New Mexico Real Estate

How do Rising Real Estate Values Hurt?

Over the past several years home owners have watched their net worth grown faster than their paychecks thanks in large part to rising real estate values. Increased equity has allowed consumers to finance the purchase of cars, college education and even charitable giving so how could anyone have cause to complain?

As it turns out, an increased real estate value might hurt as many as it helps.

1. Higher Property Taxes. Property taxes are typically based upon the value of the home so as the price of real estate rises so does the real estate tax.

2. Higher Insurance Rates. As the price of real estate increases so does the cost to insure the property.

3. Capital Gains Taxes. Profits on the sale of an investment property or even private residence rise in response to the selling price of the home.

4. Replacement Costs. Even if you make a tidy profit on the sale of your home the cost of purchasing another might take you by surprise.

5. Larger Down Payments. Most down payments are a percentage of the total selling price. There is a big difference between coming up with 20 percent of a $100,000 home versus a $250,000 home.

Think twice before getting excited when you see property values rising. While real estate is one of the best ways to build wealth there are very real costs involved in buying, selling and holding real estate to consider.

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What is a strawbale house?

When it comes to housing options New Mexico real estate has a lot to offer including fantastic vistas and exciting alternative building methods. Buyers from other parts of the country might not be familiar with some of the styles available among New Mexico homes for sale so it is a good idea to spend time exploring these exciting options before making a final buying decision. Two of the most popular alternatives include:

Adobe. New Mexico is dry so it is possible to build with adobe; a type of natural clay and stucco. Originally used by native Indian populations in the area, updated versions are environmentally friendly, energy efficient and absolutely stunning.

Strawbale. If you have never heard of a strawbale house then don't worry - you aren't alone. Most areas of the nation can't support the construction of a strawbale home due to high humidity but the New Mexico climate makes building with hay bales possible. The density creates a highly insulated home that requires little energy to heat or cool and the look might surprise you.

If you are interested in purchasing an alternative built New Mexico home be sure to inquire about these other options when working with a real estate agent:

• Light Clay.
• Rammed Earth
• Cob
• Pise
• Earthbag
• Earth-Sheltered
• Bamboo
• Hybrid Systems

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What do I need to know before buying an alternative form of construction?

When it comes to buying New Mexico real estate the exciting variety of construction methods might tempt home buyers to rush out and sign a contract fast. After all, many of these homes are environmentally friendly, energy efficient and low maintenance. Unfortunately, there are some special considerations to keep in mind when contemplating the purchase of New Mexico real estate constructed with alternative building methods.

1. Appraisals. Calculating the real estate value can be difficult since there are fewer of these types of homes in the surrounding area. Location, age and general condition can be difficult to determine.

2. Inspections. Finding an inspector familiar with the specific building method used is imperative. Don't take short-cuts by using a general inspector who isn't familiar with the type of construction used.

3. Finance. Don't expect the bank to be as thrilled as you are over the prospect of an alternative construction type. Many exclude certain types of construction methods while others have specific rates and requirements that must be met. In some cases it might be necessary to provide owner financing.

4. Insurance. Insurance can be difficult to obtain since the underwriter has fewer averages with which to base comparison rates and number upon. Always call to obtain at least three quotes to makes sure you will be able to insure the property.

5. Resale. Not everyone likes being different so expect to encounter a limited market when it comes time to sell the home.

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Hold or Fold - Do REIT's Still Make Sense?

Real Estate Investment Trusts or REIT's were a hot item during the recent real estate boom but now that things have cooled down a bit many investors are beginning to wonder if they are still a solid bet. The answer is a solid "It Depends". Learn all about REIT's in the face of the sub-prime meltdown with these quick tips:

Follow the Fundamentals. While speculators listen to hype, savvy investors have always followed the fundamentals. Examine the underlying assets, and FFO or Funds from Operations for starters.

Sectors. Not all REIT's are equal. Avoid those heavily invested in sub-prime markets or otherwise risky sectors like retail or office space. Each is likely to experience a downturn during a recession. Instead, seek out REIT's that focus on commodities or other areas likely to profit from a tightening economy. For example, raw land rich in natural resources like timber, minerals or natural gas may outperform the market as commodity prices continue to rise and the real estate value of the land increases. Other potential uptrends include healthcare and mixed industrial properties.

REIT's remain a solid investment strategy for those willing to do the research required to make sound investment decisions.

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How can I pick a good real estate office?

When it comes to buying or selling New Mexico real estate, the relationship you have with the real estate agent and broker can make or break the entire experience. Unfortunately, not all real estate offices are equal even though on the surface they might seem to be. Learn to to read between the lines to avoid making a big mistake when selecting a real estate office with these quick tips and helpful hints.

1. Sloppy Listings. Take time to review prior listings. While mistakes might occasionally happen, avoid real estate offices with consistently poor photographs or inadequate descriptions. Pictures and descriptions of the property are the first thing prospective buyers encounter when searching for New Mexico new homes for sale so be sure the property is presented at its best. Sloppy listings might fulfil the technical aspects of the work but fail to delivery results.

2. Phone Matters. Call the agent and real estate office at different times of the day to determine how long you are placed on hold, the level of background noise and average response times. Your experience is likely to be similar to that of prospective buyers so make sure it is up to your expectations as a consumer.

3. Restricted Access. Some agents like to make it harder for other agents to show your home by restricting access to the house or not providing a lock box. Make sure your property is visible to the most potential buyers by listing on the MLS and having open access for all but the most important personal considerations.

4. Commission Splits. Another item that is easy to miss is irregular commission splits. Typically the listing agent and broker split half the commission with the selling broker and agent; instead, some real estate offices try to keep more than their fair share which may persuade agents to show homes with more equitable compensation arrangements.

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How can I afford to buy a home in New Mexico?

If you are contemplating the purchase of New Mexico real estate then take time to review some of these great real estate resources. Depending upon the property and your individual situation, you might be eligible for down payment assistance, low interest loans or other special incentive programs designed to make buying New Mexico real estate more affordable.

United States Department of Agriculture Rural Development. The USDA assists potential home buyers in securing low interest rate financing for rural housing. To find out more about available homes visit http://www.rurdev.usda.gov/nm/contact.htm to locate the office nearest you.

The New Mexico Mortgage Finance Authority. The MFA makes housing affordable to first-time home buyers through a wide variety of programs including down payment assistance, loan interest loans and other packages. To learn more visit http://www.housingnm.org/.

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What are the Biggest Buying Mistakes?

When it comes to buying New Mexico real estate there are a few things savvy shopper should keep in mind. Learn how to avoid the biggest buying mistakes made with this helpful checklist.

1. Love at First Sight. The first rule of thumb is to remain objective and keep your eyes open when visiting potential properties.

2. Pick the Right Fight. Appraisers, brokers and inspectors are your friends not your enemies. If you find yourself picking apart a low appraisal or insisting the inspector re-evaluate the condition of the home then go back to #1 above. Chances are you have lost sight of the reason behind the service and need to balance emotion with objectivity or face a future fiasco.

3. Pride. Somewhere between college and middle age a house becomes more than a place to sleep and hang out with friends...it becomes a status symbol. Exercise control over the ego by establishing the real reasons you want to buy a home and then look for a place that fills those needs in the most cost effective manner possible. Remember, home is where the heart is...its always easy to impress good friends and family.

4. Financial Future. Just because the bank says you can borrow a certain amount doesn't mean you should. Take time to make a contingency plan that allows you to keep your home during a job loss, retirement plan or major life event. The freedom and peace of mind is invaluable.

5. Jumping to Conclusions. Ask and then get everything in writing. Don't assume the kitchen appliances stay - ask. Ditto for that great outdoor play set for the children.

6. Decorating. Everything looks good in a showroom but avoid the temptation of buying furniture, drapes and other decorations until after you move in. Room dimensions, lighting and other variations can wreck havoc on an otherwise stylish decor.

7. Overspending. Spend less than intended until after you take possession of the home. There are always last minute expenses that were overlooked; extra time away from work to move, sold out moving vans or putting the in-laws up for the week when they come down to help get you settled in.

8. DIY. New home buyers often fall in love with hardware stores and take on more than they can handle. Not only are many home improvements expensive - especially when they must be re-done by a qualified contractor - but they are invariably more time consuming than expected. Start with a few easy projects until your skill matches your ambition.

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