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| Your Toolkit to Prepare for Homeownership |
— Foreclosure Properties
While foreclosures may initially appear to be an appealing homeownership option, it’s also essential to recognize that investing in foreclosure properties is not a simple process. This is a niche market with many subtle but important nuances, requiring considerable specialized knowledge, experience and contacts.
If you decide to pursue a foreclosure purchase, you’ll want to work with an experienced real estate agent who can educate you on the process. He or she can help you crunch the numbers, determine a logical purchase plan, avoid potential setbacks and assist you with all the unique processes and paperwork involved with foreclosures.
— Short Sales
The short-sale buying option is becoming more common in places where homeowners paid higher prices for their homes a few years ago than the homes are currently worth now. Short sales are an alternative to a foreclosure. When the borrower can no longer make the mortgage payments as agreed, he is faced with many decisions. One is to allow the lender to foreclose. Another is to get the lender to agree to accept a payoff of less than the balance owed on the loan.
— Auction Sales
Auctions have become more popular, in part, because property owners recognize that taxes, maintenance, financing and other costs significantly can erode their equity, especially if the property sits idle for many months. Auction sellers effectively can pick their sale date. They also may be sending a strong signal that they’re motivated to sell, depending on the auction method chosen.
As a homebuyer in the auction process, you are able to determine the price you will pay. The seller may set a minimum price, and you will still have to compete with other buyers, but the actual selling price is ultimately set by you, which differs from houses listed for sale through brokerage firms, where the seller sets the price and the rest of the purchase process is about negotiating a sale.
Even though auctions are managed differently than traditional brokerage sales, it’s still a good idea to engage the help of a qualified ABR® or REALTOR®. Your agent can assist you by providing a competitive market analysis and other information that will be helpful in developing your pricing strategy. He or she also can help you review the disclosure package, accompany you to any presale inspections, explain the sales terms and auction procedures, coordinate attorney reviews, assist in prearranging financing and act as your representative in managing transaction paperwork with the auction company.
BUYING REAL ESTATE IN TEXAS
Real estate taxes and laws vary greatly from state to state. If this is will be your first property purchase in Texas, it is best to get acquainted with a few of these common regulations and factor them into your homebuying decisions.
— PROPERTY TAXES
In Texas, property taxes are a local tax —assessed locally, collected locally and used locally. More than 3,700 local governments in Texas, including school districts, cities, counties and various special districts, collect and spend these taxes.
You may learn that several types of local governments can tax your property. Texas counties and local school districts tax all nonexempt property within their jurisdictions. You also may pay property taxes to a city and to special districts, such as hospitals, junior colleges or water districts, also called municipal utility districts (MUDs). MUD is a political subdivision of the state of Texas authorized by the Texas Commission of Environmental Quality (TCEQ) to provide water, sewage, drainage and other services within MUD boundaries.
The governing body of each of these local governments determines the amount of property taxes it wants to raise and sets its own tax rate. Most, but not all, local governments other than counties contract with their county’s tax assessor-collector to collect the tax on their behalf.
— HOMESTEAD EXEMPTION
In Texas, homestead exemptions remove part of your home’s value from taxation so they lower your taxes. A homestead can be a separate structure, condominium or a manufactured home located on owned or leased land as long as the individual living in the home owns it. Here’s how the exemption works. If your home is appraised at $100,000 and you qualify for a $15,000 exemption (this is the amount mandated for school districts), you will pay school taxes on the home as if it were worth only $85,000. Taxing units have the option to offer a separate exemption of up to 20 percent of the total value.
To qualify for the homestead exemption, the home must be your principal residence, and the home’s owner must be an individual, not a corporation. The home also must be your principal residence on January 1 of the tax year. If you are age 65 or older, the January 1 ownership and residency are not required for the exemption. Besides the homestead exemption described here, there are several other types of exemptions you may receive; learn more by visiting www.window.state.tx.us.
— DEED RESTRICTIONS
You may decide to live in a subdivision or a master-planned community with deed restrictions, which appear in the real property records of the county in which it is located. They are private agreements and are binding upon every owner in a subdivision. All future owners become a party to these agreements when they purchase property in deed-restricted areas. That’s why it’s important to review the deed restrictions in a restricted subdivision or community you’re considering so you’re aware of the residents’ obligations and responsibilities.
While foreclosures may initially appear to be an appealing homeownership option, it’s also essential to recognize that investing in foreclosure properties is not a simple process. This is a niche market with many subtle but important nuances, requiring considerable specialized knowledge, experience and contacts.
If you decide to pursue a foreclosure purchase, you’ll want to work with an experienced real estate agent who can educate you on the process. He or she can help you crunch the numbers, determine a logical purchase plan, avoid potential setbacks and assist you with all the unique processes and paperwork involved with foreclosures.
— Short Sales
The short-sale buying option is becoming more common in places where homeowners paid higher prices for their homes a few years ago than the homes are currently worth now. Short sales are an alternative to a foreclosure. When the borrower can no longer make the mortgage payments as agreed, he is faced with many decisions. One is to allow the lender to foreclose. Another is to get the lender to agree to accept a payoff of less than the balance owed on the loan.
— Auction Sales
Auctions have become more popular, in part, because property owners recognize that taxes, maintenance, financing and other costs significantly can erode their equity, especially if the property sits idle for many months. Auction sellers effectively can pick their sale date. They also may be sending a strong signal that they’re motivated to sell, depending on the auction method chosen.
As a homebuyer in the auction process, you are able to determine the price you will pay. The seller may set a minimum price, and you will still have to compete with other buyers, but the actual selling price is ultimately set by you, which differs from houses listed for sale through brokerage firms, where the seller sets the price and the rest of the purchase process is about negotiating a sale.
Even though auctions are managed differently than traditional brokerage sales, it’s still a good idea to engage the help of a qualified ABR® or REALTOR®. Your agent can assist you by providing a competitive market analysis and other information that will be helpful in developing your pricing strategy. He or she also can help you review the disclosure package, accompany you to any presale inspections, explain the sales terms and auction procedures, coordinate attorney reviews, assist in prearranging financing and act as your representative in managing transaction paperwork with the auction company.
BUYING REAL ESTATE IN TEXAS
Real estate taxes and laws vary greatly from state to state. If this is will be your first property purchase in Texas, it is best to get acquainted with a few of these common regulations and factor them into your homebuying decisions.
— PROPERTY TAXES
In Texas, property taxes are a local tax —assessed locally, collected locally and used locally. More than 3,700 local governments in Texas, including school districts, cities, counties and various special districts, collect and spend these taxes.
You may learn that several types of local governments can tax your property. Texas counties and local school districts tax all nonexempt property within their jurisdictions. You also may pay property taxes to a city and to special districts, such as hospitals, junior colleges or water districts, also called municipal utility districts (MUDs). MUD is a political subdivision of the state of Texas authorized by the Texas Commission of Environmental Quality (TCEQ) to provide water, sewage, drainage and other services within MUD boundaries.
The governing body of each of these local governments determines the amount of property taxes it wants to raise and sets its own tax rate. Most, but not all, local governments other than counties contract with their county’s tax assessor-collector to collect the tax on their behalf.
— HOMESTEAD EXEMPTION
In Texas, homestead exemptions remove part of your home’s value from taxation so they lower your taxes. A homestead can be a separate structure, condominium or a manufactured home located on owned or leased land as long as the individual living in the home owns it. Here’s how the exemption works. If your home is appraised at $100,000 and you qualify for a $15,000 exemption (this is the amount mandated for school districts), you will pay school taxes on the home as if it were worth only $85,000. Taxing units have the option to offer a separate exemption of up to 20 percent of the total value.
To qualify for the homestead exemption, the home must be your principal residence, and the home’s owner must be an individual, not a corporation. The home also must be your principal residence on January 1 of the tax year. If you are age 65 or older, the January 1 ownership and residency are not required for the exemption. Besides the homestead exemption described here, there are several other types of exemptions you may receive; learn more by visiting www.window.state.tx.us.
— DEED RESTRICTIONS
You may decide to live in a subdivision or a master-planned community with deed restrictions, which appear in the real property records of the county in which it is located. They are private agreements and are binding upon every owner in a subdivision. All future owners become a party to these agreements when they purchase property in deed-restricted areas. That’s why it’s important to review the deed restrictions in a restricted subdivision or community you’re considering so you’re aware of the residents’ obligations and responsibilities.
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