Even if you have a picture of your “dream home” in mind, the house hunting process can be overwhelming. Keep in mind that it will take time to find just the right house for you and your family, but there are some fundamental tips that should help you along the way.
- Take pictures inside and outside the house
- Bring your spouse, a family member or friend
- Make sure the house fits your budget
- Ask about utility and maintenance costs
- Consider commuting time and costs
- Compare what you would like to have versus what you really need
- Consider your monthly budget and if you can afford the renovations and maintenance you will need to do
- Do not make a spur-of-the-moment decision
Other tips to make the house hunting process easier:
List your needs: Know the difference between what you want and what you need and keep track of the homes that come closest to meeting your needs.
Concentrate on a few neighborhoods: Decide what is most important to you about a neighborhood and search houses around those areas. This will greatly narrow your search.
Find a real estate agent: They have more listings than you can find on your own.
Compare homes: Be sure to know what you would get and what you would miss in each house before you make a decision.
MLSonline.com can help make the house hunting process much easier by providing valuable information about neighborhoods, matching you with a real estate agent and other important features including refinancing and pre-approval. Get started today!
Tuesday, May 19, 2009
A Real Estate Agent Can Add Money to Your Sale
A Real Estate Professional Can Increase the Money in your Pocket!
When you’re thinking about selling your house, and you want to get the most money for it, don’t automatically assume that selling it yourself is the best way to do that. It’s true that you will cut out the fee that is paid to any third party Realtor, but this isn’t necessarily to your advantage and the reason for this is that usually a good real estate professional will be able to get more for your home than you could selling it yourself!
Having decided to at least consider allowing a Realtor to list your home, don’t just sign up with the first one you ring, or the one with the most billboards/ads in the newspaper. Their ability to market themselves doesn’t necessarily mean that they are good at selling homes, just that they’re good at convincing people to list with them. Speak to several real estate pros and really find out if they are as good as they claim to be.
Ask the Realtors you meet with very specific questions such as how many homes they’ve had listed with them in the last 6 months, how many of those homes sold, and of direct relevance to putting more money in your pocket by using a real estate professional instead of selling your home yourself, how many of the homes they sold went for the listing price. The last question is the one that will separate the good real estate professionals from the rest, because a good Realtor will only allow you to list your home for what they know it will sell for, they won’t list it for more because they know they’ll have to come back and ask you to lower the price later. You need to know an honest answer to what your home is worth because that’s how much you can really expect to get for it, so once the Realtor gives you a figure on what your home is worth ask them if that’s what homes similar to yours are selling for in the current market. Choose the real estate professional who can show that they’re experienced and skilled enough to give direct answers to your questions and is someone you feel you can trust to sell your home.
Selling a home is a big decision and in a buyer’s market, it’s more important than ever to choose the right strategy to get the most from your property. There’s nothing wrong with selling your home yourself, but chat to a few real estate professionals first and see if they can convince you by their track record that they are worthy of your listing. What have you got to lose?
When you’re thinking about selling your house, and you want to get the most money for it, don’t automatically assume that selling it yourself is the best way to do that. It’s true that you will cut out the fee that is paid to any third party Realtor, but this isn’t necessarily to your advantage and the reason for this is that usually a good real estate professional will be able to get more for your home than you could selling it yourself!
Having decided to at least consider allowing a Realtor to list your home, don’t just sign up with the first one you ring, or the one with the most billboards/ads in the newspaper. Their ability to market themselves doesn’t necessarily mean that they are good at selling homes, just that they’re good at convincing people to list with them. Speak to several real estate pros and really find out if they are as good as they claim to be.
Ask the Realtors you meet with very specific questions such as how many homes they’ve had listed with them in the last 6 months, how many of those homes sold, and of direct relevance to putting more money in your pocket by using a real estate professional instead of selling your home yourself, how many of the homes they sold went for the listing price. The last question is the one that will separate the good real estate professionals from the rest, because a good Realtor will only allow you to list your home for what they know it will sell for, they won’t list it for more because they know they’ll have to come back and ask you to lower the price later. You need to know an honest answer to what your home is worth because that’s how much you can really expect to get for it, so once the Realtor gives you a figure on what your home is worth ask them if that’s what homes similar to yours are selling for in the current market. Choose the real estate professional who can show that they’re experienced and skilled enough to give direct answers to your questions and is someone you feel you can trust to sell your home.
Selling a home is a big decision and in a buyer’s market, it’s more important than ever to choose the right strategy to get the most from your property. There’s nothing wrong with selling your home yourself, but chat to a few real estate professionals first and see if they can convince you by their track record that they are worthy of your listing. What have you got to lose?
Short Sale To Avoid Foreclosure
The names change, but the problem remains the same. Some people call it the housing crisis while others have named it the mortgage crisis. Recession is mentioned as a possible result of the problem while confident money experts recommend patience until the dust settles.
Whatever it is called, there seems to be a vicious cycle spiraling down to disaster. Homeowners have given up, and some foreclosed homes are on the market at prices that would have been a great bargain five years ago. Individuals in dire straits cannot sell their homes and face foreclosure if they cannot unload the property in a market filled with homes that have been placed on the market by lenders that want to unload them. Unfortunately, other homeowners who might buy these bargains cannot sell their homes because it is suddenly difficult to get a mortgage. Homeowners also have trouble selling their homes unless they agree to bargain basement prices. Other homeowners find themselves living in homes that are not worth the mortgage that secures them.
Help is available for those caught in parts of the vicious cycle, and a short sale is a possibility for some homeowners looking to avoid disaster. Lenders are a diverse group so anyone looking for hardship assistance should immediately contact their lender to ask for help. A short sale might be a good option for the lender and the homeowner. The lenders have already foreclosed on many properties. Most of these companies do not want more foreclosures, and they do not really want to deal with selling the property.
In general, the basic process for a short sale works like this. The Lender agrees to accept the fair market value of the property rather than the amount owed on the loan as a settlement. The homeowner sells the property at the agreed price. The homeowner provides the proceeds to the lender as the settlement. The credit rating of the homeowner will not be affected by the short sale.
A short sale deal usually takes about sixty days from start to finish depending on the local market. The appraisal process often takes about two weeks to determine and agree on the fair market value. The approval of this amount by all the parties involved takes approximately two to five days. Closing escrow usually takes from two to four weeks and the deal is done.
The homeowner should avoid a negative impact on their credit rating by the short sale, but there may be tax implications. All homeowners should discuss the entire process and agreement with a Tax Professional before initiating short sale negotiations.
Whatever it is called, there seems to be a vicious cycle spiraling down to disaster. Homeowners have given up, and some foreclosed homes are on the market at prices that would have been a great bargain five years ago. Individuals in dire straits cannot sell their homes and face foreclosure if they cannot unload the property in a market filled with homes that have been placed on the market by lenders that want to unload them. Unfortunately, other homeowners who might buy these bargains cannot sell their homes because it is suddenly difficult to get a mortgage. Homeowners also have trouble selling their homes unless they agree to bargain basement prices. Other homeowners find themselves living in homes that are not worth the mortgage that secures them.
Help is available for those caught in parts of the vicious cycle, and a short sale is a possibility for some homeowners looking to avoid disaster. Lenders are a diverse group so anyone looking for hardship assistance should immediately contact their lender to ask for help. A short sale might be a good option for the lender and the homeowner. The lenders have already foreclosed on many properties. Most of these companies do not want more foreclosures, and they do not really want to deal with selling the property.
In general, the basic process for a short sale works like this. The Lender agrees to accept the fair market value of the property rather than the amount owed on the loan as a settlement. The homeowner sells the property at the agreed price. The homeowner provides the proceeds to the lender as the settlement. The credit rating of the homeowner will not be affected by the short sale.
A short sale deal usually takes about sixty days from start to finish depending on the local market. The appraisal process often takes about two weeks to determine and agree on the fair market value. The approval of this amount by all the parties involved takes approximately two to five days. Closing escrow usually takes from two to four weeks and the deal is done.
The homeowner should avoid a negative impact on their credit rating by the short sale, but there may be tax implications. All homeowners should discuss the entire process and agreement with a Tax Professional before initiating short sale negotiations.
Saturday, May 9, 2009
Ways to Stop Foreclosure
Ways to Stop Foreclosure
Foreclosure is the process by which a creditor regains possession of a property when the borrower has stopped making payments on the loan. This situation can arise for many legitimate reasons, including loss of job or income, medical situations or a death in the family. Foreclosure should be considered a last resort by both parties, as it involves time and money for legal proceedings, hurts the borrower's credit, and often results in loss of money by the lender. There are several options available to stop foreclosure. They should all be seriously evaluated as a possible way out of a bad situation.
The first thing to consider is a Loan Modification plan. This is very popular and is suited for people who can make current mortgage payments, but cannot pay for past-due payments. For instance, if a medical emergency resulted in a homeowner being out of work for several months and unable to make mortgage payments, a Loan Modification plan will stop foreclosure by folding past-due payments into the principal owed. Payments are continued normally from that point forward. The new principal balance is reamortized over a new term, but this is usually well worth it for the homeowner to stop foreclosure.
Forbearance is another good option and it buys the mortgagor time by slowing down the process of the foreclosure. Essentially, the homeowner promises to take certain steps in exchange for the creditor temporarily ceasing legal action. This step may include making home repairs or improvements, or listing the property for sale with an accredited Realtor.
Often the option to refinance the home is one to consider in an effort to stop foreclosure. There are many different types of loans available to consumers today and the field is very competitive. For example, an interest-only loan could make sense depending on market conditions. The advantage of an interest-only loan is that monthly payments are significantly lower than with more traditional loans. The disadvantage is that nothing is being paid toward principal, so in a soft or downward-trending market where home values are decreasing, there is considerable risk of losing money in the long run. Any serious effort at attempting to stop foreclosure should include thoroughly evaluating refinance options with a loan specialist.
Sometimes it is possible to stop foreclosure with a short sale. This involves selling the home on the market for less than what is owed to the lender. The mortgagor or representing lawyer then negotiates with the lender to settle for less than they are owed instead of proceeding with foreclosure. Sometimes this makes sense to the lender if the loss from the short sale is less than what they stand to lose from legal proceedings and fees associated with foreclosure. If possible, work directly with the lender's supervisor who is responsible for handling short sales.
Ample documentation will be required for a short sale. Exactly what will need to be provided will vary from lender to lender. In general, one can expect to prove loss of job or income in writing as well as a hardship letter describing the homeowner's current financial or medical situation. Other common forms of documentation include an estimated net sheet showing the expected sales price of the home, copies of bank statements and market comparisons of other homes sold in the area.
Finally, it may be possible to arrange a Deed in Lieu transaction. This is where the borrower hands over the property to the lender instead of paying off the debt. This of course results in the homeowner being out of a home, but if this is an option, it is often far more desirable than foreclosure. This is particularly true if there is not much equity built up in the home. One advantage for the mortgagor is that his credit history will not blemished with a foreclosure mark, which will certainly make future borrowing more difficult. Another advantage is that the homeowner gets to merely walk away from the debt situation and avoid the hassles and stigma of foreclosure.
Deed in Lieu is only possible if both parties, in good faith, agree to the arrangement. A lender may opt for this if the value of the property is close to, or exceeds the amount of the debt owed. Once the deed in lieu is accomplished, the home can be sold on the market by the lender, who then keeps all the money resulting from the sale in order to recover the debt. Even if the lender only breaks even, or comes out slightly behind, this is often a big savings over the cost of the legal proceedings of foreclosure.
Foreclosure can be a complicated and costly process for both the borrower and the lender, and can have some very negative consequences. It is often in the best interest of both parties to stop foreclosure by proceeding with one of several better options. Whether this action involves loan modification, forbearance, refinancing, a short sale, or a deed in lieu, totally depends on the circumstances of the situation. The value of the home, amount of equity, amount of the loan and living situation of the homeowner all play a role in evaluating which option is best.
Foreclosure is the process by which a creditor regains possession of a property when the borrower has stopped making payments on the loan. This situation can arise for many legitimate reasons, including loss of job or income, medical situations or a death in the family. Foreclosure should be considered a last resort by both parties, as it involves time and money for legal proceedings, hurts the borrower's credit, and often results in loss of money by the lender. There are several options available to stop foreclosure. They should all be seriously evaluated as a possible way out of a bad situation.
The first thing to consider is a Loan Modification plan. This is very popular and is suited for people who can make current mortgage payments, but cannot pay for past-due payments. For instance, if a medical emergency resulted in a homeowner being out of work for several months and unable to make mortgage payments, a Loan Modification plan will stop foreclosure by folding past-due payments into the principal owed. Payments are continued normally from that point forward. The new principal balance is reamortized over a new term, but this is usually well worth it for the homeowner to stop foreclosure.
Forbearance is another good option and it buys the mortgagor time by slowing down the process of the foreclosure. Essentially, the homeowner promises to take certain steps in exchange for the creditor temporarily ceasing legal action. This step may include making home repairs or improvements, or listing the property for sale with an accredited Realtor.
Often the option to refinance the home is one to consider in an effort to stop foreclosure. There are many different types of loans available to consumers today and the field is very competitive. For example, an interest-only loan could make sense depending on market conditions. The advantage of an interest-only loan is that monthly payments are significantly lower than with more traditional loans. The disadvantage is that nothing is being paid toward principal, so in a soft or downward-trending market where home values are decreasing, there is considerable risk of losing money in the long run. Any serious effort at attempting to stop foreclosure should include thoroughly evaluating refinance options with a loan specialist.
Sometimes it is possible to stop foreclosure with a short sale. This involves selling the home on the market for less than what is owed to the lender. The mortgagor or representing lawyer then negotiates with the lender to settle for less than they are owed instead of proceeding with foreclosure. Sometimes this makes sense to the lender if the loss from the short sale is less than what they stand to lose from legal proceedings and fees associated with foreclosure. If possible, work directly with the lender's supervisor who is responsible for handling short sales.
Ample documentation will be required for a short sale. Exactly what will need to be provided will vary from lender to lender. In general, one can expect to prove loss of job or income in writing as well as a hardship letter describing the homeowner's current financial or medical situation. Other common forms of documentation include an estimated net sheet showing the expected sales price of the home, copies of bank statements and market comparisons of other homes sold in the area.
Finally, it may be possible to arrange a Deed in Lieu transaction. This is where the borrower hands over the property to the lender instead of paying off the debt. This of course results in the homeowner being out of a home, but if this is an option, it is often far more desirable than foreclosure. This is particularly true if there is not much equity built up in the home. One advantage for the mortgagor is that his credit history will not blemished with a foreclosure mark, which will certainly make future borrowing more difficult. Another advantage is that the homeowner gets to merely walk away from the debt situation and avoid the hassles and stigma of foreclosure.
Deed in Lieu is only possible if both parties, in good faith, agree to the arrangement. A lender may opt for this if the value of the property is close to, or exceeds the amount of the debt owed. Once the deed in lieu is accomplished, the home can be sold on the market by the lender, who then keeps all the money resulting from the sale in order to recover the debt. Even if the lender only breaks even, or comes out slightly behind, this is often a big savings over the cost of the legal proceedings of foreclosure.
Foreclosure can be a complicated and costly process for both the borrower and the lender, and can have some very negative consequences. It is often in the best interest of both parties to stop foreclosure by proceeding with one of several better options. Whether this action involves loan modification, forbearance, refinancing, a short sale, or a deed in lieu, totally depends on the circumstances of the situation. The value of the home, amount of equity, amount of the loan and living situation of the homeowner all play a role in evaluating which option is best.
Why Is My House Still on the Market
Why Is My House Still on the Market
Some houses sell as quickly as they are placed on the market. Others sit there languishing for months becoming not only harder to sell, but also, becoming harder to show. After all, the longer a house sits on the market, the harder it is to get rid of it. Houses pick up reputations like it or not.
Not only do the neighbors begin to realize that your home has been on the market for quite a while, but certainly so do the real estate agents. Even some of the potential home buyers might realize that your property has been for sale for quite some time now. Surely, something must be wrong with it. What is it about your home that is keeping it from being sold?
The Overpriced House
A house that is overpriced is not going to sell as quickly as other properties simply because a quick comparison of prices will show that it is overpriced. Real estate agents won’t even want to show it after a while, leaning toward properties that are more likely to sell. After all, they want to earn a living and trying to unload a property that is simply marked up too high is next to impossible.
A good real estate agent will insist that you lower the price before putting it on the market. You should listen to him if you want to sell your home in the near future. Take note of the pricing strategies of luxury homes during slumps in the market. Those properties are marked down not by hundreds of dollars or even thousands of dollars, but they are marked down by millions of dollars.
If you price your home reasonably when you first put it up for sale, you are more likely to sell it quickly than if you wait. Once a home is visibly marked down with a “price reduced” label, every potential buyer is instantly aware that your house has been on the market for a while. They are going to know that you are not a person who is up to any more compromises. After all, you priced your home much higher than the market would bear.
The Dump or Poorly Maintained House
A house that is a real dump is not going to sell because it is a dump. The word “dump” can be used to describe a house that has a wide range of problems from dirty, in need of repairs, and unkempt to falling apart at the seams. Homeowners who do not take care of their houses while they are living in it risk the possibility of not being able to unload it when they want to do so.
A dump typically has more wrong with it though than a few “sadly in need of paint” walls and carpets that look like the entire world came tramping through after a walk through a swamp. A dump has structural problems that are real eyesores and that a few cosmetic strategies are not going to solve.
What good is a coat of paint on the front porch when the floor slats are clearly rotting out on the perimeters? What good is a new bush or two on the side of the house when clearly every tree in the back yard is dying from some type of disease? What good is allowing the buyers to keep the washer and dryer when the home is clearly infested with mice, cockroaches, and other vermin? And what good are a few dirty, but pretty, curtains when every window refuses to open and the screens are all missing?
Plus, a dump is simply one of those homes that you know you do not want to enter even when your real estate agent insists. It is one of those homes that clearly smells like animal urine as you approach it from the sidewalk. It not only has a fine coat of dust covering the window ledges or fireplace mantle, but it also has a fine layer of grime covering the walls, ceiling, and steps to the basement. It simply doesn’t matter how much potential it has. Would you want to live there?
However, if the homeowners clean it up, then it is no longer a dump and it might eventually sell. Then again, a dump in your eyes might not be the same as a dump in someone else’s eyes. After all, it is all a matter of perspective. Nonetheless, a house that was once a dump is always a dump in the eyes of the people who have already seen it, including the real estate agents.
Who Did You Say Is Selling Your House?
If you pick the wrong person to sell your home for you, you could be in even bigger trouble than you think. After all, if your brother-in-law is a real estate agent and you list your home with him, he is going to be sharing a bit more than the specs in the paperwork. Let’s face it, people like to share what they know without even realizing they are doing it. It is simply human nature to talk to those around us.
Before you know it, a conversation about the new roof leads to the fact that the house had some structural inconsistencies leading to the roof’s collapse. Gosh, would you want to live in a house like that? What else could be wrong with it? Or perhaps he will share the fact that the neighbors are real party hounds during the summer and your kids cannot get any sleep before 10 pm when the law reinforces the “peace and quiet” guidelines of the area.
How much harder is it to sell a home when every tiny negative aspect is laid out on the table for the potential buyers? Yes, the homeowners do have the responsibility to disclose certain things, but do they really have to tell the potential owners that the teenager down the block revs his car at 7 am in the morning every day or the neighbor’s cat likes to spray in your garden?
A real estate agent who knows these things is going to share these things without even realizing that he is doing it. It is simply normal conversation to share when someone else shares. In fact, he might even think he is being helpful to point out certain things. Let’s face it though, some things are better left unsaid.
Some houses sell as quickly as they are placed on the market. Others sit there languishing for months becoming not only harder to sell, but also, becoming harder to show. After all, the longer a house sits on the market, the harder it is to get rid of it. Houses pick up reputations like it or not.
Not only do the neighbors begin to realize that your home has been on the market for quite a while, but certainly so do the real estate agents. Even some of the potential home buyers might realize that your property has been for sale for quite some time now. Surely, something must be wrong with it. What is it about your home that is keeping it from being sold?
The Overpriced House
A house that is overpriced is not going to sell as quickly as other properties simply because a quick comparison of prices will show that it is overpriced. Real estate agents won’t even want to show it after a while, leaning toward properties that are more likely to sell. After all, they want to earn a living and trying to unload a property that is simply marked up too high is next to impossible.
A good real estate agent will insist that you lower the price before putting it on the market. You should listen to him if you want to sell your home in the near future. Take note of the pricing strategies of luxury homes during slumps in the market. Those properties are marked down not by hundreds of dollars or even thousands of dollars, but they are marked down by millions of dollars.
If you price your home reasonably when you first put it up for sale, you are more likely to sell it quickly than if you wait. Once a home is visibly marked down with a “price reduced” label, every potential buyer is instantly aware that your house has been on the market for a while. They are going to know that you are not a person who is up to any more compromises. After all, you priced your home much higher than the market would bear.
The Dump or Poorly Maintained House
A house that is a real dump is not going to sell because it is a dump. The word “dump” can be used to describe a house that has a wide range of problems from dirty, in need of repairs, and unkempt to falling apart at the seams. Homeowners who do not take care of their houses while they are living in it risk the possibility of not being able to unload it when they want to do so.
A dump typically has more wrong with it though than a few “sadly in need of paint” walls and carpets that look like the entire world came tramping through after a walk through a swamp. A dump has structural problems that are real eyesores and that a few cosmetic strategies are not going to solve.
What good is a coat of paint on the front porch when the floor slats are clearly rotting out on the perimeters? What good is a new bush or two on the side of the house when clearly every tree in the back yard is dying from some type of disease? What good is allowing the buyers to keep the washer and dryer when the home is clearly infested with mice, cockroaches, and other vermin? And what good are a few dirty, but pretty, curtains when every window refuses to open and the screens are all missing?
Plus, a dump is simply one of those homes that you know you do not want to enter even when your real estate agent insists. It is one of those homes that clearly smells like animal urine as you approach it from the sidewalk. It not only has a fine coat of dust covering the window ledges or fireplace mantle, but it also has a fine layer of grime covering the walls, ceiling, and steps to the basement. It simply doesn’t matter how much potential it has. Would you want to live there?
However, if the homeowners clean it up, then it is no longer a dump and it might eventually sell. Then again, a dump in your eyes might not be the same as a dump in someone else’s eyes. After all, it is all a matter of perspective. Nonetheless, a house that was once a dump is always a dump in the eyes of the people who have already seen it, including the real estate agents.
Who Did You Say Is Selling Your House?
If you pick the wrong person to sell your home for you, you could be in even bigger trouble than you think. After all, if your brother-in-law is a real estate agent and you list your home with him, he is going to be sharing a bit more than the specs in the paperwork. Let’s face it, people like to share what they know without even realizing they are doing it. It is simply human nature to talk to those around us.
Before you know it, a conversation about the new roof leads to the fact that the house had some structural inconsistencies leading to the roof’s collapse. Gosh, would you want to live in a house like that? What else could be wrong with it? Or perhaps he will share the fact that the neighbors are real party hounds during the summer and your kids cannot get any sleep before 10 pm when the law reinforces the “peace and quiet” guidelines of the area.
How much harder is it to sell a home when every tiny negative aspect is laid out on the table for the potential buyers? Yes, the homeowners do have the responsibility to disclose certain things, but do they really have to tell the potential owners that the teenager down the block revs his car at 7 am in the morning every day or the neighbor’s cat likes to spray in your garden?
A real estate agent who knows these things is going to share these things without even realizing that he is doing it. It is simply normal conversation to share when someone else shares. In fact, he might even think he is being helpful to point out certain things. Let’s face it though, some things are better left unsaid.
Foreclosure House Flipping
Foreclosure House Flipping – Can You Profit From the Current Foreclosure Market?
With the current housing market still trying to recover there is a sea of foreclosure homes waiting to be purchased by investors or home buyers. Because there are so many available many people think there is a lot of money to be made by purchasing a foreclosure, fixing it up and then selling it, also known as flipping a house. But is there money to be made this way by an individual investor or is this better left to the big investors?
The first point to remember is that not all foreclosures can be purchased at a discount. There are different types or stages of foreclosure and purchasing in one stage may be more profitable than another. The other important point to be aware of is that you are not the only one looking to buy a good deal on a foreclosure. While there are many on the market right now, if there is a good deal out there you can be assured other investors are interested in it too.
Investment Capital
While this is a great buyer’s market with a high supply of homes for sale to choose from it is also a slow seller’s market for those trying to sell. If you are thinking of flipping a home for profit you should be prepared to wait for several months before the home will sell. Investors who have a lot of capital are able to sit on these investments without worrying about cash flow and hold out for the best price they can get. An individual who is looking for a quick profit doesn’t have that luxury. So, unless you have the extra investment capital so you can wait out the slow seller’s market you shouldn’t be looking into buying a foreclosure to flip.
If you feel you are able to wait out the market and still want to invest in a foreclosure home you should be aware that banks and lenders are being very careful about issuing loans, especially for houses. Your options may be to get a second mortgage or home equity loan against your own home or to open a home equity line of credit. The problem with these is that you risk losing your own home if the other home doesn’t sell for months and you start losing money on the deal. You may want to consider getting an investor to work with you on your first few projects. You’ll make less profit but you won’t risk your own property in order to make that profit.
Finding the Right Foreclosure Home
Not all foreclosure homes are equal so you should be aware of the three stages of foreclosure before deciding how to find the right one to flip.
• Pre-Foreclosure - A pre-foreclosure is when foreclosure has been filed for a home and the owners still have a chance to do something before they lose it completely. For many investors this is the opportune time to purchase the home directly from the owners. Generally, you can purchase the home for the equity they have in it and you take over their loan. You will have to make sure you have the cash to pay off their back payments so you can get the home out of foreclosure. With a pre-foreclosure purchase you rarely have any competition for the property and you generally gain a better deal on the home then by any other type of foreclosure.
• Foreclosure Auctions – A foreclosure goes to auction after a period of time if the owners have done nothing to stop the foreclosure. Once it goes to auction you will have more work and cost in trying to obtain the property. You will also have competition from the big investors if the home looks like a good deal. Auction homes sell “as is” and it is up to you to do your homework in order to really know what you are buying. You also need to do a title search, at your cost, to make sure there are no additional loans or liens on the property before you bid on it. Experts don’t recommend first-time flippers buy a home at auction if they are not familiar with the procedures and terms.
• Real Estate Owned Properties (REO) – REO properties are foreclosures that have gone to auction but were not bid on so they return to the lender to be sold. In the past, lenders would fix up these properties in order to sell them for the best profit. Now, with so many homes going back to the lender, they don’t want to put the time and money into them. Finding an REO home that needs work may be one of the best ways of finding a good deal in today’s foreclosure market. You can work with a real estate agent or check with your local bank to find REO’s available in the area where you are interesting in investing in.
Other considerations you need to look at before deciding to purchase a foreclosure home to flip are the neighborhood, home structure and how much it will cost you to fix it up and have it ready to sell. Experts recommend not purchasing a home in an area with a high ratio of foreclosures because this will lower the value of the home you are trying to sell. You also need to have an expert in home structure, plumbing, etc., look at the home to make sure there won’t be any surprises once you start remodeling. Since you can only sell the home for the going rate in that particular neighborhood, spending a lot of extra money on the flip will not help your bottom line.
Buying a foreclosure home to flip and make a profit in this current market sounds easy but there are a lot of details you need to be aware of so you don’t end up losing money. This is something that shouldn’t be taken lightly. If you are really serious about flipping a foreclosure home, do your homework and be prepared to wait for the end sale and you just may be able to make that profit you are looking for.
With the current housing market still trying to recover there is a sea of foreclosure homes waiting to be purchased by investors or home buyers. Because there are so many available many people think there is a lot of money to be made by purchasing a foreclosure, fixing it up and then selling it, also known as flipping a house. But is there money to be made this way by an individual investor or is this better left to the big investors?
The first point to remember is that not all foreclosures can be purchased at a discount. There are different types or stages of foreclosure and purchasing in one stage may be more profitable than another. The other important point to be aware of is that you are not the only one looking to buy a good deal on a foreclosure. While there are many on the market right now, if there is a good deal out there you can be assured other investors are interested in it too.
Investment Capital
While this is a great buyer’s market with a high supply of homes for sale to choose from it is also a slow seller’s market for those trying to sell. If you are thinking of flipping a home for profit you should be prepared to wait for several months before the home will sell. Investors who have a lot of capital are able to sit on these investments without worrying about cash flow and hold out for the best price they can get. An individual who is looking for a quick profit doesn’t have that luxury. So, unless you have the extra investment capital so you can wait out the slow seller’s market you shouldn’t be looking into buying a foreclosure to flip.
If you feel you are able to wait out the market and still want to invest in a foreclosure home you should be aware that banks and lenders are being very careful about issuing loans, especially for houses. Your options may be to get a second mortgage or home equity loan against your own home or to open a home equity line of credit. The problem with these is that you risk losing your own home if the other home doesn’t sell for months and you start losing money on the deal. You may want to consider getting an investor to work with you on your first few projects. You’ll make less profit but you won’t risk your own property in order to make that profit.
Finding the Right Foreclosure Home
Not all foreclosure homes are equal so you should be aware of the three stages of foreclosure before deciding how to find the right one to flip.
• Pre-Foreclosure - A pre-foreclosure is when foreclosure has been filed for a home and the owners still have a chance to do something before they lose it completely. For many investors this is the opportune time to purchase the home directly from the owners. Generally, you can purchase the home for the equity they have in it and you take over their loan. You will have to make sure you have the cash to pay off their back payments so you can get the home out of foreclosure. With a pre-foreclosure purchase you rarely have any competition for the property and you generally gain a better deal on the home then by any other type of foreclosure.
• Foreclosure Auctions – A foreclosure goes to auction after a period of time if the owners have done nothing to stop the foreclosure. Once it goes to auction you will have more work and cost in trying to obtain the property. You will also have competition from the big investors if the home looks like a good deal. Auction homes sell “as is” and it is up to you to do your homework in order to really know what you are buying. You also need to do a title search, at your cost, to make sure there are no additional loans or liens on the property before you bid on it. Experts don’t recommend first-time flippers buy a home at auction if they are not familiar with the procedures and terms.
• Real Estate Owned Properties (REO) – REO properties are foreclosures that have gone to auction but were not bid on so they return to the lender to be sold. In the past, lenders would fix up these properties in order to sell them for the best profit. Now, with so many homes going back to the lender, they don’t want to put the time and money into them. Finding an REO home that needs work may be one of the best ways of finding a good deal in today’s foreclosure market. You can work with a real estate agent or check with your local bank to find REO’s available in the area where you are interesting in investing in.
Other considerations you need to look at before deciding to purchase a foreclosure home to flip are the neighborhood, home structure and how much it will cost you to fix it up and have it ready to sell. Experts recommend not purchasing a home in an area with a high ratio of foreclosures because this will lower the value of the home you are trying to sell. You also need to have an expert in home structure, plumbing, etc., look at the home to make sure there won’t be any surprises once you start remodeling. Since you can only sell the home for the going rate in that particular neighborhood, spending a lot of extra money on the flip will not help your bottom line.
Buying a foreclosure home to flip and make a profit in this current market sounds easy but there are a lot of details you need to be aware of so you don’t end up losing money. This is something that shouldn’t be taken lightly. If you are really serious about flipping a foreclosure home, do your homework and be prepared to wait for the end sale and you just may be able to make that profit you are looking for.
Friday, May 8, 2009
Should I Buy a Foreclosure
Should You Buy a Foreclosure?
By E. E. Kane
In today’s market, where foreclosures are becoming as common as houseflies, buying a house in foreclosure might make financial sense. On average, a home in foreclosure sells for about 10-20 percent less than the market value of similar homes in the same location. Some properties sell for less than tax value. That could make all the difference to buyers who could not otherwise afford a home. Others see foreclosures as an investment opportunity to flip and resell, or to maintain the house as a rental property.
But amateur buyers should proceed with caution. A foreclosure carries serious potential risks. If you are just an average Joe wanting to get a good deal on a home for your family, a little bit of homework will go a long way toward preventing a costly mistake.
1. Get loan approval first.
Before you do any looking, get pre-approved by your bank or a trustworthy lending company. That will save you precious time that you will need once you find the property you want.
2. Liquidate assets for a down payment.
Most loans require some percentage for a down payment, so gather what you have before you start looking. When you know what you want, you will have the cash (or the check) ready to put on the table.
3. Use a realty professional.
Unless you have done this often, this is not the time to go solo. The details and legal aspects of a foreclosure vary from state to state, county to county, and even from case to case. A realtor will provide valuable advice and will think of details that would not likely occur to you.
4. Decide what stage of foreclosure you want to pursue.
You can buy a house in foreclosure in three ways:
-Pre-foreclosure means the homeowners have been told by the lending company that they have X amount of time to sell or they will lose the property. They will be motivated to sell for less so their home does not go to foreclosure. Buying a home in pre-foreclosure means you have to be ready to act quickly, but you will be able to view the property.
-Foreclosures sold at auction usually take place on the courthouse steps. Normally you will not be able to view the property. This is the riskiest way to buy a home in foreclosure. In most states, cash is required, and the new owner is responsible for any liens on the property. It may seem like the best way to get a good deal, but you will also have to compete against knowledgeable bidders.
-Real Estate Owned (REO) homes are properties that did not sell at auction and are owned by the bank or lending company. The bank pays a real estate broker to clean it up and sell for a profit, usually at or just below market price. The discount may not be as deep as those homes in the previous stages, but banks are usually willing to negotiate, especially if they have a number of these properties on hand. You can see what you are buying, although many homes in this stage are sold “as is”: nothing further will be done to fix it up before a sale. To the average buyer, the process of buying an REO property is much easier.
5. Be ready to repair and remodel.
Just assume at the outset that any home in foreclosure will be in need of some repair. If the owners could not keep up with the payments, they probably did not spend money on maintaining the property. If you have experience with all aspects of making repairs to a home, then you are in a good position to buy a foreclosure and fix what is needed. Hiring contractors will be more expensive. Either way, you will have the cost of materials, and that can add up to a significant amount of added cost to the total that you paid for the house. In the end, making repairs might be worth it, if you like remodeling, if the house is sound, and if you have ideas that you would like to try but could not afford to otherwise – and, of course, if the total cost of the house plus repairs is less than you would have paid for full market value.
6. Beware of hidden faults.
Even newer homes could be hiding serious structural imperfections. The most costly repairs to a home are often those that the amateur eye does not always recognize: replacing a roof, replacing the plumbing system, foundational and support beam repairs, rewiring, or replacing a septic tank. A home inspection by a professional can provide you with a better idea of what you are in for, if you are allowed to do one. Keep in mind that even a professional inspector might miss something major (hidden termite damage). If you are ready for these possibilities before you buy a home in foreclosure, then you can anticipate financially what you will be spending, and make a sound decision.
7. Keep a cool head.
It helps not to get too attached to a property. Any foreclosure that looks too good to be true probably is, or else the investor sharks would have snatched it up. If you are outbid on a property you really liked, keep looking. Sadly, the foreclosure market looks to be promising for an extended period of time .
8. Consider buying a HUD home foreclosure.
Sure, they might have an inferior reputation, but HUD homes (ie., government-owned) also have advantages to the buyer who intends to live in the home. One distinct advantage is that prospective homeowners get first dibs over the investors. HUD homes also offer photo printouts of the foreclosed homes for sale, inspection reports, and an estimate of what it will cost to make repairs to the property. Often the home will have thousands of dollars of free equity after you purchase it.
Buying a home in foreclosure could be the best deal you ever made, especially if you are able and willing to put some “sweat equity” into it. You will be better off if you have already owned a home previously and know the ins and outs of home ownership. You will also be ahead of the game if you enter it with savvy, experienced professionals – real estate agents, brokers, or a real estate attorney. Do your homework, and get ready to find the home you always dreamed of owning, and making it your own.
By E. E. Kane
In today’s market, where foreclosures are becoming as common as houseflies, buying a house in foreclosure might make financial sense. On average, a home in foreclosure sells for about 10-20 percent less than the market value of similar homes in the same location. Some properties sell for less than tax value. That could make all the difference to buyers who could not otherwise afford a home. Others see foreclosures as an investment opportunity to flip and resell, or to maintain the house as a rental property.
But amateur buyers should proceed with caution. A foreclosure carries serious potential risks. If you are just an average Joe wanting to get a good deal on a home for your family, a little bit of homework will go a long way toward preventing a costly mistake.
1. Get loan approval first.
Before you do any looking, get pre-approved by your bank or a trustworthy lending company. That will save you precious time that you will need once you find the property you want.
2. Liquidate assets for a down payment.
Most loans require some percentage for a down payment, so gather what you have before you start looking. When you know what you want, you will have the cash (or the check) ready to put on the table.
3. Use a realty professional.
Unless you have done this often, this is not the time to go solo. The details and legal aspects of a foreclosure vary from state to state, county to county, and even from case to case. A realtor will provide valuable advice and will think of details that would not likely occur to you.
4. Decide what stage of foreclosure you want to pursue.
You can buy a house in foreclosure in three ways:
-Pre-foreclosure means the homeowners have been told by the lending company that they have X amount of time to sell or they will lose the property. They will be motivated to sell for less so their home does not go to foreclosure. Buying a home in pre-foreclosure means you have to be ready to act quickly, but you will be able to view the property.
-Foreclosures sold at auction usually take place on the courthouse steps. Normally you will not be able to view the property. This is the riskiest way to buy a home in foreclosure. In most states, cash is required, and the new owner is responsible for any liens on the property. It may seem like the best way to get a good deal, but you will also have to compete against knowledgeable bidders.
-Real Estate Owned (REO) homes are properties that did not sell at auction and are owned by the bank or lending company. The bank pays a real estate broker to clean it up and sell for a profit, usually at or just below market price. The discount may not be as deep as those homes in the previous stages, but banks are usually willing to negotiate, especially if they have a number of these properties on hand. You can see what you are buying, although many homes in this stage are sold “as is”: nothing further will be done to fix it up before a sale. To the average buyer, the process of buying an REO property is much easier.
5. Be ready to repair and remodel.
Just assume at the outset that any home in foreclosure will be in need of some repair. If the owners could not keep up with the payments, they probably did not spend money on maintaining the property. If you have experience with all aspects of making repairs to a home, then you are in a good position to buy a foreclosure and fix what is needed. Hiring contractors will be more expensive. Either way, you will have the cost of materials, and that can add up to a significant amount of added cost to the total that you paid for the house. In the end, making repairs might be worth it, if you like remodeling, if the house is sound, and if you have ideas that you would like to try but could not afford to otherwise – and, of course, if the total cost of the house plus repairs is less than you would have paid for full market value.
6. Beware of hidden faults.
Even newer homes could be hiding serious structural imperfections. The most costly repairs to a home are often those that the amateur eye does not always recognize: replacing a roof, replacing the plumbing system, foundational and support beam repairs, rewiring, or replacing a septic tank. A home inspection by a professional can provide you with a better idea of what you are in for, if you are allowed to do one. Keep in mind that even a professional inspector might miss something major (hidden termite damage). If you are ready for these possibilities before you buy a home in foreclosure, then you can anticipate financially what you will be spending, and make a sound decision.
7. Keep a cool head.
It helps not to get too attached to a property. Any foreclosure that looks too good to be true probably is, or else the investor sharks would have snatched it up. If you are outbid on a property you really liked, keep looking. Sadly, the foreclosure market looks to be promising for an extended period of time .
8. Consider buying a HUD home foreclosure.
Sure, they might have an inferior reputation, but HUD homes (ie., government-owned) also have advantages to the buyer who intends to live in the home. One distinct advantage is that prospective homeowners get first dibs over the investors. HUD homes also offer photo printouts of the foreclosed homes for sale, inspection reports, and an estimate of what it will cost to make repairs to the property. Often the home will have thousands of dollars of free equity after you purchase it.
Buying a home in foreclosure could be the best deal you ever made, especially if you are able and willing to put some “sweat equity” into it. You will be better off if you have already owned a home previously and know the ins and outs of home ownership. You will also be ahead of the game if you enter it with savvy, experienced professionals – real estate agents, brokers, or a real estate attorney. Do your homework, and get ready to find the home you always dreamed of owning, and making it your own.
The Pros and Cons of a Short Sale
Seller’s Pros and Cons of a Short Sale
By E. E. Kane
The scenario has become all too common. The home you bought for $300,000 is now worth only $225,000. You are in what professionals in real estate call an “upside-down house” – you owe more on the mortgage than the house is now worth. If you cannot ride out the current storm financially, you may be considering a short sale to avoid foreclosure.
A short sale is the sale of a house at or just below market value that falls short of the balance due on the mortgage. The lender takes a loss, but not as much as a foreclosure process. You take a loss as well – you walk away with no money earned from the deal – but you are free of the debt, if you hired an experienced short sale agent. A short sale is not always the best course for everyone. You will need expert advice to decide, but here are some basic pros and cons of a short sale.
Pros:
• You are relieved of paying overblown monthly mortgage payments.
• In some cases, the lender may forgive the difference in debt between what you still owe and the final selling price.
• You are spared the lengthy and traumatic foreclosure proceedings.
• Your credit score could be less damaged than if you had gone through foreclosure – depending on the lender’s actions.
• You can re-qualify for a new mortgage more quickly (about two years) than you would after foreclosure (about three to five years).
• You are more likely to escape bankruptcy.
• If the short sale occurs between January 1, 2007 and December 31, 2009 you will not be taxed on the debt forgiveness amount.
• If you are not able to pay your mortgage premiums, or work with the lender to lower monthly payments, a short sale can be the best case scenario, even though it means losing your home and your investment.
Cons:
• The lender is not obligated to grant a short sale.
• You must show proof that you are no longer able to make your mortgage payments, and the proof must be reasonable. The lender will not approve a short sale if you gambled away your savings. A few examples of hardship that a lender will see as legitimate are illness, divorce, or a job loss.
• The lender will make sure you do not have any recourse – savings accounts or other assets – which may help pay off your debt. It’s not fair to walk away from your debt because you don’t like high payments and you don’t want to deplete your nest egg to pay them.
• You don’t have to be in default of your loan to be approved for a short sale, but it helps, if nothing else than to prove you can’t make the payments. If you are in default, you may have less time to jump through all the necessary hoops. A good short sale agent will negotiate for more time, and lenders often relent in hopes of recouping some of the loss.
• A short sale is anything but short, and can be stressful as you wait for weeks for the lender to respond. The response time depends on how quickly you put together the necessary papers, how adequately you provided the right information, and the lender’s ability to reach your file – along with a backlog of many others in your situation. You need nerves of steel.
• Lenders are notorious for not communicating enough about the approval process for a short sale.
• If your home has liens, second mortgages, or a home equity line of credit, each lender will have to be consulted for approval – which takes considerable time.
• Once the lender approves the short sale, a successful transaction depends on a reasonable offer from a buyer, and their readiness with an approved loan.
• Because the lender is losing money on the deal, they might require that the realtor or broker take a smaller commission. They also will probably not approve payment of closing costs, which might put a deal with a buyer in jeopardy.
• The lender may require you to sign a promissory note for the debt forgiveness in order to approve a short sale.
• The lender may pursue repayment for the debt forgiveness after the short sale goes through.
• Your credit score could take just as hard a hit as it would if you went through foreclosure. Consult legal and tax advice if salvaging your credit score is the only reason for a short sale.
• You could be taxed on the debt forgiveness if the property sells for more than 2 million, or is not your primary residence. After December 31, 2009, unless a new law for tax relief on debt forgiveness is passed, the debt forgiveness is seen as taxable income and you will have to pay taxes at the normal rates – which could be significant. Consult a tax professional.
A short sale is a difficult process with many details the average homeowner is not aware of. If you are facing financial trouble and selling your home is necessary, consult professionals who are experienced and have a history of successful short sales.
By E. E. Kane
The scenario has become all too common. The home you bought for $300,000 is now worth only $225,000. You are in what professionals in real estate call an “upside-down house” – you owe more on the mortgage than the house is now worth. If you cannot ride out the current storm financially, you may be considering a short sale to avoid foreclosure.
A short sale is the sale of a house at or just below market value that falls short of the balance due on the mortgage. The lender takes a loss, but not as much as a foreclosure process. You take a loss as well – you walk away with no money earned from the deal – but you are free of the debt, if you hired an experienced short sale agent. A short sale is not always the best course for everyone. You will need expert advice to decide, but here are some basic pros and cons of a short sale.
Pros:
• You are relieved of paying overblown monthly mortgage payments.
• In some cases, the lender may forgive the difference in debt between what you still owe and the final selling price.
• You are spared the lengthy and traumatic foreclosure proceedings.
• Your credit score could be less damaged than if you had gone through foreclosure – depending on the lender’s actions.
• You can re-qualify for a new mortgage more quickly (about two years) than you would after foreclosure (about three to five years).
• You are more likely to escape bankruptcy.
• If the short sale occurs between January 1, 2007 and December 31, 2009 you will not be taxed on the debt forgiveness amount.
• If you are not able to pay your mortgage premiums, or work with the lender to lower monthly payments, a short sale can be the best case scenario, even though it means losing your home and your investment.
Cons:
• The lender is not obligated to grant a short sale.
• You must show proof that you are no longer able to make your mortgage payments, and the proof must be reasonable. The lender will not approve a short sale if you gambled away your savings. A few examples of hardship that a lender will see as legitimate are illness, divorce, or a job loss.
• The lender will make sure you do not have any recourse – savings accounts or other assets – which may help pay off your debt. It’s not fair to walk away from your debt because you don’t like high payments and you don’t want to deplete your nest egg to pay them.
• You don’t have to be in default of your loan to be approved for a short sale, but it helps, if nothing else than to prove you can’t make the payments. If you are in default, you may have less time to jump through all the necessary hoops. A good short sale agent will negotiate for more time, and lenders often relent in hopes of recouping some of the loss.
• A short sale is anything but short, and can be stressful as you wait for weeks for the lender to respond. The response time depends on how quickly you put together the necessary papers, how adequately you provided the right information, and the lender’s ability to reach your file – along with a backlog of many others in your situation. You need nerves of steel.
• Lenders are notorious for not communicating enough about the approval process for a short sale.
• If your home has liens, second mortgages, or a home equity line of credit, each lender will have to be consulted for approval – which takes considerable time.
• Once the lender approves the short sale, a successful transaction depends on a reasonable offer from a buyer, and their readiness with an approved loan.
• Because the lender is losing money on the deal, they might require that the realtor or broker take a smaller commission. They also will probably not approve payment of closing costs, which might put a deal with a buyer in jeopardy.
• The lender may require you to sign a promissory note for the debt forgiveness in order to approve a short sale.
• The lender may pursue repayment for the debt forgiveness after the short sale goes through.
• Your credit score could take just as hard a hit as it would if you went through foreclosure. Consult legal and tax advice if salvaging your credit score is the only reason for a short sale.
• You could be taxed on the debt forgiveness if the property sells for more than 2 million, or is not your primary residence. After December 31, 2009, unless a new law for tax relief on debt forgiveness is passed, the debt forgiveness is seen as taxable income and you will have to pay taxes at the normal rates – which could be significant. Consult a tax professional.
A short sale is a difficult process with many details the average homeowner is not aware of. If you are facing financial trouble and selling your home is necessary, consult professionals who are experienced and have a history of successful short sales.
Stop Foreclosure Save My House
There are workable solutions that you can take to stop foreclosure refinance and lower your payments in order to stay in your home and save your mortgage. With the ever increasing surge in foreclosures these days it's actually becoming much easier to save your home from having to be refinanced. This article will look at a couple possible suggestions for you.
Before you go to the trouble and expense of trying to refinance your home loan just to save your home or lower your payments - You may be able to make a few phone calls and get your payments lowered by several hundred dollars.
The funny thing is that most lenders and bank institutions are not willing to negotiate until you've missed at least one or two payments on your home. Once you have missed a couple of payments then the bank or lending institution must consider foreclosure on your property.
The one time that it is smart to possibly stop foreclosure and refinance is if you have an adjustable loan and you could possibly refinance it and stop your foreclosure with a fixed rate loan. If you are able to lower your payments by simply paying interest only - You may have to pay a small fee or at least make one or two of the missed payments in order to set this up.
One of the keys that you want to express when speaking to a bank or lending institution about lowering your payments in order to stop foreclosure refinance would be to be honest with them and have a workable plan already sent out that you feel is going to allow you to make the adjusted payments.
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