Residential Real Estate and Portability (FILING DEADLINES EXTENDED)

Posted on 07/12/2022 by khaniauerbach

Portability (FILING DEADLINES EXTENDED)

Portability allows eligible property owners to pay less property taxes at their newly homesteaded property by transferring all or a portion of the Save Our Homes (SOH) savings from one Florida property to another Florida property, within a strict time frame allowed by law. If you qualify, Portability allows for a reduction on your property’s assessed value, resulting in tax savings this year and possible tax savings in future years, depending upon the market value of your home each year.

Portability applies to both upsizing and downsizing in property value, based upon specified formulas. The intent of Portability is to encourage Florida homeowners to stay within the State. Portability may be used an unlimited number of times and may be used for moves to anywhere within Florida. Portability does not require you to sell your previous home, but merely that the Homestead at your prior property be fully abandoned.

Most homeowners will have already applied for Portability when completing their Homestead Exemption application. Portability is only reflected on our website’s property record page the first year for which it is approved.

Effective tax year 2021, a property owner who applied and was approved for Homestead Exemption for 2021 is eligible to apply for Portability if the property owner held a Homestead Exemption at a previous Florida home in one of the three previous tax years. Example: if you established a new Homestead in tax year 2021, you must have held Homestead at your prior residence in tax year 2020, 2019, or 2018 in order to take advantage of potential Portability savings.

PLEASE NOTE: Homesteads established in tax years 2008 through 2020 are eligible for Portability if the property owner held Homestead Exemption on a property in the previous two tax years (the law was changed in 2021 to allow three years before any Portability savings expired). Example: you established Homestead on your property in 2014 but forgot to file for Portability, you may be eligible if you held a previous Homestead at another Florida property in tax year 2013 or 2012.

You can apply this year by completing the Transfer of Assessment Difference Form found on the Broward County Property Appraiser’s website https://web.bcpa.net/bcpaclient/#/Download-Forms by the September 19, 2022 exemption filing deadline. If you have any questions, please contact the BCPA Customer Service Department at 954-357-6830 or by email at Portability@bcpa.net

DO NOT FEAR, REMOTE ONLINE NOTARIZATION IS HERE!

Posted on 03/26/2020 by khaniauerbach

It’s two days before closing simultaneous real estate transactions. You’re finally moving up from that townhouse into a single-family home. You travel all over the world for work and now, you’re in Budapest finishing up a project, when you find out that, due to the Novel Coronavirus (COVID-19), International travel has been suspended. You cannot possibly make it to an embassy to get the docs properly executed in time because the Embassies are all open for urgent matters only. If you don’t complete the transactions, you will lose a deposit of $30,000. What do you do?

On January 1, 2020, Florida’s legislation on using audio/visual technology to notarize documents became effective. This is very useful legislation that provides notary execution alternatives, allowing buyers and sellers to have their signatures notarized wherever they are in the world.

The Florida Statues now permit specially licensed Remote Online Notaries “RON”s, to use audio/visual technology to notarize documents. This is a process where the signer/consumer is no longer required to be “physically present” before the Notary in order to properly execute and notarize a document. This new alternative to getting docs executed allows them to be signed and notarized, digitally, all without requiring the Consumer and Notary being physically present in the same room. This new alternative provides incredible options for Consumers who are international or out-of-state.

So, here you are, thousands of miles away from Florida and you need to get this transaction closed or you will lose $30k. Find a Remote Online Notary and your problems will be solved! But, you’re not sure what that even means or how to even find a RON. As the title implies, do not fear…both partners at Khani & Auerbach are now Remote Online Notaries!

Just like any process that is governed by legislation, there are rules the RON must follow:

(1) The RON must be physically in Florida but signers, referred to as “consumers” or “principals” or any witness to a principal may be anywhere in the world;

(2) The RON must record the audio-video conference using real-time, two-way communication by electronic means where participants are able to see, hear, and communicate with one another;

(3) At the commencement of the recording, the RON must clearly advise the Consumer/Principal that the RON will be notarizing;

(4) Provide a description or identification of the records to be signed;

(5) Ask where the Consumer/Principal is currently located? If the Consumer/Principal is not in Florida, confirm that they want the notarization performed by a Florida Notary and under Florida law;

(6) Confirm the Consumer/Principal’s’ identity by either: attesting to personally knowing the signer; or from the signer: (i) remotely presenting a government issued ID and confirming their identity; and (ii) passing a “credential analysis” (where a third party verifies the government-issued ID’s validity); and (iii) passing an “identity proofing” (where a third party verifies the signer’s identity through questions or via biometric verification); and

(7) Obtain a declaration from the signer that their signature is knowingly and voluntarily made.

Consumer/Principal’s Identity Verification:

If the Consumer/Principal is not personally known to the RON, the Consumer/Principal must go through what’s called Knowledge Based Authentication (KBA), a process very similar to that of financial institutions used to verify a consumer’s identity. The questions are drawn from various data bases, including your individual credit and public information collected about you from the internet. The Consumer/Principal is provided with five questions, drawn from both public and/or proprietary data sources, and must, within two minutes, correctly respond to four out of five questions.

Each of the five questions provide five possible answer choices per question. If the Consumer/Principal fails to respond correctly to 80% of the questions, then the Consumer/Principal will be offered one more additional opportunities to complete another set of KBA questions and during that attempt, the Consumer/Principal is limited to being asked with more than three (3) questions from the prior attempt. Should both attempts fail, there is a 24-hour waiting period in which you must wait before you able to get another opportunity to go through the identity verification process.

Once the government issued identification and identity verification have been confirmed, you will connect via audio/video with the RON. The RON will probably ask the following questions before the signing, Who is in the room with you? Are you under the influence of any drug or alcohol today that impair your ability to make decisions? Do you have any physical or mental condition or long-term disability that impairs your ability to make decisions?

You might be wondering what to do if a document requires witnesses. There are a few options. The witness can either be physically present with the Consumer/Principal or can also be present using the audio-video technology (in other words, be in the room with the RON). If the witness is not present with the Consumer/Principal then, (1) the RON must verify the witness’ identity; (2) the witness must hear the Consumer/Principal say “I have signed the electronic record”; (3) the witness must verbally confirm they are a “resident of and currently physically located in the US or its territory.”

After all the formalities of signing have been complete, the RON will then use an electronic notary seal, identifying the RON as an “online notary.” All the documents where the RON has acknowledged and signed will contain an electronic notary stamp, similar to that which you may be familiar with. The notary process will then be complete.

The RON will then be able to provide electronic copies of the given series of related electronic records, if requested by: (a) A party to the electronic record, or (b) In real estate transactions, the title agent, settlement agent, or title insurer who insured the electronic record or engaged the online notary public with regard to such transaction.

BEFORE you can take advantage of the RON process, you must ensure that you meet all the system requirements. The checklist below explains what you need to optimize your experience during the scheduled RON eClosing.

(1) Login information and 6-digit PIN: The RON will send you an invitation which will include a link to create your profile and the PIN.

(2) Valid Identification: You will need to have a valid state-issued ID, Driver’s License, or government-issued passport.

(3) Smartphone with both text message and camera capabilities: During the process, you will be required to take a picture of your ID (in Landscape mode) during the RON eClosing session.

(4) Computer/Laptop with working camera, microphone, and speakers: Cell phones and tablets (such as iPads) are NOT COMPATIBLE with RON. Hybrid tablets (like a Microsoft Surface Pro) are the exception and are compatible when using Google Chrome.

(5) Latest version of a compatible web browser and Windows 8.1 or higher: While Google Chrome, Mozilla Firefox and Microsoft Internet Explorer are all compatible, we are finding that Google Chrome works best.

(6) Strong, uninterrupted internet connection with minimum 15 MBPS download/upload speed for an optimal experience: The most important aspect of this process is having a strong internet connection. If the process gets interrupted at any point, the identity verification process will have to restart from the beginning. FIND THE BEST INTERNET CONNECTION!

Remember, when you purchase, refinance, sell, or obtain a home equity loan/line on a home, signing the closing documents is one of the FINAL steps in the transaction. Traditional closings have required in person, wet signing of large amounts of paper documents. With Remote Online Notarization, we can now “meet” online to electronically sign and notarize your closing documents.

At Khani & Auerbach, we are dedicated to providing as much information to assist you in becoming a home buyer. Please be sure to follow us on Facebook, Twitter, Instagram and LinkedIn and for additional useful information.

APPRAISALS…..WHAT ARE THEY GOOD FOR?

Posted on 06/21/2017 by khaniauerbach

REVEALING THE MYTHS OF THE HOME APPRAISAL

You are so excited because someone finally made an offer on your home and you ACCEPTED! You have been working so hard to sell your place and now, since the contract has been fully executed, you can sit back and relax while the Buyer does their thing. WRONG. You can’t just sit back and relax, just yet. You still have an appraisal to worry about. In most cases, Buyers won’t come to you with a wad of cash and say, “I want to buy your house.” A majority of the residential real estate transactions are financed and the bank, well, they are the Buyer’s partner and as such, they want to make sure they get their full value. So what about that appraisal?

Lenders will often require the use of their own, FHA-approved appraiser. What does that mean for the Seller? Basically this….you have absolutely no say in who determines the financial value of your home. The home you have nurtured, put your entire life savings into and built relationships in.
In this article, I include things that Sellers can do to help them get through this process.

1. THE APPRAISER IS NOT A MAGICIAN
If you think the appraiser can determine the value or worth of your home upon entry, think again. They don’t. Once you have a clear understanding of the appraisal process, you can understand the home’s value determination.
Initially, the appraiser will compile a list of comparable listings in the area where your property is located, what we lovingly refer to in the biz as “comps”. Comps can be someone’s dream come true or possibly a nightmare, depending on how they are compiled. You would hope that the homes being used in the comps are homes similar in location, square footage and style that have been sold within the past few months. After pulling the comps, the appraiser will then do a physical inspection of the home to determine its quality and condition. In an effort to make the most accurate assessment, the appraiser will also take in to account other factors that may affect the home’s value. Keep in mind, this won’t be immediate and could take a few days to complete.

2. STAGING, STAGING, STAGING
If there was ever a reason to clean your house, this is a perfect one. The appraiser is not judging you on cleanliness, but clear away the clutter, clean the floor and do what you can to make the home presentable. More than likely, your home won’t be devalued due to a mess, but staging (organizing and decluttering) may help. Be sure the occupants of the home are prepared when the appraiser shows up. This includes the reclusive teen’s room.

3. PREP YOUR PAPERS
Beat the appraiser to the punch and send any information you have about the house to the appraiser BEFORE they arrive. The lender or broker may ask for this information, but be prepared.
Prepare a list of major improvements (with their permits attached), detailed information about the condition and age of the roof, plumbing, air conditioning and major appliances. Appraisers do not appreciate surprises and if they see an improvement that hasn’t been supported by documentation, they will get concerned and the values will not be accurate. Full disclosure will serve you well.

4. DON’T PUT ALL YOUR EGGS IN THE HOME IMPROVEMENT BASKET
Sure, your recently renovated kitchen is fabulous, but don’t take it personally when it doesn’t proportionally increase the home’s market value.
Folks in the biz will tell you that only a fraction of what you may have invested or spent may add value to the house. So, if you are looking for a large ROI from your improvements, don’t be disappointed when the ROI is not as large as you initially expected. This expectation applies doubly for a new pool. Depending on what kind of climate you live in, the pool addition may or may not bring as much value as you had hoped for.

5. DON’T BULLSH*T ON FACTS THAT CAN BE CONFIRMED
Before even listing a property, be sure that you and your real estate agent take a realistic snapshot of what the home actually offers. What are you including in the square footage total. Is it really there or are you just making it up? If you hope that no one will notice that the roof is not actually new, think again. Even if the appraiser doesn’t notice, a subsequent inspection will. Be real about numbers. Puffery will get you nowhere.
In South Florida, it’s even more difficult to fudge the numbers because they exist online at the Property Appraiser’s website and they are typically accurate. If you think nobody will notice, think again. And the appraiser, well he or she will definitely notice and it won’t help you.

At Khani & Auerbach, we are doing our very best to remain at the forefront of the real estate market. We will continue to educate ourselves, our clients and real estate professionals. If you have any questions, please feel free to ask us!

AVOID A FAIL IN YOUR SALE

Posted on 01/13/201701/13/2017 by khaniauerbach

2017-01-04-23-45-38 — Photo by Khila L. Khani, iTakeGr8Pics.com

Most discussions about real estate transactions concentrate on the needs of the Buyer. However, Sellers have needs, too! Lately, the residential real estate industry has experienced a slight increase in transactions falling apart. The majority of transactions failing to close seem to be limited to homes that are of lower value and/or older homes. There are steps that Sellers can take to avoid a transaction from “blowing up”. Here are a few tips to assist on ensuring the transaction makes it to the closing date:

1. AVOID THE UNQUALIFIED BUYER: While most Florida real estate contracts provide a “loan contingency,” the failure of the Buyer to qualify for a loan AFTER the contract is signed can be very frustrating for the Seller. To avoid this frustration, we recommend that the Seller request a Pre-Qualification letter and in some instances, proof of funds, to give them additional assurances that the Buyer is capable of getting the funds to close.

2. GET AN PRE-CONTRACT APPRAISAL: As the Seller, sometimes it is difficult to accept a price that is recommended by a Realtor. Often times, Sellers believe their property is worth more than it really is, and therefore they set the sales price higher than the market value. Pricing your property too high can sometimes prevent qualified Buyers from looking at your property. Also, once the property is under Contract, the Buyer’s lender will order an appraisal and you, the Seller could be surprised by the result. Surprises are fun when they are related to a party, but not when you are trying to sell your home. We highly recommend that you obtain what’s called a “Pencil Appraisal” to give you an idea of what your property is worth, before you put the property on the market.

3. CONDUCT A PRE-CONTRACT INSPECTION: Most real estate contracts provide the Buyer with an opportunity to inspect the property immediately after signing. This opportunity to inspect is limited to a certain period of time, usually 10-15 days after the contract is executed. When a Buyer inspects the property, their inspection might reveal defects, damages and issues to which the Seller had no knowledge. However, a Pre-Contract inspection from a licensed inspector will help you avoid surprises that might be revealed by the Buyer’s inspector. The Pre-Contract inspection will permit you discover and make necessary repairs before they are brought to your attention by the Buyer’s inspector. This will lessen the probability of a deal falling apart due to the condition of the house.

New Mortgage Disclosures Expected to Delay Real Estate Closings

Posted on 09/29/2015 by khaniauerbach

Our sincerest apologies for not having provided you with new content in such a long time, but we have been working tirelessly on becoming prepared for the changes ahead! In just a few short days, federal laws will be implemented that will affect the way homebuyers finance their mortgages in real estate transactions. The Consumer Financial Protection Bureau created “TILA RESPA Integrated Disclosure,” known in the industry as TRID, and TRID implementation begins on Saturday, October 3, 2015. Most, if not all, of the experts in our industry agree that these changes could increase the time to close on purchases by at least double. Take note, these changes do NOT affect all-cash or commercial transactions. Furthermore, the implementation of TRID will only affect loan applications that are taken on residential purchases that are financed ON or AFTER Saturday, October 3rd. So, if you are able to squeeze in a loan application before that date, you will avoid being subject to these changes. Our local colleague, Gary M. Singer, outlines all these changes and we have reposted his article originally published in the Sun Sentinel, below:

Sept. 25, 2015

By GARY M. SINGER Sun Sentinel – Tribune News Service

Big changes are planned for how homebuyers finance their mortgages, and that almost certainly means that closings will take longer. In some cases, closings that now speed through in 30 days probably will require at least 60 days.

The changes had been expected to begin in August, but the effective date was pushed back to Oct. 3.

After the housing crash, Congress felt that we needed a better system of mortgage disclosures and procedures so that Americans can better protect themselves and make the best choices when getting home loans.

The Consumer Financial Protection Bureau was created and charged with accomplishing this.

The bureau decided that the four existing disclosure forms required under federal law would be changed into two new, more comprehensive documents — a Loan Estimate and a Closing Disclosure.

These forms are known as the “TILA RESPA Integrated Disclosure,” or more commonly, TRID.

In addition, the closing process was unified so that all 50 states use the same forms and procedures.

Who Do These New Rules Apply To?
They apply to residential properties that include a mortgage as part of the transaction — both sales and refinances.

The rules are designed to protect the buyer/borrower, but they will affect all parties to the transaction.

Lenders are bearing the brunt of ensuring compliance with the new rules, making the lender responsible for getting all of the other parties on board. The rules do not apply to commercial transactions or all-cash deals.

What is Changing?
Buyers applying for loans will get a Loan Estimate (instead of the current Good Faith Estimate) within three days of applying for the loans.

The new form is designed to highlight key terms to enable borrowers to shop around for the best deals. It’s supposed to be user-friendly and almost certainly will be, considering how confusing the current form is.

The Closing Disclosure must be received by the borrower three business days before the closing. If the form is mailed, couriered or emailed, the lender must allow an extra three business days on top of that.

This means that the closing can’t occur for at least six business days after the lender sends out the completed Closing Disclosure.

This is a massive change from the way it is now, when some of the information is still being filled in on the closing day, sometimes even while the parties are sitting at the closing table.

The biggest issue I have with these new forms is that they significantly downplay the importance of getting owner’s title insurance policies, which is money well spent. I can’t think of any situation in which not getting this very important coverage would be a good idea. And I’ve seen many instances in which not having title insurance costs a buyer the home.

K&A note: There are many ways a person can lose their home as a result of not having an Owner’s Policy for Title Insurance. Should you wish to learn what they are, contact us and we’ll share that information with you. It’s certainly not a short list and being uninsured can definitely result in the loss of property.

What do Buyers and Sellers Need to Do?
Closing agents — used to finalizing the process at the last minute to accomplish everyones’ rush to close — now will need to get the final closing information to the mortgage lender at least 10 days before the closing date so that the lender can complete the Closing Disclosure in time to get it out six days before the scheduled closing.

Realistically, to accomplish this, buyers and sellers will need to add three to four weeks to their closing time lines.

To make matters even more confusing, all of the standard purchase contract forms have been recently changed to address the new rules.

That’s causing real estate professionals to learn the new forms.

K&A note: If you are a real estate professional, please reach out to us for guidance on the new forms. We are all in this together and are looking forward to making all future transactions go as smoothly as possible.

Be sure your real estate agents and others on your team are aware of the new information and have been trained on how to deal with it.

Fortunately, the industry seems ready for this change, and there is plenty of training available for those in the business.

About the Writer
Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He is the chairperson of the Real Estate Section of the Broward County Bar Association and is an adjunct professor for the Nova Southeastern University Paralegal Studies program.

The information and materials in this column are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed. Nothing in this column is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.

This article, originally dated 9/25/15, was re-posted from the Sun-Sentinel, distributed by Tribune News Service.

CFPB releases ‘Know Before You Owe’ Shopping Tool Kit

Posted on 04/06/201505/28/2019 by khaniauerbach

The Consumer Financial Protection Bureaus a/k/a the “CFPB” intends to roll out new guidelines and requirements for consumer home loans that will be in effect beginning August 1st of this year. They have kicked off their “Know Before You Owe” campaign by releasing a new toolkit to guide consumers through the process of shopping for a mortgage and buying a home.

“The new mortgage disclosure forms coming in August will help consumers comparison shop for mortgages and avoid surprises at the closing table. We are releasing this toolkit well in advance of the effective date to help the mortgage industry come into compliance with the new rules,” said CFPB Director Richard Cordray.

The toolkit, which can be found here, provides a step-by-step guide to help consumers understand the nature and costs of real estate settlement services, define what “affordable” really means and search for their best mortgage.

The Shopping Tool Kit also features interactive worksheets and checklists, conversation starters for discussions between consumers and lenders, and research tips to help consumers seek out and find important information.

Before the CFPB rule, the law required lenders to deliver two different disclosures to borrowers within three business days of receiving their applications. However, new guidance from the CFPB will now severely restrict how much a final mortgage deal can vary from from the original loan estimate.

In an effort to ensure compliance, the ‘Know Before You Owe’ loan documentation will consist of two new forms: the Loan Estimate and the Closing Disclosure to ensure compliance.

“Taking out a mortgage is one of the biggest financial decisions a consumer will ever make. Our new ‘Know Before You Owe’ mortgage forms improve consumer understanding, aid comparison shopping, and help prevent closing table surprises for consumers,” said CFPB Director Richard Cordray. The CFPB states further that the new documentation is intended to help improve consumer understanding, compare loan offers and avoid closing costs at the table.

At Khani & Auerbach, we are doing our very best to remain at the forefront of these changes. We will continue to educate ourselves, our clients and real estate professionals that we work with in an effort to make these transitions as seamless as possible. Click here for the downloadable .pdf file.

Hey Millennials! Here’s Your Checklist for Buying Residential Real Estate

Posted on 02/27/201505/28/2019 by khaniauerbach

Image by: Khami Auerbach, acrylic on wood

As 2015 has comfortably settled in, we are beginning to notice an increase in the Millennial’s (ages 18-34) becoming first-time home buyers. As rents are continuing to increase faster than incomes can keep up, it should come as no surprise that in 2015, Millennials are choosing to buy real estate rather than rent, as rents in large cities like New York, Chicago, Miami and Los Angles have continually increased since the “great real estate crash” a/k/a GREC of 2008. The GREC left a bad taste in every person’s mouth, and rather than have the confidence to invest in real estate at all, this entire generation basically chose to rent. Yes, this is a generalization, but it’s a generalization based on statistical information from a variety of sources. It would seem that the choice to flee-from-purchase created an overnight demand for rentals causing higher than normal monthly payments, far outside the reach of the Millennials.

During this “supply and demand” situation in the rental market, banks made it more difficult for first-time home buyers to borrow money, leaving them with very few mortgage options and tons of restrictions on down payment resources. The good news is, however, over the past few years, lenders have now relaxed their lending requirements, the real estate market has improved and Millennials are finally seeing the light at the end of the tunnel. They can discard the chains of rent and embrace home ownership.

With these possibilities before them, Millennials can actually buy a residential home. But keep in mind, buying a home is usually largest purchase anyone will probably make in a lifetime. So, before plopping down the down payment on the dream home, we suggest every home buyer do their homework, be prepared and have this handy-dandy 8 item checklist that includes the following: (Click this link, BUYING RESIDENTIAL, to receive concise .pdf handout version of this article. If you are mobile, it will download to your device for easy future reference)

#1 KNOW YOUR CREDIT SCORE

If you don’t already know your credit score, go and find out what it is. You will be better off knowing what your score is BEFORE looking at homes, finding your dream home and later finding out that what you want is not even within your reach. The heartbreak and disappointment can be avoided. Finding out your credit score is also helpful before speaking with lenders. It’s like being prepared for the biggest test of your life. Would you feel good going in unprepared?

#2 GET PRE-APPROVED

After finding out your credit score, but before even looking at properties, get a pre-approval from a qualified lender or mortgage broker. Better to find out what a lender is willing to give you before looking. Find out what you can afford, how much you might spend in monthly mortgage payments, property taxes and insurance BEFORE looking. Again, this avoids disappointment and the epic fail that follows when you find out that you can’t get a loan on a home you fell in love with.
The pre-approval process requires that you submit current tax documentation, typically from the last 2 years, and additional information. During this time, you’ll also have the ability to get an understanding of your spending habits and make an honest assessment of your budget. It may seem like a cumbersome process, but you will appreciate the fact that you did this before a contract is signed. Be sure to go through this process with a qualified mortgage broker or lender. Having clarity on your financial picture will allow you to have clarity about your assets and liabilities and then, you’ll know what you can comfortably spend on a home. In the end, the pre-approval process will result in knowing the amount you are able to borrow and knowing this information before you look at properties will save you a ton of time.

#3-DON’T BUY THE BEST HOUSE IN THE NEIGHBORHOOD

I wouldn’t necessarily recommend that you buy the worst home in the neighborhood, but you definitely do NOT want to buy the best. Buying the best home in any neighborhood puts you at the top of the home-buying food chain. Should you wish to refinance your home in the future, it’s likely that there will be few, or no, comparable sales in the neighborhood that you can use as leverage to obtain the best loan and pull the most equity out of your home. Buying an “average” home in any neighborhood will put you in a better position to see the greatest value appreciation, even over a short amount of time. You may have to put a little TLC into the property, but a little renovation can go a long way. Watch those home-improvement TV shows and you can learn how to invest very little, but get back a lot of value in return.

#4-MAKE A WISH LIST

What do you want? Before you even think about emailing, calling or even texting a real estate agent, put your wish list together. Again, watch those home-improvement TV shows to get an idea of what you want. Remember, KEEP IT REAL and keep your numbers in mind when you are putting this list together. If you know you can’t even afford the home in a gated community with high monthly maintenance requirements, put yourself outside the gate. If you know there are extra costs for living in a community on the water, don’t put the home on the water on your list. Make two lists, name them however your wish. On one list, put the “must haves” and on the other list, put the things you “wish” to have. Be willing to give up the items on “wish” list. Be practical and don’t let this process become too emotional for you. Remember, it’s just DIRT!

#5-FIND A REAL ESTATE EXPERT YOU HAVE CONFIDENCE IN

Yes, the handsome agent on the billboard in front of your office looks good and yes, the gorgeous agent on the bus bench you pass every day is tempting to hire on the spot, but choose your real estate agent wisely. Find out which agent has the most experience in the neighborhood you are looking into. Getting a referral from someone you know and trust is probably the best way to find an agent. Make sure they have patience to explain the process, details and the contract. If they rely upon too many other people for things you expect a realtor to know, you might be better off finding someone else. You will be spending a large amount of time with this person in a very short amount of time. Make sure you like them because you really want to enjoy the process. If they don’t seem that into you, don’t take it personally and move on. If the relationship works out, then you will both benefit. You can search for agents online, but again, the very best way to find an agent is through your own network or a personal referral. You can always check reviews online using services like Zillow, an agent’s own website, their YouTube videos and various search engines, such as Google, Bing or Yahoo.

#6-MEET THE NEIGHBORS

Be a Social Butterfly, get the skinny on the fat and speak to the people in the neighborhood. This process might reveal information about everything you want or need to know, but sometimes, you might find out things you don’t want to know. Like calling a previous employer that has been referred as a resource, however, this may not result in the revelation of any information. But, if you are lucky, you’ll find that person who loves to gossip and maybe, that neighbor can share what it’s like to live in a specific neighborhood.

#7-HIRE AN EXPERIENCED REAL ESTATE ATTORNEY TO REVIEW CONTRACTS BEFORE THEY ARE SIGNED
Before you bind yourself to the largest purchase you will every make during your life, have an experienced and qualified real estate attorney review the real estate contract BEFORE you sign the contract. Unfortunately, once you sign the contract, your ability modify or make changes to the major terms of the agreement are diminished, greatly. We have seen this too many times where a client comes to us AFTER the contract is signed and they wish to make changes. Unfortunately, after the contract is fully executed by all parties, it’s usually more difficult to make changes to the major terms, such as the purchase price. Get a real estate attorney involved early on in the process to avoid any unhappiness later.

#8-GET A HOME INSPECTION AFTER THE CONTRACT IS SIGNED

You can’t really do a physical inspection of the home until after the contract is signed, but this is an integral part of home buying and should be done early on in the process. What is a home inspection? A home inspection is where the potential buyer gets an opportunity to analyze the structure and integrity of the real estate. You may see a visually appealing home on the outside or something with awesome curb appeal, but unless you have a qualified inspector go through the property with a fine-tooth comb, you may never know that the plumbing is failing, the air-conditioner is on its last leg, that the foundation is cracking or that the roof has leaks that are not easily identifiable. A qualified inspector will make every effort to determine the integrity of all the major aspects of the property.

So, after reviewing this checklist, you will be armed with the tools you need to find the right home. But remember, before you sign that contract, let a real estate attorney review the terms to make sure you get what you bargained for. Khani & Auerbach is a law firm with experienced real estate attorneys and we are here to help.

Looking to see the estimated value of a potential real estate purchase or real property you presently own? Check out our partners at Zillow for more information.

Millennials Consider Love, Marriage and Real Estate, Oh My!

Posted on 02/19/201502/26/2016 by khaniauerbach

First comes love, then comes marriage, then comes a mortgage in the baby carriage! While we have traditionally heard that old ditty a different way over the years, traditions change and for many Millennials (ages 18-34) the family expansion has to wait. Not only does the baby have to wait, but for many Millennials, even marriage has to take a proverbial number. Many Millennials are holding off on marriage to save up for a down payment on residential real estate. A recent survey shows that 38 percent of American Millennials said that they would, or have, put off a wedding or honeymoon in order to afford to buy a home. This statistic isn’t very surprising considering that the average American wedding can cost around $30,000. This figure doesn’t even include the honeymoon.

Unfortunately, the decision to hold off marriage before getting a mortgage might be more complicated than the Millennials may have first thought. Take note, I wrote this article to inform, not admonish the reader. I want you to have all the information about making one of the largest investments you’ll probably ever make in your lifetime. Initially, it sounds like it makes more financial sense to put the mortgage ahead of the marriage, but if the relationship goes south between these unmarried Millennials, be sure that divorce is much easier than breaking up real estate encumbered by a mortgage held between two unmarried people. In other words, think before you ink.

Rather than go into the details of how incurring the debt makes financial sense before marriage, if you expect a return on your real estate investment, ensure that your relationship with this significant other can withstand the financial commitment. Here’s an interesting statistic, according to the CDCP, 27.4 percent of couples who co-habitate before marriage break up by the third year of living together. In other words, think before you ink.

UPDATE on 2/20/15:

On 2/19/15, we posted this article about the risks of investing with someone you are romantically involved with before getting married. On 2/20/15, less than a day after posting the article, our office was presented with a legal situation that clearly exposed the pitfalls associated with couples buying residential real estate before marriage. Below are the facts:

In 2012, Boyfriend and Girlfriend purchase a home. They finance the purchase and both are considered borrowers (read: jointly and severally liable for the debt). In other words, both are on the hook for the debt separately and as a couple. Boyfriend and Girlfriend break up and Girlfriend moves out. Boyfriend continues to make payments on the debt and some years later, Girlfriend transfers her interest. The transfer is made to Boyfriend without any money exchanging hands, via Quit Claim Deed, to Boyfriend. Minimum documentary stamp tax was paid upon recording, not documentary stamp tax based upon half the balance of the principal amount remaining on the mortgage, as would be required by the Department of Revenue. There was no refinance or change in liability on the debt.

Fast-forward to 2015, where the Department of Revenue does an audit of the transfer referenced above. The Department of Revenue questions the Boyfriend about the minimum documentary stamp tax and now wants him to pay taxes based on half the balance of the principal amount remaining on the mortgage. This figure requested by the Department of Revenue most probably includes penalties for not paying the correct documentary stamp tax upon transfer. Now, here is a real life situation that probably could have been avoided by being informed of the risks before taking on the mortgage. Technically, it is our opinion that the Department of Revenue is entitled to collect on the unpaid balance of documentary stamp tax, but however you look at it, there is a problem that needs to be addressed. Think before you ink.

Goodbye 2014 and Hello 2015 – Residential Real Estate Predictions

Posted on 12/30/201412/29/2014 by khaniauerbach

Rather than rehash, review and regurgitate 2014, we’ll do something that might be more productive and useful to you. Let’s predict the future and see what we all might anticipate for the residential real estate market in 2015. As most everyone has seen, the real estate market has shown improvement which has been catapulted forward by improvements in the economy, low mortgage rates and reduced inventory. The analysts out there are predicting that this will translate into larger gains for 2015. Everyone has tons of questions, like “What should we expect next? Will there be another real estate boom? Will the real estate market recovery be consistently steadier?” What we can tell you is that the trends from 2014 indicate a better 2015. Here are a few indicators:

1. Low Mortgage Rates: The Federal Reserve did take steps to ease lending, but despite doing this, mortgage rates continue to decline and assisted the home buyers with lowered borrowing costs. The borrower benefits continue with the 30-year fixed-rate mortgage remaining below 4 percent.

2. Economy Improvement: The beginning of the year brought the nation’s harshest winter, but despite this, the economy improved steadily and new jobs were created, resulting in a higher GDP and stronger consumer confidence.

3. Foreclosures and Short Sales Decline: To everyone’s delight, distressed sales that include foreclosures and short sales have significantly declined. The numbers don’t matter, but should you care to know, foreclosures are expected to be reduced by at least 30 percent by 2014’s close.

4. Investors Retreat From the Market: In conjunction with the reduction in distressed sales and increased median home prices, those large scale investors in the single-family market have significantly decreased. This reduction results in less competition from investors, allowing for first-time home buyers to dip their feet into the real estate market.

5. Home Prices Level Out: In 2012 and 2013, we saw some unusually high levels of home prices appreciating and it wasn’t until 2014 that we saw a leveling out of these increases. The present increases in the residential home market are more consistent with “healthy” long-term growth.

With these positive predictions for 2015, there are factors that may interfere to prevent a truly strong recovery:

1. First-Time Buyers Fear: According to the National Association REALTORS®, first-time buyers dropped to the lowest level in nearly 30 years. As we have continued to report over the past few months, however, there are signs of improvement. While these improvements are modest, the next largest home buying market, The Millennials, are starting to think about the residential real estate market. Federal policies for lenders implemented in December resulted in revised lending regulations and lower down-payments from lenders have greatly assisted in first-time home buying confidence.

2. Credit Requirement Inflexibility: Even though the mortgage rates have been historically low, homeowners have seen an inability to borrow on their homes because of lender qualification standards. Therefore, 2014 saw mortgage credit availability come to a screeching halt and did not improve.

3. Inventory is Low: Despite the small increase in inventory of residential real estate, supply did not outweigh demand. As has been reported throughout 2014, the supply of new and existing residential real estate continues to remain below “normal” expected levels.

4. New Home Startups Don’t Increase: 2014 saw that new home sales were still at the levels they were in 2013. Despite this lack of growth, new home prices continued to rise substantially in 2014. The rise in prices might indicate that the increased home prices actually put a wall up on demand.

5. Renting Rules: There continues to be record levels of renting, which seems like a likely result when home ownership continues to remain at low levels. As long as this continues, rental prices will continue to increase.

This will be the last post for the year 2014. All of us at Khani & Auerbach wish you a wonderful New Year and may 2015 bring you everything you hope for in health, happiness and peace.

Khila L. Khani, Esq.