Author Archives: realestateestablishment

Ways To Cut Household Expenses And Save Money Each Month

The key to saving money is knowing where to trim your budget.

Paying bills is never fun, but it’s even less exciting when monthly expenses leave you eating noodles for the last few days before every payday. But you don’t necessarily have to sacrifice the lifestyle you want to live in an apartment or home you love. In fact, eliminating unnecessary household expenses is easier than you think.

Whether you’re living those big-city dreams in a studio apartment in San Francisco, CA, or moving into a single family home in Austin, TX, read on to find out how to eliminate or reduce monthly household expenses like grocery bills, insurance, and cellphone bills without disrupting your life.

7 Ways to Cut Household Expenses

  1. Head to the grocery store. Sure, you can’t eliminate the price of food when you are determining your budget. But do you really need to buy all of your groceries at Whole Foods and buy takeout for lunch every day?  Eating in doesn’t have to mean daily trips to the grocery store either. Research local Community Supported Agriculture (CSA) programs and talk with your neighbors or coworkers about sharing the weekly offerings — buying into a CSA with a group still gives you a variety of fresh fruits and vegetables while easing the stress of having to figure out a way to use every piece of produce delivered.
  2. Have a plan when you shop. Using coupons to cut expenses is easy, but it’s not for everyone. One top alternative for cutting those grocery expenses, sans couponing, is to know the cost of the top 20 things you buy most often (think milk, eggs, and butter). That way, when you see the prices go up (or down!), you’ll know if you’re getting a good deal. Small strategic changes in shopping can help you cut down on expenses over time.
  3. Lay off the landline. Be honest: When is the last time you used your landline? If your phone has followed you from rental to rental or remained unused in your home for years, it may be time to unplug it for good — and cut out that expense. However, if you have a home office and require a landline, it may be worth investing in a product that hooks up to your router and allows you to make voice calls around the country.
  4. Renegotiate your insurance rates. Car, health, rental, and homeowners insurance costs are negotiable. Insurance rates fluctuate often, so you could be missing out on a lower rate if you don’t shop around for new insurance at least once per year. Plus, competition is high among insurance companies, and you may qualify for certain discounts based on your age or risk with a different plan.
  5. Keep your home neat. A cleaning service can tempt even the neatest renter or homeowner, but you may be paying for more than you’re getting, especially if you live in a small apartment rental in NYC. It’s not uncommon to spend $150 or more on each cleaning. If you’re paying for a monthly maid service, that could add up to well over one month’s rent each year. Instead, dedicate 30 to 60 minutes each week to speed clean your place yourself and split the time into five to 10 minutes each day. That way, your space will never get out of control, and you won’t be tempted to dial your cleaning service for a quick fix.
  6. Switch from commuting to carpooling. While it may not seem fair that you have to drive an hour to work or pay for parking at your office, your best bet for trimming your transportation budget is to share the cost with coworkers or skip the parking space altogether. Make a plan to carpool a few days a week with co-workers who live closest to you, or ditch the car entirely and bike or take public transportation to work.
  7. Cut back on unnecessary pet expenses. Fido’s needs come first, of course, but when it comes to dog spas, doggie day care services, and accessories, it’s easy for the extras to pile up. Instead of taking your pooch to doggie daycare every day, find a local dog park to throw the ball and let him run loose with other dogs before you head to work. And instead of spending loads on grooming costs, renters can shop for apartment communities that include dog washes and grooming stations as amenities. Homeowners or renters without grooming stations should look into self-service wash shops that can cost as little as $10 per wash.

Post courtesy of Trulia.com

Advertisements

6 Financial Perks of Being a First-Time Homebuyer

From mortgage points to PMI, unlock the essential info about how homeownership affects your tax burden.

Hours after we closed on our first house, my husband and I sat in our empty new living room and stared at the walls. He was the first to speak, saying simply, “I thought it was painted.”

We learned a lot about that old house over the next 15 years. While we knew to expect some of the work, other tasks, such as needing to paint the walls, we figured out as we went along. One of the changes we didn’t anticipate was needing to make some adjustments to our tax forms.

The forms you fill out when you buy your house are just the beginning. We quickly understood that first-time homeowners have years of mortgage and insurance paperwork to look forward to. Then, of course, there are the taxes. To help you sort through that pile of paperwork and ensure you’re saving as much money as possible we did some research into tax benefits that can come from buying.

Six Tax Benefits for New Homeowners

1. You can deduct the interest you pay on your mortgage.

The home mortgage interest deduction is probably the best-known tax benefit for homeowners. This deduction allows you to deduct all the interest you pay toward your home mortgage with a few exceptions, including these big ones:

  • Your mortgage can’t be more than $1 million.
  • Your mortgage must be secured by your home (unsecured loans don’t count).
  • Your mortgage must be on a qualified home, meaning your main or second home (vacation homes count too).

Don’t assume that if you are married and file a joint tax return, you have to own your home together to claim the interest. For purposes of the deduction, the home can be owned by you, your spouse, or jointly. The deduction counts the same either way.

And don’t worry about keeping track of how much you’re paying in interest versus principal each month. At the end of the year, your lender should issue you a form 1098, which reports the amount of interest you’ve paid during the year.

Warning: Since, as a first-time homeowner, you pay more interest than principal in the first few years. That number can be fairly sobering.

2. You may be able to deduct points.

Points are essentially prepaid interest that you offer upfront at closing to improve the rate on your mortgage. The more points you pay, the better deal you get.

You can deduct points in the year you pay them if you meet certain criteria. Included in the list (and it’s a long one): Points must be paid on a loan secured by your main home, and that loan must be to purchase or build your main home.

Pro tip: Points that you pay must also be within the range of what’s expected where you live — unusual transactions may cause you to lose the deduction.

3. Depending on the year and your income level, you may be able to deduct PMI.

Private mortgage insurance, or PMI, protects the bank in the event you default. PMI may be required as a condition of a mortgage for first-time homebuyers, especially if they can’t afford a large down payment.

For most years, PMI is not generally deductible, but the specific rules around it change annually. In 2016, if you made less than $109, 000 a year as a household, you could claim a tax deduction for the cost of PMI for both their primary home and any vacation homes. Check to see if the PMI deduction is a possibility as you are working on your taxes.

4. Real estate taxes are deductible.

Real estate taxes are imposed by state or local governments on the value of your property. Most banks or other mortgage lenders will factor the cost of your real estate taxes into your mortgage and put those amounts into an escrow account.

You can’t deduct the amounts paid into the escrow, but you can deduct the amounts paid out of it to cover the taxes (you’ll see this amount on a form 1098 issued by your lender at the end of the year).

If you don’t escrow for real estate taxes, you’ll deduct what you pay out of pocket directly to the tax authority.

And don’t forget about those taxes you paid at settlement. If you reimburse the seller for taxes already paid for the year, you get to deduct those too.

Those amounts won’t show up on a form 1098; you’ll need to check your settlement sheet for the totals.

5. Your other tax deductions may matter more.

To take advantage of these tax benefits, you have to itemize your deductions on your tax return.

For most taxpayers, this is a huge shift: in many cases, you’re moving from a form 1040-EZ to a form 1040 to list expenses on Schedule A.

In addition to interest, points, and taxes, Schedule A is where you would report deductions for charitable donations, medical expenses, and unreimbursed job expenses.

For itemizing deductions to make good financial sense, you generally want to have more total deductions than the standard deduction (for 2015, it’s $6,300 for individuals and $12,600 for married couples). Most taxpayers don’t reach those numbers — unless they’re homeowners.

The home mortgage interest deduction, in particular, tends to tip most homeowners over the standard deduction amount, making those other deductions (such as medical expenses) that might otherwise go unclaimed more valuable.

6. You’ll get capital gains tax relief down the road.

I know you just bought your home, but admit it: Resale value is something you considered when you chose your home. And different from other investments for which you’re taxed on the full value of any gain, you can exclude some of the gain attributable to your home when you sell.

Under current law, you can avoid paying tax on up to $250,000 of gain ($500,000 for married filing jointly) so long as you have owned and lived in the property for two of the last five years (those years of owning and inhabiting don’t have to be consecutive).

Gain over that amount is taxed at capital gains rates, which are generally more favorable than ordinary income tax rates.

 

Post courtesy of trulia.com

10 Easy Decorating Ideas for Fall

Ready to give your home a mini makeover for fall? Here are 10 autumn-inspired home decorating ideas we love.

1. Faux-liage

1400972330872

Add an autumnal touch to an open bookcase with silk fall leaves, which you can find at your local craft store. Whether they’re pressed inside a picture frame or strategically placed along the shelves, autumn-colored leaves are sure to pump up the fall factor. Design by Layla Palmer

2. Paper Pretties

1400972330538

Fall decorating doesn’t have to be expensive, especially if your material of choice is paper. Book pages, framed silhouettes, and a colorful pennant banner make an inexpensive impact in this living room. Design by Krista Janos

3. Less Is More

1400970444916

Create a fresh, fall look with an orange-and-white palette. Here, white furniture and accessories, paired with a few orange accents create a sophisticated balance. Design by Melissa Smith

4. Pedestals and Pennants

1400970243721

Pumpkins on pedestals and pennant banners made from fall-themed scrapbook paper or fabric will give an open hutch a healthy hint of autumn. Design by Sara Madrigal-Fehling

5. White Pumpkins

1400972330699

Keep it simple with an elegant display of white, or ghost, pumpkins. For visual interest, stagger the heights by using stacks of old books or vintage scales as pedestals. Design by Beth Hunter

6. Painted Pumpkins

1400972330547

Faux pumpkins and gourds painted in a monochromatic color scheme add understated elegance to this mantel. Design by Susie Harris

7. Birds of a Feather

1400970221419

Pinecones, gourds, pheasant feathers and artificial owls add an organic, woodsy touch to this rustic, fall vignette. Design by Laura Putnam

8. Mason Jar Sconces

1400970194155

Create quick-and-easy wall sconces this fall with a pair a vintage jars and some twine. Suspended from cup hooks in the ceiling and filled with cinnamon sticks and LED candles, these temporary sconces add warmth. Design by Holly Charlesworth

9. Natural Elements

1400970444946

Weathered wood, antlers, rope and time-worn finishes make for a beautifully rustic, fall mantel display. Design by Catherine Beaver-Hawman

10. Spooky Stuff

1400970243661

Inexpensive cheese cloth, skulls, a black wreath and decorative moss create one spook-tacular display. Design by Ashlie
Post and photos courtesy of HGTV.com

Flip, Rent, or Hold: What’s the Best Path to Real Estate Riches?

Maybe you’re addicted to those home-flipping shows on HGTV where glam couples buy grim shacks, spend 22 minutes smashing down walls and adding funky kitchen backsplashes, and then make tens of thousands selling the refurbished places on the open market. Or perhaps you’re jonesing for a steady stream of extra income and feel certain you’ve got what it takes to be a landlord.

Or just maybe you’re on the prowl for a hands-off way to make serious real estate money with financial investments that don’t require laying down new flooring or screening prospective tenants.

Whichever option floats your boat, you’ve got plenty of company. After the epic boom-and-bust of the speculative home-flipping market in the aughts, everyone again seems to be looking to make a quick buck by becoming a real estate investor. But these days, there are a dizzying variety of different takes on the once-simple idea of property investing—all requiring varying levels of blood, sweat, tears—and risks. Which one might be right for you?

“Over the generations, real estate has proven itself to be a pretty good, time-tested investment,” says Eric Tyson, who co-authored “Real Estate Investing for Dummies.” “Like investing in the stock market, people who follow some basic principles and buy and hold over long periods of time should do fairly well.But, of course, there’s no guarantee.”

And that’s why the thrill-a-minute world of real estate investing isn’t for everyone—especially when life savings are involved.

OK, now that we’ve gotten that out of the way, let’s go shopping.

 

1. Home flipping: Not exactly like reality TV

First half of 2017 gross returns: 48.6%*
2014 gross returns: 45.8%
2012 gross returns: 44.8%

If the Property Brothers or Chip ’n’ Joanna can do it, why can’t you? Real estate reality TV has made the “fixer-upper” flipping market seem fun, very sexy—and mostly foolproof. But becoming a successful home flipper is a lot harder than it looks on television. And it isn’t always as wildly profitable as you might think.

The returns appear deceptively high, as they don’t account for hefty renovation costs, closing costs, property taxes and insurance. Flippers should figure that about 20% to 30% of their profits will go straight toward such expenses, say experts. The median returns above only reflect sale price gains—not net profits.

Newbie investors need to make sure they’re thoroughly familiar with a neighborhood before they consider buying a potential flip in it, says Charles Tassell, chief operating officer at the National Real Estate Investors Association, a Cincinnati-based investors group. This means looking at what kinds of homes are located nearby, what sort of shape they’re in, and how much they’ve sold for. Wannabe flippers should pay attention to the quality of local schools, transportation, and the job market—just as they would for their own home. Those are the things that can make or break a sale. And an investment.

A market where homes are still affordable but appreciating rapidly is ideal. Once they’ve settled on an area, flippers need to focus on the basic structure of prospective homes. Special attention should be paid to a home’s heating and cooling systems, foundation, and roof—the things that are most expensive to fix.

Then they need to create a realistic budget. Experts recommend setting aside 10% to 20% to cover any unknowns—like what’s inside the walls. Costly surprises are par for the course.

“The biggest hurdle of flipping is: The costs are never what they seem to be on HGTV,” says flipper and landlord April Crossley, co-owner of Crossley Properties in Reading, PA. She owns the business with her real estate agent husband, and they do 8 to 10 flips a year. “In fact, they’re always way more.”

Flippers are gambling that the housing market stays strong in their target area—at least long enough to resell their investment home.

“You’re constantly anticipating what the market will be doing 6 to 12 months in the future,” says Daren Blomquist, senior vice president at ATTOM. So if you miscalculate, and it drops, you could lose a lot of money.

2. Investment (rental) properties: You, too, could be a landlord

First half of 2017 returns: 13%*
Three-year returns: 9.9%
Five-year returns: 11.67%

Perhaps flipping homes, and all the varied costs and stressors associated with it, isn’t for you. But you’d still like to be a hands-on real estate investor. Why not consider buying investment (rental) properties?

One big advantage is the tax deduction folks get for their rental properties. They can write off their mortgage interest, property taxes, and operating expenses, as well as repairs.

Like home flippers, landlords-to-be should look at growing areas with new jobs moving in, says Steve Hovland, director of research at HomeUnion, an Irvine, CA–based company that helps smaller investors buy and manage properties.

“I’m very bullish on high-growth markets, like Texas, the Southeast, Arizona. You’re always going to have new renter demand,” he says. But coastal cities can be tough for aspiring property owners because they’re just too expensive.

First-time investors may want to target middle-class neighborhoods near top-rated schools, where stability rules and tenants are more likely to hold steady jobs. These homes often require less maintenance—a boon to landlords who don’t live nearby.

Landlords who aren’t local or don’t want to deal with 3 a.m. calls about an overflowing toilet will want to consider hiring a property manager who will find tenants and coordinate (but not perform) maintenance. But that eats into profits, costing about 7% to 12% of the monthly rent.

And the payoff you get, as compared with flipping a home, isn’t in one lump sum, and isn’t always steady. For example, landlord and flipper Crossley rents out multiple single-family homes, duplexes, and apartments in the Reading, PA, area, and once had a couple stop paying their rent for six months after they went through a divorce. She had to eat those losses, as well as attorney fees, while she went through eviction court to get them out.

Landlords also need to have insurance on their properties and set up their rental companies to protect their personal assets, in case they get sued.

And like other investors, owners also run the risk that home prices—along with the rents they were counting on—could plunge. “You have to be prepared for the worst. When something goes wrong in a tenant’s life, you’re the last person to get paid,” Crossley says.

3. U.S. REITs: Buying shares in real estate instead of companies

Year-to-date returns: 2.75%*
Three-year returns: 8.39%
Five-year returns: 9.79%

Those who’d like to own apartment and office buildings like a legit mogul but don’t have the bank balance to do so may want to turn to Real Estate Investment Trusts. Don’t worry if you’ve never heard of REITs. You don’t need a fancy finance degree to understand how they work.

Most REITs are publicly traded corporations that investors buy and sell shares in—just like stocks. Only instead of buying shares in Apple, you’re buying shares in real estate. Shares can range in price from just a few dollars to hundreds of bucks. Investors can buy into them on certain exchanges.

As with stocks, investors can make money by buying shares at a low price and selling them at a higher one, and by collecting quarterly dividends (payouts are made every three months).

There are two main kinds of publicly traded REITS. Equity REITs own rental properties ranging from homes to business space, and make money collecting income on them. Residential and commercial mortgage REITs allow investors to buy mortgage debt where investors profit from the interest.

4. Crowdfunded real estate: Like Kickstarter for property

Year-to-date annualized returns: 8.72%*
Two-year returns: 8.89%

Crowdfunded real estate is like the younger, cooler cousin of REITs. Simply put, it allows ordinary folks to pool their money to invest in things like apartment complexes, office buildings, and shopping centers. It’s like a Kickstarter for buying real estate—instead of funding your college roommate’s feature-length documentary about Furries.

Previously available only to uber-wealthy accredited investors, crowdfunding only became open to the general public in March 2015. That’s when the government enacted new rules opening up the investments to folks without ginormous bank balances. So there isn’t much data available yet on how these investments perform over the long term.

While REITs can hold tens of thousands of properties and be worth billions of dollars, crowdfunding companies are often significantly smaller, holding just one or a handful of properties. And they often require a long-term commitment from investors.

As with REITs, the two main options in crowdfunded real estate investing are equity or debt. Equity, the riskier of the two, involves investing in a fund connected to commercial or residential development. It makes money from the income the property generates and the increase in the value over time. The investment is usually tied up for about five to seven years. Debt is the loan used to get the project off the ground and continue to finance it through the life of the project.

“These are long-term investments, so if you pull your money out early, there’s usually a financial penalty,” Ippolito says. That’s a big difference from REITs, which can be sold at any time. “Retirees who need the money soon probably should look elsewhere.” Debt is a bit safer, but the payouts may not be as high.

5. Home appreciation: The investment you can live in

One-year appreciation: 10%*
Three-year appreciation: 26.7%
Five-year appreciation: 44.8%

Folks don’t need to flip homes or pour money into crowdfunded projects to make money as a real estate investor. Instead, they can search hard for the perfect home, get their finances in order, negotiate smartly, and close the deal for the best possible price.

And then live in it.

Real estate typically appreciates over time. That means that buyers who buy a home in a decent area and keep it in good shape should make money when they decide to sell. Depending on the market and the home, sometimes a lot of money. But they should plan on being in that home for at least five or so years, so they can build up enough equity in the home to net a profit once real estate agent fees and closing costs are accounted for.

“In general, buying a home is a good investment and a way to build wealth and equity over a lifetime,” says Joseph Kirchner, senior economist at realtor.com®. “[But] even if you’re buying it to live in the house for the next 30 years, it is always better to buy when prices are low.”

And as folks build equity in their home, through appreciation and paying down their mortgage debt, they can take out home equity loans or home equity lines of credit against their property.

But of course, just as with the other investments on this list, there are risks. The country could enter into a new recession, or there could be a local housing market crash if a big employer leaves the area. Or homes in your area could simply be overvalued.

However, when home prices fall, they do generally rebound—eventually.

“Good markets aren’t going to last forever,” says real estate investment author Tyson. “Even the best real estate markets go through slow periods.”

Post courtesy of realtor.com

What’s Really Included In Closing Costs?

Expect property taxes, homeowners insurance, and lender’s costs to be part of your settlement-day tab.

With your house-hunting and lender searches now in the rearview mirror, you can start steering your way around the final bend that leads to the driveway of your new home: settlement day and closing. A few days before you meet with your real estate agent, a title company representative, and your loan officer for this joyous event, you should have received from the title company a copy of your closing documents. Read these documents carefully — they will include details on the closing costs that are due upon settlement.

  • What are closing costs?

    Closing costs are lender and third-party fees paid at the closing of a real estate transaction, and they can be financed as part of the deal or be paid upfront. They range from 2% to 5% of the purchase price of a home. (For those who buy a $150,000 home, for example, that would amount to between $3,000 and $7,500 in closing fees.) Understanding and educating yourself about these costs before settlement day arrives might help you avoid any headaches at the end of the deal.

  • What’s included in closing costs?

    Closing costs will cover both recurring and nonrecurring fees that are a part of your transaction. Recurring costs are ongoing expenses that you will continue to pay as a homeowner, with a portion due upon closing; nonrecurring fees are one-time fees associated with borrowing money and the services that were required to purchase the property.

    Recurring closing costs are placed in your escrow account, which you might view as a forced savings account for those upcoming home expenses you’ll be facing. They can vary, but the most common ones are property taxes (one to eight months’ worth, depending on when your home purchase coincided with the local tax billing cycle), homeowners insurance (the annual premium is typically due at closing, plus another two or three months’ worth of payments), and prepaid loan interest (for the number of days you’ll have the loan until its first payment is due). Also placed into escrow are costs for title insurance, which is considered a must because it protects you in case the seller doesn’t have full rights and warranties to the title of the property.

    Nonrecurring closing costs are fees paid to your lender and other professionals involved in the transaction. They include: any home inspection fees; any discount points you’re paying upfront to lower your interest rate; an origination fee, which is charged by the lender to process your loan; a document-prep fee, which covers the cost of preparing your loan file for processing; an appraisal fee, which covers the cost of a professional estimating the market value of the home; and a survey fee for verifying the home’s property lines. Also expect as nonrecurring costs: an underwriting fee for the cost of evaluating and verifying your loan application; a credit report fee for pulling your credit scores; title search and recording fees; and a wire-transfer fee for wiring funds from the lender to your escrow account.

  • How to prepare for closing costs

    The best time to study closing costs is when you’re shopping for a lender and can compare your desired loan amount with interest rates you’re offered (plus any discount points you might plan to pay upfront to lower those rates). Then use a closing-cost calculator to determine what your costs might be. The calculator will gauge your monthly mortgage payments, based on whether you’re financing the closing costs into your mortgage or whether you’ve decided to pay them upfront.

How to Design a Room Your Guests Will Never Want to Leave

A well-appointed guest room is the secret to becoming the host with the most.

Stick to One Style

Keeping each element of your guest room consistent with its overarching style is one of the easiest ways to design a space that feels well-thought-out and welcoming. Avoid picking up that clearance “bed in a bag” and instead find a few unexpected elements to create a space that feels like the ultimate retreat. This room nails the rustic chic look thanks to antlers, wood and faux fur pieces.

 

1462989803120

Make it Feel Like Home

Homey details like a cozy chair and a tray for your guests morning coffee will make them feel welcome immediately. And leaving space in the cupboard for their wares encourages them to get comfortable and stay awhile.

 

1400967963759

Don’t Forget the Entertainment

You never know if your guests have the same sleep schedule as you, so adding a television and plenty of books to their room ensures they have plenty to do if they’re an early riser or night owl.

1400977682420

Let Your Location Shine

Whether you live by the beach, in a big city or in the middle of the country, your location can be used to inspire your decor. Stock the space with accessories that echo your surroundings, and let your guests truly savor their time in your home.

1485879278130

Put Nooks to Use

If your home doesn’t have a dedicated guest room, you can always turn any little nooks into a space for friends and family to get comfy. Daybeds, murphy beds and even pull-out couches are all perfect places to put your guests up.

1417629987542

Elevate Your Bunk Beds

Bunk beds may be synonymous with little kids’ rooms, but they can actually be quite chic. Go for a sleek, pared down look — think industrial frames and understated bedding — and any adult would be happy to get some shut eye in your bunk. Plus, you just can’t beat having space for additional visitors.

1502442465934

When in Doubt, Add More Pillows

You can never have too many pillows, especially when you’re designing a room meant to make your visitors feel at-home. Stocking the bed with plenty of fluffy pillows gives your guests the option of crafting their perfect sleeping arrangement. A stylish throw, like this Moroccan wedding blanket, adds an extra dose of comfort that will leave your friends and family dreaming about your guest bed.

1441033687611

Buying a Short Sale: 4 Tips to Make Yours the Winning Offer

Bargain shoppers know that buying a short sale can score you a sweet deal on a home. Since the sellers are set on avoiding foreclosure, buyers can jump in and nab a house below its market value. It might even sound like the easiest transaction ever: The seller is determined to sell a house and you have the means to buy it. It’s good as gold, right? Not necessarily.

Though they might appear simple, short sale transactions are different from traditional home sales. There are a number of pitfalls and extra costs that can arise with a short sale.

What is a short sale and how does it differ from other sales?

Simply put, a short sale is when a home sells for a price that won’t cover the cost of the outstanding mortgage.

Short sales are different from both traditional home sales and foreclosures. In a traditional home sale, you work with only the seller and the seller’s agent to make an offer. In a foreclosure, the lender has already bought the property, so you’ll make an offer directly to the lender, without a buyer involved.

In a short sale, the home is being sold at a loss. So, while the seller still owns the property, the lender must approve any offers.

Below are tips on what to expect and how to have your offer stand out from the crowd.

1. Have your finances sorted

Solid financing always makes an offer appear stronger, but this is especially true in a short sale.

According to Mark Ainley of GC Realty Investments in Chicago, “You can increase your chances of having an offer accepted by either being a cash buyer or having a pre-approval letter from a lender. The pre-approval will carry more weight than a pre-qualification letter because it shows that a lender has already vetted your finances and approved you for that loan amount.”

In addition to the pre-approval, being prepared to put down a sizable earnest money deposit can help move your offer to the top of the pile.

2. Be ready to wait for approval

The approval process is a bit different with short sales. The seller first has to approve your offer, as usual, but then it must be sent to the lender for review before the sale can move forward.

“Be patient. Banks take their time approving a short sale,” advises, Kathryn Bishop, a Keller Williams agent in Los Angeles.

Several individuals, including the lender, will need to look at your offer before a consensus can be reached. The lender must decide how much of a loss it’s willing to take on the loan and it’ll likely vet your finances to make sure you are financially sound enough to buy the home.

This process could take weeks, but in most cases, it will take three to four months.

3. Don’t expect contingencies

In a typical home sale, you can negotiate contingencies with the seller to reduce closing costs, cover fees, or make repairs before you finalize the deal. However, in a short sale, the lender also needs to be taken into consideration, and it is less likely to approve your contingencies.

Keep in mind that the lender is already taking a loss on the loan and won’t want to lower its profits any further.

The lender “is the one making the final decision on whether or not to accept your offer,” says Karen Hanover, a former short sale negotiator with a major lender. “They are going to look at the net after all costs of sale, not just the asking price. They also want to see the properties sold as is.”

4. Don’t navigate a short sale alone

The bank will be trying to recoup as much of its investment as possible, and the seller will be focused on unloading the property before it’s foreclosed. So who has your interest at heart? It’s important to have someone in your corner who can advocate for you and make sure you leave the negotiating table satisfied.

“The buyer must be able to control who does the short sale negotiation and have the legal right to communicate with that negotiator and receive status reports,” says James Tupitza, a real estate lawyer with Tupitza & Associates in West Chester, PA.

Before you even consider making an offer, make sure to bring on a real estate agent—or even legal council—who specializes in this type of transaction.

Post originally found on realtor.com