Top Ten Reasons to Own a Home

“Real Estate segment with our Residential Expert Cheryl Marlow, at Keller Williams Realty!”

Good morning, Cheryl! So today you want to give us some great reasons to own a home, is that right?

Good morning, Bob! Yes, I do! Let me start off by saying that home ownership is an intrinsic part of the American Dream, and it is an amazing feeling to walk through the front door of a home, and know that it’s yours. Not only does owning your own home give you a reason to be proud, but it’s also a great financial move. Purchasing a house is probably one of the largest investments you’ll ever put so much effort and fiscal responsibility into; with time and patience, it reaps great rewards!

What are some of these great rewards?

In my opinion, the top ten reasons to own a home are:

1.   Real estate appreciates in the long term, giving you a good return on your investment.

2.   The alternative is to pay rent, which benefits your landlord and does nothing to improve your finances!

3.   The interest on your mortgage is tax deductible!

4.   In an emergency, you can borrow against your home equity.

5.   A home is a leveraged investment using the bank’s money if you’re financing a mortgage. Who wouldn’t be excited about that?

6.   A home purchased with a fixed rate mortgage has a stable payment schedule that becomes easier to pay over time because of inflation.

7.   Owning a home is a good way to diversify your assets.

8.   Home ownership clear of debt will help you retire comfortably.

9.   Owning a home is still one of the most important steps towards financial success and security!

10. And, of course, you can always change your home by painting, remodeling, landscaping, etc., and the only person that benefits is you!

Great reasons! Is there anything else you’d like to touch on?

Bob, when the real estate market changes, concerns rise about whether or not it makes sense to purchase a home in a particular market environment. With today’s affordable home prices and low interest rates now is a great time to buy your first home or to sell your current home and purchase your dream home!

Home Inspections & Warranties

This morning we have a guest speaker with us today, Mr. Scott Herrmann of ABQ House Detectives and Assurance Home Warranty, filling in for Cheryl Marlow. Good morning, Scott. Can you give us some information on home warranties and how they work?

Good morning, Bob. We have had great success working with many of Cheryl’s clients for several years. As a licensed home inspector, I would advise obtaining a home inspection and warranty, and here’s why. A home inspection is vital to the process of purchasing a home, negotiating repairs, and fully understanding how to take care of your new home.  A home inspection should reveal potential repair items, which, in turn, can save both buyers and sellers thousands of dollars.

Tell me about home warranties.

A home warranty is a one-time annual premium that is renewable, and covers either the repair or replacement of these home system components that often breakdown. It’s simple: when it comes to home warranties, we PREACH. Plumbing, roofs, electrical, appliances, cooling, and heating.

So what kinds of problems do warranty companies run into?

The most common issue is when people assume certain things are covered, when, in fact, they aren’t; or they fail to contact their home warranty company before making repairs. So the lesson to be learned here is that it’s important to read and understand the warranty contract thoroughly in order to ensure that you’re covering all of the bases. You can also contact me directly with any questions!

It certainly sounds like home warranties are important!

They most certainly are! Warranties protect all parties involved in a home sale transaction. They protect buyers and sellers from unexpected expenses that can end up burning holes in their pocket. Because buying a home is such a big investment, and probably one of the most important purchases you’ll ever make, it’s imperative to work with professionals, from your Realtor, to the inspector, to the home warranty company.

Scott, you had mentioned roof coverage.

Well, yes, Bob. Let me forewarn you that I have found home warranty companies out there that provide limited or no roof coverage, but at Assurance Home Warranty, we do cover roofs. At Assurance Home Warranty, we have the highest available coverage, which is just one of the many reasons that, as an inspector, I feel confident they offer our clients the best warranty value. 

Showing Feedback

I wanted to ask you about showing feedback. One of my friends has their townhouse for sale and their agent told them that feedback was not important. They’re in another state, or of course I would have had them list with you! You’re the expert, is feedback important or not? 

This is something that I’ve been discussing with our clients. The answer is both, it is and it isn’t important. Let me explain what I mean. The obvious feedback is that if that particular buyer didn’t make an offer on your house, then you didn’t win the price war and beauty contest in their mind. They found something else that they felt was a better value, and they bought a different home. It could have been many reasons, your floor plan, your neighbourhood, your price compared to the competition. The reasons are as varied as the buyers. At the end of the day, if you aren’t the best priced for the best home, you won’t win that price war and beauty contest.

It sounds like you’re saying no offer is the actual feedback and it doesn’t really matter what they thought of the house if they didn’t buy it.

That may sound harsh, but it’s reality. It’s a challenging situation as Realtors often don’t respond to feedback requests, and yet sellers want to know what they thought. As part of our customer service, we attempt to obtain feedback from every showing. We email the other agent three times and often try to chase them down by phone. In real estate, as in other businesses, 5-10% of the agents are doing 95% of the sales. I’m going to try to get that feedback from the other top agents because they are busy in the field every day and know what the competition is, and my clients appreciate it. If the agent doesn’t respond to three emails, it’s a safe bet their client has no interest.

So I’m officially telling my friends and everyone else that no offer is feedback! Ha ha :)

And I’m officially telling you and everyone else that getting feedback never sold a house! Ha ha :) 

Forecast for 2014

I know everyone is wondering about how the real estate market is going to perform in 2014. Can you give us your predicted forecast?

My real estate crystal ball remains cautiously optimistic for 2014! I predict that we will see the Greater Albuquerque areas continue to slowly stabilize. We will continue to be in a price war and a beauty contest with realistically priced homes selling well. I expect inventory will increase dramatically in the first and second quarters, which may create downward pressure on pricing as supply and demand drives home values either up or down. Overall, 2014 should see a higher number of sales than the previous year. I predicted 2013 to increase over 2012, and the final yearend figures should show an increase of over 1,000 sales. I’m optimistic that we may even experience home value appreciation.

Stabilizing sounds good. What about all of these foreclosures we’re hearing about?

As part of the market stabilization, we expect to see a continued decrease in bank controlled sales in 2014. A bank controlled sale is a home that either is bank owned through a foreclosure action or bank controlled through their willingness to accept a short sale whereby they’re accepting less than the homeowner owes on the property. In 2012, 30-35% of sales were bank controlled. As I predicted last January, the 2013 bank controlled sales dropped to approximately 25% of all sales.

Your crystal ball tends to be really clear! Cheryl, tell us a bit about mortgages and interest rates in 2014.

When historically low interest rates are enjoyed for an extended period of time, the only way to go is up. Interest rates will continue to slowly increase. This is a great motivator to buy now, instead of paying more later! Momentum continues to build in the housing market and there are still many opportunities to take advantage of the past few years of lower home prices and unbelievably affordable interest rates. These favourable conditions will not last.

Overall, you’re prediction is positive?    

                     

Again, I’m cautiously optimistic about the Albuquerque real estate market for 2014. For many reasons, New Mexico is a great place to live and own real estate. Whether you are a seller, a first-time buyer, or a move-up buyer, there are great opportunities in this market to take advantage of. Call me today and let’s get started. 

Potent Pricing

It seems like, for the most part, our market seems to be improving, so how important is pricing? 

You know, pricing is one of the hardest issues to deal with as a Realtor, because, quite frankly, every seller feels like their home is better than the competition, and that it’s worth more. Many potential sellers want to believe that their home is an exception to the real estate market downturn we have experienced since 2008. And I hate to be the bearer of bad news, but the reality is that we are still very much in a “price war” and “beauty contest!” Your home has to be priced extremely well in today’s market conditions in order to be the one to have that SOLD sign put in front of your house.

How many homes are currently available?

There are currently almost 5,000 homes available in the greater Albuquerque area. The absorption rate can vary month to month from 10-20%. In other words, 10-20 homes sell per month of the 100 homes available. This means that 80-90 people out of every 100 who would like to sell their home this month are not going to. Supply and demand drive value and I am encouraged by the improvements in our market. Understanding these numbers clearly these indicates that pricing is still critical! I am here to help sellers protect their equity; I’m not trying to beat them up about their price. At the same time, it is my duty to tell my clients the truth, because in pricing the home accurately, it will sell at a higher price in a reasonable amount of time.

It seems like buyers are still being picky about homes to purchase?

Yes! To see that sold sign in today’s market, you really need to be number one, two, or three in the market in terms of your pricing, as well as how well your home shows. You absolutely have to be the best all-around deal! Buyers are far less emotional in today’s market. For years, a buyer would fall in love with a house that they had to have, and then pay a reasonable price for it. Today’s buyers make a value-based business decision when purchasing a home. An agent like myself, with 27 years of experience and over 3,700 home sales has a different level of insight in understanding both buyers and sellers in today’s market. This is critical in negotiating a win-win home purchase.

Why A Buyer Chooses A Home

I would like to visit with the listeners about why a buyer makes the decision to purchase their next home, the things they desire and missteps by sellers. I think this can be helpful information for both buyers and sellers. If you’re like most people, you probably think that practical issues such as the number of bedrooms or kitchen amenities control the home buying process, correct?

That would make sense, yes!

Nevertheless, this is not the case.  Financial and emotional considerations have taken the lead when buyers view homes. Over 60% of homebuyers say the “feel” of a home is important and 78% place more emphasis on quality rather than square footage. We are seeing that buyers will no longer tolerate purchases of “as-is” properties. In our marketplace, we have recently seen multiple offers  for nice properties simply because buyers don’t want to deal with a lot of “projects.” Remember, we are still in a price war and a beauty contest! Buyers want the best deal on the best house! This doesn’t mean that sellers need to spend a lot to sell their home; there are some tricks to get that necessary first impression on good standing.

What are a few things sellers can do to help showcase their home and make a good first impression?

Every home is unique and with 26 years of experience, I can easily point out the key elements to draw buyers’ attention to the best features of your home. Overall, however, sellers should keep up on curb appeal, even in the winter time. Your yards and driveway free are the first impression they will see upon arrival. De-cluttering your home so that buyers can picture their own belongings in the floorplan as well as keeping dirty laundry and dishes away is definite bonus! If you have time, boiling some cinnamon before a showing is a welcoming scent, and fresh cookies are always appreciated! And last but not least, sellers staying for the showing is a no-no; buyers want to tour the homes with freedom of discussing their options. 

Market Familiarization

What are ways our listeners can familiarize themselves with our current real estate market?

Depending upon your motivation to move, that will change the various ways that you could select how to keep an eye on the market. For example, if you’re looking to move within the next year or two, I offer free monthly market reports delivered straight to your inbox. These will touch base on statistics such as price points and areas selling the best, indicating the strength of the market. You can then make decisions with knowledge of how the market has been and is predicted to be.

What if someone wants to buy within the next couple of months?

Now is the perfect time to buy! Last week I spoke about interest rates, and their potential and likelihood to reach 6% interest. This goes back to your motivation to move or buy a home. For those buyers that have a higher motivation level, we also offer a free, personalized, up-to-the-minute search that you can interact with. This is called a portal, and you can view a slideshow of property pictures, rate how you like properties, and save homes that you’d like to visit within the system. This system will notify you of price improvements/reductions on homes you’re keeping an eye on, and when new listings come on the market. This information is valuable because, as I’ve previously reported on, sites such as Zillow and Trulia are often inaccurate.

After someone has found a home, how is the offer price determined?

A Realtor with experience is extremely valuable in such an important transaction in your life. Part of the reason why that is the case, is that with my 4,000 homes sold, I am an expert on determining the value of a property. Knowledge of the areas in town, which affect value from one street to the next, comparing condition and upgrades, projecting resale potential, and many other factors are taken into consideration when analyzing the value of a home.

Election Affection

What are you seeing in our current market, and how the housing market will be affected by our upcoming primary election?

As we’ve seen in the past, interest rates will likely rise after the election this year, no matter which party is instated. Right now, the housing market is a buyer’s paradise. In virtually every major city in the United States, it’s now less expensive to buy a home than rent one. I quote, “Washington and the housing market are never far apart. Experts ranging from real estate professionals to the members of the Federal Reserve have reported that the state of the nation’s economic recovery relies heavily on a housing recovery.”

As you’ve been reporting, Albuquerque seems to be experiencing positive momentum.

We are experiencing positive momentum and I predict that we will continue that positive trend, with activity slowing after the election. In election years, we don’t typically see as intense of a seasonal slowdown until the dust settles. November, December, and January will be slower, however it is still a great time to sell as there is less competition during these months.

How big of an impact do interest rates play?

A raise in interest rates affects affordability; so if you wait, you may spend the same money for less house. Here are some surprising numbers: at today’s rates of 3.5% on a $250,000 mortgage, your principal and interest would only be $1,122. If rates increase by only ½ of a percent, that payment is $1,193, and a 1% increase to 4.5%, which is still low, would be $1,266. That is $144 more than today’s cost based on only a 1% increase, not to mention the long-term cost of a higher interest rate, and the equity building advantage of a lower rate.

3.5% interest is definitely a reason to buy now!

Bingo! Now is the perfect time to look at obtaining your dream home!

82 Villacitos Rd Tijera

Do-It-Yourself Homebuying

11700 Beringer in Sauvignon

Can you tell us why it's not a good idea to buy a home without using a Realtor?

Absolutely! Buying without using a Realtor can definitely be a risky choice. A buyer might think that they're making a smart financial decision in trying to cut expenses by not enlisting the aid of an expert in the real estate industry, but in reality, they could be making exactly the opposite.

Why should buyers elicit the help of a Realtor?

It's simple. Realtors, like myself, are experts in their profession! Buyers who try to represent themselves in a real estate transaction may have knowledge based on previous experience with buying or selling, or reading some real estate know-how books; Realtors, however, live and breathe real estate. And while books are great (I, myself, read up constantly), they don't represent all of the complex rigors and rules of our current housing market. It's our job to know all of the ins and outs of every real estate transaction, as well as to make all aspects of the sale as smooth and swift as possible.

Can you give us some examples of times when a Realtor is a necessity in a real estate transaction?

Though I believe a Realtor is necessary through every step, let me provide those examples. First of all, the biggest thing we are needed for is to help clients weave their way through the many dilemmas that plague current market-loan qualifications, appraisals, and renegotiations. Second, buyers and sellers hire agents that know the process and understand market value so that they don't pay too much or sell too low. When it's your life or your money, you need to hire the absolute best professional with the most experience available. The skills required to succeed at a high level are no different from the skills that you would expect a great doctor to have when caring for you. you would never knowingly go to a doctor for surgery who you knew only did three operation a year. As a buyer or seller, would you consider selecting a real estate agent that is not as skillful as the best doctor?

Tips for Homebuyers

Whether you are a single home buyer or a family, there are probably few things in life that are as exciting - or nerve-racking - as looking for a home. If one has organized a home buying plan, one can minimize a great deal of the emotional impact. By determining your buying bower, your wants and needs, and have an organized search plan, your chances of a stress-free experience are much better.

What is one of the most important factors in utilizing organization?

A mortgage pre-qualification is the second step after calling me. This will not only give you an exact price range, a pre-approval will add a great deal of strength to an offer you present. We have several quality lenders we work with to obtain the best loan programs personalized for our buyers' needs.

How about finding the "perfect" home?

I hear about this, and having sold over 3,000 homes, I can tell you there is not a perfect home. There are many people that make the mistake of thinking that they will, if they look around long enough, find a home that has 100% of their needs and wants. Determine the most important of your needs, and the most desired of your wants, and select a home that meets the majority of them. Ideally, if you can find 80-85% of your requirements, you should jump on it before someone else does.

Any other tips for home buyers?

An important thing for single individuals: don't over-buy the first time. A large and beautiful home with little or no furniture tends to be empty and cold. A life where almost every dime of your earnings goes to the support of your home wears thin very quickly and is a frequent cause of stress. Also, certain types of homes may possibly appeal a bit more to some single home buyers, such as townhomes and condominiums that help with maintenance, are a good place to start. 96% of people start their search online, and many internet sites offer inaccurate housing information. Our team offers a competitive edge to this with completely accurate information, and a personalized, professional search sent straight to your inbox!

Top Means for Buyer Appeal

Do you have any advice for our sellers?

With spring on the way and the housing inventory's impending flooding, I wanted to share some tips on what sellers can do to help their home be appealing to buyers. To me, there are top objectives to concentrate on when getting ready for a showing.

What's number one?

Without a doubt, curb appeal. It's the first thing buyers see on the internet, and when they pull up to the house. Buyers will decide to see your home or rule it out based on that first impression. Cleaning the yard, fresh paint on the trim, making the exterior inviting is critical.

What can you advise about the interior?

When a buyer is going to look at your home, they're not trying to view it as your home, but instead to imagine the home as theirs. Remove excessive personal belongings and clutter. Focus on common areas such as the kitchen and the living room and the owner's suite, as these are the areas that cause a buyer to fall in love with one home over another. There's always a balance between living in a home and having it ready to show. Too many photos can be overwhelming, such as your grandmother's walls when we were younger, but a few family photos strategically placed can show that this is a happy home for a happy family. A common mistake we see is a house looks amazing, and then you open a closet and it's like an old sitcom scene with things flying out and hitting you on the head!

Anything else that comes to mind?

Our clients often ask us to give staging ideas, which we're happy to do! There are professional stagers that may charge up to a few thousand dollars. One of the benefits we offer our clients is that we have partnered with a fabulous stager who will come into your home for a flat fee of only $200 and work with you to help rearrange and regroup your existing furnishings and decor to maximize the show-ability and sale-ability of your home.

Whether you are a single home buyer or a family, there are probably few things in life that are as exciting - or nerve-racking - as looking for a home.

Home Inspections & Warranties

This morning we have a guest speaker with us today, Mr. Scott Herrmann of ABQ House Detectives and Assurance Home Warranty, filling in for Cheryl Marlow. Can you give us some information on home warranties and how they work?

We have had great success working with many of Cheryl's clients for several years. As a licensed home inspector, I would advise obtaining a home inspection and warranty, and here's why. A home inspection is vital to the process of purchasing a home, negotiating repairs, and fully understanding how to take care of your new home. A home inspection should reveal potential repair items, which, in turn, can save both buyers and sellers thousands of dollars.

Tell me about home warranties.

A  home warranty is a one-time annual premium that is renewable, and covers either the repair or replacement of these home system components that often break down. It's simple: when it comes to home warranties, we PREACH. Plumbing, roofs, electrical, appliances, cooling, and heating.

So what kinds of problems do warranty companies run into?

The most common issue is when people assume certain things are covered, when, in fact, they aren't; or they fail to contact their home warranty company before making repairs. So, the lesson to be learned here is that it's important to read and understand the warranty contract thoroughly in order to ensure that you're covering all of the bases. You can also contact me directly with any questions!

It certainly sounds like home warranties are important!

They most certainly are! Warranties protect all parties involved in a home sale transaction. They protect buyers and sellers from unexpected expenses that can end up burning holes in their pocket. Because buying a home is such a big investment, and probably one of the most important purchases you'll ever make, it's imperative to work with professionals, from your Realtor, to the inspector, to the home warranty company.

Short Sale vs. Foreclosure

We get a lot of questions about short sales, so I thought I would share some information this morning. A short sale is when the bank allows a payoff "short" of their lien amount in order to get the home sold. I appreciate the allure of the short sale from a buyer's perspective, in that you can often get a great deal on a home. However, we also have to remember that a short sale can be a very long, drawn-out process. We jokingly refer to them as "long sales" because bank approval on offers sometimes takes weeks, and usually months, of waiting. It's even possible you may not receive any response from the banks, especially if you really low-balled your offer. So you have to be patient,a and wait it out, and not be in a hurry to move.

What if a seller is in financial trouble? Why should they go through a short sale, and endure a foreclosure?

The primary benefit of going the short sale route is that typically with a foreclosure, the bank will pursue a deficiency judgment against you for the unpaid balance of the mortgage. With a short sale, your debt is often forgiven, and the seller will also avoid the devastating effects on their credit that comes from a foreclosure. A short sale damages your credit, a foreclosure destroys it.

So what all goes into buying or selling a short sale?

Most importantly, you need agents on both sides of the deal that are knowledgeable in the short sale process. If they don't have experience, the sale will be compromised and could end up falling through. As an agent with a lot of experience in working with short sales, I can tell you that it is imperative to have someone representing you that knows how to do the job. In all reality, your success in a shorts ale deal is almost 100% dependent upon the ability of your agent. They should know how to deal professionally with the banks, as well as the other agents. But remember, even experienced agents like myself are, unfortunately, still at the mercy of bank employees. As a short sale expert, please call me today so we can help you get your home sold quickly or find you the right home!

Technology in Real Estate

What are some helpful facets of technology you can share with us today?

I am constantly working, and don't have time to waste on things that don't function efficiently for my clients or my team. When I think of using futuristic gadgetry, I envision things that are simple and uncomplicated, yet flexible and powerful enough to perform the way they promote themselves and to fit in with my high-performance lifestyle. There are many, many apps and websites out there to choose from, and I wanted to share the ones that my team and I utilize. Today, I want to discuss the websites.

What are great websites for buyers?

The Multiple Listing Service, or MLS, is accessibly only Realtors, but there are other websites that pull directly from the MLS using what is called an IDX feed, such as Realtor.com and Homes.com. When people think of online websites, typically the first ones pop up are Trulia and Zillow, being two of the most popular sites out there. If I didn't say what great exposure they can be for sellers and prospective for buyers, I would be lying. However, these are often terribly inaccurate; know that you can always call our team for up-to-the-minute accurate information on homes. As a buyer, we can set up an up-to-the-minute, personalized portal of homes available straight to your inbox for FREE.

Listing Activity Report

What do you have for sellers?

For our clients, we utilize an electronic signature system which you have heard of, Docusign, so that no matter where you are, we can have you sign an offer (or Counter Offer) within minutes. There is also my Listing Manager's favourite: ShowingSuite.com, that is linked to the lockbox in place on your home. Every time that lockbox is opened, it sends an email informing you, as well as our team, about the showing, and when the showing agent's feedback is submitted, it's sent unedited to our seller's email. My personal favourite is one that only those under the Prudential umbrella can use, what we call the Listing Activity Report. Every week, we send a personalized comparative market analysis, showing how many people have searched for your home, how many homes in your area just came on the market, amongst other helpful information. This is a sample of the technology that we offer our clients, and I will report on other application in the future.

Listing Activity Report

Buyer & Seller Mentality

How is the spring market?

With the spring market in full swing and the strong activity we’ve been seeing lately, I wanted to discuss motivation and mindsets of buyers and sellers as it’s very important for all parties to understand what their goals are and the best way to achieve them. As a seller, if you can get into the buyer’s mindset, the sale of your home can happen faster and for more money.

What, in your opinion, are the most important steps in selling a home these days?

The first step starts with a decision. I often talk to my clients in terms of motivation. So ask yourself: on a scale of 1-10, what level of motivation are you at to sell your home? A three would be maybe next year; 6-7 would be to get the kids in school before August; 9-10, we are relocating to Chicago for a job. Often selling is a hard decision, so this process helps people focus on the decision with more clarity.

What are other factors in selling a home?

Success in selling a home is primarily driven by three factors – the condition of your home, appropriate pricing, and an aggressive marketing plan to generate traffic through the door! My proven aggressive marketing plan can make the difference between a for sale and a sold sign. I just sold a home in 8 days that had been on the market with another company unsold for several months, a clear indicator that the marketing plan is critical to a successful home sale. As the seller, remember that the old cliché of “you only get to make one first impression” definitely applies to selling real estate. With many serious buyers looking right now, you want your home to stand out amidst all of the competition! It’s important to remember that your home is for sale and on open display. Buyers like to see things that are streamlined, clean, and fresh looking. Deep clean and declutter to showcase how beautiful your home can be!

How can sellers achieve their real estate goals by thinking from a buyer’s point of view?

Today’s buyers benefit from historically low interest rates and they still want the absolute best deal on a home! They are focused more on the best value and less on emotional purchasing. They will buy their second choice before paying top dollar for their first choice! By working with an experienced Realtor, like myself, you can ensure that your home makes the best overall presentation. This will give you an upper hand when negotiating on price and other important terms of your home sale. My job is to protect the interests of my clients, from the price war, to the beauty contest, until your home is closed and the cash is in your hand!

Contact Cheryl today at 505-238-3272 or email her at cheryl@cherylmarlow.com!

As always, who do you know that needs to buy or sell real estate today? Thanks!!

Real Estate Contracts - Seller's Viewpoint

Last week we talked about Real Estate Contracts, and today you wanted to discuss them from a seller's viewpoint?

Yes, a real estate contract, or REC, put simply, is a way for the seller to act as a bank for the buyer. In other words, the seller is in effect lending all or a portion of the purchase price for their property to the buyer and accepting monthly payments, including interest, over a period of time. The seller can legally sell on an REC even if they still owe a mortgage on their home.

So what are the seller's responsibilities?

The seller has very little responsibilities if they hire an escrow company to collect the payments from the buyers. An escrow company protects both parties, for a small monthly fee of about $10. The escrow company will collect all the payments, send proceeds to the seller every month, and pay all taxes, and insurance payments, if so directed. They hold the warranty deeds until the property is paid off. In the rare instance where a buyer may default, they also hold the warranty deed back to the seller, thereby eliminating the need for a judicial foreclosure action.

Why would a seller want to sell on a real estate contract?

For the seller, they may be able to sell the property for a slightly higher price, since they act as the bank. This widens the pool of available buyers for their home. Also, the REC option makes the property desirable to more buyer who may not be able to qualify for a mortgage at this time, yet have the ability to make payments. Further, the costs of selling and purchasing a home on an REC are less. This can also provide the seller with a monthly income and the interest rates negotiated are significantly higher than interest rates paid for savings accounts and CD's. Payment terms are typically more flexible than with standard mortgages, and payout dates are negotiable. It is fairly common to see a 5 year due in full clause, where the buyer must pay off the seller entirely in that time frame, either by refinancing or selling the house.

Las week  you spoke about the importance of working with an experienced Realtor, can you delve into that again?

When dealing with REC's, where all of the terms are negotiable, it is critically important to have an experienced REC specialist, like myself, represent you, whether you're in the transaction as a buyer or a seller.

Real Estate Contracts - Buyer's Viewpoint

You wanted to talk today about buying a home on a real estate contract, can you tell us what that is?

The first thing to know is that we call them REC's. A real estate contract put simply is a way for the seller to act as the bank for the buyer. In other words, the seller is, in effect, lending all or a portion of the purchase price for their property to the buyer and accepting monthly payments, including interest, over a period of time.

Does the buyer have to qualify?

The buyer does not have to qualify, however most sellers will review the credit report. It is much easier than qualifying for a mortgage and many sellers will take a chance on someone with poor credit, especially if they have a good explanation.

Why would a buyer want to buy on a real estate contract?

For a buyer with little, bad, or no credit, it may be the only way they can purchase a home. It may not be a credit issue. They may be self-employed or in a new job, or other reasons that make qualifying at the bank difficult or impossible. Another reason is that the terms and the down payment are negotiable between buyer and seller. And since you are buying the house you get the tax deduction for the home ownership.

Sounds a little complicated, have you done a lot of these real estate contracts?

Yes, I have, both for clients and for myself as buyer and seller. When I started selling property 27 years ago, they were very popular. When financing became so easy they almost went away. As lending requirements have become more restrictive, REC's are back and more popular than ever!

Obviously, it is important to deal with an agent like you has lots of experience in these. Do you have a property to tell us about that the owner will finance?

Yes, I do! I have homes available with owner financing starting at $150,000 up to $1,250,000 in many locations in the Greater Albuquerque Area!