While some of these factors are out of your control, there are steps you can take so your home is more likely to be valued higher. In this blog post, we will explore the importance of home appraisals and provide a comprehensive home appraisal checklist to help you maximize the value of your home during this evaluation. 

Importance of Home Appraisals 

Getting a home appraisal offers benefits for both sellers and those looking to refinance. If you’re refinancing a mortgage, a better home appraisal will result in a potentially lower interest rate, lower monthly payment, and a shorter payoff term. If you’re a seller, it provides you with an accurate estimate of your home’s value, allowing you to set a competitive listing price. Furthermore, an accurate appraisal attracts potential buyers and increases your chances of securing a better deal. 

Preparing for a Home Appraisal 

Proper preparation is essential to ensure your home is presented in the best possible light during the appraisal process. Here are some tips to help you be ready: 

• Improve the Condition: Take the time to address any necessary repairs or maintenance tasks. Fix leaky faucets, replace broken light fixtures, and touch up paint where needed. A well-maintained home leaves a positive impression on the appraiser. 
• Enhance Curb Appeal: First impressions matter. Spruce up your home’s exterior by mowing the lawn, trimming bushes, and adding colorful flowers. A well-manicured front yard significantly impacts the overall appraisal value. 
• Clean and Declutter: Ensure your home is clean, decluttered, and properly staged. Remove personal items and excess furniture to create a more spacious, inviting atmosphere. 
• Document Upgrades and Renovations: Make a list of any recent home improvements, upgrades, or renovations. Provide documentation, including receipts and permits, to showcase the added value. 

Selling or Refinancing, Perpetual Title is Here to Help! 

A home appraisal is a crucial step in both the home selling process and refinancing a mortgage. By understanding the importance of home appraisals and properly preparing for them, you can maximize the value of your home. And be sure to use our checklist to prepare your home for appraisal. Remember, professional assistance from the experts at Perpetual Title is just a click or a call away. Contact us today to make the most out of your selling or refinancing experience. 

The post Maximizing Value: A Home Appraisal Checklist first appeared on Perpetual Title.

What are Seller Impersonation Scams?

Seller impersonation scams are a growing issue that is plaguing the nation, so much so that the United States Secret Service has issued a bulletin on seller impersonation scams. According to them, these scams occur when cybercriminals search public records to identify vacant real estate that is free of mortgages or other liens as well as who the property owner is. Once found, the scammer will pose as the owner through electronic communications and have the property listed for sale below the market value, attracting unsuspecting victims who will quickly send them cash to purchase the property. Once the transaction is complete, the cybercriminal gets the sale proceeds, and the victim gets nothing but an empty wallet with no property to show for it. 

It’s a dubious scheme, but not unavoidable. Perpetual Title thwarted five attempts of seller impersonation scams in the last year. So how did we stop it? Simple: by staying vigilant and identifying the warning signs of seller impersonation scams. To secure your transactions from cybercriminals, here are five red flags of seller impersonation scams you should be on the lookout for: 

1. The property is advertised significantly below market value: Everyone loves a good deal, but often if it seems too good to be true, it probably is. Ask the seller why the property is listed so low. If you receive an answer that’s vague or doesn’t make sense, something foul may be at play. 

2. The “seller” can’t meet locally and only reaches out through email or text: Face-to-face meetings, video calls, and even phone calls can unmask a criminal pretending to be the property owner; therefore, they’ll avoid them at all costs. If a “seller” only emails or texts with odd excuses for why, it’s a red flag. 

3. Sharing necessary documentation is difficult: An unwillingness—often veiled as ignorance—to send or receive documentation can signal something is wrong. “Sellers” who fail to share a form of legible photo ID or unreturned paperwork show the signs of impersonation scams. 

4. The “seller” is insistent on who can and can’t be included in the transaction: If the “seller” is adamant about not using a real estate agent or title company, or demands to use their own agent or notary, chances are it’s a scam. You should always be represented by your own agent and go through a title company and escrow services to ensure complete transaction security. 

5. The “seller” is willing to offer incentives or cut corners to complete the closing as quickly as possible: A “seller” who pushes for a closing within a few days of agreeing on a price should be a glaring warning, especially if they’re willing to make it happen by any means necessary. 

Protect Yourself from Seller Impersonation Scams and Other Schemes

Seller impersonation scams can cause a lot of havoc, tricking buyers out of their savings as well as their dreams of owning a property. By knowing the red flags, you can better identify and stop these terrible crimes before it’s too late. At Perpetual Title, we always recommend you close with a title company and send funds through an escrow service to ensure your sending funds to the proper party. Our team is dedicated to keeping a keen eye out for impersonation scams and protecting our clients at every stage of the closing process. If you’d like to learn more about how you can protect your real estate transactions, consider reading our tips for identifying and preventing wire fraud.

The post Seller Impersonation Scams: 5 Red Flags to Look for first appeared on Perpetual Title.

We should first note that these are backed by various points of data. Each location on this list is chosen due to the following variables:  

Housing affordability: How do home prices compare to similar cities. Are they higher or lower? 

Housing inventory: Is there a significantly higher inventory of houses compared to comparable markets? 

Job market performance: Is the job market growing to attract buyers? 

Renter’s financial capability: Are renters able to buy a median-priced home? Is that percentage of renters higher than 15.1%, the national average? 

Migration gains and population growth: Which locations have the most movement and growth? 

5 of the Hottest Real Estate Markets of 2023 

1. Dallas, Texas 

Median Home Price: $342,900 

Dallas is a jewel for many aspiring homeowners for a number of reasons. With one of the strongest local economies nationwide, no state income tax, and it being fairly within the national average for cost of living, residents are stretching their paychecks further. On top of this, Dallas has thriving food and art scenes to explore via a wide network of public transportation, bike trails, and walkable neighborhoods, making it possible to live in the city without a car.  

2. Jacksonville, Florida 

Median Home Price: $282,260 

With gorgeous waterfront views and warm weather, Jacksonville is 874 square miles of land just waiting to be called home. Home to major national brands such as Fidelity Investments, Johnson & Johnson, and the Mayo Clinic as well as having a growing tech sector, a large military base, and the Jacksonville Port Authority, Jacksonville is teeming with a well-paying job market. This city is also a great choice for growing families with plenty of museums, art walks, and markets to visit along with the Jacksonville Jazz Festival, the Jacksonville Zoo, and the Arboretum and Botanical Gardens. 

3. Knoxville, Tennessee 

Median Home Price: $280,000 

Located in the foothills of the Appalachian Mountains is Knoxville, Tennessee. With a 10.4% lower cost of living than the national average, it’s considered an extremely affordable place to call home. Additionally, the University of Tennessee is located in Knoxville, giving the mid-sized city a college town feel. Not far from the Great Smokey Mountain National Park and just off the beautiful Tennessee River, Knoxville is a gem for those who enjoy outdoor recreational activities.  

4. Chattanooga, Tennessee 

Median Home Price: $300,000 

Nicknamed the Scenic City, Chattanooga offers picturesque views with plenty of hiking and biking trails to take in nature. With a growing economy and the cost of living being 13.5% lower compared to that of the national average, Chattanooga was rated the 3^rd best place to live in Tennessee by U.S News. Intersecting a rich history and a focus on all things local, this city has a little something for everyone: be it museums, shopping boutiques, or a vibrant nightlife. 

5. Miami, Florida 

Median Home Price: $510,000 

Famous for its sunny weather, sandy beaches, and exciting leisure activities, Miami is a hub of art, music, and culture. Home to the headquarters of American Airlines, Precision Response Corporation, Royal Caribbean, Office Depot, and more, Miami has a healthy job market. After work, residents can enjoy time on the beach or water, Everglades National Park, the Wynwood and Design District, or one of Miami’s many sports teams.  

Wherever You Are, Perpetual Title is Here to Help 

With direct licensing in 23 states and able to help with closings in all 50, Perpetual Title is your closing solution wherever you are in the United States. Need help in Florida? Reach out to our office in Tampa. From sea to shining sea, Perpetual Title is here for you. So, whether you’re looking at real estate in one of the hottest markets of 2023 or somewhere else entirely, let an experienced member of Perpetual Title help you at your next closing.  

The post 2023’s Projected Hottest Real Estate Markets first appeared on Perpetual Title.

Real Estate Technology Trends to Watch

Videos

One of the more popular of real estate technology trends appears to be video property tours. From YouTube and Facebook to Instagram and TikTok, realtors are finding a majority of clients by displaying home interiors in digital walkthroughs. In this manner, remote buyers can view all features of the property before committing and moving out, thus providing a more comfortable and secure experience. In addition to live viewing, potential buyers can also find real estate videos featuring timelapse on construction, wherein they can see previous renovations and length of the remodel online. With this feature, buyers can better appreciate the property’s value before they buy, ensuring the quality of their home is worth investing in. Immersive, engaging and fun, videos will enhance the real estate industry by visually enticing buyers to homes wherever you list.

Video tours allow buyers to tour remotely which is convenient for those who cannot visit in person.

Virtual Reality (VR)

People often associate virtual reality with video games; however, as real estate technology trends adapt, so too has the real estate industry grown to include virtual reality tours of homes for buyers. Yet, this isn’t limited to just inside the home. Thanks to VR imaging and sophisticated videography, potential buyers can now explore outside the home for a full inspection of the acreage. Google 360 services already offer such views to major businesses, and now realtors can invite homeowners to view properties from anywhere at any time with augmented virtual reality from their websites. If that wasn’t amazing enough, real estate websites also feature virtual staging options! Before real estate agents would stock a home with rented furniture to display the home; today, virtual reality technology can simulate custom furniture, wall colors, and flooring renovations to buyers according to their preferences. Rather than having to imagine their home design, buyers can visually lay out remodeling ideas on screen. Current real estate technology trends predict 50% of home sales in 2023 will occur via VR tours and staging, so its important agencies start implementing such features now.

Drones

Real estate technology trends of 2023 are using drones to feature home properties and surrounding highlights to buyers. Using the drone’s built-in camera lenses, real estate agencies can take 360° photos and videos to show properties from above, highlighting the full beauty of the home as well as the surrounding landscape. Since drones aren’t indoor friendly, most exterior images highlight the property exterior and amenities within the area to buyers, giving them an idea of what schools, shops, businesses, and natural landscapes to look forward to upon moving. After years of utility on the market, drones have become a much cheaper and more convenient tool to display real estate properties to buyers, saving realtors time and money from using a photographer.

Drone photography captures the entire property for the potential buyer to see.

Social Media

Realtors can count on social media to be a constant, reliable type of real estate technology trend to reach homebuyers. Facebook, Twitter, Pinterest, and even LinkedIn ads are a popular means to advertise real estate properties to homeowners and businesses. Each channel not only raises awareness across various buyers, but helps to list home prices, layout features, amenities, and other characteristics. Some platforms even allow buyers to bid on properties like a market auction, guaranteeing closings in no time.

Blockchain and NFTs

Of the lesser-known real estate technology trends for 2023, few know the growing reliance on blockchain and NFT technology to secure real estate transactions. Mostly used in cryptocurrency, blockchain serves as a digital ledger to track transactions and activity across a network, stored in coded “blocks” that connect and store information. As real estate companies move into 2023, many lean on blockchain technology to store vast amounts of data on properties from titles, payments, client information, and much more. Due to its complex design, real estate blockchain transactions are quite secure, nearly eliminating title insurance or transaction fraud risks while also limiting disputes from its contractual transparency. Fast, efficient, and secure, blockchain presents an easier means to close transactions between parties; in that same vein, though, real estate technology moves towards blockchain’s NFT utility, too. While blockchain eases the transaction process between parties, NFTs—non-fungible tokens—create a means for clients to track, manage, and exchange their title property deeds through unique digital tokens too complicated to clone. Blockchain NFTs allow realtors to complete real estate remote closings entirely online.

Data Analytics

Data analytics continue into 2023’s top real estate technology trends for helping to keep real estate agencies and properties relevant within the fluctuating housing marketing. A strong source for buyer activity and property data, data analytics help realtors to identify sale opportunities, create personalized marketing campaigns for their audience, and determine price ranges within their covered area. Moving into 2023, real estate technology hopes to include AI predictive software into data analytics, which will allow agencies to market and adapt their business strategies according to market trends and buyer behaviors online.

Analytics provide insight into data that can be used to forecast future opportunities.

eSignatures

Most agencies have moved to the real estate technology trend of eSignatures, going into exclusively digital contracts. Incorporated with other digital contract trends, eSignatures automate legal closings with simple digital markers for clients. In turn, real estate companies will save a great deal by cutting down on paper documents, and thus streamlining the sale transaction and official title exchange within seconds.

ID Authentication

One of the newer real estate technology trends coming of 2023 are identification tools. Individuals who have a smart phone or computer may have unlocked their devices via fingerprint or facial recognition scanning; well, the same technology seems to be growing in popularity with realtors and buyers. For customers remotely closing on a property on their phone, computer or tablet, identity authentication technology goes a step further to ensure security from title record and payment fraud between parties. In short, scanning technology enables buyers to access important digital data from realtors without the frustration of security codes and questions impeding the process.

Revolutionize Your Real Estate Experience with Millennial Title

Perpetual Title offers a variety of new, innovative tools that will carry real estate technology trends into 2023 and beyond. From blockchain smart contracts to crypto closings, rely on Perpetual Title’s team of real estate professionals to securely close the property.

The post A Look Into the Future: 8 Real Estate Technology Trends to Watch in 2023 first appeared on Perpetual Title.

Benefits of Staging Your Home

There are many benefits to staging your home for prospective buyers including: 

Increased Desirability.  

Staged photos can initiate the interest of the buyer in the home and push the homebuying process forward. 

Implements Buyer Urgency

A properly staged house can not only increase desirability but also shorten the length of time on the market. A study from the Real Estate Staging Association found that staged homes spend 72% less time on the market. Buyers are more likely to make a quick offer on a home they consider attractive and looks move-in ready.  

Buyer’s Expectations

Due to the oversaturation of home shows and real estate sites, buyers develop certain standards for what they want their home to look like. If your home is not staged, then it can leave buyers feeling underwhelmed and uninterested. However, if your home is staged, it can meet or possibly exceed the buyer’s expectations.  

Improved Visualization

Before you make a large investment, you want to make sure that it is the right decision for you. Staging gives buyers the chance to imagine living in your home.  

Increased Value in Home

Staging isn’t exactly cheap, but it can increase the dollar value by 1% -5% from buyers. This may not seem like a lot but 5% of a $500,000 home is $25,000.  

 Just by giving your kitchen a facelift it makes a huge difference

Staging Tips

Start with Curb Appeal

First impressions matter! Buyers first see your house’s exterior, so it’s extremely beneficial to give them a positive impression of your home before they even step foot inside. Try power washing the siding, cleaning the gutters, or pulling weeds! These small upgrades can make a dramatic difference.  

Give the Kitchen a Facelift

Kitchens can make or break a home. Consider changing out older, outdated appliances and décor with more modern options. Corroded faucets or hard water stains are significant turn-offs for buyers.  

Depersonalize and Remove Unnecessary Clutter 

Staging allows buyers to visualize them living in your home. However, they are not going to be living in YOUR home. Remove clutter and personalized items from all rooms to give a blank slate for prospective buyers to emotionally connect with. 

Rethink placement

Do not be afraid to move furniture around. Minor changes can make the space more inviting and visually appealing.  

Add potential office space.  

Today, more people are choosing to work from home or homeschool their children, so having a built-in workspace is a huge plus for buyers.  

Show off Storage

Storage always ranks high on a buyer’s wish list. Do yourself a favor and show off your decluttered closets and large kitchen cabinets. Buyers will definitely appreciate the extra space.  

Amp up the Lighting 

Great lighting is one of the easiest ways to make your home appear more warm and inviting. Increase the wattage in your light fixtures and aim for a total of 100 watts for every 50 square feet.  

Time to Fluff the Pillows!

Overall, staging your home can greatly benefit both buyers and sellers. Staging your home will highlight your home’s strong suits, downplay shortcomings, and ideally appeal to the largest possible pool of prospective buyers.

We hope that this blog was informative and helped in your home selling process. For more information regarding the home selling process, contact us today.

The post How Staging Your Home Can Lead to a Faster Sale first appeared on Perpetual Title.

What is Property Appraisal and Why Should You Care?

A property appraisal is an independent opinion of a home’s market value at a given point in time. Your home’s value is based on several factors including location, size, condition, age, amenities, and prior sales prices. Due to the housing market’s ever-changing nature, the property values in your neighborhood may be much higher or lower than when you first bought the home. There are many changes that can occur to your home since you purchased it.

An appraisal is used by the Lender to see how much the property is worth because the home serves as collateral for the loan. Having the value of the property assists the Lender in deciding how much money to lend. From a buyer’s perspective, an appraisal can let you know if the amount being asked is an appropriate price.

5 Tips to Increase Home Appraisal Value

• Update Your Kitchen and Baths. You will get more return on your investment when renovating your kitchens and bath than any other improvement to your home.
• Improve Curb Appeal. Curb appeal can make or break a house. Buyers will notice damaged siding and overgrown lawns, so it’s best to correct such eye sores.
• Create the right atmosphere. Now that you’ve fixed the outside, it’s time to give the interior some TLC. Remove unnecessary clutter, use natural lighting, and refresh the paint to make your house feel more like a home.
• Fix small imperfections. This is the perfect time to work on that to-do list. Fixing the dripping faucet or upgrading an outdated kitchen will add more value to your home. Remember to document all the updates you’ve made along the way.
• Really sell your home. Do not be shy! Mention the newly built library, museums, shopping centers, and parks in the area. These will make your home even more desirable.

Key Takeaways

The housing market can be extremely intimating. Sellers should attempt to make their home look its best in order to look appealing on the housing market. Pulling weeds and touching up paint may seem small, but those changes can make a dramatic difference to your house.

We hope that this blog was informative and provided helpful home improvement tips, but if you still have questions, our team is here to help. Contact Perpetual Title for more information on the home appraisal process.

The post What Can You Do to Increase Home Appraisal Value? first appeared on Perpetual Title.

1. Prepare for Home Inspections

Home inspections are a standard part of the buying and selling process. Home inspectors will notify both parties of potential issues and items to repair. To prepare for the home inspection, sellers can take charge and minimize any delays by completing the following:

• Clean out gutters
• Repaint the exterior if weathered
• Caulk around windows, doors, and chimney
• Repair any broken pavers, bricks, or loose railings
• Test smoke and carbon monoxide detectors
• Ensure crawlspace and attic are accessible
• Inspect plumbing fixtures for any leaks
• Replace any burnt out lightbulbs indoors and out

2. Provide Pertinent Information to Your Realtor and Title Company

• Current Mortgage Statement for payoff
• HELOC or Equity Line statement
• Personal Information (social security number)
• Homeowners Association contact information (if applicable)
• LLC or Trust documentation (if applicable)

3. Moving Preparations

As the buyer finalizes items on their end and a closing date has been set, it’s time to pack up your belongings for the move. One way to alleviate some of the stress is by hiring a reputable moving company in the area. We recommend gathering at least three names so that you can compare quotes.

4. Leave Essential Documents and Manuals for Buyer

Collect essential documents such as manuals, receipts, and warranties in a folder for the buyer to easily access.

5. Collect all Remotes, Keys, and Garage Door Openers

Many buyers will change the locks, but until they can make a trip to the home improvement store, they will need the keys. The buyer will also need any remote controls for ceiling fans and garage doors to get full use of the house. Set these aside in one location so they’re easy to find.

6. Clean the House Thoroughly

Once you’re all packed, now it’s time to clean! No one wants to move into a dirty house, yourself included. So, whether you hire a professional cleaning service or do it yourself, the buyer will appreciate being able to move right in without having to get to work immediately.

Cleaning your home when it is vacant is much easier than with moving boxes everywhere.

Once the Closing is Scheduled

7. Notify Change of Address

Be sure to notify friends and family of your upcoming move. You should also fill out a change of address form on the USPS website to ensure your mail is rerouted.

8. Inform Utility Companies

Electric, gas, water, cable, and any other utility companies will need to be notified of your move. Unless they are informed, they will keep charging you even after the new owner moves in. We recommend gathering all your utility bills, phone numbers, and websites in one place to make canceling your services more efficient. Many companies will also allow you to do this online and even input a specific date for the last day of service.

Ask that the utilities be transferred out of your name, not turned off. That way your buyer can have them transferred into their names with ease.

9. Personal Walk Through

Walk through your home one last time to make sure you do not leave anything behind. Check closets, drawers, sheds, and all the nooks and crannies for your personal items. If you’re considering leaving behind any personal property that may be useful to the new owner, just check with the real estate agent.

10. Cancel Insurance

Once the closing has occurred, contact your insurance provider to cancel your homeowners insurance. There’s no reason to keep paying for insurance that you do not need! However, be sure to wait until ownership has been transferred because until then you will be financially liable for any issues.

Closing Day!

With your documents in order, moving completed, and the house ready for the new buyer, the final step in the process is closing day! Before you make your way to the closing table, be sure to have the following items with you:

• License or Government-Issued photo ID; all individuals on the purchase and sale agreement will need to bring their ID.
• House keys, keypad access codes, garage door openers (don’t forget the one in your car).

With closing completed, it’s time to celebrate the sale! While selling a home can be a complex process, Perpetual Title’s experienced and knowledgeable team is here to address all your questions and concerns in the closing process. If you would like to learn more about our closing process or to schedule your next closing remotely or in one of our offices, please contact our team!

The post Remember to Do These 10 Things When Selling a House first appeared on Perpetual Title.

What is a Warranty Deed?

When a property is sold, a warranty deed is a legal document that is used to transfer ownership of the property from the seller to the buyer. A warranty deed, provided by the seller, guarantees to the buyer that the property is owned by the seller, free and clear of any title defects, and does not have any outstanding debts, including mortgages. This document is issued as part of the title search and includes details such as the address, description of the property, information about the parties involved, and the date of the transaction.

Understanding Deeds of Trust and Mortgages

A Mortgage is an instrument pledging real property for a loan. This is a two-party instrument: The mortgagor (debtor) grants the mortgage to the mortgagee (lender). A mortgage explains the details of the loan including the principal balance, maturity date, and interest rate information. Mortgages can be foreclosed judicially or nonjudicially, though they are usually foreclosed judicially.

Deed of Trust is a three-party instrument: The grantor (debtor, mortgagor) gives Deed of Trust to a trustee as security for a debt owed to the beneficiary (a.k.a lender, mortgagee). Like a mortgage loan agreement, the deed of trust explains the details of the loan including the principal balance, maturity date, and interest rate information. The trustee is given the power of sale allowing the trustee to foreclose nonjudicially.

With a deed of trust or a mortgage, they can only be released after satisfaction by the beneficiary or mortgagee. However, a few states have granted the power to release to the trustee.

This map shows where a deed of trust, mortgage loan, or both are accepted.

Deed of Trust, Mortgage, and Warranty Deed: Key Difference

Depending on where you are purchasing a home, you may encounter one or all these documents, however, each of them plays an integral role in the home buying process with vastly different purposes.

A deed of trust or mortgage only secures that Promissory Note of the lender against the property. A warranty deed conveys the legal title to the buyer and warrants that a property is owned and able to be sold without any encumbrances and liens. A warranty deed is only used in a purchase transaction whereas a deed of trust and mortgage can be used in a purchase or refinance.

If you have additional questions regarding warranty deeds, deeds of trust, mortgages, or any other paperwork associated with the home buying and selling process, contact the team at Perpetual Title today.

The post Deed of Trust, Mortgage, and Warranty Deed: What’s the Difference? first appeared on Perpetual Title.

What is a 1031 Exchange?

Section 1031 of the Internal Revenue Code allows investors to avoid paying capital gains taxes when they sell and reinvest the earnings of the sale into a property or multiple properties of like kind and equal or greater value. By reinvesting, investors will defer the capital gains tax from the sale.

For example, an investor purchases a property in 2015 for $200,000, then by 2020, the property appreciated to $500,000 and the investor decides to sell. The sale will have a capital gain tax of $300,000 and the tax will need to be paid on that gain. However, if the investor decides instead to utilize a 1031 exchange, they can invest the $300,000 they earned into another property and defer the capital gains tax on that sale.

Benefits of 1031 Exchange: Why Should Investors Use it?

While a 1031 exchange may look like a tax loophole, it is a perfectly legal process that allows investors the opportunity to reinvest, build their portfolios, and more. Here are 5 benefits of 1031 exchange transactions:

Reset Depreciation

When declaring taxes from rental income, investors can claim depreciation as an expense toward their deductions. Typically, when selling your rental property, you would have to calculate its depreciation and pay the taxes associated. With a 1031 exchange, the depreciation is carried over into the replacement property and is deferred until the new property is sold.

Increase Cash Flow and Free up Capital

Between tax savings and building wealth through capital appreciation, owning property that produces positive cash flow will grow your assets quickly. You can leverage your assets to get a more expensive replacement property by using your proceeds of the exchange toward a down payment or even consider exchanging for a commercial or rental property to earn a monthly income.

Utilizing a 1031 exchange allows investors to avoid capital gains tax by reinvesting the money earned from the sale.

Diversify Portfolio

By purchasing properties through a 1031 exchange, you can diversify your portfolio by branching out into different markets or types of properties. Owning a single asset or several of the same type exposes you to more risk in the event that the market crashes.

Consolidate Properties

On the other hand, for some investors, owning multiple properties can be costly and time-consuming, especially if the ROI isn’t high enough. Investors can utilize the 1031 exchange to swap these properties for something that is less maintenance and easier to manage.

Transfer Assets and Profits to Beneficiaries Tax-Free

In the event of death, the property and profits associated will be transferred to the designated beneficiaries tax-free.

Perpetual Title Protects Your Investment

As your partner, Perpetual Title recognizes the importance of profitable investment strategies. At Perpetual Title, we understand every aspect of real estate investing as well as its potential risks and rewards. From completing your title work and issuing policies, the team at Perpetual Title is here to ensure your investments remain protected now and in the future. To learn more about title and escrow services, contact us today.

The post Investing in Real Estate? 5 Benefits of 1031 Exchange first appeared on Perpetual Title.

Defining Mortgage Escrow

Escrow is a financial account that is held by a third party on behalf of two parties that are currently engaged in a real estate transaction. The third-party will temporarily hold the property until the purchase agreement has been fulfilled. While escrow accounts are primarily used in real estate transactions, they can also be used in other situations that require an agreement between buyers and sellers or require time to inspect the purchase before payment is made.

Types of Accounts

In real estate, escrow is commonly in two instances:

1. To secure the purchase of a home
   • When you’re buying a home, your purchase agreement will include an earnest money deposit, which shows you’re serious about buying the home. In the event that the contract falls through due to the fault of the buyer, the seller will use the earnest money to relist the home. However, if the purchase is successful then the deposit is applied as a down payment. In order to protect both parties, an escrow account will hold the deposit until the transaction is closed. By holding the money in escrow, this ensures that it will reach the right party once the conditions are met.
2. To hold the homeowner’s funds for insurance and taxes
   • The second type of escrow account is used through the life of your mortgage loan. Most lenders will require you to open an escrow account when signing a mortgage contract. The escrow account will take a portion of your monthly mortgage payment and hold it in escrow. This money is then used to pay property taxes and home insurance. By holding the funds in escrow, the lender ensures that bills are paid on time and avoid any potential penalties against your property.

How Much Does Escrow Cost?

The cost of escrow is dependent on how much you pay for property taxes and homeowners insurance each year. Since your taxes and insurance premium change on an annual basis, your lender performs an annual escrow analysis to determine the amount that should be funded into the account each payment period. In order to keep your escrow funded, you can expect to pay about 1/12th of the total cost of your annual property taxes and insurance every month.

Benefits

The biggest benefit of an escrow account is protection throughout the real estate transaction for both buyers and sellers. For homebuyers, escrow is the key to protecting your deposit during the sale and returned to you if anything falls through. For homeowners, an escrow account will take the pressure off you when it comes to covering your taxes and insurance. This will allow you to make manageable payments and not worry about the various due dates of bills.

Disadvantages

When it comes to an escrow account, most of the disadvantages fall on the homeowner. This includes higher mortgage payments because you’re prepaying for insurance and property taxes. Another possible disadvantage is an incorrect estimate of your taxes and insurance since these can change annually. As stated previously, the lender will analyze these costs each year to determine what you need to pay but the fluctuation could affect your monthly payments and escrow account.

Do You Need an Escrow Account?

Escrow is a part of the homebuyer’s and owner’s journey and serves an important purpose throughout the real estate transaction and life of the home. While it serves as a safety cushion for the transaction, it is also convenient for you to pay for your taxes and insurance in full and on time.

Have additional questions about escrow? Contact Perpetual Title today – we are always happy to help.

The post What is Escrow on a Mortgage and How Does it Work? first appeared on Perpetual Title.