What should American homeowners do when facing foreclosure?

2020 was unprecedented for everyone and even as we start off 2021 our way of life is still not back to normal. The global pandemic and its effect on everyone’s ability to go about their business, is still affecting lives. The government intervened with various programs and protections to provide relief to people and businesses alike. Such programs have and will run their course and not be repeated.

Sadly, for many homeowners paying their mortgages or rent became understandably, secondary to feeding their families. Government programs were put in place to protect both the homeowner and the lenders during this period of uncertainty. Many of those programs have expired or will no longer be in place in the next few months.

What does this all mean…? It means it is more important than ever for those homeowners to be talking to their lenders and landlords about their options. If you have already been talking to your lenders or landlords, congratulations… While there are no guarantees, if you avoid talking to your lenders or landlords, evictions and/or foreclosures are guaranteed. It is widely expected the number of foreclosures and evictions is going to rise sharply in the coming months and will continue throughout 2021.

So what options are left for struggling homeowners who find out they don’t have long before their auction date?

• Refinancing – works if you have income and good credit
• Loan modifications – works if you have income and equity
• Hiring a foreclosure defense attorney – getting sound legal advice could help
• Short sales – needs a buyer and bank approval, will affect your credit and ability to borrow in the future
• Finding an investor and selling your home fast for cash – works best if you have equity in the property
• Bankruptcy – normally last resort

I will leave you with this final thought, the sooner you explore your options, the better informed you will be when trying to decide your next steps during this distressing time.

Call or email us for further information. Good health to all in 2021!

Linkville Property Solutions, LLC

www.linkvillepropertysolutions.com

[email protected]

At face value, working with cash buyers should be easy and simple. Cash, As-Is, no appraisals….easy! Unfortunately, this is not always the case and working with cash buyers can be difficult. The good news is, knowing what to look out for when working with cash buyers BEFORE opening escrow can prepare you to save you time, frustration, and hair-pulling! Over the years, we’ve seen competing cash buyers include certain terms in their offers that should be seen as red flags and/or warning signs. Whether you’re thinking of selling your own property to a cash buyer or you’re listing a property for a client that is attracting cash buyers, keeping a keen eye out for the Red Flags below could help avoid choosing the wrong buyer!

Knowing why investors include these terms in their offers and how to counter them will put you in a much stronger position in the transaction and simplify the process of selling your home for cash.

1. The “Non-Contingent” Offer

What exactly is a non-contingent offer? When a buyer submits a “Non-Contingent” offer, they are essentially forfeiting any and all of their privileges to perform due diligence on a property they’re interested in. I.e., they’re giving up the right to….

• perform further inspections
• review seller’s disclosures
• confirm clean ownership with a title report
• complete a final walkthrough….

….in addition to plenty of other protections that are standard in a purchase contract.

We see it in competing offers all the time. Companies that buy houses for cash say they’re non-contingent and that they “don’t need an inspection period”. Often times their goal here is to make their offer appear as strong as possible and get their offer accepted. Unless you’ve seen the tactic before and know how to prevent it, buyers may take advantage of their Earnest Money period to complete their due diligence. They know that once their offer is accepted, they likely have the industry standard 72 hours to submit their Earnest Money Deposit and can use these 72 hours to do their initial walkthrough of the property, perform inspections, etc. If they find something they don’t like or realize the numbers don’t make sense after physically walking through the property they can cancel their offer or try and re-negotiate by asking for a price reduction. All this happens before any of their money has been submitted to escrow!

Pro tip: Write up a Seller counter! Shorten the earnest money period to 24 hours or sooner and make it clear that no further inspections will be allowed until escrow receives buyer’s nonrefundable Earnest Money!

2. Long (Unnecessary) Inspection Periods

While a typical financed buyer typically gets about 17 days to perform their due diligence on a property, cash buyers should be writing in a much shorter time period into their contracts. 

How much time does a cash buyer need to perform inspections? It’s a loaded question, and depends on a couple things….

1. the complexity of the renovation
2. necessity of additional inspections (I.e., Foundation, soils report, zoning/planning research, etc.)

The more complex a project, the more time a buyer may need to perform due diligence. With that said, a cash buyer SHOULD be able to complete their inspections on an average house of average size (up to 2,500 square feet) in 3-4 days. Some investors may be able to work faster while others may rightly need more time to perform additional due diligence. BUT – digging deeper into the buyer’s plans is HIGHLY encouraged if they’re asking for 8+ days to perform due diligence for a basic home. They may be trying to give themselves as much time as possible to farm out to other buyers!

PRO TIP: Write up a Seller counter! You can always counter inspection days to whatever timeline you feel fair!

3. Low Earnest Money Deposit

Any savvy seller should want their buyer to have “Skin in the game” i.e., something to lose if the buyer does not perform to the contract. This typically comes in Earnest Money Deposit which is usually expected to be submitted to Escrow within 72 hours of offer acceptance. Should the buyer cancel their offer or not perform per the contract after removing their contingencies, escrow may be obligated to disburse those funds to the seller. The LOWER the earnest money amount, the LESS SKIN a buyer has in the game, and the LESS incentive a buyer has to perform to the contract! It’s important that the amount of the earnest money is significant enough to motivate the buyer to perform.

Things to Keep in Mind

• 1% of the purchase price is industry standard. (Earnest money on a $600,000 purchase contract should be at least$6,000)
• Anything below that, consider countering it up!!

Remember: If a buyer can’t submit a reasonable amount of money to escrow, how are they going to bring all the funds to close!?

4. Unusually High Offers

If you’re selling a fixer property for cash in Sacramento, it’s likely that it will get a lot of attention from local investors if exposed to the local market. If the property you’re selling has multiple offers on the table, be wary of investors that are significantly higher than the average offer price of others you have in hand. Some investors knowingly come in higher than what they can actually pay for the property to tie the property up and use the contingency period to negotiate the price back down to a number they can buy it. Keep in mind that most fix and flip investors have similar way and method for running numbers and determining their offer price. If one fix and flip buyer is significantly higher than the others, something may be amiss! Dig deeper!

Pro tip: Use logic, ask questions, and see HOW an investor plans on using the property once completed. If a buyer is doing so to renovate and re-sell themselves for a profit, how do they plan on making money by paying significantly more than other competitors?

5. Out of Area buyer

If you catch wind that a certain buyer submitting on your listing/property is from out of your area, proceed with caution! While by no means are all out of area investors “bad” it’s likely a safe bet that these buyers don’t know the local neighborhoods of Sacramento (or your area) as well as a local buyer would. Investor-buyers that are not from the Sacramento region likely aren’t as familiar with the market as a local buyer who has an established track record of flipping homes in the area. These types of buyers usually need to do MORE market due diligence during their contingency period to confirm their numbers and feel comfortable with the purchase. More due diligence means more uncertainty for you, and puts the transaction at a higher risk of changing their numbers mid-escrow and potentially leading to a price re-negotiation.

We hope that by knowing these tips in what to look out for when working with cash buyers, you’ll be better equipped and more prepared to facilitate an EASY escrow for top dollar!

In many markets’ property values have taken off to levels not seen in well over a decade. Depending on your financial situation and the growth of your market it may be a great time to explore cashing out and selling your home. Depending on the condition of your home, the buyer of your property may be a cash buyer.

There are some nuances and slight differences when working with a cash buyer instead of a traditional financed one.  Being aware of these slight differences and knowing what to expect next in the transaction will help you plan, manage expectations, and clear potential hurdles for an easy closing.

Here are six steps to consider when selling your home to a cash buyer!

Step 1 – Find and Qualify your Buyers

The first step in selling on your home for cash is finding the RIGHT buyer. With the growth of social media and power of the internet, it is easier than ever to advertise your property. To attract attention to your property, you could post a FSBO (For Sale by Owner) listing on Zillow or similar website. You could do a quick google search of highly rated investors in your area and reach out to start the process. Most cash buyers are quick and responsive and are happy to submit a cash offer should you be interested in one!

Once you get a couple of interested buyers it’s reasonable to expect that one of them will make an offer. Cash buyers shouldn’t need more than 24 hours to get you an offer, especially after walking the property! It’s always a good idea to get multiple offers / opinions if you can. When you’re ready to make a decision on offers you have in hand, it’s a good time to remind yourself that price is NOT the only term to pay attention to in an offer. The right buyer should put forth an offer with the ideal balance of price, inspection period, closing timeline, and special terms that put you in the best possible position to achieve your goal with selling the property. It’s also important at this stage to research the buyers BEHIND the offer.

Questions to ask of your potential buyer…

• Who are they?
• How long have they been around?
• Are they local?
• Can I trust them to execute on the terms of the contract?

To help you in your decision making, here’s a great checklist on what to look for in a strong cash buyer! Take to the internet and do some research on testimonials and any reviews you can find. Try to get a sense of how experienced they are and how many years they’ve been in the business. The longer a buyer has been investing the more likely they are to close! If you’re looking for an offer on your property Reach out to us here!

Remember: accepting an offer that doesn’t end up closing not only wastes your time, and potentially money, but deters you from negotiating with real buyers who are legitimately qualified. Do your research!

Step 2 – Compare Offer Terms

Inspections

How long will the buyer need to complete their inspections? It’s reasonable to expect that any buyer will perform some type of inspection after you accept an offer. Typically, it’s agreed that the time period for inspection starts the day after an offer is accepted or “Executed” . You want inspections to be done as soon as the contract is accepted. If there are issues you need to know about them before you get too deep in the transaction. The inspection can be anywhere from a half hour to numerous hours depending on the specific inspector. You can try to impart information about the property, but they are going to do their own legwork regardless of what you tell them. It is important to understand that the inspection is used as a negotiating tool for buyers. They are almost always going to give you a list of deficiencies with the property in an attempt to knock something off the price. Some are legitimate and some are exaggerated. Don’t take anything the buyer does personally. Understand that there may need to be some give and take at this point. You can stand your ground, but the next buyer may find the same issues on their inspection. Let the market be your guide on where you can concede and where you can take a hard line.

Where can you find “inspection period” on the contract? Section 14 Part B (1) Page 6/10 of California Residential Purchase Agreement – Click Here!

Earnest Money Deposit

Will the buyer have skin in the game? If so, how much? On every contract there is a line where an Earnest Money Deposit (EMD) amount is indicated. In simple terms the EMD is a down payment made that is subtracted from the final amount needed at closing. The EMD is often used as a way to gauge true interest from a buyer and represents their “skin in the game”. If the buyer breaks the contract in any way, or backs out of the deal without justification the seller may be entitled to this money. It is a way to incentivize them to keep their word and not simply shotgun offers without following through. This money should be received within 72 hours aka THREE (3) business days of offer acceptance. For example – if the offer is accepted on Monday the funds should be in escrow by Thursday. Your attorney or escrow company will hold this money in a separate account. Any cash buyer who is truly interested should be able to produce these funds within 3 days. If they’re not able to, it may be a red flag and could be time to start considering back up options.

Where can you find the “Earnest Money” amount on the contract? See Section 1 Part 3, Page 1/10 of California Residential Purchase Agreement – Click Here!

Closing Period

How quickly is the buyer able to close escrow? Is the buyer rushing you to close or do they need too much time? You have a couple options to weigh when considering closing period. You can either close “X” number of days after the contract is accepted OR you can close on a specific day (i.e., January 1st, 2021). It really depends on your preferred closing time period. Here at Linkville Property Solutions, we typically write in 10-90 days, Seller’s choice. This gives you as the seller the ability to choose any tentative days in the next 10 to 90 days to close escrow! You may want to close quickly, or you may want to close NOT so quickly. This 10-90 days verbiage gives you the flexibility you may need!

Don’t know where to find your agreed upon closing period? See Page 1/10, Section 1, Part D, of California Residential Purchase Agreement – Click Here!

 

Step 3 – Accept an offer and open Escrow

Once you complete Step 1 and gather one or multiple offers, it’s time to Accept one! It’s normal to either sign a hard copy version of the offer or use an online contract signing services like DocuSign to execute the contract. Once you and the buyer have signed, it’s at this time that escrow and title companies enter the transaction to help research any questions with title, coordinate communicate, and If you don’t know or don’t have a preference for who will be helping with escrow/title, the buyers should have a one of their own contacts lined up to help!

Once you accept the offer, the clock starts ticking and the transaction timeline begins!

Step 4 – Monitor Major Deadlines / Sign Disclosures and Paperwork

Sellers often avoid selling on their own because of the paperwork associated with the process. We get it – the paperwork can be overwhelming! The process is made easier with an efficient escrow and/or Transaction Coordinating Company to help execute these documents. If you didn’t know, disclosures are always required when selling your home or a piece of property (Realtor or not) and are intended to give the buyer a clear picture of exactly what they are buying. Sellers are often expected to fill out disclosures on anything they know about the property with regards to radon, flooding, mold, lead paint, structural issues, asbestos and much more! Needed disclosures vary by location, ownership type, and a number of other factors. Work with a local expert (escrow, transaction coordinator, or otherwise) to fill out necessary disclosures for your property.

Step 5 – Closing Escrow

There are several documents needed to complete the closing. It is always a good idea to enlist the services of a real estate attorney. Not only will they expedite the closing process, but they offer protection. Even experienced real estate investors aren’t versed in every contractual scenario. With thousands of dollars of EMD at stake as well as potential litigation it makes financial sense to spend the money on a good real estate attorney.

Now is a great time to at least explore the option of selling your home and taking advantage of a cash offer. Before you do anything know the process and understand exactly what you are walking into.

Considering selling your property?

As financially damaging as the mortgage collapse of 2009 was, it wasn’t nearly as widespread as what we are currently facing. There are many people in various sectors who are currently not earning a paycheck or generating income. Savings have been exhausted and paying everyday bills has become more difficult. Fortunately, the government has thrown many homeowners a lifeline and halted mortgage payments for the time being. Before you blindly assume that you do not, or should not, make your payment there are a few critical items you should know. This information could have a dramatic impact on your situation in just a few months down the road. Here are five things you should do if you can’t make your next mortgage payment.

1. Call Customer Service

Don’t make the assumption that you don’t have to pay your mortgage based on what you heard on the news or saw on social media. Sure, there is a good chance that your lender is offering some kind of deferment, but it isn’t a guarantee. Even if they are offering something you need to know exactly what you are getting into. There is a big difference between a modification and a deferment. A loan modification typically will decrease your interest rate to a monthly payment you can afford. Any missed payments are tacked onto the back end of the loan. With a deferment your lender is simply allowing you to miss the next three months of payments without any negative impact on your credit. The catch is that they are going to ask for the payment in full after the 90-day period. If you cannot make the full payment your lender may start the process of foreclosure or take some other kind of adverse action. Individual lenders may handle things differently which is why it is so important to talk to customer service before making any decision.

2. Construct a three-month plan

As of right now nobody really knows when things are going to change. Some states appear to be less impacted than others, but it doesn’t mean they are totally out of the woods. If you don’t think you can make your payment you should come up with a short-term three-month plan. Simply put, how do you plan on making your payment after the 90-day period? Lenders don’t have to accept partial payments or even extend the deferment period if they don’t want to. To err on the side of caution you should assume that you need the full payment in order to stave off foreclosure. What is the likelihood of your business opening in the next few weeks or your paycheck bouncing back to normal? If it does, will you have the ability to accumulate the full payment? Without a firm plan in place you run the risk of losing your home.

3. Weigh Future Earnings

There are many sectors impacted by COVID-19. Everything from restaurants to commissioned sales agents have seen a severe dip in income. While the short-term goal is to protect your home from foreclosure in the next few months, you also need to think about the relatively big picture. Is your employment or business in an area that will need time to ramp back up? Will you make the same income over the next 12 months? Will you be forced to change careers and prolong the period prior to generating income? You don’t want to simply put a Band-Aid on the problem if the cut is much deeper. It may be best to take action now, before things get too much worse.

4. Capital/Equity Evaluation

If you can’t make your payment and your employment situation is shaky, you should do a full capital evaluation. In addition to basic checking and savings accounts you should look into your retirement funds, pensions, stock holdings and any other type of capital accounts. Perhaps, you could draw from these penalties free or with a discounted interest rate. If you have an accountant or financial advisor it is recommended to talk to them prior to making any rash decisions. You can also explore the option of a HELOC if you have equity. HELOC rates are nearing historic lows and can provide interest only payment flexibility. That being said, they also add to total amount owed.

5. Get a Cash Offer for Your Property

If you know that your employment situation may not improve for several months, it may be best to act now. Before your credit takes a fall or the real estate market dips it could be worth considering selling now. Selling now could put you in a better position to capture what equity you do have in your home and limit risk of losing your home to foreclosure if things don’t improve. Having an offer on the table would at least give you an idea of what you’d net and walk away with as a result of the sale.

Preparation is the key. Doing nothing about your situation likely will not improve it! The reality is that you most likely have more positive options than you think. Start by reaching out to customer service, taking inventory on your income, assets and employment. The quicker you are to take action the more likely you can make the best of a negative situation.

As we have seen over the last few months life can change on a dime. One day we are thinking about March Madness and the next planning when we can leave our homes. If you have inherited a property over this time or making preparations, you may be dealing with an extra layer of stress you do not want or need in your life. Knowing the most common, reliable, and powerful ways to transfer or receive a piece of inherited property is hugely important when it comes to expediting the process when the times come. Below are two of the more common estate planning tools (Wills and Trusts), along with what may need to happen if these preparations aren’t made ahead of a decedent’s passing (Probate).

Wills

One of the most common ways a property is transferred from one party to another is through a Will. Every adult should have a Will, regardless of assets. The absence of a well-defined Will may require bringing the courts into play to facilitate the “fair” distribution of the decedent’s assets. Dealing with the courts can be time consuming, expensive, and potentially stressful on family relationships. If, however, a Will is written and set up correctly it leaves no doubt as to what is wanted and where assets are allocated. The person named as the recipient of property through a well is often called a “beneficiary”. If you’ve been named as a beneficiary of property you may be left liable for the mortgage payments, taxes, and outstanding liens on title for the property received. The first thing to do as a beneficiary as reach out to a local real estate attorney as there are several legal items that likely need to be done prior to even thinking about renting the property or putting the home on the market.

Trusts

Another common vehicle used for transferring title to a surviving family member is called a “Trust”. While a Will is a legal document in which a person’s assets are distributed among legal heirs, a Trust is an entity that bestows a legal obligation upon a third party (called a “Trustee”) to hold assets for the benefit of another person (i.e. an heir or family member), also called a beneficiary. A person can sign an agreement to put property into a Trust at any time, which can become active upon their passing. The trustor ( the person who originates the Trust and has control) directs the passing of assets to trustee per the instructions outlined in the Trust. If you’ve inherited a piece of real estate via a Trust, you may need to work with the trustee to get it sold. All things considered, there are many advantages that come with Trusts as well as many challenges that can arise when selling an inherited property.

What if there is no Will or Trust in Place?

While Wills and Trusts are just two common vehicles for estate planning, they are not necessarily the only ones. There are other tools that guide how property can distributed among family including joint ownership, tenants in common or a transfer on death deed just to name a few. If any and all of these options were not planned for or set up in advance the property will likely go to Probate Court.

We can help streamline the process of selling your inherited property by submitting a cash, as-Is offer for the property that puts you and your family in a better position to sell the property quickly with less headaches.

What is Probate and what does it cost?

Probate is the process by which local courts step in to help distribute property of someone who has passed. If no estate planning instrument like the ones above is in place to guide the distribution of Assets, the property in question may be subject to Probate. Probate is often seen as the least ideal of all scenarios as it can be more costly in terms of time, cost and privacy than other options

• Time – Anyone who has tried to have a lien removed or dealt with the court in any fashion knows that they can often move at a less than ideal pace. This is only magnified when it comes to appointing ownership in real estate. The process can take several months to several years to sort out depending on the estate and family. It’s important to note that the probate process can vary state by state and is subject to the laws and guidelines of the state the property is located in.
• Money – In addition to time, you also have to factor in cost with a probate property. With no Will or Trust to guide them, the court has to figure out who is the rightful descendant and beneficiary to the property being passed. To do so, they need to expend resources. To name just a few, there are personal representative’s fee, attorney fees, court fees and potentially fees for an appraisal and accountant. These costs add up quickly!
• Privacy – In addition to time and cost, probate also may come at the expense of you and your family’s privacy. While Trusts keep information about beneficiaries and family members private and off public recorded, probate involves the recording of court docs for public record. This can be especially important for those who want to keep extremely sensitive and private information private, such as who is involved, how much money is in the estate, what types of property are in question.

Inheriting a property from a spouse, parent or distant relative is challenging for many reasons, some of which have been outlined above. It requires a lot of thoughtful planning ahead of time in addition to more time, money, and communication to prepare an inherited property for rent or to be listed for top dollar. The good news is that we can help by submitting a cash, As-Is offer for the property that puts you and your family in a better position to sell the property quickly with less headaches. Reach out to us today to see how we can help!

Even with the backdrop of a pandemic extremely present, the Real Estate world does not stop. There are many sellers who were waiting for the spring market to list their home and find a buyer. On the surface it would seem that these plans have taken a hit, but in reality they just need a slight adjustment. As difficult as it may appear, you can still sell your home. In many ways from a buyer’s perspective this is a great time to buy. Interest rates have once again dropped to all-time lows and many lenders have loosened some of their most restrictive guidelines. With states and individual companies forcing stay at home policies, buyers have more time to investigate and research their dream home. While COVID-19 is changing the way homeowners are doing so, selling your home is still very realistic – here are 5 points to consider in this current market.

1. Virtual Showings

Over the past year many real estate agents have slowly shifted to how they preview and show their listings. In an effort to maximize their time they have started producing property preview videos. With these they can either send through email on demand or place on their website for public viewings. Doing this in the midst of a crisis isn’t much of an adjustment at all. The biggest difference is where the videos are coming from. Instead of outsourcing to a professional company many are doing it themselves or relying on the video skills of the homeowner. With enough quality video the footage could be sent to a videographer who may add music, lighting or other effects to give it the finishing touch. A two minute virtual showing often gives a prospective buyer all the need to decide if they want to pursue. Instead of open houses or MLS exposure you can drum up interest in your property through a quality virtual showing.

2. Leveraging Technology

Technology is constantly changing. It wasn’t that long ago that eFax was considered a game changer and scanning a document from your phone was a break through. Today some of the biggest deals are done with one party at a coffee shop or in flip flops from a beach house. As a seller you can leverage technology to perform almost all of the tasks involved in the transaction. On the most basic level you and your real estate agent can use Facetime or Zoom to iron out a negotiation or contract detail, instead of simply texting or emailing. When you have an executed contract your attorney can use e-signatures from a scan or fax, instead of having to meet in person. Real estate agents, attorneys and even lenders have quickly adapted to new closing guidelines and procedures. You may be able to sign every document, form and addendum you need to without leaving your home office.

3. Creative Marketing

In a traditional real estate transaction initial interested is usually derived from an alert on the MLS. From there a real estate agent springs into action and the process is started. In this current environment, instead of solely relying on the MLS, word of mouth or interoffice networks real estate agents are becoming more creative. The most common starting point is social media. With people working from home there has been an uptick on social media traffic. Real estate agents are using this to get organic interest in their listings. A video tour of the property coupled with a dedicated website with all pertinent information, facts and data is a great way to find the right buyer in this market. There are also email or text alerts to fellow agents, investors, attorneys and mortgage brokers. Simply put, if you list your home there is a good chance that marketing and exposure will not be an issue.

4. Virtual Staging

Don’t think that you missed your window to sell because you weren’t able to get your property staged. There are a handful of programs and apps that give you the ability to virtually stage your property. In fact, this may actually be more appealing to buyers because you can give them multiple options. With traditional staging you have one chance to make an impression. If what you and your real estate agent come up with doesn’t work you are out time and money. Virtual staging allows the buyer to play around with what they like for them and see the property through that lens. There are plenty of skilled computer and tech people who would love to give you some property ideas. Virtual staging will never replace the real thing but it shouldn’t be something that holds you back from presenting your property in the best possible light.

5. (Carefully) Showing Your Property

As much as a virtual property tour or a dedicated website can provide valuable property information, nothing replaces actual eyes on a property. If there is true interest in the property you can still show it, with a series of restrictions. For starters, there may be a required set of disclosures from all parties prior to entering the property acknowledging the risks of entering. Next, it is advised that the seller is not present at the time of the showing. There is a hard limit on the number of people who are allowed in the property at one time. No more than two people on the buying side are allowed, in addition to their real estate agent. During the showing strict social distancing rules are still in place and there must be a six foot separation between parties. There may be additional rules depending on the specific county and individual state. The bottom line is that if a buyer really needs to put eyes on the property, they are still allowed to. The California Association of Realtors just released best Real Estate Practices During Coronavirus which will help give you an idea of what specific guidelines to be aware of when selling your home during COVID-19.

Over the last few weeks Americans have shown just how adaptable we truly are. Changes in local real estate practices and procedures will become the new normal in short order and won’t be much resistance in conducting a transaction. If you are thinking selling your home you will have to alter some of the things you do, but it is just a minor obstacle and hardly a roadblock

We Are Still Buying! Contact Us Today.

If you have questions or are interested in learning what we can pay for your Sacramento property, give us a call at 530-672-0676.

More often than not, real estate transactions can get tricky, especially if you’re purchasing a property where the previous owner has passed away. Conveying ownership in this scenario can tack on several months to the process and consume you, if you let it. On the flip side many prospective buyers know this and are not willing to follow through thus leaving the buyer pool reduced. Understanding how real estate is conveyed upon death can give you a definite leg up on your competition, or help protect a personal asset you are holding. Here are some scenarios to help determine how a piece of real estate is conveyed upon death.

• Wills/Probate: The most common and straightforward property transfer comes when there is a “will” in. Upon passing the will is enforced and an executor determines the descendants last wishes. If they listed an heir (usually a spouse or family member) then that mentioned individual would take ownership. If there is no will in place or the heir has passed away, the process of “Probate” begins where the Probate Court in the state where the property is located appoints an administrator, or “executor”. The administrator facilitates the process of collecting assets, paying liabilities and ultimately distributing any assets to any rightful beneficiaries. Many beneficiaries who receive ownership of real estate via the Probate process do not have the time, interest, or financial resources to own, renovate, or maintain the property. There are costs associated with owning real estate where, in some cases, it may make more sense to sell the inherited propert to a cash buyer who can purchase the property in “as-is” condition.
• Trusts: A “trust “is another popular estate planning option for those looking to avoid probate. Essentially an individual or “Grantor” puts ownership of a property into a trust and names a “Trustee”. Should the grantor pass away, the Trustee facilitates the sale and handling of the property should. There are numerous ways for the property to go into trust as well as numerous types of trusts. For example, if the property is held in an irrevocable trust, it may not be considered part of the taxable estate, so it will reduce the owner’s tax obligation. Selling a property in a trust is a bit tricky, but certainly not as difficult as it may appear. The person that inherits the property must work with the trustee to sell. The trustee is the one who actually conducts the sale. Upon the sale the trustee will transfer the title to the seller, who can then transfer it to the new owner.
• Joint Ownership with Right of Survivorship: The passing of a property owner doesn’t necessarily have to trigger a sale. There are many cases where husband and wife own equal shares in a piece of real estate. They go on the mortgage application and title as joint owners. If one of the individuals passes away, the surviving owner immediately inherits their partner’s percentage of ownership. They now own the property solely and are free to do with it what they please. It is important to note that the will and any trusts may need to be modified, or updated, to reflect the change in ownership.
• Estates: If multiple people own a property and die simultaneously each share of their ownership would go to into their own estate. At this point each share of the property would follow guidelines set in the individuals will. That means the individual could designate their own beneficiaries to inherit their portion of the property. This can usually be worked out when a spouse passes away, but is much more complicated if the property is owned by working partners, or friends. In this event, there is usually plenty of legal red tape and it is not uncommon for a property to sit for months, even years before a settlement is made.

Buying, owning or selling a property after an unexpected death can certainly have its challenges. Within these challengers there can be many steps to be followed before a descendant can have the legal standing to sell an inherited property.

If you’ve inherited a property and are considering selling it – give us a call at (916) 970-7660 and we’ll have a cash offer to you quickly!

Take a minute and consider how much your investing business has changed over the past twelve months. There is a good chance that you have probably undergone some subtle, and not so subtle, changes in philosophy and direction. It is always better to be a step or two ahead rather than chasing outdated trends and strategies. Such is the case in dealing with an investment property. Not every rental is designed to be held onto forever. There are many cases when selling makes the most sense, even if you are netting a positive cash flow. It may seem outlandish to get rid of a cash producing property, but if it doesn’t fit your long-term vision or is more trouble than it is worth it may be time to sell. Here are five reasons to at least consider selling your investment property.

• Liquidity: The real estate market is constantly changing. What makes sense to you today, may not be the same a few months down the road. Every few months you should dive into your portfolio and assess your holdings. What you will find is that some markets are performing better than others and it may make sense to cash out of the property. You never know where a particular real estate market is headed. Trying to time it at the peak is often a recipe for disaster. That being said with a market analysis and experience of a local real estate agent you can get a good idea of just how much you could net from a sale. If the number is more than you thought you should consider cashing out and moving on. Rental demand doesn’t appear to be slowing down any time soon, but you shouldn’t put all your eggs in one basket. If the sales number makes sense you can parlay your capital into other profit generating properties.
• Opportunity: It should go without saying, but the goal of an investor is to generate revenue, not simply compile assets. Owning a handful of rental properties sounds great but if they are not making you money, they aren’t that strong of an asset. There are times in every investor’s career when they are presented with unexpected opportunities that often need quick capital. If the opportunity is greater than what you have with your rental, it makes sense to sell. You can take the profits, apply them to the new opportunity and generate additional profits. This scenario doesn’t always work out this way, but if you have equity and are willing to take slightly below market value you should be able to find a buyer. Getting rid of a rental may seem difficult, but if the opportunity is too good to pass up it may be a no brainer.
• Maintenance Cycle: There is little question that one of the keys to long term wealth is the acquisition of key rental properties. However, not all rental properties are equal. Some properties in certain markets are much more stable and secure than others. What is often overlooked is the cost associated with quality rental ownership. If you want to preserve your asset you need to take care of it. This means staying on top of maintenance and big-ticket items. About ten years ownership you may see a laundry list of these items quickly approaching. Between the furnace, roof, outdated flooring and countertops this number can quickly total tens of thousands of dollars. If you do not have the means, or desire, to dump money into the property you should sell before these items are a necessity. Savvy buyers will factor these into their offers, but you will still end up ahead if you are early enough.
• Reduced Cash Flow: The numbers you estimated when you bought the property may not be the same once you take ownership. There are several seemingly hidden costs associated with owning a rental property. Little things like snow removal, lawn care, insurance & tax changes and maintenance can quickly change the bottom line. There is a big difference in a property with $500 cash flow and one with $250. There is an even bigger difference from $250 to zero. Owning for future appreciation is nice, but is often a huge gamble. If the monthly cash flow isn’t what you expected it is time to think about selling. Modest rent increases can only cover so much. Eventually the reduction in cash flow will prompt you to take action.
• Time Commitment: From the outside a landlord waits around for the first of the month, sits back and collects rent checks. While this may happen, often the reality is that owning a rental can be a lot of work. You may not hear from your tenants for weeks then get bombarded with three maintenance requests in a few days. If the property is a few towns over you could spend a few hours a month driving to and from the property, not to mention returning calls and answering texts. At some point the time commitment of the rental becomes more than the value of the property. This is magnified if you are self-managing and handling everything, especially if the monthly cash flow isn’t there.

Very few rental properties are designed to be held onto forever. If you are disappointed in the numbers or the market has peaked you should consider selling. Holding onto a diminishing asset will weigh down your portfolio.