Expert: liznarr - 7/25/2005

Question
Hi Liznarr,
I am a licensed acupuncturist residing in Nashville, TN., interested in learning how to buy/sell real estate...or maybe start up as an agent.  It's interesting that both my Western and Chinese astrological profiles mention that I should consider real estate as a primary career.
What would I need to study first...I assume one must obtain a license to begin? Could I work from my own office or home after training or licensing..or would I need to be connected to an agency? Also, I've been told that I should try "real estate seller carryback mortgages" Would you please explain what that phrase means?

Thank you very much!

Mike Eidson, LAc.

Answer
Hi Mike,

In order to become a licensed agent, you will need to take the required hours of education for whatever state you reside in.  After completing your educational requirement, you will need to pass the State exam.  You can check with your state's Real Estate Commission and get a list of the licensed schools in your area that offer pre-licensing courses.  You may even be able to find this information online.

After passing your State exam, you can then decide which company you want to place your license with (a requirement unless you qualify to sit for the Broker exam and then open your own company).  You always have the option of working from home as opposed to working only from a real estate office.  I have been in the business for now going into 22 years, and I have never liked working from a typical real estate office – too many interruptions and agents hanging around who want to talk and socialize rather than generate income.

If you are not interested in becoming an agent, you need to be able to get information on recent comparable sales for any property you want to either buy or sell so that you do not over pay or list too low or high.  Pricing is critical.  Next to pricing, you need to evaluate the condition of any property and determine what MAJOR expense items might come into play for you.  

A thorough home inspection should always be done by a qualified, licensed inspector on any property you purchase; and you would want a clear termite/water damage inspection letter and clear heating/air conditioning letter, with any required repairs for a clear letter to be paid for by a purchaser.  Don't overlook including the ductwork in the HVAC inspection.  Any contract you enter into should have an “out” for you if too many repairs are needed and a seller is not willing to correct all or most.

With any water or termite damage in a house you might purchase, I would suggest NOT taking an allowance from a seller unless you are ABSOLUTELY positive of the extent of damages.  When repairs are in process, they could be much more extensive than imagined, and many times it's not possible to assess ALL hidden damage until some of the damaged area are torn out.

Not to be ignored are homeowner association dues, regime fees, covenants and restrictions, and a survey to make sure that what you “think” you are buying is actually what you “are” buying.

A seller carryback mortgage is, simply put, owner financing of property.  If you have enough equity in a property to “carry back” a mortgage for a purchaser or you otherwise have ample funds to pay off a mortgage and do owner financing, then this might be a vehicle to use to move an otherwise hard-to-sell property.  If, however, you need your equity from any property you plan to sell, you would not consider owner financing.  

Generally speaking, people who really NEED owner financing are those who have had a rather severe credit problem and cannot obtain financing any other way.  When I say “severe” as related to a credit problem, sometimes this is not necessarily a purchaser's own doing.  Severe credit problems can be the result of an accident or catastrophic illness which caused a person to get behind in payment of their debts.  

It's the people who INTENTIONALLY run up high balances, knowing they are spending beyond their limits with neither the means nor intent to repay, that you need to look out for if you do owner financing.  You could be the next hit on someone's list.  Thoroughly check credit AND references (especially rental history) for anyone you ever plan to consider owner financing for.

Here's a site I found on Google which might answer more questions for you on owner financing:  http://www.mortgagesaver.org/seller_carry_back_mortgage.htm

I hope I've answered all your questions.  If not and you have more, feel free to write again.

Good luck to you.

Regards,
Elizabeth Narr