Many real estate investors buy and sell real property as a means to generate a positive cash flow. This can be a lucrative addition to any financial portfolio, but as with any investments, there are risks involved. One of the more difficult choices is deciding how much to try and sell the home for, or how to devise an accurate listing price for the real estate that is being sold.

The first thing that comes to many minds is the county tax appraisal. While this appraisal may seem as good a place as any to discover the cash value of a real estate investment, it will not always give an accurate picture of current trends in the local real estate market. The property taxes often reflect only general amounts and will not give a clear view of what type of real estate pricing the local market will withstand.

Another popular option is the property appraisal. While most lending institutions require the homebuyer to get a property appraisal, it is rarely necessary for the current homeowner to spend the money in order to get this appraisal done. While this is a viable option, it is an added expense in the already costly field of real estate investments.

Allowing a qualified Realtor to make set the listing price may or may not be a good idea when selling a home. If the Realtor is intelligent, has great information and is highly qualified and honest, then they may indeed be able to offer good insight into the listing price of the house for sale. Many times, the Realtor may not be so well informed however, or they may be among those who will put their personal interests above the needs of the client or seller.

Checking out the prices of other real estate values in the same general area is always a good indicator of what is available on the local market and the price ranges that are likely to be paid for a house by a real estate investor. There may still be unforeseen circumstances that the homeowner is unaware of resulting in inaccurate listing prices being published, which will ultimately be detrimental to a quick and easy real estate sale.

When most, or even all of these factors are considered equally for a prime piece of real estate, a more accurate understanding of what exactly mandates the fair local market value of a home will result. This will allow the homeowner to objectively look at all of the relevant information and come up with an asking price that is both fair and reasonable.

Real estate investment is a financial transaction much the same as any other for any portfolio. The only difference is in the physical existence of the real property instead of an intangible stock or bond. As with any financial investments, it is necessary to look at all of the facts that are available in order to be able to make sound investment decisions whether it is for buying or selling the investment in question.

Is one of your New Year’s Resolutions to move into your own home in 2013? One of the keys to making the home-buying process easier and more understandable is planning. In doing so, you’ll be able to anticipate requests from lenders, lawyers and a host of other professionals. Furthermore, planning will help you discover valuable shortcuts in the home-buying process. Follow these steps to achieve your goal of home ownership in 2013.

Resolution #1: Decide What You Want
Let’s start with the fun part. The first step is to decide what you are looking for. You need to determine the what, where, and when of your purchase. What kind of house are you looking for? Where would you like to live? When would you like to buy? Spend a lot of time thinking about this, a new home is a serious commitment and you want to choose somewhere where you can happily live for several years.

It can be helpful to write down all the information you have gathered. Be sure to take note of other important factors such as whether or not you hope to expand your family or if you plan to remain at your job for a long period of time. Consider such things as pricing, location, size, amenities (extras such as a pool or extra-large kitchen) and design (one floor or two, colonial or modern, etc.). You may want to order your priorities so that you will be prepared to make difficult decisions quickly.  If you can’t get a home at your price with all the features you want, then what features are most important? For instance, would you trade fewer bedrooms for a larger kitchen? How about a longer commute for a bigger lot and lower cost?

Resolution #2: Get Your Financial House in Order 
Once you have an idea of what you are looking for it’s time to get realistic and determine what you can afford. How much do you have available for a down payment? What is your monthly budget for a mortgage payment? Do you have money for closing costs and taxes? Is your financial house in order?  Few people can buy a home for cash. According to the National Association of REALTORS® (NAR), nearly nine out of 10 buyers finance their purchase, which means that virtually all buyers — especially first-time purchasers — required a loan. You should start the mortgage process before bidding on a home. By meeting with lenders — either online or face to face — and looking at loan options, you will find which programs best meet your needs and how much you can afford.

Resolution #3: Get Your Pre-Approval Before House Hunting
“Pre-approval” means you have met with a loan officer, your credit files have been reviewed and the loan officer believes you can readily qualify for a given loan amount with one or more specific mortgage programs. Based on this information, the lender will provide a pre-approval letter, which shows your borrowing power. You can visit as many lenders as you like and get several pre-approvals, but keep in mind that each one carries with it a new credit check, which will show up on future credit reports.

Although not a final loan commitment, the pre-approval letter can be shown to listing brokers when bidding on a home. It demonstrates your financial strength and shows that you have the ability to go through with a purchase. This information is important to owners since they do not want to accept an offer that is likely to fail because financing cannot be obtained. The loan officer will carefully review your financial situation, including your credit report and other information. The lender will then suggest programs which most-closely meet your needs.

Resolution #4: Find Your REALTOR®
Buying and selling real estate is a complex matter. At first it might seem that by checking local picture books or online sites you could quickly find the right home at the right price. But no two properties — even two identical models on the same street — are precisely and exactly alike. Homes differ and so do contract terms, financing options, inspection requirements and closing costs. In this maze of forms, financing, inspections, marketing, pricing and negotiating, it makes sense to work with professionals who know the community and much more.

The best place to find a local REALTOR® is from REALTOR.com’s® extensive listing of community professionals. In the Find A REALTOR® section you can browse profiles, read recommendations, and even use your Facebook identity to find a real estate professional with whom you share friends or interests.  Other sources include open houses, local advertising, recommendations from neighbors and suggestions from lenders, attorneys, and financial planners. You may want to interview several people before selecting one professional with whom to work. These interviews represent a good opportunity to consider such issues as training, experience, representation and professional certifications.

Resolution #5: Find Your New Home 
Now we are back into the fun stuff. A home is more than just a collection of bedrooms and bathrooms. Several properties — each with four bedrooms, three baths, and the same price — may well represent radically different designs, commuting distances, lot sizes, tax costs, interior dimensions, and exterior finishes. Here’s where the information you gathered in Resolution #1 comes into play. You already know what you want.

Some buyers like to search REALTOR.com® by looking at listings on the basis of location or price; others prefer to have local REALTORS® suggest properties; and many buyers prefer both approaches. Maintain a file with information on each of the homes you like either online, in the REALTOR.com® mobile app, or in a notebook or folder. How do you know if a house is THE one? Probably the best approach is to look at as many homes as possible.

Resolution #6: Understand Your Mortgage Options
Financing is routinely greater than the original purchase price of a home (after including interest and closing costs). Because financing is so important, buyers should have as much information as possible regarding mortgage options and costs.

How much down? Loans with 5 percent down or less are available — in fact, loans from major lenders with no money down have appeared in recent years. If you place less than 20 percent down, lenders will want the mortgage guaranteed by an outside third party such as the Veterans Administration (VA), the Federal Housing Administration (FHA) or a private mortgage insurer (PMI, or private mortgage insurance, is required by lender to protect against any mortgage defaults).

The best rates and terms are only available to those with solid credit. To get the best loans, make a point of paying credit cards, installment payments, rent and mortgage bills in full and on time.To obtain a loan you must complete a written loan application and provide supporting documentation. Specific documents include recent pay stubs, rental checks and tax returns for the past two or three years if you are self-employed. During the pre-qualification procedure, the loan officer will describe the type of paperwork required. Mortgage financing can be obtained from mortgage bankers, mortgage brokers, savings and loan associations, mutual savings banks, commercial banks, credit unions, and insurance companies.

Resolution #7: Make An Offer

Once you have found a home you want to make an offer on you have three choices: accept the listed price and create a contract; reject it and not make an offer; or suggest different terms and make a counter-offer. If you choose this last option, the seller may accept, reject or make a counter-offer. You sometimes hear that the amount of your offer should be x percent below the seller’s asking price or y percent less than you’re really willing to pay. In practice, the offer depends on the basic laws of supply and demand: If many buyers are competing for homes, then sellers will likely get full-price offers and sometimes even more. If demand is weak, then offers below the asking price may be in order. The process of making offers varies around the country. In a typical situation, you will complete an offer that the REALTOR® will present to the owner and the owner’s representative.

A number of inspections are common in residential realty transactions. They include checks for termites, surveys to determine boundaries, appraisals to determine value for lenders, title reviews and structural inspections. During these examinations, an inspector comes to the property to determine if there are material physical defects and whether expensive repairs and replacements are likely to be required in the next few years.  This is an opportunity to examine the property’s mechanics and structure, ask questions and learn far more about the property than is possible with an informal walk-through.

Resolution #8: Protect Yourself With Insurance
No one would drive a car without insurance, so it figures that no homeowner should be without insurance. Title insurance is purchased with a one-time fee at closing, title insurance protects owners in the event that title to the property is found to be invalid. Coverage includes “lenders” policies, which protect buyers up to the mortgage value of the property, and “owners” coverage, which protects owners up to the purchase price. In other words, “owners” coverage protects both the mortgage amount and the value of the down payment.

Homeowner’s insurance provides fire, theft and liability coverage. Homeowners’ policies are required by lenders and often cover a surprising number of items, including in some cases such personal property as wedding rings, furniture and home office equipment. In high-risk flood-prone areas, flood insurance may be required. This insurance is issued by the federal government and provides as much as $250,000 in coverage for a single-family home plus $100,000 for contents.

For new homes, home warranties bought from third parties by home builders are generally designed to provide several forms of protection: workmanship for the first year, mechanical problems such as plumbing and wiring for the first two years, and structural defects for up to 10 years. Home warranties for existing homes are typically one-year service agreements purchased by sellers. In the event of a covered defect or breakdown, the warranty firm will step in and make the repair or cover its cost.

Resolution #9: Close On Your New Home
The closing process, which in different parts of the country is also known as “settlement” or “escrow,” is increasingly computerized and automated. In many cases, buyers and sellers don’t need to attend a specific event; signed paperwork can be sent to the closing agent via overnight delivery.

Settlement is a brief process where all of the necessary paperwork needed to complete the transaction is signed. Title to the property is transferred from seller to buyer. The buyer receives the keys and the seller receives payment for the home. From the amount credited to the seller, the closing agent subtracts money to pay off the existing mortgage and other transaction costs. Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices.

Before closing, buyers typically have a final opportunity to walk through the property to assure that its condition has not materially changed since the sale agreement was signed. At closing itself, all papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests. For instance, buyers get the title to the property, lenders have their loans recorded in the public records and state governments collect their transfer taxes.

Resolution #10: Tie Up Loose Ends
You’ve done it. You’ve looked at properties, made an offer, obtained financing and gone to closing. What’s next?

Those papers you received at settlement are extremely valuable, so hold on to them! In the short-term they can help establish tax deductions for the year in which the property was purchased. In the future, such papers will be important for tax purposes when the property is sold, and in some cases, for calculating estate taxes.

Also at closing, determine the status of the utilities required by the home, items such as water, sewage, gas, electric and oil service. You want utility bills to be paid in full by owners as of closing and you also want services transferred to your name for billing. Usually such transfers can be done without turning off utilities. About two weeks after closing, contact your local property records office and confirm that your deed has been officially recorded. Such records are public notices that show your interest in the property.

When you move in, you may want to replace all locks just to be safe. Many owners make a photo or video record of the home and their possessions for insurance purposes and then keep the records in a safety deposit box. Your insurance provider can recommend what to photograph and how to secure it. You want to maintain fire, theft and liability insurance. As the value of your property increases such coverage should also rise.

Enjoy your home. Owning real estate involves contracts, loans, and taxes, but ultimately what’s most important is that home ownership should be a wonderful experience.

For more information on home buying and more check out the Home and Garden section on Realtor.com.

Related posts:

1. I Declared Bankruptcy Almost Two Years Ago, Can I Qualify To Buy A Home?
2. If I Pay For A House In Cash What Other Additional Charges Will I Face?
3. What Can I Do About A Title Insurance Problem?
4. Is A VA Loan Your Best Mortgage Option?
5. Can We Get Approved For A First Time Home Buyer Loan In Texas?

The Process

Real estate is one of the biggest investments most people make in their lifetime. The Santa Clarita real estate market demands high levels of skill, proficiency and knowledge. Whether you are eager to buy your first home, sell, looking to invest or even relocate to the area it is important to become informed about the Santa Clarita real estate market.

Buying a Santa Clarita home is a very personal venture but it doesn’t have to be intense. Looking for a home can be a fun and exciting occasion. It is a time of discovery and a time when people begin building their dream home in the wilds of their imagination. Selling a Santa Clarita home can be just as advantageous. In a seller’s market, sellers sometimes have the benefit of multiple offers above list price! Exceptional guidance is the key to providing people with a gratifying experience.

This complete online kit offers extensive information, tools, and expert advice to help you make knowledgeable decisions in all your Santa Clarita real estate dealings. Learn about first time home buying, investment properties, how to make an offer, types of loans, mortgage rates, relocation assistance, preparing your home for sale, pricing your home properly, area schools, and additional buyer/seller tips.

If you are receiving my month foreclosure report you are noticing the overall “available” homes for sale decreasing combined with the number of closed sales decreasing.

This is a common trend we see year after year during the Holiday months.   However, there are many factors which will make 2012/20130 worth analyzing, especially before making any conclusions.  How many “active” listing are available on the market?  Of the active listing, which one’s are Standard sales, Short Sales or Bank owned homes?  What is the buying public doing right now??  Are they paying full price, above full price on their bids?  Are they making offers below the asking price?

If you follow my charts below you we see a trend.  One important indicator which suggest prices are going up will be found under the “Above or at List Price”.   Here is how the calculation is completed.   Take the total number of properties sold under the “list or above list price” column and divide it by the “total Closed” column.   Example:     172 DIVIDED BY 252 =68%.

As I predicted last month, this number would increase.  What this means to you and I, is basically prices will increase into 2013.  Earlier this year when sales where sluggish, we saw 4 out a 10 properties selling at list or above list price.   This is one indicator (out of many) which is used to determine where prices are heading.  Long story short, the number of standing homes for sale is at a 20 year low and the percentage of properties selling at full price or more are increase.  This will be the most aggressive 4^th quarter we will see in a long time to come.