Here are a few key points:
It sounds complicated, but it's really fairly simple. Banks lent hundreds of billions of dollars to homebuyers who can't pay them back. Wall Street took the risky debt, dressed it up as fancy securities, and sold it around the world as safe investments. It sounds like a shell game or Ponzi scheme; in some ways, it was a house of cards rife with corruption, greed, and negligence.....
Jim Grant calls it an invitation to fraud. "You apply to a bank, or a mortgage broker for a loan. And you would fill out a form. And you would say, 'I have an income of, oh, $400,000 a year.' They say, 'You do? Fine. Just sign right there.' And they would nod, and because they were being paid, not by the veracity of the information, but by the consummation of the deal. The lending office would say, 'Ah. You have verified this?' 'Why, yes, we have.' And the lending officer would say, 'Great. So do I,'" Grant says.
"And he got a cut, too?" Kroft asks.
"Yes, oh, yes. Everyone gets a cut," Grant says.
Almost all of the people involved in the transactions made huge amounts of money, then passed the risk onto someone else. Instead of keeping the dicey loans in their own portfolios, the big banks and giant mortgage companies that originally underwrote them, resold the mortgages to big New York investment houses....
But Matt and Stephanie Valdez say they knew exactly what they were doing when they bought a small two-bedroom for $355,000. They could afford the initial payments and planned to refinance the mortgage before the interest rate jumped to 11 percent. But they couldn't do it because the value of the house had fallen below what they owed on the mortgage. They say they can afford the higher payments, but see no point in making them.
"The house keeps going down, payments keep going up. Where's the logic in that? And how can we fix it? I mean, that's what this whole thing's about for us is how can we fix this? And if we can't fix it, then what do we do?" Matt Valdez asks.
"Why pay a $3,200 payment on a 1200-square-foot home? It makes no sense," Stephanie Valdez adds.
"That's what you agreed to do when you bought the house," Kroft points out.
"Fine. If the value is going up. But we're not going anywhere. The price or the value is going down. It makes no sense because we will never be able to refinance and get a lower payment. There's no way," Stephanie Valdez replies.
"You're saying, essentially, that you're going to stop making payments on it? You're just gonna let it go into foreclosure?" Kroft asks.
"You know, that's the only advice we've gotten so far is walk away from the home. We don't want to do that to our credit. Why can't our mortgage company work with us?" she says.
There is a certain cold logic to just walking away.
Sunday, January 27, 2008
House of Cards: The Mortgage Mess
For the full story of House of Cards: The Mortgage Mess as shown on 60 Minutes on CBS go to http://www.cbsnews.com/stories/2008/01/25/60minutes/main3752515.shtml
Friday, January 18, 2008
Real Estate Short Sale Strategy
Increase Your Income With Short Sale Strategy By Donna Robinson, TREA Director
In todays market, with foreclosures reaching record highs, and many sellers owing more money than their property is even worth, it is time for a strategic change in business strategy.
With a fundamental situation that presents us with literally thousands of properties being "dumped" on the market with each passing month, and most of those properties having little or no equity, it is getting more difficult to sell any properties for full value.
Listings are sitting on the market for months, and many of those listings on which we have spent valuable time and effort are going into foreclosure, leaving many agents with less income and no way to sell their listings for what the seller actually owes.
Anyone may negotiate a short sale. You do not have to be licensed to negotiate with a lender or bank. You merely need to follow the specific procedures necessary to complete a successful short sale.
But this situation is creating a need more than ever for agents and brokers to understand how to use short sales to help their sellers sell and their buyers buy. If you are an agent you can use short sale strategy to save your listing commissions and help homeowners avoid foreclosure.
Short Sale means getting the lender to sell a property for a discount below the amount the owner owes for the property. With the growing number of foreclosures, more and more lenders are having to resort to short sales in order to move inventory that cannot be sold for enough to cover the payoff.
We are seeing more short sales and hearing incredible stories from around the US about short sales in some areas where the lenders are discounting properties by as much as 30 to 70 percent! This results in a very profitable deal when done correctly.
Whether you have overpriced listings that aren't selling, investor clients who want the best possible deals, or you are representing aspiring home buyers who want a good buy in a personal residence, short sales could be your ticket to more production in a slowing market that still has a long way to fall before things start to improve.
But short sales require a certain amount of expertise, not to mention specific forms, letters and procedures. You have to know what you are doing. But if you do, you can create opportunities for your clients by getting discounts amounting to tens of thousands of dollars, that can turn "no sale" into a great opportunity for your clients.
If you are also an investor you need to know how to use short sales strategy to add bigger equity spreads to your own investments. Buying at a discount will help insure strong positive cash flow on rentals, with higher equity spreads. It's the "safe" way to go in an eroding market.
But the trick is, how to get this crucial information without spending $1000 or more on a seminar or course? They are out there - anywhere from $500 to more than $1500 for information on what will surely be the hottest buying / selling strategy of 2007-2008
But we at TREA have been working on a very cost effective solution for you. If you are serious about making money in real estate in 2007, you absolutely must know how to execute short sales in a professional manner.
I am currently using this same short sales process to help increase my personal production as an agent to help sell overpriced listings, as well as help my investor buyers find better deals and I am confident short sales can do the same for you too.
There is no need to languish in this market - you must adapt to the changing market conditions with strategies that take the fundamental market conditions into account.
I predict that this market will continue to worsen for months to come, making short sales even more necessary than they are now. By 2008 the banks may be desperate for any way out possible.
Because of the obvious need for this strategy, I am very happy to announce that The Real Estate Arena is recommending a new and timely course called "Short Sales Short & Sweet", written by Real Estate Broker, Marie Whitton. Marie is my personal real estate broker. Together we use short sales to increase production for both sellers and buyer clients.
The course is easy to read, and designed to help you get up and running with short sales as quickly as possible. And frankly the price is so low that it's a "no brainer" for those of us who want to adjust our strategy to take advantage of the market conditions.
If you are looking for ways to make more money in a tough real estate market, this could be your ticket.
Short sales help homeowners avoid foreclosure, and it may be the only way to make a particular deal work for an investor or home buyer. In todays market short sales are a timely and important strategy to have in your toolbox.
Advertisement: Football fans, get your Super Bowl Memorabilia @ http://www.sportstrail.com
In todays market, with foreclosures reaching record highs, and many sellers owing more money than their property is even worth, it is time for a strategic change in business strategy.
With a fundamental situation that presents us with literally thousands of properties being "dumped" on the market with each passing month, and most of those properties having little or no equity, it is getting more difficult to sell any properties for full value.
Listings are sitting on the market for months, and many of those listings on which we have spent valuable time and effort are going into foreclosure, leaving many agents with less income and no way to sell their listings for what the seller actually owes.
Anyone may negotiate a short sale. You do not have to be licensed to negotiate with a lender or bank. You merely need to follow the specific procedures necessary to complete a successful short sale.
But this situation is creating a need more than ever for agents and brokers to understand how to use short sales to help their sellers sell and their buyers buy. If you are an agent you can use short sale strategy to save your listing commissions and help homeowners avoid foreclosure.
Short Sale means getting the lender to sell a property for a discount below the amount the owner owes for the property. With the growing number of foreclosures, more and more lenders are having to resort to short sales in order to move inventory that cannot be sold for enough to cover the payoff.
We are seeing more short sales and hearing incredible stories from around the US about short sales in some areas where the lenders are discounting properties by as much as 30 to 70 percent! This results in a very profitable deal when done correctly.
Whether you have overpriced listings that aren't selling, investor clients who want the best possible deals, or you are representing aspiring home buyers who want a good buy in a personal residence, short sales could be your ticket to more production in a slowing market that still has a long way to fall before things start to improve.
But short sales require a certain amount of expertise, not to mention specific forms, letters and procedures. You have to know what you are doing. But if you do, you can create opportunities for your clients by getting discounts amounting to tens of thousands of dollars, that can turn "no sale" into a great opportunity for your clients.
If you are also an investor you need to know how to use short sales strategy to add bigger equity spreads to your own investments. Buying at a discount will help insure strong positive cash flow on rentals, with higher equity spreads. It's the "safe" way to go in an eroding market.
But the trick is, how to get this crucial information without spending $1000 or more on a seminar or course? They are out there - anywhere from $500 to more than $1500 for information on what will surely be the hottest buying / selling strategy of 2007-2008
But we at TREA have been working on a very cost effective solution for you. If you are serious about making money in real estate in 2007, you absolutely must know how to execute short sales in a professional manner.
I am currently using this same short sales process to help increase my personal production as an agent to help sell overpriced listings, as well as help my investor buyers find better deals and I am confident short sales can do the same for you too.
There is no need to languish in this market - you must adapt to the changing market conditions with strategies that take the fundamental market conditions into account.
I predict that this market will continue to worsen for months to come, making short sales even more necessary than they are now. By 2008 the banks may be desperate for any way out possible.
Because of the obvious need for this strategy, I am very happy to announce that The Real Estate Arena is recommending a new and timely course called "Short Sales Short & Sweet", written by Real Estate Broker, Marie Whitton. Marie is my personal real estate broker. Together we use short sales to increase production for both sellers and buyer clients.
The course is easy to read, and designed to help you get up and running with short sales as quickly as possible. And frankly the price is so low that it's a "no brainer" for those of us who want to adjust our strategy to take advantage of the market conditions.
If you are looking for ways to make more money in a tough real estate market, this could be your ticket.
Short sales help homeowners avoid foreclosure, and it may be the only way to make a particular deal work for an investor or home buyer. In todays market short sales are a timely and important strategy to have in your toolbox.
Advertisement: Football fans, get your Super Bowl Memorabilia @ http://www.sportstrail.com
Thursday, January 10, 2008
Recession aka Foreclosures Rising
More than two years into the housing downturn, unpleasant surprises and market rumors are continuing to wreak havoc in an industry that may be leading the economy into a recession.
The market received its first jolt yesterday from KB Home, a leading home builder that investors have viewed as well-positioned to ride out the downturn. KB posted a net loss of $772.7 million, or $9.99 a share, for its fourth quarter ended Nov. 30, more than nine times wider than the loss that analysts expected.
Much of the loss stemmed from a $514 million noncash charge due to changed accounting for tax purposes. Nonetheless, investors took flight, driving KB's shares down 9.2%.
Getting Worse
• The News: KB Home, which was seen as well-positioned for the housing downturn, reported a wider-than-expected loss.
• What it Means: The report signals housing remains in free fall with no bottom in sight.
• In Other News: Countrywide shares fell 28% amid investor anxiety.
The other home-related stock taking a battering yesterday was Countrywide Financial Corp., a leading provider of mortgages. Its shares dropped 28% amid growing anxiety among investors about falling house prices and the surge in foreclosures.
The housing news and worries about weaker consumer spending helped drive down the broader market. The Dow Jones Industrial Average fell 238.42, or 1.9%, to 12589.07. Banking stocks were broadly lower, with Citigroup Inc. off nearly 4%. The Dow has fallen 11% from its early-October high, a decline that fits the traditional definition of a correction.
"The state of American business this year will depend, I believe, on how we get through the toughest housing correction in our lifetimes," Daniel Mudd, chief executive officer of Fannie Mae, the government-sponsored mortgage investor, said in a speech to the U.S. Chamber of Commerce in Washington yesterday.
Rumors that Countrywide might be preparing a bankruptcy-court filing fueled its decline. The company vehemently denied such plans. "There is no substance to the rumor that Countrywide is planning to file for bankruptcy," a Countrywide spokesman said.
The weak earnings report by Los Angeles-based KB Home was a signal that housing remains in free fall with no bottom yet in sight. "As we enter 2008, we see no indication that markets are stabilizing," KB's chief executive, Jeff Mezger, told investors during a conference call yesterday.
Builders and mortgage companies have been grappling for months with falling home prices and the meltdown in the market for subprime mortgages to people with weak credit. In recent weeks, the outlook has darkened further for housing as unemployment rises and the broader economy treads closer to recession. Last week, the Labor Department reported the U.S. unemployment rate rose sharply in December to its highest level in more than two years.
"Job losses are the final piece," says Paul Puryear, a real-estate analyst at Raymond James & Associates. "If we are in a recession -- and we may well be there right now -- it's going to be hard to sell a house."
Driving KB's quarterly loss was a $514 million charge related to its deferred tax assets. The ability to save on future or past taxes can be entered on a company's balance sheet as an asset. But some auditors say it isn't clear when the home builders will be able to realize these tax savings because of their losses in recent years. So they are requiring some companies to effectively write down much of their deferred tax assets.
Analysts say other builders may face similar write-downs because of the industry's uncertain outlook, and that builders may not be profitable until 2009 or 2010. The deferred tax assets, although written down for now, will eventually produce a gain.
KB has been cutting prices to move homes. Its average selling price dropped 12% to $247,800 in the fourth quarter from a year earlier. But the supply of homes remains stubbornly high. Also, more of KB's buyers are canceling contracts for homes than some analysts had expected.
The write-downs are spooking investors and forcing some builders, including KB, to renegotiate the terms of their revolving credit lines with lenders. That's because the tax-asset charges, coupled with continued write down of land and home values, could cause many builders to fall below a minimum tangible net worth level required by their lenders.
KB said it expects to strike a new agreement with its banks by the end of its first quarter. Red Bank, N.J., builder Hovnanian Enterprises Inc., which reported a $216 million tax-asset-related charge last month, said it has received the necessary waivers from its lenders.
"It's a total headache for the builders,'' says Ivy Zelman, chief executive of Zelman & Associates, a housing research firm. "I don't think it's going to push any of them into bankruptcy. But it's another poker chip that the banks have in their favor."
Many analysts took comfort in KB's ability to generate cash and reduce its debt. The company increased its cash balance by $625 million from a year earlier, while its ratio of debt to total capital improved to 31% from 43% a year earlier.
As for Countrywide, investors are worried not only about its subprime exposure but also about its holdings of other types of risky loans including option adjustable-rate mortgages. Option ARMs allow borrowers to choose smaller monthly payments that increase their loan balance. If borrowers aren't careful, they can end up over their heads in debt.
Kenneth Posner, an analyst at Morgan Stanley, said he believes a bankruptcy filing by Countrywide is unlikely, at least in the short run. Mr. Posner said the company appears to have enough cash to meet its debt obligations in 2008, though there is a "thin margin for error."
The company plans to release fourth-quarter results Jan. 29. After reporting a loss of $1.2 billion for the third quarter, Countrywide forecast that it would return to profitability in the fourth quarter. Now, though, "very few people I talk to believe that's realistic," said Frederick Cannon, an analyst at Keefe, Bruyette & Woods in San Francisco.
The market received its first jolt yesterday from KB Home, a leading home builder that investors have viewed as well-positioned to ride out the downturn. KB posted a net loss of $772.7 million, or $9.99 a share, for its fourth quarter ended Nov. 30, more than nine times wider than the loss that analysts expected.
Much of the loss stemmed from a $514 million noncash charge due to changed accounting for tax purposes. Nonetheless, investors took flight, driving KB's shares down 9.2%.
Getting Worse
• The News: KB Home, which was seen as well-positioned for the housing downturn, reported a wider-than-expected loss.
• What it Means: The report signals housing remains in free fall with no bottom in sight.
• In Other News: Countrywide shares fell 28% amid investor anxiety.
The other home-related stock taking a battering yesterday was Countrywide Financial Corp., a leading provider of mortgages. Its shares dropped 28% amid growing anxiety among investors about falling house prices and the surge in foreclosures.
The housing news and worries about weaker consumer spending helped drive down the broader market. The Dow Jones Industrial Average fell 238.42, or 1.9%, to 12589.07. Banking stocks were broadly lower, with Citigroup Inc. off nearly 4%. The Dow has fallen 11% from its early-October high, a decline that fits the traditional definition of a correction.
"The state of American business this year will depend, I believe, on how we get through the toughest housing correction in our lifetimes," Daniel Mudd, chief executive officer of Fannie Mae, the government-sponsored mortgage investor, said in a speech to the U.S. Chamber of Commerce in Washington yesterday.
Rumors that Countrywide might be preparing a bankruptcy-court filing fueled its decline. The company vehemently denied such plans. "There is no substance to the rumor that Countrywide is planning to file for bankruptcy," a Countrywide spokesman said.
The weak earnings report by Los Angeles-based KB Home was a signal that housing remains in free fall with no bottom yet in sight. "As we enter 2008, we see no indication that markets are stabilizing," KB's chief executive, Jeff Mezger, told investors during a conference call yesterday.
Builders and mortgage companies have been grappling for months with falling home prices and the meltdown in the market for subprime mortgages to people with weak credit. In recent weeks, the outlook has darkened further for housing as unemployment rises and the broader economy treads closer to recession. Last week, the Labor Department reported the U.S. unemployment rate rose sharply in December to its highest level in more than two years.
"Job losses are the final piece," says Paul Puryear, a real-estate analyst at Raymond James & Associates. "If we are in a recession -- and we may well be there right now -- it's going to be hard to sell a house."
Driving KB's quarterly loss was a $514 million charge related to its deferred tax assets. The ability to save on future or past taxes can be entered on a company's balance sheet as an asset. But some auditors say it isn't clear when the home builders will be able to realize these tax savings because of their losses in recent years. So they are requiring some companies to effectively write down much of their deferred tax assets.
Analysts say other builders may face similar write-downs because of the industry's uncertain outlook, and that builders may not be profitable until 2009 or 2010. The deferred tax assets, although written down for now, will eventually produce a gain.
KB has been cutting prices to move homes. Its average selling price dropped 12% to $247,800 in the fourth quarter from a year earlier. But the supply of homes remains stubbornly high. Also, more of KB's buyers are canceling contracts for homes than some analysts had expected.
The write-downs are spooking investors and forcing some builders, including KB, to renegotiate the terms of their revolving credit lines with lenders. That's because the tax-asset charges, coupled with continued write down of land and home values, could cause many builders to fall below a minimum tangible net worth level required by their lenders.
KB said it expects to strike a new agreement with its banks by the end of its first quarter. Red Bank, N.J., builder Hovnanian Enterprises Inc., which reported a $216 million tax-asset-related charge last month, said it has received the necessary waivers from its lenders.
"It's a total headache for the builders,'' says Ivy Zelman, chief executive of Zelman & Associates, a housing research firm. "I don't think it's going to push any of them into bankruptcy. But it's another poker chip that the banks have in their favor."
Many analysts took comfort in KB's ability to generate cash and reduce its debt. The company increased its cash balance by $625 million from a year earlier, while its ratio of debt to total capital improved to 31% from 43% a year earlier.
As for Countrywide, investors are worried not only about its subprime exposure but also about its holdings of other types of risky loans including option adjustable-rate mortgages. Option ARMs allow borrowers to choose smaller monthly payments that increase their loan balance. If borrowers aren't careful, they can end up over their heads in debt.
Kenneth Posner, an analyst at Morgan Stanley, said he believes a bankruptcy filing by Countrywide is unlikely, at least in the short run. Mr. Posner said the company appears to have enough cash to meet its debt obligations in 2008, though there is a "thin margin for error."
The company plans to release fourth-quarter results Jan. 29. After reporting a loss of $1.2 billion for the third quarter, Countrywide forecast that it would return to profitability in the fourth quarter. Now, though, "very few people I talk to believe that's realistic," said Frederick Cannon, an analyst at Keefe, Bruyette & Woods in San Francisco.
Wednesday, January 9, 2008
Isn't there an easier way to do a property title search?
Isn't there an easier way to do a property title search?
In the modern environment of the internet, and "everything online", it is common to wonder why the process of running a title search is so complex. Property title records are recorded and stored as hard-copy paper documents. Information that is contained on hard-copy documents cannot be stored easily in an online database, as can most other types of records. Because of this, title searching involves searching through all of the recorded documents for a property. Property records are recorded the individual county, each of which has different procedures for the records office.
For example, to search for mortgages, the title examiner must first locate the copies of mortgage documents signed by the property owner. All of the papers for a property are not kept together in a group. These copies are kept in books, with each volume corresponding to a particular day and year. In order to locate all the open mortgages, the examiner must go through all the books over time, and find the documents that pertain to the subject property. The county normally keeps an index, which helps the examiner know which books to look in. The examiner must then look for documents that release any of these mortgages that were refinanced, or paid off. The same process is repeated for liens.
In some counties, there are multiple records rooms to go through. All of the information about the liens, and mortgages is contained in the wording of the documents, which must be retrieved and read individually. From this process, the title search abstract is created for a property.
For more info on how to do a title search or helpful title search links,
http://www.thenoteservice.com/title-search.html
In the modern environment of the internet, and "everything online", it is common to wonder why the process of running a title search is so complex. Property title records are recorded and stored as hard-copy paper documents. Information that is contained on hard-copy documents cannot be stored easily in an online database, as can most other types of records. Because of this, title searching involves searching through all of the recorded documents for a property. Property records are recorded the individual county, each of which has different procedures for the records office.
For example, to search for mortgages, the title examiner must first locate the copies of mortgage documents signed by the property owner. All of the papers for a property are not kept together in a group. These copies are kept in books, with each volume corresponding to a particular day and year. In order to locate all the open mortgages, the examiner must go through all the books over time, and find the documents that pertain to the subject property. The county normally keeps an index, which helps the examiner know which books to look in. The examiner must then look for documents that release any of these mortgages that were refinanced, or paid off. The same process is repeated for liens.
In some counties, there are multiple records rooms to go through. All of the information about the liens, and mortgages is contained in the wording of the documents, which must be retrieved and read individually. From this process, the title search abstract is created for a property.
For more info on how to do a title search or helpful title search links,
http://www.thenoteservice.com/title-search.html
Sunday, January 6, 2008
Buying A Bank Owned Home (REO)
Is Buying A Bank Owned Home (REO) Property a good move?
The real estate market is in its second year of decline and there are many buyers who are looking at buying a foreclosed or bank owned home. In fact, there are many bank owned properties on the market right now and it is projected that the number will increase through the summer of 2008.
For a free list of banks offering bank owned properties, also known as reo properties, go to http://www.thenoteservice.com/free-bank-owned-listings.html
Buying a foreclosed home is not right for everyone and it does not mean that you are going to get a home at a low price. It takes a lot of effort and time to find the right property. I know many investors who pursue properties in the bank owned market who claim they may have to look at 30 homes before finding one worth purchasing.
So this is not an approach that one should take on lightly. Great deals do not come in the bank owned market and it is one can end up with a property that requires a lot of repair and could cost more in the end. But there are some good buys on the market if you spend the time to find them.
There are two main ways of purchasing bank owned homes. The first is in the normal real estate market where properties are offered through real estate agents. The second is through the auction market where the home is sold to the highest bidder.
Auctions
The auction process is the riskier approach to buying a property I recommend that you only pursue auctions if:
1) You know how to properly research a property
2) You know about the building or remodeling trades so that you can assess the condition of a home
3) You have a lot of time to do proper investigation and you are not in a hurry to move
4) You can afford a potential loss of your deposit-sometimes you will win a bid only to later find out the property is not right for you
Why is the auction process riskier? When a property is purchased at auction the buyer does not have a traditional due diligence period to investigate the property. So before you go to the auction you need to so some research on the property. What you are looking for is:
• how much is owed on the mortgages
• if there are liens against the property
• if there are taxes due to the municipalities
An auctioned property is not going to deliver the title to you free and clear of encumbrances. So it is up to you to pay off any liens on the property. This, of course, adds to the total cost of the home.
You also may not have much time to inspect the property. In fact, you may not get to see the inside of it at all. So before the auction try to look at it if you can. Looking at the outside is usually easy, just drive or walk by the property, if it is vacant you may be able to peer in the windows. (I urge you to get permission before going on the property.) What you want to do is get an idea of the condition of the property so you can determine how much it will cost to repair, if repairs are needed. Some things to look at:
• the condition of the roof
• the condition of the exterior- does it need paint or repairs
• the condition of the interior -does it need kitchen or bath updating?
• the condition of the heating systems
• the condition of the plumbing
These are the major cost items with one exception. If the house is not on a public sewer system then it may have a private septic system.
Septic systems can be very expensive to replace and there is no easy way to determine the condition short of having an inspector check it out. It is unlikely that you will have the access or time to perform such an inspection.
Real Estate Markets
Banks often attempt to market properties in the normal real estate markets using real estate agents. To find these homes contact a local real estate agent or search through the local Multiple listing services at your favorite real estate web site.
Why is this a better way to shop for a bank owned home? First, there will often be more information about the home available. Real estate agents will often do some preliminary information gathering and will make it available to you. Second, you will have the opportunity to look at the house, both inside and out, to check its condition. Third, yo will be able to make an offer that has a due diligence period so that you can do proper inspections of the home to uncover defects. This way you know exactly what you are buying. In the event you find a major defect in the home during inspections you have the opportunity to back out of the purchase and get your deposit money back (make sure this contingency is included in your offer to purchase)
Buyers who want a bank owned property but may not have the skill to properly investigate on their own, this is a great approach. If you do find a bank owned home you love and decide to make an offer be prepared to wait for a response to your offer. Banks are not very responsive. It could take 1 week or more for a decision on your offer and 4 weeks is not uncommon.
The real estate market is in its second year of decline and there are many buyers who are looking at buying a foreclosed or bank owned home. In fact, there are many bank owned properties on the market right now and it is projected that the number will increase through the summer of 2008.
For a free list of banks offering bank owned properties, also known as reo properties, go to http://www.thenoteservice.com/free-bank-owned-listings.html
Buying a foreclosed home is not right for everyone and it does not mean that you are going to get a home at a low price. It takes a lot of effort and time to find the right property. I know many investors who pursue properties in the bank owned market who claim they may have to look at 30 homes before finding one worth purchasing.
So this is not an approach that one should take on lightly. Great deals do not come in the bank owned market and it is one can end up with a property that requires a lot of repair and could cost more in the end. But there are some good buys on the market if you spend the time to find them.
There are two main ways of purchasing bank owned homes. The first is in the normal real estate market where properties are offered through real estate agents. The second is through the auction market where the home is sold to the highest bidder.
Auctions
The auction process is the riskier approach to buying a property I recommend that you only pursue auctions if:
1) You know how to properly research a property
2) You know about the building or remodeling trades so that you can assess the condition of a home
3) You have a lot of time to do proper investigation and you are not in a hurry to move
4) You can afford a potential loss of your deposit-sometimes you will win a bid only to later find out the property is not right for you
Why is the auction process riskier? When a property is purchased at auction the buyer does not have a traditional due diligence period to investigate the property. So before you go to the auction you need to so some research on the property. What you are looking for is:
• how much is owed on the mortgages
• if there are liens against the property
• if there are taxes due to the municipalities
An auctioned property is not going to deliver the title to you free and clear of encumbrances. So it is up to you to pay off any liens on the property. This, of course, adds to the total cost of the home.
You also may not have much time to inspect the property. In fact, you may not get to see the inside of it at all. So before the auction try to look at it if you can. Looking at the outside is usually easy, just drive or walk by the property, if it is vacant you may be able to peer in the windows. (I urge you to get permission before going on the property.) What you want to do is get an idea of the condition of the property so you can determine how much it will cost to repair, if repairs are needed. Some things to look at:
• the condition of the roof
• the condition of the exterior- does it need paint or repairs
• the condition of the interior -does it need kitchen or bath updating?
• the condition of the heating systems
• the condition of the plumbing
These are the major cost items with one exception. If the house is not on a public sewer system then it may have a private septic system.
Septic systems can be very expensive to replace and there is no easy way to determine the condition short of having an inspector check it out. It is unlikely that you will have the access or time to perform such an inspection.
Real Estate Markets
Banks often attempt to market properties in the normal real estate markets using real estate agents. To find these homes contact a local real estate agent or search through the local Multiple listing services at your favorite real estate web site.
Why is this a better way to shop for a bank owned home? First, there will often be more information about the home available. Real estate agents will often do some preliminary information gathering and will make it available to you. Second, you will have the opportunity to look at the house, both inside and out, to check its condition. Third, yo will be able to make an offer that has a due diligence period so that you can do proper inspections of the home to uncover defects. This way you know exactly what you are buying. In the event you find a major defect in the home during inspections you have the opportunity to back out of the purchase and get your deposit money back (make sure this contingency is included in your offer to purchase)
Buyers who want a bank owned property but may not have the skill to properly investigate on their own, this is a great approach. If you do find a bank owned home you love and decide to make an offer be prepared to wait for a response to your offer. Banks are not very responsive. It could take 1 week or more for a decision on your offer and 4 weeks is not uncommon.
Friday, December 28, 2007
Spouse Objections to Rehabbing Real Estate
Spouse Objections to Rehabbing Real Estate
I’ve run across a lot of folks who tell me they’d love to do what I do, but their wife is just not comfortable with it. That’s a powerful objection, and sometimes it’s one that cannot be overcome. Most times, I think it can be, if you really want to. All too often, I get the impression the potential investor doesn’t want to jump into rehab real estate bad enough to work through the spouses objections. It’s the old “it’s easier NOT to” mentality!
The issue is usually not that your spouse doesn’t want the financial rewards that accompany the real estate rehab business. The reasons spouses object is usually good ol’ fear. For example:
fear of the unforeseen
fear of financial loss
fear that you don’t yet know what you’re doing (my favorite!)
The latter two are the big leaders. These fears may come from something they’ve heard, or they may be rooted in them not really understanding the transaction or what you’re trying to accomplish.
For my wife, her fears were that something would come up that I hadn’t thought of, or that a house may sit empty for several months thus depleting the bank account.
How to deal with the fears of your spouse regarding rehab real estate
Sit down and discuss their fears. Find out what they really are. You always want to deal with a known entity.
Be sure your spouse understands the importance of rehab real estate in your long term financial goals, and how it fits into your family’s security.
Always encourage your spouse to ask questions!
If your spouse expresses general fear of the whole thing, that may be because of a lack of understanding of the process or they are very intimidated by it.
Encourage questions!
Explain how the transactions will work
Explain how you are minimizing the risk to your family.
Yes, the numbers might be big, but if you aren’t putting a lot of your own money in it, then your risk of loss is minimal.
Go over the worst case scenarios. Explain that worst case, the property could be quickly sold for SOME profit.
Reveal to your spouse the folks you have working with you, such as your mortgage broker, your wholesaler (flipper), appraiser, and anyone else you’ve identified up to that point.
My wife was very distrustful of these folks in the beginning. I had to explain and show her that these folks had EVERYTHING to gain by my first deals going very well, if they wanted to continue making money with me.
If the fear seems to be of the unforeseen
Explain that while this seems complicated, you’ve done your homework and you’ve learned about all you can learn without actually doing a deal for experience. (You reach a point where this is true!)
Explain that you won’t own the property a minute without enough insurance to cover anything that could happen.
If the fear is financial loss
Depending on your personal financial situation, you should focus your spouse on how real estate can and does improve the lives of investors.
If you’ve already identified a property, reveal your worksheet and how much you stand to make off that property.
Agree with your spouse NOT to take on too much risk. Set your boundaries together. I assure you that you’ll easily revisit these the first time you bring home a large check.
Fear that you don’t have the knowledge
Be sure you are well studied! Remember, knowledge comes before the money! Spend the money on a good course, or book. Don’t rely on just one. Get several author’s take on the subject. There are inexpensive ways to do this!
Explain that you have studied this thoroughly. Heck, you’ve got a head full of knowledge that needs to be put into action in order to move forward.
Agree with your spouse. That’s why you are tapping into the knowledge of those real estate professionals around you! Explain who’s on your team, and what they have to gain from you. Remind your spouse that you are tapping into the knowledge of those around you, those that know your area very well.
When your spouse comes around and is resigned that you are going to do this, they may:
Sign on and dig in beside you for the deal and what follows (throw total support behind you).
Flatly say, they don’t agree, but if you must…
Something in between, like “Honey, you do whatever you think is best.”
This last possibility is what I predict will happen to most. This allows your spouse to give you the room you need, but at the same time not completely agree. That’s where my wife went. It was a safe position for her. And, it’s a safe position for you! You’ve got the go-ahead, so go ahead!
I was in that position myself. If was a good feeling to watch her fears fall away as I complete my first couple of projects. Her eyes got nice and big when I refinanced my first two properties at the same time and brought home more money in one day than I’d ever held in my hands before. I also watched her understand the benefits more completely while sitting in my CPA’s office and having him say to her “These properties are saving you big time on your taxes.” I dare not say, I told her so, but I told her so
Sure, there are challenges, but the paydays are great.
So, over time, my bride is my full partner taking on whole aspects of the business freeing me up to do the parts I do best.
Spouse objections can be show-stoppers, but these suggestions will hopefully help you deal carefully with them. It’s not enough to merely brush them aside and charge ahead. I recommend a loving, cautious approach because in good time and bad, your spouse is your greatest ally. Keep them close!
I’ve run across a lot of folks who tell me they’d love to do what I do, but their wife is just not comfortable with it. That’s a powerful objection, and sometimes it’s one that cannot be overcome. Most times, I think it can be, if you really want to. All too often, I get the impression the potential investor doesn’t want to jump into rehab real estate bad enough to work through the spouses objections. It’s the old “it’s easier NOT to” mentality!
The issue is usually not that your spouse doesn’t want the financial rewards that accompany the real estate rehab business. The reasons spouses object is usually good ol’ fear. For example:
fear of the unforeseen
fear of financial loss
fear that you don’t yet know what you’re doing (my favorite!)
The latter two are the big leaders. These fears may come from something they’ve heard, or they may be rooted in them not really understanding the transaction or what you’re trying to accomplish.
For my wife, her fears were that something would come up that I hadn’t thought of, or that a house may sit empty for several months thus depleting the bank account.
How to deal with the fears of your spouse regarding rehab real estate
Sit down and discuss their fears. Find out what they really are. You always want to deal with a known entity.
Be sure your spouse understands the importance of rehab real estate in your long term financial goals, and how it fits into your family’s security.
Always encourage your spouse to ask questions!
If your spouse expresses general fear of the whole thing, that may be because of a lack of understanding of the process or they are very intimidated by it.
Encourage questions!
Explain how the transactions will work
Explain how you are minimizing the risk to your family.
Yes, the numbers might be big, but if you aren’t putting a lot of your own money in it, then your risk of loss is minimal.
Go over the worst case scenarios. Explain that worst case, the property could be quickly sold for SOME profit.
Reveal to your spouse the folks you have working with you, such as your mortgage broker, your wholesaler (flipper), appraiser, and anyone else you’ve identified up to that point.
My wife was very distrustful of these folks in the beginning. I had to explain and show her that these folks had EVERYTHING to gain by my first deals going very well, if they wanted to continue making money with me.
If the fear seems to be of the unforeseen
Explain that while this seems complicated, you’ve done your homework and you’ve learned about all you can learn without actually doing a deal for experience. (You reach a point where this is true!)
Explain that you won’t own the property a minute without enough insurance to cover anything that could happen.
If the fear is financial loss
Depending on your personal financial situation, you should focus your spouse on how real estate can and does improve the lives of investors.
If you’ve already identified a property, reveal your worksheet and how much you stand to make off that property.
Agree with your spouse NOT to take on too much risk. Set your boundaries together. I assure you that you’ll easily revisit these the first time you bring home a large check.
Fear that you don’t have the knowledge
Be sure you are well studied! Remember, knowledge comes before the money! Spend the money on a good course, or book. Don’t rely on just one. Get several author’s take on the subject. There are inexpensive ways to do this!
Explain that you have studied this thoroughly. Heck, you’ve got a head full of knowledge that needs to be put into action in order to move forward.
Agree with your spouse. That’s why you are tapping into the knowledge of those real estate professionals around you! Explain who’s on your team, and what they have to gain from you. Remind your spouse that you are tapping into the knowledge of those around you, those that know your area very well.
When your spouse comes around and is resigned that you are going to do this, they may:
Sign on and dig in beside you for the deal and what follows (throw total support behind you).
Flatly say, they don’t agree, but if you must…
Something in between, like “Honey, you do whatever you think is best.”
This last possibility is what I predict will happen to most. This allows your spouse to give you the room you need, but at the same time not completely agree. That’s where my wife went. It was a safe position for her. And, it’s a safe position for you! You’ve got the go-ahead, so go ahead!
I was in that position myself. If was a good feeling to watch her fears fall away as I complete my first couple of projects. Her eyes got nice and big when I refinanced my first two properties at the same time and brought home more money in one day than I’d ever held in my hands before. I also watched her understand the benefits more completely while sitting in my CPA’s office and having him say to her “These properties are saving you big time on your taxes.” I dare not say, I told her so, but I told her so
Sure, there are challenges, but the paydays are great.
So, over time, my bride is my full partner taking on whole aspects of the business freeing me up to do the parts I do best.
Spouse objections can be show-stoppers, but these suggestions will hopefully help you deal carefully with them. It’s not enough to merely brush them aside and charge ahead. I recommend a loving, cautious approach because in good time and bad, your spouse is your greatest ally. Keep them close!
Saturday, December 8, 2007
Investor Apprentice Program
There is a famous old story about a company that had a
problem, and they called out a repairman to fix it.
The entire company was on the verge of shutting down production because
no one at the company had been able to identify this problem,
let alone fix it.
The repairman soon arrived, checked out the situation, went over
to one of the many miles of pipes running through the building,
and started banging on one particular pipe. He banged for about a minute.
He then ordered the crew chief to restart the machinery. Production
was restored and everyone was happy.
A few days later, the company received the bill for the repair.
The company manager was shocked to see that the amount due for the
repair was $10,000. The manager called the repairman and shouted
in the phone, "This repair bill is for ten thousand dollars! Where
do you get off charging me $10,000 for what amounted to banging on
a pipe for all of about 1 minute?!"
The repairman calmly replied "Oh, I only charged you $50 for banging
on the pipe. The other $9950 was for knowing precisely what pipe
to bang on."
And so the moral of this story is...experience is everything.
The fact is there are major investing opportunities all around you,
but can you see them? Do you know how to read the fundamentals of
your market to help you develop a strategic advantage? Do you worry
that your deals might not be profitable?
Are you an agent or broker who is wondering how to cope with a
down market, searching for ways to stabilize or increase income?
Would you like to discover how to go from killing yourself for a lousy
$5000 commission, to making a $100,000 commission for the same amount
of work with less hassle?
You may not know it, but there is a world of big opportunity out there
if you only know where to look and what to do when you find it.
You don't have to be licensed to break into high dollar real estate.
But if you are, it is even better. You can make a few thousand bucks
a year or you can make a few HUNDRED thousand bucks a year. It's all
in the choices you make.
Would you like to implement multiple income strategies that are
synergistic with your existing business model, and enable yourself
to make money all the time in any market?
If you are serious about your real estate career and your financial
future, and you have some resources for real estate investing and
business growth, you may be a candidate for our Investor Apprenticeship
Program.
If accepted, you'll be working one-on-one with Donna Robinson and
Peter Vekselman; two experienced real estate investors with more than
1000 transactions and years of on the street know-how and insight.
If you are wondering how to take advantage of the current housing
market, and drive your investing business or real estate brokerage
business to the next level, keep reading...
The fact is that todays housing market crisis is largely the result
of inexperienced investors who used bad loans to finance good properties
and today they are going down the financial drain by the thousands.
Many well meaning, honest investors are in financial ruins today
simply because they did not know what they were doing, and failed to get
advice from experienced experts who could have easily identified their
mistakes BEFORE they were made. This one simple step could have
saved them years of turmoil, financial hardship and bad credit.
It is a fact that some of our apprenticeship clients come to us
for damage control. They have already made severe, costly mistakes.
Mistakes that will affect their lives for years to come. Some went from
having perfect credit to credit that has been ruined, due to bad
investing decisions. If only they'd gotten professional advice from
us first.
The most common mistake new investors make is to try and
cut costs by neglecting things like professional advice that can insure
that they know what to do to be profitable and avoid life changing
mistakes.
This investor apprenticeship is a real bargain when compared to the
price thousands of investors are now paying for their failure to
get independent, professional advice from someone who has "been there
and done that".
Todays market is developing into some of the best buying opportunities
in 20 years. But there are also some of the worst opportunities in
20 years. Can you tell the difference? If you want to discover how
to really be profitable in any market while avoiding common and costly
mistakes, you need solid professional advice with over 20 collective
years of experience.
One of our current clients is learning how to take his brokerage
business to new levels by focusing on market opportunities in his
area that he thought were beyond his reach and expertise.
Another investor client is learning how to increase his volume from
struggling to do 1 or 2 deals a month, to building a business that
will allow him to double his volume with the same or even less work
than he is doing now. He was focusing on the wrong market. In just
one session we changed the way he looked at his business and corrected
several mistakes he was making but did not even realize.
Here's how you can find out if an Investor Apprenticeship is right
for you...
Donna Robinson and Peter Vekselman are planning a live teleconference
on Monday, December 10th, at 1 PM Eastern Time.
To register for the call please click the link below and a
confirmation will be emailed to you very quickly with complete
details on how to dial in.
http://www.reiuonline.com/coaching/freecoachingcall.htm
We will be discussing true stories of things that happen to real investors
and some actual case histories of Apprenticeship clients and how they
are using our strategies to increase income, build new income streams
and avoid big mistakes along the way.
If you are serious about growing your real estate business, this may be
just what you need to put the pieces all together and drive
your business into high gear.
problem, and they called out a repairman to fix it.
The entire company was on the verge of shutting down production because
no one at the company had been able to identify this problem,
let alone fix it.
The repairman soon arrived, checked out the situation, went over
to one of the many miles of pipes running through the building,
and started banging on one particular pipe. He banged for about a minute.
He then ordered the crew chief to restart the machinery. Production
was restored and everyone was happy.
A few days later, the company received the bill for the repair.
The company manager was shocked to see that the amount due for the
repair was $10,000. The manager called the repairman and shouted
in the phone, "This repair bill is for ten thousand dollars! Where
do you get off charging me $10,000 for what amounted to banging on
a pipe for all of about 1 minute?!"
The repairman calmly replied "Oh, I only charged you $50 for banging
on the pipe. The other $9950 was for knowing precisely what pipe
to bang on."
And so the moral of this story is...experience is everything.
The fact is there are major investing opportunities all around you,
but can you see them? Do you know how to read the fundamentals of
your market to help you develop a strategic advantage? Do you worry
that your deals might not be profitable?
Are you an agent or broker who is wondering how to cope with a
down market, searching for ways to stabilize or increase income?
Would you like to discover how to go from killing yourself for a lousy
$5000 commission, to making a $100,000 commission for the same amount
of work with less hassle?
You may not know it, but there is a world of big opportunity out there
if you only know where to look and what to do when you find it.
You don't have to be licensed to break into high dollar real estate.
But if you are, it is even better. You can make a few thousand bucks
a year or you can make a few HUNDRED thousand bucks a year. It's all
in the choices you make.
Would you like to implement multiple income strategies that are
synergistic with your existing business model, and enable yourself
to make money all the time in any market?
If you are serious about your real estate career and your financial
future, and you have some resources for real estate investing and
business growth, you may be a candidate for our Investor Apprenticeship
Program.
If accepted, you'll be working one-on-one with Donna Robinson and
Peter Vekselman; two experienced real estate investors with more than
1000 transactions and years of on the street know-how and insight.
If you are wondering how to take advantage of the current housing
market, and drive your investing business or real estate brokerage
business to the next level, keep reading...
The fact is that todays housing market crisis is largely the result
of inexperienced investors who used bad loans to finance good properties
and today they are going down the financial drain by the thousands.
Many well meaning, honest investors are in financial ruins today
simply because they did not know what they were doing, and failed to get
advice from experienced experts who could have easily identified their
mistakes BEFORE they were made. This one simple step could have
saved them years of turmoil, financial hardship and bad credit.
It is a fact that some of our apprenticeship clients come to us
for damage control. They have already made severe, costly mistakes.
Mistakes that will affect their lives for years to come. Some went from
having perfect credit to credit that has been ruined, due to bad
investing decisions. If only they'd gotten professional advice from
us first.
The most common mistake new investors make is to try and
cut costs by neglecting things like professional advice that can insure
that they know what to do to be profitable and avoid life changing
mistakes.
This investor apprenticeship is a real bargain when compared to the
price thousands of investors are now paying for their failure to
get independent, professional advice from someone who has "been there
and done that".
Todays market is developing into some of the best buying opportunities
in 20 years. But there are also some of the worst opportunities in
20 years. Can you tell the difference? If you want to discover how
to really be profitable in any market while avoiding common and costly
mistakes, you need solid professional advice with over 20 collective
years of experience.
One of our current clients is learning how to take his brokerage
business to new levels by focusing on market opportunities in his
area that he thought were beyond his reach and expertise.
Another investor client is learning how to increase his volume from
struggling to do 1 or 2 deals a month, to building a business that
will allow him to double his volume with the same or even less work
than he is doing now. He was focusing on the wrong market. In just
one session we changed the way he looked at his business and corrected
several mistakes he was making but did not even realize.
Here's how you can find out if an Investor Apprenticeship is right
for you...
Donna Robinson and Peter Vekselman are planning a live teleconference
on Monday, December 10th, at 1 PM Eastern Time.
To register for the call please click the link below and a
confirmation will be emailed to you very quickly with complete
details on how to dial in.
http://www.reiuonline.com/coaching/freecoachingcall.htm
We will be discussing true stories of things that happen to real investors
and some actual case histories of Apprenticeship clients and how they
are using our strategies to increase income, build new income streams
and avoid big mistakes along the way.
If you are serious about growing your real estate business, this may be
just what you need to put the pieces all together and drive
your business into high gear.
Monday, December 3, 2007
Do you need a Partner?
Business Partners
Donald Trump said that if not for a prenuptial agreement, his divorce would have buried him in the late 1980s.
A business divorce can also bury you. You are not necessarily going to have a prenup agreement for your business partner, but if you do take on partners, here’s what I recommend:
· Take on business partners only on a deal-by-deal basis.
· Use partners for money, credit or to acquire properties.
· Never give anyone authority over your money.
· Make decisions on a financial basis first.
· Make sure you, your partner and partner’s spouse share the same goals.
People ask me, “Should I have a partner in business?” And my answer is, “Should you get married?” Because both of those require a commitment.
No one really knows what a partner is going to be like until you hit tough times and you disagree. You have to create assurances that you are both going to be solvent and liquid.
Use money or credit partners, but only on a deal-by-deal basis. It’s easy enough to get out of one deal if you have to, but it is much more difficult to get out of 100 deals with a partner.
Make sure that you and your partner share the same goals and work ethics. (Here in the book I talk about one of my early partnership deals! I also address how to do business with family, spouses and spouses of partners.) Most importantly, I talk about how to protect yourself. This section will be available when the book is released!)
…if you go into business with family, the same rules apply.
If you are married to your business partner, make sure you define clear roles and boundaries in your business and marriage. In my business, I am the president and my wife is vice-president, so I have final say. She trusts my decisions based on my experience. But in our marriage, we are equal partners and consult each other on decisions and problem solving.
Donald Trump said that if not for a prenuptial agreement, his divorce would have buried him in the late 1980s.
A business divorce can also bury you. You are not necessarily going to have a prenup agreement for your business partner, but if you do take on partners, here’s what I recommend:
· Take on business partners only on a deal-by-deal basis.
· Use partners for money, credit or to acquire properties.
· Never give anyone authority over your money.
· Make decisions on a financial basis first.
· Make sure you, your partner and partner’s spouse share the same goals.
People ask me, “Should I have a partner in business?” And my answer is, “Should you get married?” Because both of those require a commitment.
No one really knows what a partner is going to be like until you hit tough times and you disagree. You have to create assurances that you are both going to be solvent and liquid.
Use money or credit partners, but only on a deal-by-deal basis. It’s easy enough to get out of one deal if you have to, but it is much more difficult to get out of 100 deals with a partner.
Make sure that you and your partner share the same goals and work ethics. (Here in the book I talk about one of my early partnership deals! I also address how to do business with family, spouses and spouses of partners.) Most importantly, I talk about how to protect yourself. This section will be available when the book is released!)
…if you go into business with family, the same rules apply.
If you are married to your business partner, make sure you define clear roles and boundaries in your business and marriage. In my business, I am the president and my wife is vice-president, so I have final say. She trusts my decisions based on my experience. But in our marriage, we are equal partners and consult each other on decisions and problem solving.
Do you need a Partner?
Business Partners
Donald Trump said that if not for a prenuptial agreement, his divorce would have buried him in the late 1980s.
A business divorce can also bury you. You are not necessarily going to have a prenup agreement for your business partner, but if you do take on partners, here’s what I recommend:
· Take on business partners only on a deal-by-deal basis.
· Use partners for money, credit or to acquire properties.
· Never give anyone authority over your money.
· Make decisions on a financial basis first.
· Make sure you, your partner and partner’s spouse share the same goals.
People ask me, “Should I have a partner in business?” And my answer is, “Should you get married?” Because both of those require a commitment.
No one really knows what a partner is going to be like until you hit tough times and you disagree. You have to create assurances that you are both going to be solvent and liquid.
Use money or credit partners, but only on a deal-by-deal basis. It’s easy enough to get out of one deal if you have to, but it is much more difficult to get out of 100 deals with a partner.
Make sure that you and your partner share the same goals and work ethics. (Here in the book I talk about one of my early partnership deals! I also address how to do business with family, spouses and spouses of partners.) Most importantly, I talk about how to protect yourself. This section will be available when the book is released!)
…if you go into business with family, the same rules apply.
If you are married to your business partner, make sure you define clear roles and boundaries in your business and marriage. In my business, I am the president and my wife is vice-president, so I have final say. She trusts my decisions based on my experience. But in our marriage, we are equal partners and consult each other on decisions and problem solving.
Donald Trump said that if not for a prenuptial agreement, his divorce would have buried him in the late 1980s.
A business divorce can also bury you. You are not necessarily going to have a prenup agreement for your business partner, but if you do take on partners, here’s what I recommend:
· Take on business partners only on a deal-by-deal basis.
· Use partners for money, credit or to acquire properties.
· Never give anyone authority over your money.
· Make decisions on a financial basis first.
· Make sure you, your partner and partner’s spouse share the same goals.
People ask me, “Should I have a partner in business?” And my answer is, “Should you get married?” Because both of those require a commitment.
No one really knows what a partner is going to be like until you hit tough times and you disagree. You have to create assurances that you are both going to be solvent and liquid.
Use money or credit partners, but only on a deal-by-deal basis. It’s easy enough to get out of one deal if you have to, but it is much more difficult to get out of 100 deals with a partner.
Make sure that you and your partner share the same goals and work ethics. (Here in the book I talk about one of my early partnership deals! I also address how to do business with family, spouses and spouses of partners.) Most importantly, I talk about how to protect yourself. This section will be available when the book is released!)
…if you go into business with family, the same rules apply.
If you are married to your business partner, make sure you define clear roles and boundaries in your business and marriage. In my business, I am the president and my wife is vice-president, so I have final say. She trusts my decisions based on my experience. But in our marriage, we are equal partners and consult each other on decisions and problem solving.
Wednesday, November 28, 2007
Real Estate Investing
Real Estate Investing
“Real estate investor seeks apprentice, 10k a month.” This might sound familiar to some- the token real estate investing advertisement feeding off the ideas of those wanting a piece of a lucrative industry. And it’s well-founded! Real estate investing is a very profitable business but only to a very lucky few does it come in the form of a simple phone call. Investing in real estate requires knowledge and fervor in order to make a serious return. The savvy investor will take advantage of the tools available and exercise every entrepreneurial bone in their body.
There are several avenues to take within the rather large realm of real estate investing. Whether you execute more traditional types of real estate investing such as buying low and flipping or investing in tax liens, there are several profitable routes to take. Another trend forecasted for the coming years is the rise of foreclosure investing. With all the resources available online, foreclosure investing is much easier than once considered. Some services contain listings for foreclosures and tax liens making them a one-stop real estate investment shop.
One truth is that real estate investing will always be a safe bet. With current savings rates as low as they are most investors are scurrying for other investment opportunities. Despite current rumors of the real estate market’s supposed down turn, real estate investing sill provides lucrative profits for those willing to do their homework. Sure, the real estate market may be slow but all these unfounded theories of a crash are better left on the prophesier’s tablet. Certain fluctuations in the real estate market are followed by subsequent market corrections. Whether the entire economy directs these fluctuations or they are triggered by some local cause, there are balances to come.
Look at Florida, for every 10,000 families that leave the sunshine state due to the battering of recent hurricanes there are 15,000 families willing to take their place and bask in the sun. Real estate like any other product of society is still subject to the basic laws of economics- supply and demand. As long as people are seeking to fulfill what Maslow considers one of the most basic and necessary needs then the housing market, and real estate investing, will certainly be a stable sanctuary for your money.
“Real estate investor seeks apprentice, 10k a month.” This might sound familiar to some- the token real estate investing advertisement feeding off the ideas of those wanting a piece of a lucrative industry. And it’s well-founded! Real estate investing is a very profitable business but only to a very lucky few does it come in the form of a simple phone call. Investing in real estate requires knowledge and fervor in order to make a serious return. The savvy investor will take advantage of the tools available and exercise every entrepreneurial bone in their body.
There are several avenues to take within the rather large realm of real estate investing. Whether you execute more traditional types of real estate investing such as buying low and flipping or investing in tax liens, there are several profitable routes to take. Another trend forecasted for the coming years is the rise of foreclosure investing. With all the resources available online, foreclosure investing is much easier than once considered. Some services contain listings for foreclosures and tax liens making them a one-stop real estate investment shop.
One truth is that real estate investing will always be a safe bet. With current savings rates as low as they are most investors are scurrying for other investment opportunities. Despite current rumors of the real estate market’s supposed down turn, real estate investing sill provides lucrative profits for those willing to do their homework. Sure, the real estate market may be slow but all these unfounded theories of a crash are better left on the prophesier’s tablet. Certain fluctuations in the real estate market are followed by subsequent market corrections. Whether the entire economy directs these fluctuations or they are triggered by some local cause, there are balances to come.
Look at Florida, for every 10,000 families that leave the sunshine state due to the battering of recent hurricanes there are 15,000 families willing to take their place and bask in the sun. Real estate like any other product of society is still subject to the basic laws of economics- supply and demand. As long as people are seeking to fulfill what Maslow considers one of the most basic and necessary needs then the housing market, and real estate investing, will certainly be a stable sanctuary for your money.
Friday, November 23, 2007
Black Friday Foreclosure Shopping
The foreclosure market continues to boom as no relief appears in sight for stretched subprime mortgage holders. As the economy shows more signs of a slowdown, this trend is likely to continue.
Although the real estate industry would prefer otherwise, foreclosures continue to make headlines. The latest data showed superficial relief, with September foreclosures down 8% from some 243,000 in August, but still more than double last year -- and still with more to come.
It may be a harsh analogy, but I often think of foreclosure buyers as the forest-floor ants consuming the dead wood to clean the forest.
That means three things. First, as I see it, the sooner we get through this credit mess, the better. Second, the faster properties get through the foreclosure process and find buyers, the sooner we'll get through the mess. So third, foreclosure buyers clean out the dead wood (I like) and get great bargains in the process (I also like).
I can save how much?
My recent column broadly covers the discount you can expect from market value if you buy a foreclosure. It varies by region, but using information published by real estate portal and foreclosure specialists RealtyTrac, I saw discounts ranging from 15% in Hawaii to 40% in Alabama, with 20% and 25% being a rule of thumb.
Not bad. So then the next question, incidentally raised by several readers, is "how do I find those bargains in my area?"
Finding the for sale signs
To locate specific foreclosures in your area, RealtyTrac is a good place to start. Visit the nations #1 site for foreclosures and find homes for half the price.
The site lists foreclosures by ZIP code and foreclosure stage, ranging from preforeclosure property to bank-owned real estate. It's a broad and fairly deep picture of foreclosure availability in your area.
Some have found RealtyTrac less than precise, as the task of keeping up with foreclosure listing activity across the company is large, to say the least. And to get specific information on the property, RealtyTrac requires a $49.95/month subscription after a seven-day free trial.
But realize that RealtyTrac sits behind other real estate sites, so sooner or later you'll probably run into RealtyTrac. If you're serious about foreclosure shopping, you might want to sign up.
Combining sources
If you aren't ready to make the financial commitment or "come out of the closet" as a registered foreclosure buyer, there are several other paths which work surprisingly well:
Bank sales. To their chagrin, banks and financial institutions are going into the real estate business in a big way. Too bad for them, but you can find a lot of bargains on their Web sites: Bank of America, Countrywide and U. S. Bank have good listings, to name a few. Countrywide, for example, has 300 listings in California alone priced under $170,000.
Agency sales. Banks sell their "REO" (Real Estate Owned) but often hire agencies to do the job. Such agencies include Keystone Asset Management, Lenders Asset Management Corporation and HomeEq Servicing. Some of these agencies may operate bank sites, so you may see a similarity.
Government and government-backed lender sales. Government agencies ranging from FHA and VA to HUD and the Department of Justice sell real estate, visible through a single portal. And government-backed Fannie Mae and Freddie Mac also operate sites. The variety of properties available is, shall we say, wide, but Fannie Mae in particular lists a lot of solid mainstream real estate values.
Auctions and auction houses. Local and regional auctions are becoming bigger as banks and others pile up inventory. A real estate auction specialist will announce an auction of dozens, maybe hundreds of properties in a large region or metro area. Auctioneers include Real Estate Disposal Corporation (REDC) and Williams & Williams. Experience helps in playing this game, although the auctioneer sites walk you through the process.
Local real estate specialists. A lot of agents know about action in a particular area and can hook you up with the sellers. Good agents have their eyes and ears to the ground at all times, and get tips and hear about stuff coming on the market. You can often Google "foreclosures (area)" to get local listings.
Don't forget: reward comes with risk
Remember that, while foreclosure properties often sell at a healthy discount, you may run into poorly maintained properties. There may be other foreclosures in the immediate area, hurting the quality and value of your investment. Double check other adjacent listings and visit the area if you can.
Remember: Good value investors buy assets at the right time in the right place at the right price. Real estate is no different.
Although the real estate industry would prefer otherwise, foreclosures continue to make headlines. The latest data showed superficial relief, with September foreclosures down 8% from some 243,000 in August, but still more than double last year -- and still with more to come.
It may be a harsh analogy, but I often think of foreclosure buyers as the forest-floor ants consuming the dead wood to clean the forest.
That means three things. First, as I see it, the sooner we get through this credit mess, the better. Second, the faster properties get through the foreclosure process and find buyers, the sooner we'll get through the mess. So third, foreclosure buyers clean out the dead wood (I like) and get great bargains in the process (I also like).
I can save how much?
My recent column broadly covers the discount you can expect from market value if you buy a foreclosure. It varies by region, but using information published by real estate portal and foreclosure specialists RealtyTrac, I saw discounts ranging from 15% in Hawaii to 40% in Alabama, with 20% and 25% being a rule of thumb.
Not bad. So then the next question, incidentally raised by several readers, is "how do I find those bargains in my area?"
Finding the for sale signs
To locate specific foreclosures in your area, RealtyTrac is a good place to start. Visit the nations #1 site for foreclosures and find homes for half the price.
The site lists foreclosures by ZIP code and foreclosure stage, ranging from preforeclosure property to bank-owned real estate. It's a broad and fairly deep picture of foreclosure availability in your area.Some have found RealtyTrac less than precise, as the task of keeping up with foreclosure listing activity across the company is large, to say the least. And to get specific information on the property, RealtyTrac requires a $49.95/month subscription after a seven-day free trial.
But realize that RealtyTrac sits behind other real estate sites, so sooner or later you'll probably run into RealtyTrac. If you're serious about foreclosure shopping, you might want to sign up.
Combining sources
If you aren't ready to make the financial commitment or "come out of the closet" as a registered foreclosure buyer, there are several other paths which work surprisingly well:
Bank sales. To their chagrin, banks and financial institutions are going into the real estate business in a big way. Too bad for them, but you can find a lot of bargains on their Web sites: Bank of America, Countrywide and U. S. Bank have good listings, to name a few. Countrywide, for example, has 300 listings in California alone priced under $170,000.
Agency sales. Banks sell their "REO" (Real Estate Owned) but often hire agencies to do the job. Such agencies include Keystone Asset Management, Lenders Asset Management Corporation and HomeEq Servicing. Some of these agencies may operate bank sites, so you may see a similarity.
Government and government-backed lender sales. Government agencies ranging from FHA and VA to HUD and the Department of Justice sell real estate, visible through a single portal. And government-backed Fannie Mae and Freddie Mac also operate sites. The variety of properties available is, shall we say, wide, but Fannie Mae in particular lists a lot of solid mainstream real estate values.
Auctions and auction houses. Local and regional auctions are becoming bigger as banks and others pile up inventory. A real estate auction specialist will announce an auction of dozens, maybe hundreds of properties in a large region or metro area. Auctioneers include Real Estate Disposal Corporation (REDC) and Williams & Williams. Experience helps in playing this game, although the auctioneer sites walk you through the process.
Local real estate specialists. A lot of agents know about action in a particular area and can hook you up with the sellers. Good agents have their eyes and ears to the ground at all times, and get tips and hear about stuff coming on the market. You can often Google "foreclosures (area)" to get local listings.
Don't forget: reward comes with risk
Remember that, while foreclosure properties often sell at a healthy discount, you may run into poorly maintained properties. There may be other foreclosures in the immediate area, hurting the quality and value of your investment. Double check other adjacent listings and visit the area if you can.
Remember: Good value investors buy assets at the right time in the right place at the right price. Real estate is no different.
Thursday, November 15, 2007
Is Flipping houses a lucrative investment?
Flipping houses is one of the most lucrative investment strategies you can make. I stress that statement with one caveat, though: You absolutely must do your due diligence and your homework before you invest. Contrary to conventional wisdom, the hardest part about flipping houses is not the financing. (That's actually the easy part, because you don't even need to use your own credit or your own money.) The hardest part is not even doing the actual rehab work to fix up the foreclosure property and getting it back on the market. The hardest part is not even the negotiation or the bidding process. If you've done your homework, negotiation is really a matter of having the interpersonal communications skills to convey to the seller that you want to help them out.
The hardest part about flipping houses is doing the research and making the determination whether or not a particular property is worth investing in. Once you make the decision to either pass on a particular house or to go forward with the negotiation process, it becomes a matter of statistical numbers, salesmanship, and a bit of luck.
Many a time have foreclosure real estate investors been burned by neglecting to do their homework before investing in a particular parcel of real estate. Novice investors have a tendency to get emotionally attached to particular deals for some reason. Perhaps they like the house. Perhaps they think this house is a guaranteed home run and will net them with a nice decent five- or even six-figure profit. But when they actually sign the paperwork and handover the money to do the deal, the nightmare begins.
The house may need far more repairs than originally anticipated, and the investor had not bothered to do a visual walk-through of the house, or did not buy the house with a low enough loan-to-value (LTV) margin to leave room for repairs before flipping it. Or, the house is in a neighborhood or market where homes are sitting for upwards of six months at a stretch before being sold, and the investor ends up making monthly payments on the house that eat into his or her profits, and ends up having to rent out the place for less than the monthly payments on the mortgage are.
The house may have had an encumbrance on it such as a judgment lien or a second or third mortgage, and the investor didn't bother to conduct a title search to ensure clean title.
Or quite simply, the homeowner just didn't do a CMA (comparative market analysis) properly and didn't buy the house at a low enough percentage below market value in order to make the deal profitable.
You may have heard the expression from various foreclosure gurus that you make your money on an investment when you buy it, not when you sell it. In other words, what that means is that you should only be buying assets that have equity that can be realized.
Research is one of the single most important aspects of the foreclosure investing business. When done properly, you will find riches beyond your wildest dreams. When done improperly, you are digging a deeper hole for yourself financially. I know from personal experience, having done foreclosure investing, the sad reality of this fact. As a rookie investor, my first couple of deals I barely made a few pennies on. I was lucky that I didn't end up losing my shirt. I walked away with a few bucks. This was because I hadn't done the math right in my calculations because more was owed on the house than I previously thought. On another deal, I ended up paying more in repairs than I had anticipated, because I had never been inside the house before the homeowner deeded the house over to me. But then on my next deals, because I had done my homework properly (having learned from my mistakes with my previous deals), I was able to get into deals with a much healthier profit margin. A healthy profit margin is very important to maintain when doing your calculations. You can almost always expect that, due to factors beyond your control, you have the potential to make less on a deal than the numbers tell you that you will on paper. If you think you will net $20,000 on a particular property, you might end up only making $10,000 or $15,000, or who knows, maybe even less.
That is why research is important. That is why it is important to use a reliable foreclosure listing service that provides reliable and accurate data. Yes I could go to the courthouse and research the deals myself, but rather than spend countless hours looking through files from 8am to 4pm on weekdays, I would rather use my valuable time to evaluate pre-researched deals, make go / no-go decisions on each deal based on the researched information, and then focus more of my time on the actual process of making offers. If you want to be a successful real estate investor, you will learn that if you want to do a volume of deals, you will need to outsource some of your tasks. The easiest one to outsource is the compilation of foreclosure listings and researching of the deals. (You don't have to train anyone to do it, because there are services out there that already do this for you.)
Learn more about foreclosures and get access to all the tools you need to get started investing today at http://www.thenoteservice.com
The hardest part about flipping houses is doing the research and making the determination whether or not a particular property is worth investing in. Once you make the decision to either pass on a particular house or to go forward with the negotiation process, it becomes a matter of statistical numbers, salesmanship, and a bit of luck.
Many a time have foreclosure real estate investors been burned by neglecting to do their homework before investing in a particular parcel of real estate. Novice investors have a tendency to get emotionally attached to particular deals for some reason. Perhaps they like the house. Perhaps they think this house is a guaranteed home run and will net them with a nice decent five- or even six-figure profit. But when they actually sign the paperwork and handover the money to do the deal, the nightmare begins.
The house may need far more repairs than originally anticipated, and the investor had not bothered to do a visual walk-through of the house, or did not buy the house with a low enough loan-to-value (LTV) margin to leave room for repairs before flipping it. Or, the house is in a neighborhood or market where homes are sitting for upwards of six months at a stretch before being sold, and the investor ends up making monthly payments on the house that eat into his or her profits, and ends up having to rent out the place for less than the monthly payments on the mortgage are.
The house may have had an encumbrance on it such as a judgment lien or a second or third mortgage, and the investor didn't bother to conduct a title search to ensure clean title.
Or quite simply, the homeowner just didn't do a CMA (comparative market analysis) properly and didn't buy the house at a low enough percentage below market value in order to make the deal profitable.
You may have heard the expression from various foreclosure gurus that you make your money on an investment when you buy it, not when you sell it. In other words, what that means is that you should only be buying assets that have equity that can be realized.
Research is one of the single most important aspects of the foreclosure investing business. When done properly, you will find riches beyond your wildest dreams. When done improperly, you are digging a deeper hole for yourself financially. I know from personal experience, having done foreclosure investing, the sad reality of this fact. As a rookie investor, my first couple of deals I barely made a few pennies on. I was lucky that I didn't end up losing my shirt. I walked away with a few bucks. This was because I hadn't done the math right in my calculations because more was owed on the house than I previously thought. On another deal, I ended up paying more in repairs than I had anticipated, because I had never been inside the house before the homeowner deeded the house over to me. But then on my next deals, because I had done my homework properly (having learned from my mistakes with my previous deals), I was able to get into deals with a much healthier profit margin. A healthy profit margin is very important to maintain when doing your calculations. You can almost always expect that, due to factors beyond your control, you have the potential to make less on a deal than the numbers tell you that you will on paper. If you think you will net $20,000 on a particular property, you might end up only making $10,000 or $15,000, or who knows, maybe even less.
That is why research is important. That is why it is important to use a reliable foreclosure listing service that provides reliable and accurate data. Yes I could go to the courthouse and research the deals myself, but rather than spend countless hours looking through files from 8am to 4pm on weekdays, I would rather use my valuable time to evaluate pre-researched deals, make go / no-go decisions on each deal based on the researched information, and then focus more of my time on the actual process of making offers. If you want to be a successful real estate investor, you will learn that if you want to do a volume of deals, you will need to outsource some of your tasks. The easiest one to outsource is the compilation of foreclosure listings and researching of the deals. (You don't have to train anyone to do it, because there are services out there that already do this for you.)
Learn more about foreclosures and get access to all the tools you need to get started investing today at http://www.thenoteservice.com
Monday, November 12, 2007
Secrets to Finding Foreclosure Deals
Secrets to Finding Foreclosure Deals
With experience comes knowledge. And Louis Butler certainly has the experience to give him ample knowledge about how to find foreclosure bargains. After purchasing more than 25 foreclosure properties in the Little Rock, Ark., area, Butler can spot a deal from more than a thousand miles away — literally.
“I don’t need a spreadsheet or software to spot a deal,” said the San Dimas, Calif., native who buys foreclosures in a town that is nearly 1,600 miles from where he lives and works. “I have a local real estate agent in Little Rock, and local title and loan people that help put together my foreclosure deals.”
Butler originally lived in the Little Rock area, so he knows the good locations and neighborhoods. He said he looks for properties with 30 to 40 percent equity. Then, he puts together wholesale deals that are 20 to 30 percent below market value in certain areas and zip codes that he is familiar with.
“I pencil it out, look at the comps, search for liens and rely on my local realtor to send me photographs,” he explained. “Then, I contact the owner and negotiate a price. A lot of my deals I don’t even inspect the property. I look at photographs sent to me from my realtor and study the comps.”
To accommodate his long-distance investing, Butler sometimes receives closing documents via overnight couriers and has to sign the documents and ship them back immediately. The mailing costs are a small price to pay for the benefits of investing in a market that produces so many good deals for him.
Targeting a less-expensive housing market across the country has helped Butler locate a plethora of bargain buys, but that’s not the only way to find great deals on foreclosures. There are as many strategies for finding great deals as there are foreclosure investors. Below are a few key strategy secrets from experienced investors across the country.
Handwritten letters stand out
While many investors use printed form letters to contact homeowners in default, investor Michelle Mangione relies on handwritten envelopes to drive her foreclosure business. Mangione’s letter-writing strategy got her the dream home she currently lives in four years ago when she first started investing in foreclosures. She purchased her Fallbrook, Calif., home in 2003 for $655,000. In March and April 2007, two homes down the street sold for more than $1.5 million.
“I target pre-foreclosures and send out handwritten envelopes with a form letter inside,” said Mangione, a licensed realtor who invests in foreclosures full-time. Mangione mails 500 to 1,000 letters at a time to homeowners in the early stages of default. Typically, she gets a response rate of about 1 to 3 percent per mailing. Many conversations with distressed homeowners go nowhere, she said. “When I get a telephone call back, then I check out the property and start the dialogue with the owner.”
Auction deals can amaze
Like Mangione, Michigan real estate investor Nancy Levin also purchased her dream home in foreclosure. Levin found a foreclosed home in an affluent Detroit community.
“The property was in pre-foreclosure when I first saw it online,” explained Levin. “I kept tracking it on the Internet. My agent didn’t even know the property was in foreclosure. Finally, it went to auction — and to my surprise — I was the only one who showed up at the auction. I paid cash at the auction and bought the house for $260,000.”
Levin said the 2,800 square foot Bloomfield Hills home, which appraised for $430,000, was totally remodeled and featured three baths and three bedrooms. She bought the redemption rights from the previous owner for another $20,000 and moved in.
“I got this place for a steal,” Levin said. “Right now, Michigan is foreclosure heaven. It’s raining foreclosures here. I’m looking to do another one soon. If I can find a deal like the one I’m living in, I’ll definitely buy it.”
Strike while the iron is hot
Glen Miller, a 39-year veteran of foreclosure investing, believes now is a great time to buy foreclosures.
“After I look at the properties on RealtyTrac, I then go the courthouse and look for properties that have low mortgage balances and I look for any outstanding liens,” said Miller, who currently owns 20 foreclosure properties in and around Vero Beach, Fla. Miller owns eight duplexes, four single family homes, a condo unit and has just flipped five foreclosures. Now, Miller is finishing rehabbing another foreclosure that he will sell soon.
“I’m putting on a new roof on this four-bedroom, two-bath home in Fort Pierce I bought for $60,000,” Miller said. “I’ll invest another $20,000 and put it on the market in the next three weeks and list it for $130,000. I should sell this one fast because the other homes on the market are listed for $160,000 and more.”
While there’s no one secret to buying foreclosure property at discounted prices, Miller and the other investors agree that it’s important that investors jump in and find out what works for their personality and target market. Once they find a strategy that works, investors should stick with it.
“You got to have common horse sense. This isn’t rocket science,” Miller said. “You just have get off your behind and go out and attack the market.”
With experience comes knowledge. And Louis Butler certainly has the experience to give him ample knowledge about how to find foreclosure bargains. After purchasing more than 25 foreclosure properties in the Little Rock, Ark., area, Butler can spot a deal from more than a thousand miles away — literally.
“I don’t need a spreadsheet or software to spot a deal,” said the San Dimas, Calif., native who buys foreclosures in a town that is nearly 1,600 miles from where he lives and works. “I have a local real estate agent in Little Rock, and local title and loan people that help put together my foreclosure deals.”
Butler originally lived in the Little Rock area, so he knows the good locations and neighborhoods. He said he looks for properties with 30 to 40 percent equity. Then, he puts together wholesale deals that are 20 to 30 percent below market value in certain areas and zip codes that he is familiar with.
“I pencil it out, look at the comps, search for liens and rely on my local realtor to send me photographs,” he explained. “Then, I contact the owner and negotiate a price. A lot of my deals I don’t even inspect the property. I look at photographs sent to me from my realtor and study the comps.”
To accommodate his long-distance investing, Butler sometimes receives closing documents via overnight couriers and has to sign the documents and ship them back immediately. The mailing costs are a small price to pay for the benefits of investing in a market that produces so many good deals for him.
Targeting a less-expensive housing market across the country has helped Butler locate a plethora of bargain buys, but that’s not the only way to find great deals on foreclosures. There are as many strategies for finding great deals as there are foreclosure investors. Below are a few key strategy secrets from experienced investors across the country.
Handwritten letters stand out
While many investors use printed form letters to contact homeowners in default, investor Michelle Mangione relies on handwritten envelopes to drive her foreclosure business. Mangione’s letter-writing strategy got her the dream home she currently lives in four years ago when she first started investing in foreclosures. She purchased her Fallbrook, Calif., home in 2003 for $655,000. In March and April 2007, two homes down the street sold for more than $1.5 million.
“I target pre-foreclosures and send out handwritten envelopes with a form letter inside,” said Mangione, a licensed realtor who invests in foreclosures full-time. Mangione mails 500 to 1,000 letters at a time to homeowners in the early stages of default. Typically, she gets a response rate of about 1 to 3 percent per mailing. Many conversations with distressed homeowners go nowhere, she said. “When I get a telephone call back, then I check out the property and start the dialogue with the owner.”
Auction deals can amaze
Like Mangione, Michigan real estate investor Nancy Levin also purchased her dream home in foreclosure. Levin found a foreclosed home in an affluent Detroit community.
“The property was in pre-foreclosure when I first saw it online,” explained Levin. “I kept tracking it on the Internet. My agent didn’t even know the property was in foreclosure. Finally, it went to auction — and to my surprise — I was the only one who showed up at the auction. I paid cash at the auction and bought the house for $260,000.”
Levin said the 2,800 square foot Bloomfield Hills home, which appraised for $430,000, was totally remodeled and featured three baths and three bedrooms. She bought the redemption rights from the previous owner for another $20,000 and moved in.
“I got this place for a steal,” Levin said. “Right now, Michigan is foreclosure heaven. It’s raining foreclosures here. I’m looking to do another one soon. If I can find a deal like the one I’m living in, I’ll definitely buy it.”
Strike while the iron is hot
Glen Miller, a 39-year veteran of foreclosure investing, believes now is a great time to buy foreclosures.
“After I look at the properties on RealtyTrac, I then go the courthouse and look for properties that have low mortgage balances and I look for any outstanding liens,” said Miller, who currently owns 20 foreclosure properties in and around Vero Beach, Fla. Miller owns eight duplexes, four single family homes, a condo unit and has just flipped five foreclosures. Now, Miller is finishing rehabbing another foreclosure that he will sell soon.
“I’m putting on a new roof on this four-bedroom, two-bath home in Fort Pierce I bought for $60,000,” Miller said. “I’ll invest another $20,000 and put it on the market in the next three weeks and list it for $130,000. I should sell this one fast because the other homes on the market are listed for $160,000 and more.”
While there’s no one secret to buying foreclosure property at discounted prices, Miller and the other investors agree that it’s important that investors jump in and find out what works for their personality and target market. Once they find a strategy that works, investors should stick with it.
“You got to have common horse sense. This isn’t rocket science,” Miller said. “You just have get off your behind and go out and attack the market.”
Thursday, November 8, 2007
How To Dramatically Increase Your Credit Score
Of course, one of the obvious ways to increase your credit score is simply to pay your bills on time, which of course you need to do. However, there's a more proactive approach to raising your credit score that's easy to do and makes the process quicker!
Let's say you have a Visa card with a $1,000.00 credit limit. Starting today you can use your $1,000.00 line of credit to increase your credit score and it doesn't matter if the credit card is secured or non-secured. The only thing that matters is that your credit card payments are reported to the credit bureau.
Each month you probably pay an electric bill, phone bill, water bill, car insurance and other types of bills which are generally not reported to the credit bureau unless you have an outstanding balance and refuse to pay it. The trick is to pay all these bills each month using your credit card, which does report to the credit bureau. Remember, you can even pay your groceries and fuel purchases for your car using a credit card. As long as the bill can be paid using a credit card you're ok. The next step is to apply the same money you were going to spend for the bills directly to your credit card bringing the balance to zero each month. Each month you charge your credit card then pay it off to reflect a positive payment history and you'll increase your credit score.
If you have a credit card with a large enough credit line, you can easily pay your car payment or even a mortgage payment. Even if you don't have a large enough credit line or can't get a non-secured credit card, you can still get a secured credit card from your local bank. Once this is done, deposit the same money you were going to use to pay your bills into your secured credit card account and simply use your secured credit card to pay your bills.
When using this method you can also use two credit cards showing more accounts with positive activity, which can work in your favor. However, don't get carried away! Having too many active credit card accounts or open lines of credit will also work against you.
Note: Debit cards with the Visa logo that come directly out of your checking account don't count. The credit card you're using must be set-up as a true credit card with the payments reported to the credit bureau.
Now your bills are being paid on time and you're maximizing your credit score with every bill you pay using your credit card reflecting a positive payment history for both your bills and your credit card.
Remember, this costs you very little to accomplish. All you may end up paying is a few dollars in interest, if that. The benefits you'll receive as your credit score increases will far outweigh a few dollars per month.
THE KEY HERE IS TO ALWAYS USE THE MONEY YOU WERE GOING TO ALREADY USE TO PAY YOUR BILLS TO PAY THE CREDIT CARD YOU'RE NOW USING TO PAY YOUR BILLS, BRINGING THE BALANCE TO ZERO EACH MONTH. NEVER MAKE THE MISTAKE OF THINKING YOU HAVE ALL THIS MONEY AT THE END OF THE MONTH AND ONLY PAYING THE MINIMUM PAYMENT TO THE CREDIT CARD. PAY THE CREDIT CARD DOWN TO A VERY SMALL BALANCE EACH MONTH! I CAN'T STRESS TO YOU ENOUGH HOW IMPORTANT THIS STEP IS. BY NOT DOING SO, YOU'LL END UP MORE AND MORE IN DEBT.
Note: The reason it is important to leave a small balance every month on your credit card is that banks like to see that you are paying interest, which helps raise your credit score. A $20 or $30 balance will work fine.
Of course, the only bills this will work on are those you can use a credit card to pay. I believe you'll find you can pay most of your bills with a credit card.
Once again let me remind you AS STATED THROUGHOUT OUR WEBSITE YOUR CREDIT HISTORY HAS NO IMPACT ON ACQUIRING REAL ESTATE WHEN YOU WORK WITH US.
This information is provided as a gift to you with no strings attached.
I hope to hear from you soon.
Let's say you have a Visa card with a $1,000.00 credit limit. Starting today you can use your $1,000.00 line of credit to increase your credit score and it doesn't matter if the credit card is secured or non-secured. The only thing that matters is that your credit card payments are reported to the credit bureau.
Each month you probably pay an electric bill, phone bill, water bill, car insurance and other types of bills which are generally not reported to the credit bureau unless you have an outstanding balance and refuse to pay it. The trick is to pay all these bills each month using your credit card, which does report to the credit bureau. Remember, you can even pay your groceries and fuel purchases for your car using a credit card. As long as the bill can be paid using a credit card you're ok. The next step is to apply the same money you were going to spend for the bills directly to your credit card bringing the balance to zero each month. Each month you charge your credit card then pay it off to reflect a positive payment history and you'll increase your credit score.
If you have a credit card with a large enough credit line, you can easily pay your car payment or even a mortgage payment. Even if you don't have a large enough credit line or can't get a non-secured credit card, you can still get a secured credit card from your local bank. Once this is done, deposit the same money you were going to use to pay your bills into your secured credit card account and simply use your secured credit card to pay your bills.
When using this method you can also use two credit cards showing more accounts with positive activity, which can work in your favor. However, don't get carried away! Having too many active credit card accounts or open lines of credit will also work against you.
Note: Debit cards with the Visa logo that come directly out of your checking account don't count. The credit card you're using must be set-up as a true credit card with the payments reported to the credit bureau.
Now your bills are being paid on time and you're maximizing your credit score with every bill you pay using your credit card reflecting a positive payment history for both your bills and your credit card.
Remember, this costs you very little to accomplish. All you may end up paying is a few dollars in interest, if that. The benefits you'll receive as your credit score increases will far outweigh a few dollars per month.
THE KEY HERE IS TO ALWAYS USE THE MONEY YOU WERE GOING TO ALREADY USE TO PAY YOUR BILLS TO PAY THE CREDIT CARD YOU'RE NOW USING TO PAY YOUR BILLS, BRINGING THE BALANCE TO ZERO EACH MONTH. NEVER MAKE THE MISTAKE OF THINKING YOU HAVE ALL THIS MONEY AT THE END OF THE MONTH AND ONLY PAYING THE MINIMUM PAYMENT TO THE CREDIT CARD. PAY THE CREDIT CARD DOWN TO A VERY SMALL BALANCE EACH MONTH! I CAN'T STRESS TO YOU ENOUGH HOW IMPORTANT THIS STEP IS. BY NOT DOING SO, YOU'LL END UP MORE AND MORE IN DEBT.
Note: The reason it is important to leave a small balance every month on your credit card is that banks like to see that you are paying interest, which helps raise your credit score. A $20 or $30 balance will work fine.
Of course, the only bills this will work on are those you can use a credit card to pay. I believe you'll find you can pay most of your bills with a credit card.
Once again let me remind you AS STATED THROUGHOUT OUR WEBSITE YOUR CREDIT HISTORY HAS NO IMPACT ON ACQUIRING REAL ESTATE WHEN YOU WORK WITH US.
This information is provided as a gift to you with no strings attached.
I hope to hear from you soon.
Wednesday, November 7, 2007
Mortgage rates fall to May 2007 levels
Mortgage rates fell last week to their lowest point in nearly six months according to the results of Freddie Mac's Primary Mortgage Market Survey for the week ended November 1.
The average rate for the 30-year fixed-rate mortgage (FRM) dropped to 6.26 percent with an average 0.4 point from the average the previous week of 6.33 percent with 0.5 point. This was the lowest average rate for the 30-year FRM since the week ended May 17 when it averaged 6.21 percent. One year ago this product carried an average rate of 6.31.
The 15-year FRM was down eight basis points to 5.91 percent with an average 0.4 point, a decrease of 0.2 point from the week ended October 25. This was the lowest rate for the 15-year FRM since the week ended May 10 when the average was 5.87 percent. One year ago the average was 6.02 percent.
The five-year Treasury-indexed hybrid adjustable rate mortgage (ARM) averaged 5.98 percent with 0.4 point compared to the previous week when it averaged 6.03 percent with 0.5 point. This is the lowest rate for this category of loan since May 17 when the average was 5.92 percent.
The one-year Treasury-indexed ARM averaged 5.57 percent, nine basis points lower than a week earlier. The average point was unchanged at 0.6. This rate tied with the last low that was recorded during the week ended May 31.
"October's consumer confidence fell to its lowest level since October 2005 as mortgage rates continued to decline this week to their lowest level in almost six months," said Frank Nothaft, Freddie Mac vice president and chief economist. "Continued market concerns about weaker economic growth and further declines in the housing market have kept mortgage rates low over the last few weeks.
"Although the third quarter gain in real gross domestic product (GDP) of 3.9 percent was stronger than market forecasts, the housing market has subtracted from GDP growth over the past twenty-one months ending in September. In its most recent policy announcement, the Federal Open Market Committee (FOMC) noted that the rate of expansion in the economy will most likely slow in the near term, due in part to a reflection of the intensity of the housing correction."
The survey of lenders conducted weekly by the Mortgage Bankers Association (MBA) showed a very slight increase in average rates for two of the three categories of loans it tracks.
The 30-year fixed rate mortgage had an average contract interest rate of 6.16 percent compared to 6.15 percent a week earlier. Fees and points, including the origination fee, increased to 1.08 from 1.05.
The average rate for the 15-year FRM decreased from 5.79 percent to 5.77 percent with fees and points unchanged at 1.10.
The one-year ARM also increased one basis point to 5.94 percent with points decreasing to 0.9 from 0.93.
All MBA figures are for 80 percent loan to value originations.
Mortgage loan applications decreased 1.6 percent on a seasonally adjusted basis from a week earlier and 2.4 percent on an unadjusted basis. Application volume was 8 percent higher than that recorded during the same week in 2006.
Applications to refinance represented 49.1 percent of all mortgage applications compared to 49.6 percent a week earlier while the market share of adjustable rate mortgages decreased to 14.2 percent from 14.7 percent.
The average rate for the 30-year fixed-rate mortgage (FRM) dropped to 6.26 percent with an average 0.4 point from the average the previous week of 6.33 percent with 0.5 point. This was the lowest average rate for the 30-year FRM since the week ended May 17 when it averaged 6.21 percent. One year ago this product carried an average rate of 6.31.
The 15-year FRM was down eight basis points to 5.91 percent with an average 0.4 point, a decrease of 0.2 point from the week ended October 25. This was the lowest rate for the 15-year FRM since the week ended May 10 when the average was 5.87 percent. One year ago the average was 6.02 percent.
The five-year Treasury-indexed hybrid adjustable rate mortgage (ARM) averaged 5.98 percent with 0.4 point compared to the previous week when it averaged 6.03 percent with 0.5 point. This is the lowest rate for this category of loan since May 17 when the average was 5.92 percent.
The one-year Treasury-indexed ARM averaged 5.57 percent, nine basis points lower than a week earlier. The average point was unchanged at 0.6. This rate tied with the last low that was recorded during the week ended May 31.
"October's consumer confidence fell to its lowest level since October 2005 as mortgage rates continued to decline this week to their lowest level in almost six months," said Frank Nothaft, Freddie Mac vice president and chief economist. "Continued market concerns about weaker economic growth and further declines in the housing market have kept mortgage rates low over the last few weeks.
"Although the third quarter gain in real gross domestic product (GDP) of 3.9 percent was stronger than market forecasts, the housing market has subtracted from GDP growth over the past twenty-one months ending in September. In its most recent policy announcement, the Federal Open Market Committee (FOMC) noted that the rate of expansion in the economy will most likely slow in the near term, due in part to a reflection of the intensity of the housing correction."
The survey of lenders conducted weekly by the Mortgage Bankers Association (MBA) showed a very slight increase in average rates for two of the three categories of loans it tracks.
The 30-year fixed rate mortgage had an average contract interest rate of 6.16 percent compared to 6.15 percent a week earlier. Fees and points, including the origination fee, increased to 1.08 from 1.05.
The average rate for the 15-year FRM decreased from 5.79 percent to 5.77 percent with fees and points unchanged at 1.10.
The one-year ARM also increased one basis point to 5.94 percent with points decreasing to 0.9 from 0.93.
All MBA figures are for 80 percent loan to value originations.
Mortgage loan applications decreased 1.6 percent on a seasonally adjusted basis from a week earlier and 2.4 percent on an unadjusted basis. Application volume was 8 percent higher than that recorded during the same week in 2006.
Applications to refinance represented 49.1 percent of all mortgage applications compared to 49.6 percent a week earlier while the market share of adjustable rate mortgages decreased to 14.2 percent from 14.7 percent.
Tuesday, October 23, 2007
CT Foreclosure Process Rules
FORECLOSURE BY SALE STANDING ORDERS
1. Committee will be appointed by the Court from a list of approved attorneys.
2. Sale will take place at 11:00 am on the premises unless otherwise ordered by the court.
3. Inspection will occur one hour prior to the sale on the date of sale unless otherwise
designated.
4. The deposit is 10% of the fair market value as found by the Court. The deposit is waived for
the plaintiff unless requested otherwise. Deposit is to be paid by either bank or certified
check. Purchaser is to close within 30 days of the Court’s approval of the committee deed.
The deposit shall be forfeited if the purchaser fails to close within 30 days of the approval of
the committee deed.
5. Advertisement is to be published twice in a newspaper as directed by the court.
6. The sign is to be placed on the premises as directed by the court.
7. The size of the sign is to be approximately 3 feet wide and 2 feet high and must contain the
following statement: DO NOT REMOVE; VIOLATION SUBJECT TO PUNISHMENT BY
THE COURT.
8. Cost of the sign is not to exceed the amount customarily authorized by the court including
preparation, erection and photograph for inclusion in committee report.
9. Committee is authorized to replace the sign once without court approval, provided the sign
can be erected at least ten days prior to sale. DO NOT ERECT THE SIGN YOURSELF.
10. A disinterested appraiser will be appointed and will, under oath, appraise the property and
make return of the appraisal to the Clerk of the Court at least seven days prior to the sale. The
court will retain this appraisal.
11. Committee is to obtain liability insurance for the date of the sale in the amount of $1,000,000.
Premium not to exceed $275.00.
12. Except for filing an appearance, if the sale is more than two months in the future, the
committee should incur no fees or expenses until directed by the court.
13. The Committee is authorized to conduct a title search of the property. The expense incurred
in connection with the title search shall not exceed $200.00.
14. If the sale is cancelled for any reason after publication or erection of the sign, a written
announcement of cancellation should be posted on the site. The committee is to remain on
site in that event.
15. The following information is to be contained in the Court ordered letter to the nonappearing
defendant owner of the equity: a.) Clearly state at the beginning that the letter is being sent at
the direction of the Court; b.) State the results of the foreclosure judgement; c.) Inform the
nonappearing equity owner that he/she/they risk loss of the equity if he/she/they fail to take
steps to protect that equity AND THAT HE/SHE/THEY SHOULD CHECK WITH THE
COURT AFTER THE SALE TO LEARN IF THERE IS ANY MONEY THAT IS
DISTRIBUTABLE TO HIM/HER/THEM; d.) State that the nonappearing party should either
file his/her own appearance or have an attorney file one on his/her/their behalf in order to
protect his/her/their interest in the equity. This letter is to be sent by the plaintiff via certified
mail, return receipt requested. A copy of the letter and later the return receipt should be sent
to the Clerk of the Court. NO SALE WILL BE APPROVED OR FUNDS DISBURSED
WITHOUT PROOF OF MAILING.
16. The sale is subject to and an all liens choate and inchoate which are prior in right to the
encumbrance being foreclosed.
17. The committee is to follow the Uniform Procedures for Foreclosure by Sale Matters except as
modified herein. (JD-CV-81 Rev.1-03). Committee deed to be prepared on form JD-CV-74
only.
18. Standing orders regarding Standard form Newspaper Ads, Model Notice To Bidders and
Plaintiffs Bid at Foreclosure Sale are incorporated herein by reference.
1. Committee will be appointed by the Court from a list of approved attorneys.
2. Sale will take place at 11:00 am on the premises unless otherwise ordered by the court.
3. Inspection will occur one hour prior to the sale on the date of sale unless otherwise
designated.
4. The deposit is 10% of the fair market value as found by the Court. The deposit is waived for
the plaintiff unless requested otherwise. Deposit is to be paid by either bank or certified
check. Purchaser is to close within 30 days of the Court’s approval of the committee deed.
The deposit shall be forfeited if the purchaser fails to close within 30 days of the approval of
the committee deed.
5. Advertisement is to be published twice in a newspaper as directed by the court.
6. The sign is to be placed on the premises as directed by the court.
7. The size of the sign is to be approximately 3 feet wide and 2 feet high and must contain the
following statement: DO NOT REMOVE; VIOLATION SUBJECT TO PUNISHMENT BY
THE COURT.
8. Cost of the sign is not to exceed the amount customarily authorized by the court including
preparation, erection and photograph for inclusion in committee report.
9. Committee is authorized to replace the sign once without court approval, provided the sign
can be erected at least ten days prior to sale. DO NOT ERECT THE SIGN YOURSELF.
10. A disinterested appraiser will be appointed and will, under oath, appraise the property and
make return of the appraisal to the Clerk of the Court at least seven days prior to the sale. The
court will retain this appraisal.
11. Committee is to obtain liability insurance for the date of the sale in the amount of $1,000,000.
Premium not to exceed $275.00.
12. Except for filing an appearance, if the sale is more than two months in the future, the
committee should incur no fees or expenses until directed by the court.
13. The Committee is authorized to conduct a title search of the property. The expense incurred
in connection with the title search shall not exceed $200.00.
14. If the sale is cancelled for any reason after publication or erection of the sign, a written
announcement of cancellation should be posted on the site. The committee is to remain on
site in that event.
15. The following information is to be contained in the Court ordered letter to the nonappearing
defendant owner of the equity: a.) Clearly state at the beginning that the letter is being sent at
the direction of the Court; b.) State the results of the foreclosure judgement; c.) Inform the
nonappearing equity owner that he/she/they risk loss of the equity if he/she/they fail to take
steps to protect that equity AND THAT HE/SHE/THEY SHOULD CHECK WITH THE
COURT AFTER THE SALE TO LEARN IF THERE IS ANY MONEY THAT IS
DISTRIBUTABLE TO HIM/HER/THEM; d.) State that the nonappearing party should either
file his/her own appearance or have an attorney file one on his/her/their behalf in order to
protect his/her/their interest in the equity. This letter is to be sent by the plaintiff via certified
mail, return receipt requested. A copy of the letter and later the return receipt should be sent
to the Clerk of the Court. NO SALE WILL BE APPROVED OR FUNDS DISBURSED
WITHOUT PROOF OF MAILING.
16. The sale is subject to and an all liens choate and inchoate which are prior in right to the
encumbrance being foreclosed.
17. The committee is to follow the Uniform Procedures for Foreclosure by Sale Matters except as
modified herein. (JD-CV-81 Rev.1-03). Committee deed to be prepared on form JD-CV-74
only.
18. Standing orders regarding Standard form Newspaper Ads, Model Notice To Bidders and
Plaintiffs Bid at Foreclosure Sale are incorporated herein by reference.
Friday, October 19, 2007
Foreclosure Filings Double
Foreclosure filings across the United States nearly doubled last month compared with September 2006, as financially strapped homeowners already behind on mortgage payments defaulted on their loans or came closer to losing their homes to foreclosure, a real estate information company said Thursday.
A total of 223,538 foreclosure filings were reported in September, up from 112,210 in the same month a year ago, according to Irvine-based RealtyTrac Inc.
The number of filings in September was down 8 percent from August’s 243,947, the firm said.
Despite the sequential decline, the September figure represents the second-highest total for filings in a single month since the company began tracking monthly filings two years ago.
"August was an extraordinarily high month for foreclosure activity, so some falloff was almost predictable," said Rick Sharga, RealtyTrac’s vice president for marketing.
The filings include default notices, auction sale notices and bank repossessions. Some properties might have received more than one notice if the owners have multiple mortgages.
Typically, borrowers must be 60 to 90 days past due on their mortgage payments before their lender will consider them in default, the first stage of the foreclosure process. If a homeowner can’t find a way to get current on payments, the home is then often put up for auction, and if it doesn’t sell, it eventually goes back to the bank.
In all, 39 states saw a decline in foreclosure filings, the firm said.
Sharga noted that there was a spike in the number of bank repossessions in August that did not occur in September.
It’s likely that the sequential decline in foreclosure activity between August and September was just a blip, not a bellwether of lessening foreclosure filings.
"We don’t see September as the beginning of the end in this cycle of foreclosures," Sharga said.
The foreclosure rate for the nation in September was one foreclosure filing for every 557 households, the firm said.
The U.S. housing market has seen sales decline and home prices fall or remain flat, making it harder for homeowners who can’t afford to make mortgage payments to sell their homes or seek refinancing.
Many of those troubled homeowners were among those who took on adjustable-rate mortgages that are now adjusting to a higher interest rate, translating into payments they cannot afford to make.
The rising delinquencies and foreclosures this year have led the mortgage industry to tighten lending standards, further narrowing options for homeowners struggling to pay their mortgage.
Nevada, Florida and California had the highest foreclosure rates in the country last month, the firm said.
Rounding out the states with the Top 10 foreclosure rates last month were Michigan, Arizona, Georgia, Ohio, Colorado, Texas and Indiana.
A total of 223,538 foreclosure filings were reported in September, up from 112,210 in the same month a year ago, according to Irvine-based RealtyTrac Inc.
The number of filings in September was down 8 percent from August’s 243,947, the firm said.
Despite the sequential decline, the September figure represents the second-highest total for filings in a single month since the company began tracking monthly filings two years ago.
"August was an extraordinarily high month for foreclosure activity, so some falloff was almost predictable," said Rick Sharga, RealtyTrac’s vice president for marketing.
The filings include default notices, auction sale notices and bank repossessions. Some properties might have received more than one notice if the owners have multiple mortgages.
Typically, borrowers must be 60 to 90 days past due on their mortgage payments before their lender will consider them in default, the first stage of the foreclosure process. If a homeowner can’t find a way to get current on payments, the home is then often put up for auction, and if it doesn’t sell, it eventually goes back to the bank.
In all, 39 states saw a decline in foreclosure filings, the firm said.
Sharga noted that there was a spike in the number of bank repossessions in August that did not occur in September.
It’s likely that the sequential decline in foreclosure activity between August and September was just a blip, not a bellwether of lessening foreclosure filings.
"We don’t see September as the beginning of the end in this cycle of foreclosures," Sharga said.
The foreclosure rate for the nation in September was one foreclosure filing for every 557 households, the firm said.
The U.S. housing market has seen sales decline and home prices fall or remain flat, making it harder for homeowners who can’t afford to make mortgage payments to sell their homes or seek refinancing.
Many of those troubled homeowners were among those who took on adjustable-rate mortgages that are now adjusting to a higher interest rate, translating into payments they cannot afford to make.
The rising delinquencies and foreclosures this year have led the mortgage industry to tighten lending standards, further narrowing options for homeowners struggling to pay their mortgage.
Nevada, Florida and California had the highest foreclosure rates in the country last month, the firm said.
Rounding out the states with the Top 10 foreclosure rates last month were Michigan, Arizona, Georgia, Ohio, Colorado, Texas and Indiana.
Wednesday, October 17, 2007
Top Ten Reasons For A Title Search
Top 10 Reasons to Check Your Property Title Search
The real estate "bubble" market of the past 5 years has caused millions of documents to be recorded on property titles. This volume has increased the number of errors, and opened loopholes for document fraud. Because of this, more homeowners are becoming interested in checking their property title records, like they might check a vehicle history or their credit report. We are more often finding some common title errors. When clients check the title search on their property, they are often surprised to find old liens, incorrect ownership, and even mortgages taken out without their knowledge.
1. Unreleased mortgages
Even though the financial account for a prior refinanced mortgage may be paid off, the lender also has to file a lien release with the county records office to remove the old mortgage from your property title. The extreme volume of mortgage refinance activity over the past 5 years has resulted in lenders becoming less careful in filing these documents.
2. Incorrect liens
Liens can become recorded on a property due to county clerk error, or misfiling of property tax payments.
3. Property vesting - family events
A title search will show the current ownership structure, if it is owned individually, jointly, as tenants-in-common, tenants by entireties, or even as a corporation. A death in the family, or divorce are also reasons to verify title search records.
4. Document fraud
Increasingly, criminals are using property records fraud to commit financial crimes, and identity theft, without notice to the property owner.
5. Prior owners records
The gap between the contract and closing dates allows a loophole where liens or mortgages from a prior owner may not be cleared from property records.
6. Assessed value
The counties assessed value may not represent the true taxable value of property in today's changing market, resulting in an inflated tax bill.
7. Deed copy
A title search will provide a stamped recorded copy of the property deed, which can be valuable as proof of ownership, or residency.
8. Other party mortgages
By using loopholes in the recording system, third parties can take out a mortgage against one property and have it recorded against another property, resulting in a lien on the title.
9. Pre-purchase research
The title search shows the original purchase price and date of the current owner, listing mortgages and liens. The buyer knows the sellers current financial situation before making an offer.
10. After sale verification
After purchasing a property, the title search is checked, to verify that the correct names are on the title, and that all records are recorded properly.
The real estate "bubble" market of the past 5 years has caused millions of documents to be recorded on property titles. This volume has increased the number of errors, and opened loopholes for document fraud. Because of this, more homeowners are becoming interested in checking their property title records, like they might check a vehicle history or their credit report. We are more often finding some common title errors. When clients check the title search on their property, they are often surprised to find old liens, incorrect ownership, and even mortgages taken out without their knowledge.
1. Unreleased mortgages
Even though the financial account for a prior refinanced mortgage may be paid off, the lender also has to file a lien release with the county records office to remove the old mortgage from your property title. The extreme volume of mortgage refinance activity over the past 5 years has resulted in lenders becoming less careful in filing these documents.
2. Incorrect liens
Liens can become recorded on a property due to county clerk error, or misfiling of property tax payments.
3. Property vesting - family events
A title search will show the current ownership structure, if it is owned individually, jointly, as tenants-in-common, tenants by entireties, or even as a corporation. A death in the family, or divorce are also reasons to verify title search records.
4. Document fraud
Increasingly, criminals are using property records fraud to commit financial crimes, and identity theft, without notice to the property owner.
5. Prior owners records
The gap between the contract and closing dates allows a loophole where liens or mortgages from a prior owner may not be cleared from property records.
6. Assessed value
The counties assessed value may not represent the true taxable value of property in today's changing market, resulting in an inflated tax bill.
7. Deed copy
A title search will provide a stamped recorded copy of the property deed, which can be valuable as proof of ownership, or residency.
8. Other party mortgages
By using loopholes in the recording system, third parties can take out a mortgage against one property and have it recorded against another property, resulting in a lien on the title.
9. Pre-purchase research
The title search shows the original purchase price and date of the current owner, listing mortgages and liens. The buyer knows the sellers current financial situation before making an offer.
10. After sale verification
After purchasing a property, the title search is checked, to verify that the correct names are on the title, and that all records are recorded properly.
Monday, October 15, 2007
Best Places For Real Estate Deals
Best Places For Real Estate Deals
By Matt Woolsey, Forbes.com
October 8, 2007
Home sales have sunk to their lowest levels since 2001. Investors are jumping ship, foreclosures are mounting and lenders are exercising caution.
Still, there are areas of the country where it makes sense for some to buy. That's because, in a market slump, sellers eager to unload their homes often accept less money from buyers. New construction also slows. Both bode well for buyers hoping to score a deal--if the market in which they are buying is expected to experience increased sales.
To find such places, we paired with Moody's Economy.com to research current home sales patterns and sales projections in the country's 40 biggest real estate markets. Based on models that estimated housing inventory, sales rates and turnover for 2008, we arrived at a list of markets that are experiencing price stalls or declines, but where over the coming year are expected to provide deals for buyers.
In Pictures: Best Places For Real Estate Deals
A buyers' market in the purest sense is one where there are far more sellers than buyers, creating a supply and demand dynamic that benefit those looking to invest in a home. However, by that definition, a floundering market like Detroit is a good buyers' market because prices are dropping and inventory is high.
"A market with declining prices and few sales is a strong buyers' market," says Anthony Sanders, professor of real estate finance at Arizona State University. "But it is also a risky market given that prices could decline further."
With that in mind, we required the slumping or neutral markets on our list to have expected volume and turnover increases, based on sales and inventory models run by Moody's Economy.com.
The results turn out three types of markets and three types of deals.
Attractive Arrangements
The first are undervalued, affordable markets like Fort Worth, Texas, which haven't felt huge post-boom price corrections, but where there is an expected acceleration in sales volume, making now the time to buy.
Second are markets like Long Island, N.Y., and Washington, D.C. These are traditionally strong markets that are recovering from speculation, especially in the D.C. condo market and by Long Island's second-home buyers. Once these areas stabilize, the market as a whole should return to health.
"Long Island is continuing to slip, but a modest amount," says Jonathan Miller, president of Miller Samuel, a New York-based real estate appraisal and consultancy firm. "In [Long Island] the upper-end market was the market of choice for speculation and tear downs."
But economists caution that while over the next year the dust may settle in these 10 spots, buyers should be prepared for future swings. This is especially true in the case of riskier markets like Orlando and Las Vegas, where the expected increase in sales volume and housing turnover doesn't necessarily mean that the price trough is imminent.
"Housing market activity revives when house prices decline sufficiently to restore housing affordability and entice buyers to step up and make a purchase," says Mark Zandi, chief economist at Moody's Economy.com. "Some markets are already approaching those price points, in many others prices will have to decline much more to get to that point."
By Matt Woolsey, Forbes.com
October 8, 2007
Home sales have sunk to their lowest levels since 2001. Investors are jumping ship, foreclosures are mounting and lenders are exercising caution.
Still, there are areas of the country where it makes sense for some to buy. That's because, in a market slump, sellers eager to unload their homes often accept less money from buyers. New construction also slows. Both bode well for buyers hoping to score a deal--if the market in which they are buying is expected to experience increased sales.
To find such places, we paired with Moody's Economy.com to research current home sales patterns and sales projections in the country's 40 biggest real estate markets. Based on models that estimated housing inventory, sales rates and turnover for 2008, we arrived at a list of markets that are experiencing price stalls or declines, but where over the coming year are expected to provide deals for buyers.
In Pictures: Best Places For Real Estate Deals
A buyers' market in the purest sense is one where there are far more sellers than buyers, creating a supply and demand dynamic that benefit those looking to invest in a home. However, by that definition, a floundering market like Detroit is a good buyers' market because prices are dropping and inventory is high.
"A market with declining prices and few sales is a strong buyers' market," says Anthony Sanders, professor of real estate finance at Arizona State University. "But it is also a risky market given that prices could decline further."
With that in mind, we required the slumping or neutral markets on our list to have expected volume and turnover increases, based on sales and inventory models run by Moody's Economy.com.
The results turn out three types of markets and three types of deals.
Attractive Arrangements
The first are undervalued, affordable markets like Fort Worth, Texas, which haven't felt huge post-boom price corrections, but where there is an expected acceleration in sales volume, making now the time to buy.
Second are markets like Long Island, N.Y., and Washington, D.C. These are traditionally strong markets that are recovering from speculation, especially in the D.C. condo market and by Long Island's second-home buyers. Once these areas stabilize, the market as a whole should return to health.
"Long Island is continuing to slip, but a modest amount," says Jonathan Miller, president of Miller Samuel, a New York-based real estate appraisal and consultancy firm. "In [Long Island] the upper-end market was the market of choice for speculation and tear downs."
But economists caution that while over the next year the dust may settle in these 10 spots, buyers should be prepared for future swings. This is especially true in the case of riskier markets like Orlando and Las Vegas, where the expected increase in sales volume and housing turnover doesn't necessarily mean that the price trough is imminent.
"Housing market activity revives when house prices decline sufficiently to restore housing affordability and entice buyers to step up and make a purchase," says Mark Zandi, chief economist at Moody's Economy.com. "Some markets are already approaching those price points, in many others prices will have to decline much more to get to that point."
Friday, October 12, 2007
Short Sale Negotiation Basics
Short Sale Negotiation
Negotiation through the loss mitigation department will be the key factor in getting your new home at a deep discount.
If opportunities emerge in which lenders can sell distressed properties without registering big losses, they will do it.
For example, consider that a homeowner with a $200,000 mortgage is late on his or her loan payments and is facing foreclosure. With the consent of the homeowner, you offer his or her lender $150,000 as full payment for the loan, which is accepted. That means you instantly save $50,000 on a real estate investment.
This is a short sale.
Getting started
Negotiating a short sale with a lender can be a complicated. But with careful research and patience, it is possible for you to earn big profits with short sale deals. Naturally, closing the first one will be the most challenging.
The first step in this process is to identify potential investment opportunities on Foreclosure.com, which offers more than 1.2 million listings across the nation.
Preforeclosure properties are ideal because you can make more money with them versus homes that are already bank-owned.
To be most successful, we recommend reaching out to homeowners who are more than three payments behind on their mortgages. At this point, each of these homeowners has received a Notice of Default (NOD) and is very close to losing their home. Time is running out and the chances of them curing the loans and making up the back payments are slim.
The homeowners understand this and may be grateful for your assistance. The lenders understand this, too, and are motivated to recoup their losses as soon as possible.
Calling lenders
It’s important to gather as much information as possible about the properties and the homeowners prior to getting on the telephone with lenders. Because when you do get a lender representative on the line, he or she will have questions.
Using the contact information contained within the listings you have targeted from Foreclosure.com, it’s time to call a lender and inquire about the possibility of a short sale agreement. Traditionally, the “Loss Mitigation Department” will handle these types of requests.
If you can’t get in touch with anyone, move onto the next listing. The negotiating can begin only when you get in touch with the right person.
Once you have reached a representative for the lender, inform him or her that you represent the homeowner. This is all you need to say — avoid revealing that you are an investor. The representative will usually want basic information about the property, the homeowner and the proposed deal. He or she will also want to know the value of the property and the financial situation of the homeowner (borrower).
Aside from making the initial introduction, the goal of this conversation should be to request a short sales or workout packet. This packet will provide you with everything you need — instructions, forms and procedures — to close a successful short sales deal.
Broker’s Price Opinion (BPO)
Lenders generally hire local real estate brokers or appraisers to evaluate properties in the foreclosure process prior to selling them at public auction. These are referred to as a Broker’s Price Opinion (BPO).
Essentially, a Realtor® — based on the condition of the home and current market conditions — provides the lender with an estimate for the value of the property. The BPO is the key piece of information that a lender will rely on to make a decision regarding a short sale.
The lower the estimate, the better it is for you.
Lenders want to get rid of distressed properties as soon as possible, but they aren’t going to sell them for ridiculously low prices Many short sales, in fact, fall through if the BPOs come in too high. When properties are in good condition, it is hard to convince lenders that they are worth much less than the appraised values.
Hardship letter
Most lenders will request a hardship letter that details the reasons a homeowner has not made his or her mortgage payments. This is a bit strange because the borrower who is in default must prove that he or she is broke and unable to afford the payments.
This is a fairly extensive request, which may require the homeowner to submit pay stubs, tax records and other personal financial records, along with the letter. It is essential that you submit everything that is requested.
Otherwise, your offer will not be accepted.
Creating an effective and compelling hardship letter requires creativity. Without lying, the letter should paint a very bleak picture of the situation. If neither you nor the homeowner possesses decent writing skills, it may be in your collective best interests to seek the assistance of a professional — it’s worth it.
HUD-1 settlement statement
A lender will generally require a written contract between you and the homeowner. A preliminary HUD-1 settlement statement will reassure the lender that the homeowner isn’t receiving any cash from the deal.
The HUD-1 form requires you to itemize all charges imposed upon you and the homeowner for the real estate transaction. Essentially, it is a complete list of the incoming and outgoing funds.
The contract should be written so that you pay all costs associated with the deal. And, that the “net cash” to the homeowner is the precise amount of the short pay to the lender.
If you have difficulty completing the form, a title or escrow company may help you prepare it in advance of the closing.
Supporting materials
A lender will often agree to a bigger discount if a property requires significant repairs. The more work that needs to be put into the property, the less it is worth and the harder it is to sell on the open market.
Hire a professional(s) to appraise the home and provide you with a bid for repair estimate (the higher the better). This is not a requirement because as mentioned above, the lender will get its own BPO. However, providing independent appraisals and comparable sales information that support your offer are critical.
There are other things you can also do if the home is not in ready-to-move-in condition.
Always remember, it is in your best interests to submit with your paperwork as much negative information about the property as possible. For example, newspaper clippings that discuss “bad news” nearby or in the neighborhood can help reduce the price of the property in negotiations.
Waiting for an answer
It usually takes about three to six weeks to receive an answer from the lender once you have submitted the HUD-1 settlement statement and all of the other supporting materials.
It’s always good to call the lender to ensure that he or she has received the information, as well as make it clear that you are always available to answer questions and provide additional information, especially if something is missing.
If the auction date for the property is approaching, ask the lender to extend it until he or she has had time to consider your offer. If your offer is legitimate, the lender will almost always grant your request.
Negotiation through the loss mitigation department will be the key factor in getting your new home at a deep discount.
If opportunities emerge in which lenders can sell distressed properties without registering big losses, they will do it.
For example, consider that a homeowner with a $200,000 mortgage is late on his or her loan payments and is facing foreclosure. With the consent of the homeowner, you offer his or her lender $150,000 as full payment for the loan, which is accepted. That means you instantly save $50,000 on a real estate investment.
This is a short sale.
Getting started
Negotiating a short sale with a lender can be a complicated. But with careful research and patience, it is possible for you to earn big profits with short sale deals. Naturally, closing the first one will be the most challenging.
The first step in this process is to identify potential investment opportunities on Foreclosure.com, which offers more than 1.2 million listings across the nation.
Preforeclosure properties are ideal because you can make more money with them versus homes that are already bank-owned.
To be most successful, we recommend reaching out to homeowners who are more than three payments behind on their mortgages. At this point, each of these homeowners has received a Notice of Default (NOD) and is very close to losing their home. Time is running out and the chances of them curing the loans and making up the back payments are slim.
The homeowners understand this and may be grateful for your assistance. The lenders understand this, too, and are motivated to recoup their losses as soon as possible.
Calling lenders
It’s important to gather as much information as possible about the properties and the homeowners prior to getting on the telephone with lenders. Because when you do get a lender representative on the line, he or she will have questions.
Using the contact information contained within the listings you have targeted from Foreclosure.com, it’s time to call a lender and inquire about the possibility of a short sale agreement. Traditionally, the “Loss Mitigation Department” will handle these types of requests.
If you can’t get in touch with anyone, move onto the next listing. The negotiating can begin only when you get in touch with the right person.
Once you have reached a representative for the lender, inform him or her that you represent the homeowner. This is all you need to say — avoid revealing that you are an investor. The representative will usually want basic information about the property, the homeowner and the proposed deal. He or she will also want to know the value of the property and the financial situation of the homeowner (borrower).
Aside from making the initial introduction, the goal of this conversation should be to request a short sales or workout packet. This packet will provide you with everything you need — instructions, forms and procedures — to close a successful short sales deal.
Broker’s Price Opinion (BPO)
Lenders generally hire local real estate brokers or appraisers to evaluate properties in the foreclosure process prior to selling them at public auction. These are referred to as a Broker’s Price Opinion (BPO).
Essentially, a Realtor® — based on the condition of the home and current market conditions — provides the lender with an estimate for the value of the property. The BPO is the key piece of information that a lender will rely on to make a decision regarding a short sale.
The lower the estimate, the better it is for you.
Lenders want to get rid of distressed properties as soon as possible, but they aren’t going to sell them for ridiculously low prices Many short sales, in fact, fall through if the BPOs come in too high. When properties are in good condition, it is hard to convince lenders that they are worth much less than the appraised values.
Hardship letter
Most lenders will request a hardship letter that details the reasons a homeowner has not made his or her mortgage payments. This is a bit strange because the borrower who is in default must prove that he or she is broke and unable to afford the payments.
This is a fairly extensive request, which may require the homeowner to submit pay stubs, tax records and other personal financial records, along with the letter. It is essential that you submit everything that is requested.
Otherwise, your offer will not be accepted.
Creating an effective and compelling hardship letter requires creativity. Without lying, the letter should paint a very bleak picture of the situation. If neither you nor the homeowner possesses decent writing skills, it may be in your collective best interests to seek the assistance of a professional — it’s worth it.
HUD-1 settlement statement
A lender will generally require a written contract between you and the homeowner. A preliminary HUD-1 settlement statement will reassure the lender that the homeowner isn’t receiving any cash from the deal.
The HUD-1 form requires you to itemize all charges imposed upon you and the homeowner for the real estate transaction. Essentially, it is a complete list of the incoming and outgoing funds.
The contract should be written so that you pay all costs associated with the deal. And, that the “net cash” to the homeowner is the precise amount of the short pay to the lender.
If you have difficulty completing the form, a title or escrow company may help you prepare it in advance of the closing.
Supporting materials
A lender will often agree to a bigger discount if a property requires significant repairs. The more work that needs to be put into the property, the less it is worth and the harder it is to sell on the open market.
Hire a professional(s) to appraise the home and provide you with a bid for repair estimate (the higher the better). This is not a requirement because as mentioned above, the lender will get its own BPO. However, providing independent appraisals and comparable sales information that support your offer are critical.
There are other things you can also do if the home is not in ready-to-move-in condition.
Always remember, it is in your best interests to submit with your paperwork as much negative information about the property as possible. For example, newspaper clippings that discuss “bad news” nearby or in the neighborhood can help reduce the price of the property in negotiations.
Waiting for an answer
It usually takes about three to six weeks to receive an answer from the lender once you have submitted the HUD-1 settlement statement and all of the other supporting materials.
It’s always good to call the lender to ensure that he or she has received the information, as well as make it clear that you are always available to answer questions and provide additional information, especially if something is missing.
If the auction date for the property is approaching, ask the lender to extend it until he or she has had time to consider your offer. If your offer is legitimate, the lender will almost always grant your request.
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