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8 Secrets to Buying a Home Out of State, Without the Risk of Remorse

December 11, 2019

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Buying real estate is stressful (mortgages, down payments, and lenders!). Buying a home out of state? That’s downright scary.

We probably don’t have to tell you why: Typically, you won’t have the luxury of being able to spend hours touring open houses. You can’t pop by to see the neighborhood at midnight. And you very likely have no idea how hellish the daily commute for your new job really is.

Understandably, you might feel that you’re rolling the dice on a new home or even your first home—and setting yourself up for buyer’s remorse.

But with the right people on your team, and a good real estate agent (plus a little bit of luck), you can make a purchase with no regrets. I know this because I bought a new home in another state sight unseen—and it worked out great!

So take a deep breath, buyer, and keep reading for the step-by-step essential secrets to buying a new house out of state.

1. Do your research—and then do some more

You should always do loads of real estate research before purchasing a home, regardless of whether it’s 30 miles away in a different state or 3,000. But digging through the internet becomes extremely important when you’re buying from afar.

Of course, you’re going to have a real estate agent to help you find the right home (more on that later). But don’t just count on that. Be your own advocate, fire up Google, see what you can learn—and give yourself as much lead time as possible.

“The earlier people can start the real estate process, the less stressful it is,” says William Mulholland, director of ARC Relocation.

2. Be picky when choosing a real estate agent

When you’re relocating, you need to rely on your agent to be your eyes and ears. So it’s imperative to find someone you trust to have your best interests at heart.

“The relationship between the buyer and the Realtor® is the most important thing,” says Dillar Schwartz, a Realtor in Austin, TX.

“You need to know that your agent is listening, that they understand your specific real estate needs,” adds Schwartz, who helped me with my relocation.

To find the right agent: Start with personal referrals, and then vet anybody you’re considering, Mulholland says. Look for the CRS (Certified Residential Specialist) or CRP (Certified Relocation Professional) designations.

“These designations indicate that someone has gone through an extra level of training,” Mulholland explains.

You can use a real estate site (such as this one) to uncover more info about how long the agents have been at the job, their sales volume, the areas they specialize in, and client reviews.

3. Consider a relocation specialist

If you can’t find an agent with a CRP designation (or even if you can), consider reaching out to a relocation specialist. Relocation specialists don’t just work for big companies; Mulholland says many of his firm’s clients are individuals making long-distance moves on their own.

A specialist can help you with nearly all aspects of your move (aside from actually negotiating your home purchase). They can hook you up with the right agent to start your home search, or connect you with reputable movers, a trusted title company, a home inspection company, or an expert on the local school system.

Best of all? It’s free. These professionals make their money from vendor referrals, not by charging clients. (They can even negotiate better rates on things like moving services, and advocate for you if anything goes wrong.)

4. Be wary of scammers

Unfortunately, buying from out of state opens you up to the possibility of getting taken for a ride.

“You have to be sure the person is actually real, that the home is real,” Mulholland says. “It’s so easy to put something fake online.”

One common scam to watch out for: The swindler will create a listing for a house that’s not actually for sale, use stolen pictures, and advertise it at a price that is too good to be true. After an out-of-state buyer (you!) responds, a fake “bidding war” takes place. When you put down earnest money to secure your offer, the scammer takes off with your down payment.

Avoid situations like this by working with an agent you trust.

5. Ask the ‘stupid’ questions

If something is confusing, don’t hesitate to ask questions, even if they seem silly. Regardless of whether you’ve bought and sold property before, the process in another state will probably be very different.

For instance, earnest money (called a deposit in some places) can range from a few hundred dollars to 10% of the purchase price of the home. Some states do inspections before going into contract, some afterward. Some closings happen just weeks after going into contract, and some take months.

If something seems fishy, it could be standard process, or you could have uncovered a potential problem with your purchase.

6. Get a second opinion, if you can

Ideally, you’ll be able to take a quick trip to your new city to see the most promising listings in person. If not? Your agent can always use a video app (e.g., Skype or FaceTime) and take you along for a tour.

But there’s a lot you can’t tell from FaceTime: smells, sounds, and that hard-to-describe-but-all-important gut feeling that can best be described as “vibes.”

If you have any friends or relatives in the area, arrange for them to do a walk-through of the finalists on your list.

7. Try to make it to the inspection

If you can travel to only the inspection or the closing, you should choose the inspection.

“Pictures on the inspection report are great, but if you can be there in person, you can really understand the issues,” Mulholland says.

Plus, most inspectors are happy to teach new homeowners about regular maintenance they should be doing and show them small things that won’t affect that sale but should be fixed.

“They can teach you things you might not know about your home otherwise,” he adds.

8. Don’t sweat the closing

So you can’t be there in the flesh to sign a pile of paperwork. No biggie—these days, remote closings are becoming increasingly common.

One pro tip, though: Work with a title company that has a national network, so you can be sure it operates in both your current state and your new state, Mulholland suggests. Then you’ll either pop into a local office or pay a notary to come to you.

Once you’ve got the keys (or at least, the closing paperwork) in hand, the really fun part starts: your cross-country move. Bon voyage!

The post 8 Secrets to Buying a Home Out of State, Without the Risk of Remorse appeared first on Real Estate News & Insights | realtor.com®.

What Is ‘Tenants in Common’ and Should I Arrange One?

June 21, 2019

tenants in common

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“Tenants in common” may sound like a legal term rental property managers throw around, but it’s actually an important agreement between co-owners of real estate. It’s one type of arrangement that can come into play when multiple people decide to buy real estate together, be it a primary residence or a vacation home. The other common type of arrangement for multiple co-owners to buy real estate is called joint tenancy, also known as joint tenancy with right of survivorship.

For some people, buying real estate as co-owners with friends sounds ludicrous. You love your friends, but taking on a shared financial responsibility and  a mortgage? No way! But others may see becoming co-owners as a real opportunity with a serious payoff, and could one day become party to a tenants-in-common or joint tenancy agreement.

What is ‘tenants in common’?

A tenants-in-common (TIC) agreement is a way to own a share of an entire property with a number of people, says Jeff Miller, a real estate agent and team lead at AE Home Group in Baltimore. (In a TIC agreement or joint tenancy, the owners are called “tenants.”)

Unlike a joint tenancy with right of survivorship agreement, a TIC agreement allows co-owners to own unequal shares of the same property and to pass on their ownership in the property to an heir when they die.

“For example, one owner may take responsibility for managing the property and in return receive a higher share of ownership,” Miller says. “It may also be the case that, after a number of years, someone sells part of his or her ownership to the other co-owners and maintains a smaller stake in the property.”

The TIC agreement provides a legal framework for the tenants to structure how the tenancy will operate, from deciding how co-owners should split the purchase price to choosing which co-owners make major decisions about the property. So while each tenant will own a share of the property and may have tenancy rights to live in and use the property, tenants pay their share of the mortgage, taxes, insurance, and maintenance costs based on the tenant’s share of ownership.

Advantages of a tenants-in-common agreement

Because a TIC agreement brings a number of tenants together to split costs and ownership, there can be a clear financial advantage for tenants who don’t have the means to buy property or qualify for a mortgage on their own. The flexibility of the tenants-in-common arrangement can be more attractive to prospective tenants who may plan to use real property for only part of the time (e.g., during the holidays or summer months) than being joint tenants. As TIC owners, they may opt for a smaller share in the real property, instead of equal shares.

This tenancy arrangement also allows the individual tenants to decide what happens to their ownership percentage of the property in the event that they die. Tenants in common can choose to sell their ownership share or transfer it to a spouse or other person, or to an heir after they are deceased.

A joint tenancy with right of survivorship, on the other hand, requires that the owners become joint tenants in the same deed or instrument at the same time. The joint tenancy survivorship agreement provides that when one joint tenant dies, the property interest of the deceased joint owner transfers to the remaining tenants, without going through probate. Joint tenancy is popular with married couples, because the tenancy of a deceased owner passes automatically to the surviving spouse.

Disadvantages of a tenants-in-common agreement

Of course the autonomy of co-ownership through TIC interests has its drawbacks says Michele Lerner, author of “Homebuying: Tough Times, First Time, Any Time.”

“At anytime, any owner can sell their share of the property or give it to someone else without requiring the consent of the other owners,” Lerner says. “This may result in you owning a house—and perhaps living there—with other tenants that you don’t know or don’t like.”

A tenants-in-common agreement, unlike joint ownership, does not automatically avoid probate.

Be smart when entering into a tenancy agreement

To help things run smoothly, experts advise getting everything regarding co-tenancy in writing, especially a tenants-in-common termination plan that all TIC owners are comfortable signing. Make sure you understand property law, and what will happen when a co-tenant wants to divest his ownership interest, or when he dies.

Miller suggests that a buy-sell agreement that’s backed by life insurance policies be part of that plan; it will give existing tenants the right to buy out a newly inherited tenant if one tenant dies. The buyout amount can be predetermined or the result of a third-party fair market value appraisal at the time of new ownership. The life insurance policy comes in handy in cases where the surviving tenants don’t have cash on hand for a buyout.

Whatever legal plans are drawn up, Lerner advises all tenants seek independent counsel from an estate attorney and a tax professional to walk them through both the legal process and the tax ramifications of purchasing a property in common.

“While owning a home with friends as tenants in common can be a great experience, it’s important to recognize purchasing property together makes the partnership more difficult to dissolve than simply renting a home with friends,” she says. “Professional advice is crucial to a successful agreement.”

The post What Is ‘Tenants in Common’ and Should I Arrange One? appeared first on Real Estate News & Insights | realtor.com®.