5.Â A home mortgage interest deduction is always the best way to reduce your income taxes.Â Thatâ€™s like saying that every tall person is a star basketball player or that every college graduate is smart â€“ neither is true.Â Sometimes itâ€™s cheaper to pay income taxes rather than paying mortgage interest, or itâ€™s wiser to put that money to use as a deductable business expense.Â Everyoneâ€™s situation is different â€“ get an opinion from a qualified tax professional (NOT from a mortgage lender) before accepting this statement as patently true for you.
4.Â Youâ€™ll always save money selling your home â€œFor Sale By Owner.â€Â Sometimes, but not always.Â There is a lot of useful information in the public domain today that 20 years ago was available only to professional real estate agents.Â Experienced homeowners who do their homework (pun intended) can save money selling themselves, though the savings are often greatly reduced by the cost of signage, photography, advertising, contract documents, and the time it takes to show the property and hold open houses.
3.Â Cash is king.Â Not always.Â Sellers get all cash on closing day regardless of whether a buyer puts up the full purchase price in cash from their own pocket or borrows most of the purchase money from a mortgage lender.Â Cash itself is not king, but the contract features that cash can enable are, such as: Â a shorter escrow period; no loan approval contingency; and waiving contingencies for appraisal and inspections (unless the buyer wants them, which they usually should).Â A cash offer with a 30 day escrow period and appraisal and inspection contingencies will seldom beat a financed offer with the same terms if a well-qualified borrower offers a higher price and puts more money in the sellerâ€™s pocket on closing day.Â As a broker, I never advise sellers to give a â€œdiscount for cashâ€, though a discount for a short escrow period can sometimes work to their advantage.
2.Â In California, a verbal real estate sales agreement is just as valid as a written contract.Â California is where high profile divorces and palimony battles that contain â€œhe said, she saidâ€ promises are argued in court and openly in the press all the time.Â But when it comes to real estate sales what is â€œsaidâ€ doesnâ€™t mean anything unless backed up in writing.Â Californiaâ€™s â€œStatute of Fraudsâ€ is found in Cal.Civ.Code Â§1624, and provides that certain contracts "are invalid, unless the same, or some note or memorandum thereof, is in writing and subscribed by the party to be charged."Â For a legal explanation, see an attorney.
And finallyâ€¦ 1. The Three Most Important Things In Real Estate Are Location, Location, Location.Â Everyone concedes that location is important, but itâ€™s one thing, not three, and repeating this trite expression is neither cute nor insightful.Â Location is NOT always the most important thing.Â A 100 year old home with a crumbling foundation and Swiss cheese roof on the best corner in town is not providing the most important features needed by a cash-strapped home buyer (passes inspections, appraises for purchase amount and is move-in ready).Â How often does a home buyer say â€œBel Air would have been a better location for our new home, but Beverly Hills is all we can affordâ€¦â€Â Happens every day.Â Sure, location is an important consideration â€“ nobody with kids in private school in Greenwich, Connecticut is going to drive those kids to school every day from a home in Tuscaloosa, Alabama. But in the modern world location is often the first thing traded for some other, more affordable feature.
If you disagree with any of my selections or would like to add another, I hope to hear from you!
John A. Souerbry & Associates (DRE 01370983)Â Silicon Valley, Napa Valley, Fairfield Real Estate
Tags: northern California real estate, real estate jargon, real estate contracts