To Buy a House and Lot or to Rent a House?

Buying versus renting property: which is right for you?

Did you know that only about 40 per cent of Filipinos own their own home? This figure, from consumer banking firm Citibank, is one of the lowest in the Asia-Pacific region.

But with the price of rent increasing, buying property outright may make better financial sense. So how do you decide whether buying or renting is right for you?

Consider all the costs

Some say rent money is wasted money. Renters pay a large bill every month and, unlike with investing in property, you never recuperate any of the costs. But owning property comes with several additional fees and taxes that you need to take into account when deciding whether to buy – think closing costs, repairs, regular maintenance and interest on your mortgage.

In the Philippines, documentary stamps tax of 1.5 per cent is levied on the sales price or market value, whichever is higher. Buyers must also pay a transfer tax of between 0.5-0.75 per cent. Remember to take these into account when calculating how much your new home will cost you in the long run.

If your only concern is your budget, then there is a great measure for checking whether buying or renting makes more financial sense. Calculating the price-to-rent ratio is pretty simple:

Step 1: find two similar properties, one available to buy and one to rent.
Step 2: divide the price of the property for sale by the annual rent for the second property. This is the P/R ratio.
A P/R ratio above 20 means the cost of buying the property will likely exceed the costs of renting, according to the New York Times.

Think about your lifestyle

However, at the end of the day there is more to this decision that just money! Even if you can afford to buy property outright, you might still decide renting works better for you. One key factor is the flexibility that goes with renting. Renters can often afford to live in urban areas close to work and other amenities, while buyers are sometimes forced to choose a home further afield. And if you don’t like an area, it is also much easier to leave.

Here are a few questions to ask yourself before you buy:

Do I prefer the flexibility of renting or the stability of being a homeowner?
Do I like living in the inner city or am I most at home in the suburbs?
Is this home a good fit for the lifestyle I want?
Will I be able to relocate easily if work requires it?
Am I willing to look after all maintenance and repairs myself?

Source: Lamudi.com

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A little Cautious Way of Dealing with Real Estate Agents

Sometimes real estate agents tend to trick buyers and these are becoming rampant with each passing day. However, if a buyer remains a little cautious, then searching for a property, even with a dealers’ assistance becomes easier. The post explains few ways of dealing with dealers’ tricks.

home, house, house with money

Buying a property often involves dealing with an agent. While, we do derive extensive information from them about buying and selling properties, we must understand that they are not a buyers’ friend. This is said because, often times buyers end up completely trusting these real estate agents, thus getting trapped in their tricks. Before you think of hiring a real estate agent, glance through the following paragraphs:

- Understand that real estate agents are not a buyers’ friends; they are mere businesspersons who work for the seller, get them the best possible deal and in return the buyer pays them.

- There are very few real estate agents who work on salary

- Most real estate agents earn through commission. If an agent is unable to close a transaction, he or she does not get paid.

However, having said all these, we must understand often we are tricked by agents; especially first time home buyers who have resorted to a real estate agent. So, it is advisable that you do not get tempted about explaining everything to the agent. Such information might be used against you, thus leading you to finally compromising on your chosen residential property. The agent will get an idea and will know how far he can push you if he is already aware that you have already missed out on three/four properties before you approached this particular one. But do not be afraid of getting your points across with the dealer. Some tips of dealing with dealers’ tricks are explained below:

You Need to Approach an Agent

Do not expect that an agent will send you properties if they are available. It is better that you remain a little proactive in the house hunting process and remain involved with the agent throughout the process. Go and check out properties with the agent if possible. You will not only get to see various types of properties all by yourself, but will get to learn a lot through this process.

Bank Valuation does not benefit the Buyer

Often a buyer is fooled by the fact that bank valuation benefits the buyer; understand that a bank valuation is for the lender and not for the buyer.

Agents get paid only after the Transaction is over

Well, this is one of the most important aspects while it comes to dealing with a real estate agent. Since they are paid only after the transaction is over, they will always be keen on helping a serious buyer. So make sure that you project yourself as a serious buyer and monetary transactions are not a constraint.

Ignore any kind of incentives or discounts offered by the Agent

This is one of the major tricks played by real estate agents. They use incentives and discounts to lure their customers. If someone pays your moving costs or your stamp duty, then it is included in the price and you will have to repay it above and over the next 25 years’ of your mortgage.

Confirm every Conversation that you have with your agent

While verbal communication is important, make sure that you confirm every conversation that you have with your agent. Ask for an agreement if possible. Alternately, do not forget to keep a track of the appointments engaged in, any kind of offers made or any bids that were rejected along with terms and conditions. If you do so, it will give the agents an impression that not only you have genuine interest in the buy/sell process but your are aware about the basic process involved in property dealing.

Never opt for your Finances from the Agents’ Services

Dealing with finance is an integral part of the entire buy-sell-rent process; always opt for a reliable adviser. You may get the quote from the agent, but do not forget to discuss finances with your mortgage advisor.

Cross-check everything that an Agent Tells you

Never trust an agent blindly; always cross check everything that an agent tells you regarding a property or a location. Visit locations in person so that you get a fair enough idea about location as well the property.

While, agents do tend to trick buyers, hiring them also has an advantage as house-hunting becomes a little easier. If you are pro-active and take the above-mentioned precautions while dealing with an agent – searching for a property through agents can yield good results.

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