the appraisal value of the home is above the price to be purchased. Generally, you will want the lenders to appraise the home so that you know the fair value of the home and the lenders would only lend of you are buying the home at fair market value.The security deposit is an amount you will provide to lock the home from being sold to other buyers while you perform to checks to see whether these conditions have been met. If these conditions are not met, then you SHOULD get your security deposit back.The Bad Real Estate Agents will want to you provide very few conditions and a big security deposit. Doing so ensure the home is more likely to be sold.Do NOT go through the internet and pick the first agent you see or the agent that has the most advertisements. They are just spending marketing money which they intend to recover from you. I especially find the ones that are top ranked search engines to be the most conniving, especially the Mississauga location!More to Come!
Real estate investing for beginners includes a few things to consider before choosing your first property to buy and deciding to enter the present market. We plan to address some of the concerns for beginners that want to get involved in this form of investing. You need to realize that many people lose money by making the wrong decision. The key to making money in real estate is to buy when market prices are low and sell when they are high. We will give you important tips to think about before you decide on your first property and enter the field of real estate investing.One of the first things to think about is the number one rule about investing in property-the location. When you are thinking about which property you want to buy, you need to think of locations that might be expected to become popular locations in the near future, but have prices which have not gone up yet. This might mean they are located on the outer parts of town or they might be located near a planned resort area. When you are looking at property to invest in, think about whether the chances of it going up will be better than some other locations for real estate investing.You might want to consider investing in real estate that is priced lower than market prices. You can find good deals on property that an owner needs to sell because of a job transfer or divorce. This might mean that you can get the property for lower prices than other homes in the area and you will have better chances of making a profit when you sell. You might find a property that needs a few repairs or just needs a coat of paint and some minor details added. These can be the best chances to make better profits when you start real estate investing.Another thing to think about is finding property that can be rented out to make the mortgage payment. If you pay the right price and get the right financing for the real estate you buy then you can afford to rent it until the market goes up and you can make a profit. Keep in mind that you will need to find a good renter and pre-screen them to find ones that pay their bills on time and will not damage your property. You do not want the added expense of hiring a lawyer and evicting renters that have not paid rent or caused damage but this can be part of real estate investing.If you need a mortgage on the property you invest in, you need to make sure that there is no penalty clause for paying the loan off early. This can happen if you buy property and fix it up to sell quickly. You can make a profit this way but if you have a penalty for paying off the loan early you might have to pay an added two or three percent of the mortgage when you sell it. Many bankers understand that you plan to fix up the property and sell it, but they may require a higher down payment if they know you are real estate investing.Think about ways that you can save money on closing costs and real estate fees. You can get better deals when you find property for sale by owners because they are saving the agent fee. These fees can be seven to ten percent of the property price but it is a fee that is paid by the seller. Many investors always use agents because they can help them find the best deals. The main thing to consider is that you get the best price on the property and do not pay over market price when you are real estate investing.Do not make these common mistakes when investing in properties. Think carefully before you make offers on properties and do not rely on gut instincts because they are not always right. Make sure you do your homework on properties before you invest and find out as much as you can. Inspect the properties for major defects and consider a professional home inspector. Do not rely on rumors or promises about a certain area becoming popular or prices going up because of plans to develop it. Do not become emotionally involved with properties because it can cause you to make bad decisions that cost money when you are real estate investing.You have learned some of the major things to think about if you plan to invest in real estate. For the beginners in this field there can be small things that make a big difference when it comes to making a profit. Before you enter the field of investing in property, you need to find out as much as you can about property you are interested in and get expert help. You can contact a local real estate agent to help you find the best deals or find other expert advice to help you make the best decision. This should be your next step before you enter the real estate investing business.