Buying, Sell, Uncategorized

Lenders Affect Buyers and Sellers

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If you are a Seller and you think that the Buyers Lender doesn’t affect you, you may be in for a surprise when on the day of closing they issue a decline letter and get their earnest money back and you are still in your home and have to start all over!

“Anyone who has ever taken out a mortgage will be unsurprised to learn that it is, literally, a death pledge”

by Mark Forsyth from his book ‘The Etymologicon’

Click on the picture for the Podcast OR Below in the text link

Want to see what to look for when deciding whether to go with a Buyers offer and their lender…before it is too late!

Lenders can make or break a real estate deal and unfortunately, you sometimes don’t know that the deal is dead until you are just about to close escrow. I have had many a deal where I am the Listing Agent and the lender of the Buyer issues a decline on the close of escrow date. I can’t say for sure that the Buyer didn’t ask for a decline letter but there was one time where I didn’t know until 3 weeks into the escrow that the Buyer was needing a Co-signer and that the Co-signer didn’t qualify.

So what does your Listing Agent need to ask the potential Lender of the potential Buyer (it is super important to do this before accepting an offer-if you wait till after you accept the offer there really is no reason to ask because it just doesn’t batter anymore) You Buyers Agent and even Buyers may want to make sure your Lender has verified everything they need to so that you aren’t getting excited for no reason!

  • Are there any Co-signers on the loan? If so have all of their information been verfied?
  • Has all of the information on the Buyer been verified, you will only be able to get yes or no answers but that is ok
    • Has the Buyer Income been verified-Overtime, self-employment, and Venmo/Paypal income can all create havoc during the loan process
    • Has the All Information required from the Buyer been received and deemed acceptable
    • Has the Credit Report been done on the Buyer
    • Has the down payment been verified that it is seasoned (they will know what this means- I had a buyer that was declined after we were under contract because his down payment had not been in a bank account prior to getting under contract. Not a lender I had used before…obviously I have added to my list of questions based on experience.
    • Sometimes a lender will say more that is helpful like they are well qualified, they have worked with them before, they really like the home…the lender can also say things that are a little more concerning…I think we can close in that amount of time, I think we can make this work, I know they have been trying for a while-hopefully this one closes.

Really ask anything that you think is helpful to know, if they can’t answer they will tell you and don’t read into that it could be that you asked a confidential question and they are just not allowed to answer, like their credit score…

Video About How Lenders Affect the Transaction for Both Buyers and Sellers

Buying, Sell, Uncategorized

BUYING AND SELLING AT THE SAME TIME

Buying and Selling at the same time is not for the faint of heart. There are twists and turns in most real estate transactions and if your move is dependent on everything going smoothly, which it rarely does, you may wonder if it is worth considering at all…

“Patience, persistence and perspiration make an unbeatable combination for success.”

Napoleon Hill

Click on the picture for the Podcast OR Below in the text link

Want to see other options to the Simultaneous Close? Check out my Podcast!!

Buying and Selling at the Same Time Options

  • If you have funds available to Buy the home you want, move, then spruce up your old home and sell. You will get more money from the home you are selling and will more than likely get a better deal on the house you are buying.
  • If you do not have the funds to do this yourself, there are programs out there that allow you to take the equity from the house you currently have to put toward a new home and then move and then get the old home ready for sale and then pay off the funds borrowed that you put toward the down payment that you borrowed from the equity of the old home. Again, you should be able to sell for more than if you are selling and living in the home and you definitely won’t have the stress of hoping all goes well with the purchase of your new home and sale on the same day.
  • When you need to buy a home with a contingency, some Sellers will not accept your offer just because of that one contingency, others may only accept if you are under contract to sell your current home. But, if you wait until you are under contract to put an offer on a house you will have lost leverage as a Buyer, and while it may not seem fair, many Sellers will use this leverage to their advantage and want more than they would if you did not have a contingency.
  • So maybe you have looked at all the above options and you have decided to go for it and do it any way…some people are thrill seekers! So get under contract before you even list if you can. Some Sellers have vacant property and they are more than willing to accept your contingent offer and give it a whirl.
  • You will want to time accepting offers with the rules of your state, in AZ the Seller of the home that the buyer is purchasing has the right to veto the contract that the Buyer enters into to sell their home…kinda crazy! You could find yourself having sold your home and the home you are under contract to buy the Seller doesn’t like the contract you entered into and cancel the contract. (I always put a clause in the purchase contact that the Seller has a right to decline and then that other purchase contract is now void) I think this is very very confusing so please feel free to call/text/or email me if you want!!
  • Your agent will want to be communicating with both agents often (more often than usual) probably every few days, and double checking with title and lenders on both deals to make sure all is well with both sides. Making sure signings are happening timely and funding with lenders is all figured out. You want an Agent who feels confident in this similtanenous close and doesn’t have a vacation planned in the middle of it, same goes for Title if there are vacations planned be sure that you know who and when the back up will be in place. I cannot stress enough that your agent will need to be hyper vigilant.

Video About Buying and Selling at the Same Time!

Buying, Uncategorized

FIRPTA

The Foreign Investment in Real Property Tax Act (FIRPTA) has been around since 1980, if you have never come across it when buying real estate it may be more common now than it ever was! It affects you as a Buyer when you buy Real Estate from someone who is a foreigner.

“Don’t Wait to Buy Real Estate. Buy Real Estate and Wait.”

Will Rogers

FIRPTA IS HERE TO STAY AND YOU AS A BUYER NEED TO KNOW WHAT THAT MEANS TO YOU! CHECK OUT MY PODCAST!

Remember you as the Buyer are responsible for the tax withholdings!

Why Do I (as a buyer) Become Responsible for the Seller’s Taxes and what does this look like?

  • A person who is selling their home may be subject to taxes and if that person(s) is not in the US Tax System as a required Tax Payer then they cannot be counted on to file a tax return and report the Real Estate Transaction.
  • So Congress through the IRS decided in 1980 to have the US Taxpaying Buyer withhold the estimated taxes on the sale of the home.
  • The Amount of the Withholding can change however currently it is 15% for most Real Estate transactions. (There are some ways to reduce this amount however, these exceptions benefit the Seller not the Buyer so be sure to talk to your CPA and Title Company before deciding to reduce the amount of the withholding)
  • You want to make sure that your Title Agent is experienced in FIRPTA Transactions. If they are not find out if there is someone in the branch that is and is willing to take care of the FIRPTA portion of the transaction. This is so important…here are some horror stories:

Horror stories of how FIRPTA got messed up!

  • The Title Company submitted the Federal Tax Withholding was deposited in the Title Companies EIN instead of the Buyers SSN as is required. The Title Company was not trying to take the funds the agent just had not done FIRPTA before and didn’t know. Well there substantial penalties and the IRS didn’t just say oh no problem we will just transfer it. It turned out to be a costly mistake requiring a Tax Attorney to resolve!
  • Another Title Company just didn’t submit the Federal Tax Withholding to the IRS. Then a year later when the Seller went to file their return no withholding was there to be found! 6 figures in IRS penalties and did you know that the Title Company has each party sign a waiver that if they mess up you cannot go after them!!
  • Then with one of the exceptions of agreeing as the Buyer to reduce the amount of the withholding to 10% by stating they will live in the property for more than 50% of the time that anyone lives in the property for the next 24 months…but then something changes and they rent it out and the IRS wants to know what is up!! You (buyer) promised you would not have anyone else live in the property more than you and now the IRS wants some answers and some $’s!!
  • If all this sounds like a mess that you may not want to be a part of…well tell your agent to not show you FIRPTA homes otherwise you may find you have fallen in love with a home and then when you go to write the offer you get notified it’s FIRPTA.

Video on FIRPTA and how it works!

Buying, Uncategorized

VA & FHA Assumable Loans

With interest rates higher than they used to be in the early 2020’s buyers are wondering if they can assume a loan with a lower interest rate…is it a good idea? Well as with most things…it depends!

“Lead me, Follow me, or Get out of my way”

General George S. Patton

Veterans Your Loan is Valuable – Check out my Podcast on VA & FHA Assumptions

Just a reminder you need to qualify for an assumption just like as if you were getting the loan yourself for the first time. All the VA Rules and FHA Rules for lending still apply.

What Makes a Good Assumable Loan?

  • If the difference between what is left on the loan and the Fair Market Value of the loan is equal to or less than what someone would want to pay as their down payment that is a great assumable loan.
  • But, let’s not forget the obvious-the Interest rate is less than the current going Interest rate.
  • There is are instances where you do not have to be a Veteran to assume a VA loan (IF THE VETERAN RELEASES THEIR ENTITLEMENT TO YOU FOR THE LENGTH OF THE LOAN) But still do not forget about the first two items since these are still the most important.

What Makes a Bad Assumable Loan?

  • The opposite of above – the remaining loan balance is low compared to the Fair Market Value of the home. Thus, the Buyer will need to pay a substantial amount in cash in order to assume the remaining balance on the loan.
  • Combine the above situation with a minimal difference in the Current Interest Rate and the current Assumable Loan and you do not have an ideal situation.

What to look for when trying to find one?

  • A listing with an FHA or VA Loan purchased around 2021 and the first half of 2022, possibly the last half of 2020. The reason being is that the interest rate is lower and the loan payoff is probably minimal.
  • See if the Listing Agent has already contacted the lender to see if they have a process for doing Assumptions?
  • The Listing Agent should have contact information and have discussed the potential for an Assumption with the contact person.
  • Knowledge is key, if the person in charge of the assumption has done this before, or better yet they are in a department that is all they do, your escrow may go much smoother than one who says, what?
  • Find out how fast is the fastest that the lender doing the assumption has ever done one? This will give you an idea on how long it could take you to get through yours.

A Buyer’s Agent will want to get updates often through the process either from their own Buyer or from the Lender. Every day counts when you are trying to close escrow and make everyone happy!

VIDEO ON VA AND FHA LOAN ASSUMPTIONS

Sell, Uncategorized

SELLER INSPECTIONS

We think that only Buyers need to get an Inspection on a home, but in reality when the Seller gets an inspection it can save them money on costly last minute repairs and even can increase the value before you list! Don’t forget to disclose what you found and how you fixed it!! Remember either you will find it or the Buyer will…

“Measure twice, cut once”

– adapted from John Florio 1591 book Second Frutes

Check out my Podcast by Clicking on the Image Above! Seller’s Get Your Inspections!

When a Seller has an inspection BEFORE they list, they have the opportunity to have things fixed on their own time table and thus costing less money for having urgent work done on the home to accommodate a Buyer Closing schedule. Here are just a few items that will come up when a Buyer has their inspection. Get ahead of the situation!

Most Common Inspection Items

  • Electrical – GFCI missing or not working, electrical outlets not working or not installed properly, exposed wires, circuit breaker mismatch, panel not labeled
  • Plumbing – Anti siphon missing from hose bib, leaky faucets, angle stops corroded or unable to move,
  • Sewer or Septic – Obstruction from the street to the home, belly in the line, deterioration of the line or tank
  • Floors – Gaps, mismatch tripping hazards, broken tiles
  • Termites – You really want to know this before you list!
  • Dishwasher – No high loop, not working properly, too noisy
  • Pool and/or Spa Equipment – Not working properly, less than 2-3 years useful life, not current to code
  • Water Heater – Leaking, no pan, less than 2-3 years useful life
  • HVAC – Not properly maintained, less than 2-3 years useful life, previous patch work done to keep it going, old R22 Freon
  • Windows – Broken seal, cracked windows, doesn’t open/close/lock
  • Roof – Debris, cracked tiles, roof less than 2-3 years useful life
  • Vegetation – Too close to the house or touching the roof (some loan products will call this out during the appraisal)
  • Handyman – Toilet seat not bolted properly, cracks in plaster or wood, door handles, locks, missing keys, tile cracks, doors not able to open close properly, missing or old smoke detectors and carbon monoxide detectors when there is gas in the home, anti tip device on the stove/oven missing, lack of proper attic insulation

So these are just a few of the things that a prospective Buyer’s Agent is going to be looking for. Why wait until you have already decided on a price for the home and then the Buyer wants you to come down on price or hurry up and fix everything in the next 2 weeks!

SELLER INSPECTIONS

Sell, Uncategorized

Commissions to Buyers Agents – Why pay them?

When it comes to whether or not to pay a Buyers agent as a Seller there are many things to consider and it’s not as easy as yes I want to or no I do not…let’s discuss

“Price is what you pay. Value is what you get.”

– Warren Buffett

Check out my Podcast by Clicking on the Image Above! Buyer’s Agent Commissions – To Sellers

When it comes to whether you as a Seller should consider paying the Buyer’s Agents Commissions here are a few things to consider:

  • Do you have other offers that provide a better net that should be considered? Or is this the only Offer you have received and if so, how long have you been on the market?
  • Always think about the net, not only to yourself but to the other side as well. This is a strategic move not a move based on empathy. (For those who think this is coming from a position of weakness)
  • If a Buyer needs to pay their own Agent that more than likely will increase their closing costs since currently it is not able to be wrapped into the loan. So again, strategically it makes sense for a Seller to included the Buyer’s Agent costs in a way that those costs can be included in the loan by agreeing to pay the Buyer’s Agent.
  • If the deal is cash then the issue of commissions is not as strategic as it is more a matter of principal to one party or the other. As a Seller, I would say don’t stand on principal if that is the only thing getting in the way of the deal. Just get to the net!!

Deciding on who pays what should not be a matter of conflict but a matter of strategic negotiating between the two parties. If the Buyer wants their agent paid then the best outcome for the Seller is to work with the Buyer to make the requests of the Buyer happen, and deal with the net with the Sales Price. This strategy really goes for everything, HOA Fees, Home warranty, and Concessions needed to close, if it was important enough for the Buyer to ask, give on everything except the Sales Price. Be strategic!

SELLER COMPENSATION AGREEMENTS

Buying, Uncategorized

New and Improved Buyer’s Agent Rules February 2025

As a Buyer’s Agent we have new rules and now we have revised Rules!! Here is the basics of what we now need to do and how this affects you, the Buyer!!

I can’t predict the future, I have to wait for it like everybody else.

– Niels Bohr

Check out my Podcast by Clicking on the Image Above! How all the new rules affect Buyers!

The Basics of the Old Rules, New Rules and Revised Rules!! (as of today in Arizona)

  • Prior to August 2024 Sellers could provide an amount that they felt comfortable providing to a Buyer’s Agent prior to seeing the property on the MLS (Multiple Listing Service)
  • Prior to August 2024 Buyer’s Agents could show a property without a Buyer Broker Agreement (it was allowed, but optional, depending on Brokerage
  • After around August 1, 2024 (varied by location) Buyer Broker Agreements became a necessity for which we needed to have signed by the Buyer’s Prior to seeing a property and then submitted to our Broker for Review. We needed to communicate in writing our fees and have all parties to the Buyer Broker Agreement agree to them in writing prior to seeing properties.
  • Between August 1, 2024 and January 31, 2025 Sellers were able to authorize their Agents to fill out a form called a CABB to provide to the Buyer’s Agent stating the amount they felt comfortable providing to the Buyer’s Agent should they get under contract. (this seemed to cause confusion-so it was stopped)
  • After August 1, 2024 (varied by location) a form called the SCA – Seller Compensation Agreement was used to have the Buyer request from the Seller an amount or percentage to pay their Buyer’s Agent. Prior to January 31, 2025 this could be used in addition to the CABB, which is what caused confusion. Now if the Buyer is requesting the Seller make a contribution toward commissions to their Buyer’s Agent, the SCA form is how it is done.

There are a lot of other rules regarding the new practice so please do not hesitate to call me 480-809-5853 or contact your local Realtor® and get the latest scoop on what the process is!

Time to Get Shopping for Your Next Home

Buying, Uncategorized

BEYOND THE DOOR | BUYER’S AGENTS

The Value of a Great Buyer’s Agent goes beyond the time and money you save, it also includes peace of mind that all the boxes are being checked by a professional that deals with the boxes on a daily basis.

“Time is more valuable than money. You can get more money, but you cannot get more time.”

– Jim Rohn

THE VALUE OF A GREAT BUYER’S AGENTS

Check out my Podcast on Behind the Door (Buyer’s Agents)

What to look for in a Buyer’s Agent!

  • Not just years experience, but volume as a Buyer’s Agent | Some agents pride themselves as a listing agent (ratio should be no less than 40% Buyer’s Agent Experience)
  • Relatable Buyer Stories | Can they give you stories about past buyer transactions that show you they know their stuff?
  • Systems | A Great Buyer’s Agent has done this so many times they have a process (checklist) of what needs to be done and when!
  • Able to answer your questions | Are they open to answering all your questions and even “what would you do” based on your own history with buyer’s agents?
  • Can they express what their value is to you as your Buyer’s Agent? | If their value is all generic that could apply to any Buyer, then they don’t know you and your needs!

Post NAR Settlement

So we are still getting used to the ramifications of the lawsuits and the proposed NAR Settlement and awaiting for a definitive answer on everything we are being told, as to all the changes. There is one thing that seems to be more than probable as remaining and that is Buyer Broker Agreements–The Agreement between the Buyer’s Agent and the Buyer(s). This agreement is a very important document and if you are thinking of buying a home in the near future, I recommend asking to see this document well prior to wanting to see homes. While you are at it, ask to see all the documents you are going to be requested to sign either by the Brokerage you are thinking of using and by the State Real Estate Board you are in.

In the end a Great Buyer’s Agent is worth every dime and then some…like peace of mind that all the boxes are checked…

HAPPY HOME BUYING

Here is my YouTube Video Beyond the Door (Buyer’s Agent)
1031 Exchange, Buying, Sell, Uncategorized

1031 Exchanges & Tax Filing Deadlines

There are a lot of rules with 1031 Exchanges but there is ONE Huge rule that many people don’t talk about and it could disqualify your entire 1031 Exchange…

“The Best Way to Predict the Future is to Create it.”

– P. Drucker & A. Lincoln | National University.
Check out my Podcast on 1031 Exchanges & Tax Filing Deadlines
Some Things That Can Mess Up Your 1031 Exchange!
  • Thinking that Holidays and/or weekends don’t count–THEY DO COUNT SO GET YOUR CALENDAR OUT! The IRS does not care that you don’t know how to count 45 days or 180 days or that you were sick or it was a weekend…or even Christmas!
  • Not making sure that you can close on the right amount of properties in time.–AGAIN THE IRS doesn’t care that you found something in your due diligence that disqualifies all of your choices that you made in the first 45 days!! HINT: Get under contract while you are under contract to sell your 1031 Exchange Property, do your Due Diligence and submit your properties by the 45th day with confidence that you can close on time!
  • Deciding to File your Tax Return for the year you did your 1031 Exchange BEFORE YOU COMPLETE YOUR EXCHANGE!! — NEVER DO THIS! Why this is rarely talked about is beyond me! But, I think that unless you deal with 1031 Exchanges as a CPA and a Realtor (which I am both) you forget this little but VERY IMPORTANT RULE. If your 180 days starts around mid-October (again get your calendar out!) then your 180 days ends around April 15th of the following year. If you file your tax return before April 15th and you have not finalized your 1031 Exchange Closing you just BUSTED your 1031…trust me that is not a good thing!!! So be sure to extend and then be sure to file by the extended due date after you finalize your 1031 Exchange!!!!
  • Thinking you can decide you want to do a 1031 Exchange on the day or after closing of your property you are selling! OMG get your qualified intermediary figured out BEFORE you even put the property you are selling on the market! Know who your team is, Realtor, Title, and QI. Have conversations with all of them, know their qualifications ask questions and then keep at it until you have a game plan. Having bad representation is not an excuse for missing deadlines or doing the 1031 Exchange incorrectly. The IRS is very unforgiving on this, if you want to play in the big leagues of 1031 Exchanges you need to know as much as your representatives and be on top of it!
  • Not reading and knowing the HOA rules that require the property to be owner occupied for a certain amount of time before it can be rented. WOW, I have seen this one Bust a 1031 and/or cost the investor a lot in penalties because they had to keep the tenant and pay the monthly HOA fines. [Real Life Situation–Agent/Buyer did not read the HOA documents that said the Buyer needed to occupy the property for 2 years before it could be rented. The Seller didn’t disclose this information either. The Seller had a tenant with a lease in place. On the close of escrow the HOA sent a letter to the new buyer (part of the 1031 Exchange) we know you have a tenant, you must pay us $400 a month for violating our policy of not being owner occupied AND as you know you cannot terminate the lease as per the Arizona Revised Statues…have a nice day (ok maybe they didn’t say that last part–but it was a big mess, PS I was not involved in any part of that transaction!)

There are so many things that can be done with a 1031 Exchange like combining it with a Section 121 (and no I am not going to go into details-you need to talk to your CPA!!) Doing a 1031 Exchange is not for the faint of heart for any of the participants, lots of rules, unforgiving of mistakes, and a lot of money on the line if your 1031 gets busted!

Here is a YouTube Video about the 1031 Exchange Concerns
Buying, Sell, Uncategorized

WHEN IS THE BEST TIME TO SELL YOUR NEXT HOME?

You may not like the real answer, but it may make the decision easier!

Never complain and never explain

Benjamin Disraeli-The 19th UK Prime Minister
Check Out My Podcast on When is the Best Time to Sell and/or Buy?

Some Questions to Ask Yourself When You are Thinking of Buying or Selling Your Next Home!

  • Do I love my neighborhood?
  • Am I ok with the time that it takes to get to the things I do daily or often?
  • What am I most dissatisfied with my current home that brings up the question in the first place?
  • Are any of the issues that concern me temporary?
  • What would my ideal home have, be located, include or not include?
  • Can you envision yourself in the new home and does it excite you?

If You Are Ready for the Next Step…Here are Some Questions to Ask Yourself to Have Ready for your Agent!

  • Where do you ideally want to be located?
  • How far in minutes from the things you do daily or often?
  • Single Family, Condo, Patio Home/Town Home?
  • HOA or No HOA?
  • How many parking spots do you need on a daily basis and for guests?
  • How many pets do you have or want to have and their size?
  • Is your family size changing in the near future?
  • Do you need a gas stove or is an induction stove your ideal?
  • Do you want a pool? Private, Community, or NO Thank you!
  • Guarded, Gated, or None of the Above?
  • Approximately what do you want to spend per month? (not just what you qualify for)

Talk to your agent and let them know while you may qualify for a certain amount that doesn’t mean you want to necessarily spend that amount.

Also, it is important to separate your “wishes” from your “deal breakers” and let your agent know which is which. Sometimes, one persons wish is another persons deal breaker, so if it not a deal breaker, bring it up and then immediately say it is NOT a deal breaker.

When you get the list of homes, also ask for the criteria used to create the list so you can double check that there isn’t more or less than what you want! And Do NOT Hesitate to tell your agent you want to change the criteria if you aren’t finding what you want. Expanding a couple of blocks one way or the other, or being ok with a den instead of a bedroom can open up a whole set of options!

Here are some ideas on the Buying and Selling Decision!

There's No Better Time Than NOW!!

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