Category Archives: Real Estate

The Perfect Time to Buy a Home?

The Perfect Time to Buy a Home?

I was looking at the local MLS statistics for June 2009 recently. What I found was kind of astounding on one level. And on another level it demonstrates that the Obama tax incentives for first-time homebuyers are incredibly effective.

Before I get into the meat of the story, let me offer some background. Cincinnati Ohio’s real estate market has always been pretty stable. Average home price increase year-over-year has always been around 3%. Some neighborhoods a bit more, some a bit less. So we haven’t ever seen the kind of increases seen in places like California, Florida, Phoenix or Las Vegas. So what is it that has me writing today? Our Cincinnati MLS statistics reveal that in June of 2008, the average sold home price was around $190,000. In June 2009 – twelve months later – the average sold home price was just on the high side of $130,000.

What? Did home values in Cincinnati decline by 35% in 8 months? No! What’s happening is that the Obama tax incentives are doing exactly what they’re intended to do – stimulate home buying on the part of the first-time buyer.

Those first-time homebuyers aren’t buying $200,000 homes. They’re buying homes in the $100K-$150K range. And because the number of homes bought by first time homebuyers is so much greater than buyers purchasing trade-up homes, the effect on average sold home price is pretty astounding. And why wouldn’t people buy a home now? There has never been a time when homes were so affordable.

First, they can get an $8,000 tax credit. Second, they can take advantage of some incredibly low interest rates on 30 year financing – in the 5% to 6% range currently. And third, home prices have declined around here recently for the first time since we’ve been keeping track. Largely as a result of economic fallout – in the form of short sales and foreclosure homes.

And this won’t last. The echo boomer generation is coming of the prime age for buying homes. And their numbers – way greater than the baby boom generation – will fuel an unprecedented demand for housing – way greater than the baby boomers. Obviously, such demand will have to push prices higher.

So I’m recommending to anyone who’s thinking to buy a Cincinnati home – that they get serious this year. Find a great Cincinnati Realtor, get on the Cincinnati MLS, and find the home of their dreams for less money than they ever will again! There’s no substitute for the Cincinnati MLS for the buyer who’s serious about buying a Cincinnati home.

Landlord – To Be Or Not to Be?

Landlord - To Be Or Not to Be?

Investing in Rental Property can be a worthwhile and profitable venture. For one thing, the property that you own and rent out will appreciate over time. Another advantage is the positive cash flow the property will generate. On the other hand, in order to take advantage of these benefits there are some things you should be aware of.

Being a Rental Property Landlord can be very time consuming if you plan on doing it all yourself. You could be called in the middle of the night if the sink starts leaking, the toilet gets clogged up, or some other emergency arises. There are also the regular issues that have to be taken care of, such as lawn maintenance. Unless this is going to be your only job; I suggest you hire out, at least some of these responsibilities.

If you decide to hire out some of the responsibilities of managing or maintaining your Rental Property, there are a couple of different options you can consider. You can hire a property management company. A good property management company will assume virtually all of the responsibilities of your Rental Property. They will take care of tenant complaints, lawn maintenance, collecting rent, advertising for and screening new tenants, property maintenance and repairs. The best way to find a good property management company is to join your local REIA. They should know of good local property management companies.

Another option to hiring a property management company is to allow a tenant to oversee the Rental Property for you. A tenant can handle yard work, maintenance, and minor repairs, such as unclog toilets and so on. You and the tenant can decide how much or how little responsibility you give them, as well as the amount of rent you are willing to knock off for the assumed duties.

Owning Rental Property and Being a Landlord can be a great way to increase your net worth, and your positives monthly cash flow. Just remember, there is also a lot of responsibility that goes along with it. However, you don’t have to be the one that handles it all. You can always hire out whatever you don’t want to do, or don’t have time for. for more information, please visit my blog: http://basicsofinvestinginrentalproperty.blogspot.com/

How to Find Bank Owned Properties

How to Find Bank Owned Properties

When you are trying to find properties that are owned by the bank the simplest thing that you can do is call the bank. Taking the time to call all the banks in your area will get you the full list of bank owned properties that are up for sale. Once you get the list you can on your own drive around to all of the properties and create another list of the ones that interest you most. Look for properties that you think will be the easiest for you to resell once you put it on the market.

After your list is made contact the bank that owns each of the properties and find out if there is a time or a way that you could conduct a walk through of the homes on your list. If you are lucky and come from a trusting community the bank may tell you to get the key from them and check out the houses on your own. This is a best case scenario; worse case they will set up an appointment time that someone can meet with you and take you to view the property. Once you see the house thank them for their time and go home to think about the odds of you selling the home for a profit. If you think you can then work with the bank to contract the property.

Finding the bank owned properties will be the easiest part of the transaction. Calling the bank as opposed to trying to find these properties any other way will put you ahead of the game. You will have already made contact with the bank and they will know that you are interested in maybe obtaining one of the homes they have to offer. Be patient but persistent when dealing with this kind of real estate transaction. While it may take longer to get started the profit will be worth it in the end.

Bank Owned Real Estate – What You Must Know When Buying Bank REOs

Bank Owned Real Estate - What You Must Know When Buying Bank REO's

Buying bank REO’s is not an incredibly difficult process, but one that you must learn about. As a real estate investor, you have had to learn things down the road. You know things that the average individual looking to buy a property does not know.

You know that a strategy is needed, money is needed, and you know that you have to have some initiative to find the best deals possible. As a real estate investor, you have an advantage over the general public and you have to make that advantage pay.  If you’re struggling in your endeavors, then you know that there is something that you’re missing.  

If you’re struggling, you know that things have to change so that you not only have an advantage over the general public, but so that you have one over other real estate investors.  

Bank REO’s are full of a lot of opportunity because these are properties that have already seen the auction block. The bank still has the property because they bid on their own auction in hopes that someone would bid higher.  

In the beginning, it is about the bank getting as much money as they can, but it later becomes a matter of someone taking the property off of their hands. This is where you can step in. However, you have to keep some things in mind:

  • Sometimes, the bank may have one person working in their REO department. This means that a loan broker will handle the property. When dealing with a third party, you do need to be mindful of the details.
  • You can buy directly from the bank, so it is important to see if they will only take cash for the property or if they will finance for a higher price.
  • You have to ask if the bank will compensate in the case that something is wrong with the property or if the property becomes defective at some time during the buying process.
  • When looking for properties to buy, it is best to buy from the bank. The other option is to check the MLS (Multiple Listing Service), although the best deals are not available this way.
  • Don’t go to auctions to buy property, but to identify buyers. Hand out business cards and get theirs because not all of those people will obtain property at that auction.
  • Make yourself known amongst the main players in your area so that you are the one they call when an REO property is on the market.

This is how you become aggressive in your investing. You have to make yourself seen, make yourself known, and you have to know where to look. It does take some work, but it is something that you can do.  And the pay day is well worth it.  

As a real estate investor, you have to identify opportunity in order to scale down competition. Bank REO properties can provide you with a 35% to 50% profit. That is something you may not be able to achieve through other property acquisitions.  

If you have never seen profits like that, now you know that they are out there and you need to go get your fair share.

Cut Your Closing Costs by Getting Rid of Junk Fees

Cut Your Closing Costs by Getting Rid of Junk Fees

Many first-time home buyers are dismayed at the sudden appearance of closing costs that seem to come from every conceivable avenue. They also can be beset by fees that seem to have no real explanation and cost them hundreds of dollars. Many people accept this as part of closing a real estate deal, but if you want to save as much money as possible, you will want to carefully evaluate each fee and find out which ones can be waived or eliminated.

Attitude and knowledge are your biggest weapons when dealing with lenders. Be polite at all times, but pretend that this is the 50th home you’re going to buy and you’re just doing it because you’re bored. You don’t need this home or this lender. You bought 10 homes last week. You just sold a dozen. Let the lender know by your attitude that you’re not so heavily invested in this home that you can’t walk away if your questions aren’t answered or your needs not met. Be prepared to do just that; many lenders have been used to buyers who will spend several thousand dollars more than they have to in order to buy a home. If you can find one lender, you can find another and it’s better to wait than to go with a lender who is not going to treat you properly.

There are a number of fees that can be reduced or completely waived for the savvy home buyer. Among them can hide “junk” or “garbage” fees, which are tacked on to the overall costs merely to make money for the lender. Things like “settlement fees” “underwriting fees” “messenger fees” are examples of fees that are solely there to provide profit for the lender. Learn the more common terms and ask for these fees to be waived.

Third party fees, such as appraisal, attorney fees, credit report, title insurance and title search are generally non-negotiable, as the lender has nothing to do with how much the third party charges. However, when searching for a lender, keep a record of how much is charged for each service and ask why if there is a drastic difference between one lender’s charge for a service and another’s.

Remember that you can walk away from your mortgage at any time. Even if it would cost you to do so, take this attitude in your dealings with your lender. If a fee is unexplained or too high, call them on it. You don’t have to be rude or hold it over their head like a guillotine, just don’t be so desperate to buy that you end up giving more money than you need to.

How the FCRA Plays Into Foreclosure

How the FCRA Plays Into Foreclosure

Mortgage lenders often have a difficult time following the requirements of the federal law called the Fair Credit Reporting Act, which may create liability for them when attempting to file a foreclosure lawsuit or proceed with a nonjudicial foreclosure. The Fair Credit Reporting Act (FCRA) creates requirements that creditors must follow to when reporting consumer information to the credit bureaus.

Inaccurate reporting of information may cause damages to borrowers and create liability on the part of mortgage lenders for a wide array of mistakes. The FCRA governs the reporting of all information to credit agencies, whether it be accurate or not. Whether or not the borrowers have defaulted on payments is irrelevant to application of the law on information reported.

There are a number of specific rules that mortgage companies and all creditors must comply with when providing credit to a possible borrower and in the ongoing operation and servicing of the loan. Lenders often have a very difficult time following all of these regulations while also attempting to comply with all of the other federal and state lending laws and will often misreport information about consumers’ loans to the credit rating agencies.

If a lender denies credit or even a loan modification on the basis of information received from a credit agency, the consumers must be provided with a statement indicating that they can obtain a copy of their credit report from the reporting agency for free. The request must be sent to the company which provided the credit information within 60 days of the denial of credit by the lender.

Also, the creditor (or servicing company ) may not report information to credit agencies that it knows or has reason to believe is false or inaccurate. With the poor quality control most banks seem to have in place in their loss mitigation and foreclosure departments, mistakes are more common than many homeowners might believe. In case any errors are discovered, the creditor is also required to fix the mistake on the borrowers’ report.

There is a specific notice requirement for housing loan creditors when providing credit to borrowers. It is titled a “Notice to the Home Loan Applicant” and includes information for the borrowers’ use. This notice contains information regarding disclosure of credit scores, an explanation of the credit scoring system, and instructions to contact the lender if the borrowers have questions about the terms of the loan.

The credit bureaus themselves also have to follow guidelines in the FCRA, including verifying any information that a consumer challenges as inaccurate. The verification must be done within thirty days of receipt of the dispute. If a record can not be verified, it must be removed from the credit report.

Willful violations of the Fair Credit Reporting Act allow homeowners to recover damages in three ways. The first is actual damages between $100 and $1,000 for each and every violation of the Act. The second is any punitive damages that the judge may award to the foreclosure victims. And third, homeowners are entitled to lawyers fees and the costs of any legal action they bring against the lender for violations of the FCRA.

In practical terms, violations of the FCRA may be relied upon to offset liability in a foreclosure action or lawsuit. When homeowners are preparing their answer to the foreclosure complaint, they may wish to add violations of the FCRA as counterclaims to sue the mortgage company for damages as outlined above. Depending on the amount and type of violations, along with any legal representation the homeowners utilize, such violations can create significant liability for the mortgage company.

Loan Modification Help – 6 Lenders Approved For Federal Home Affordable Plan – Is Yours on the List?

Loan Modification Help - 6 Lenders Approved For Federal Home Affordable Plan - Is Yours on the List?

The Treasury Department has finalized approval for 6 lenders on the Home Affordable loan modification program.  This means that those banks and servicers may accept applications from homeowners needing loan modification help under this program.  Approved lenders will be able to participate in the incentive payments offered by this federally subsidized plan, and that will be a big incentive to modify loans for qualified homeowners.  Is your lender one of the six approved to offer this plan?

Most lenders are expected to sign onto the program, which offers almost $9 billion in incentives to the banks and to homeowners who successfully modify their loans.  The Feds are scrambling to approve all of the banks who wish to participate.  Approved lenders will be paid an upfront fee for each qualified loan modification, and borrowers will be paid an annual bonus of $1000 for 5 years as long as their payments remain current.  The Home Affordable plan offers standardized options to borrowers, including interest rates as low as 2% for 40 years.  The lenders who have been approved to date are:

  1. Saxon Mortgage
  2. Wells Fargo – services Wells Fargo, Wachovia
  3. Citimortgage-Citibank mortgages
  4. Chase- J.P. Morgan Chase, EMC & Washington Mutual
  5. Select Portfolio Mortgage
  6. GMAC

Some of the larger lenders are still not approved, including Bank of America who owns Countrywide Bank, which owns or services almost 1 out of every 5 loans across the country.  They are in the process of approval, and should begin offering loan modification help with the Home Affordable Plan in the next week or so.  Interested borrowers should begin their applications and start preparing their paperwork now so they will be ready.

Ocwen Financial Corporation is in the process of finalizing their approval, and has begun taking applications from borrowers seeking loan modification help under the Home Affordable plan.  However, the bank cannot receive an incentive payments until they are formally approved.  Again, now is the time to begin preparing paperwork and gathering the required documents to help expedite the approval process.

If your lender is not on the list, keep checking in and get all of your paperwork in order now so you will be ready when your lender is approved.  This could be the second chance you need, make sure you are prepared and know how to complete your loan modification application so you have the best chance of approval with the Home Affordable plan.

Closing the Door on the Top 2 Myths of Loans and Foreclosures!

Closing the Door on the Top 2 Myths of Loans and Foreclosures!

Whenever you deal with a mortgage you need to remember some very fine points that banks would like you to forget. They act in their best interests, and not in your best interests.

1. Is There Anything You Can Do To Avoid the Potential Issues A Bank Can Force On You With These Changes In Your Loans?

Well yes there are a few things you can do to take care of yourself and ensure things remain in your best interests. If a plan is presented to you by your bank you have a few options. One is researching online and finding out anything you can on whatever they may be trying to switch with your loan. If you are not fond of the internet research idea, you can always find blogs from financial folks who either have a background or at least key interest in it to at least know the questions you should be asking, and if all that fails, seek out a financial professional from either another bank or financial institution and just ask him the questions you have.

Never let someone ever tell you what’s best for you. You need to decide what is in your best interests, but only do so when you are fully informed. Do not go in with one source of information or advice, get several. You don’t need to sound like an expert on the subject, nor do you need to take any courses to be properly informed. You just need to ensure that you are not being taken advantage of and being backed into a corner that you will never get out of.

You want to avoid foreclosure at any and all costs if possible in any way. If foreclosure happens, you will in fact have a very hard time getting loans, financial assistance, and loss of your good name. You can recover from foreclosure but it can and will take a very, very long time.

2. Are There Any Solutions To These Problems?

Yes, instead of foreclosing or accepting one of these ludicrous loan modification offers that will do nothing more than delay the inevitable or even cause the situation to become far worse than it was in the first place. You need to look up the pros and cons of Short Sales and decide if they are right for you, and if you think they have potential, gather the information and take it to your local financial institution, and if they cannot process or offer this service, the internet has a vast resource web, you would easily be able to find someone within your general vicinity that offers it!

How Can A Short Sale Prevent A Foreclosure?

My favorite solution to avoiding a foreclosure is a Short Sale. A short sale is the process where we negotiate with the lender to have them accept a lower payoff amount than the original balance of the loan. Say you have a house that was appraised in the hay days at $300k that is now worth $150K (very common!) and that you have a loan of $270K We will sell the home for $150, negotiate with the lender for them to forgive $120K and to waive deficiency judgment for the forgiven amount!

Only in America, this is possible! A great way to get rid of the debt and to start anew, without staining your credit ratings.

The beauty of the short sale is that, once people choose for a short sale, you are virtually in control over the timing of the process, which means that, depending on the you financial situation, I can keep you in their home for a certain period of time without you paying on the mortgage! In other words, you stay in the house for free and get debt forgiveness and not such a bad credit report – PERFECT Deal right? The longest that I have kept someone in her house without paying is 24 months! That’s what I call The People’s Bailout!

Preventing Foreclosures Via Short Sales – The Light That Shines Through the Financial Darkness!

Preventing Foreclosures Via Short Sales - The Light That Shines Through the Financial Darkness!

Ever wonder how you may avoid the perils caused by foreclosure? There are so many ill effects that branch off from foreclosure that will affect you for long after it. It’s not just the “reset” button that some people like to pretend it is. It causes a lot of problems in many aspects of your life from obtaining loans for anything, and obtaining any credit in general will be shot straight down the drains.

Quick fix bank solutions are never the answer. They are just looking for a way to get the maximum amount of money they can before things go south and they can get nothing. They will modify just about any part of the original agreements so long as it gets them the maximum amount of money possible. All customers are to most banks simply dollar signs. They will always try to milk you for the maximum amount possible.

Is There Absolutely Any way To Empower the Customer against the Bank?

Yes there is. Knowledge is the greatest asset you can employ in these circumstances. You need to employ it in every aspect of bank transactions. Banks prey on the uninformed, because then they can twist numbers and various “research” and information to make their way sound like the right way and make it sound like they are looking out for you.

Not every bank really comes out with this evil agenda, but when a bank stands to lose money, that is their bread and butter and they will attempt to grab every single solitary cent they can drain out of you before you get cast away into the foreclosure abyss. They do not care about your personal feelings nor do they care about the best way to get you out of the crisis with the least amount of damage.

Is There a Dark Light At The End Of The Tunnel?

The dark, and dreary debt filled tunnel that ends in foreclosure and sometimes in bankruptcy is a scary one that most people panic on when they enter it. Panic does nothing but cause knee jerk reactions that are not well informed or even preplanned. You are more likely to also be taken advantage of or scammed when in these situations which is both bad for you, and for your future.

Loan companies and various other financial businesses that are not banks will also cause issues in the process. They will buy and sell loans without the person’s approval, which though not illegal can put a huge kink when trying to work out solutions or a deal that benefits both parties. By the time you get a hold of someone you need to speak to, it will have already changed hands and left you once again in the dark.

In the end, if you are looking to dig yourself out of the financial “ditch”. Take your research and questions to a qualified financial professional and get their advice before you sign or agree to anything. They may present you with some options the bank won’t publicize, like Short Sales or other ideas that won’t damage your chances of making it out of the rut millions are experiencing to this day.

Real Estate – Is It Time to Buy?

Real Estate - Is It Time to Buy?

If ever there was a good time to invest in real estate, it’s now. Seriously. We happen to believe the bottom is in. Regardless of whether it is or isn’t there are several factors that bring me to the conclusion that it is time to buy now.

The first is that the banks need money. Banks are in trouble, they need money to survive. Not all banks of course. There are many regional banks that avoided this economic crisis we’re in by following sound business practices and lending money to people that could pay it back. The problem is that the responsible banks will still pay for the greed and bad practices of the big major conglomerate bank/finance companies. The way banks make money is by charging interest rates for money they lend. OK, simple enough. This contraction the economy is in has put most of these big banks in the red. The best and easiest way for them to become profitable (and pay back all that money they owe us, the taxpayer) is to make more money, and they do this by raising interest rates. Credit companies are already doing it.

The Wichita Real Estate market faired better than most during the latest housing bubble. It slowed, like the rest of the country, but in comparison actually did very well. This shows how well this particular market holds it’s value. Housing prices are on the rise though. The last housing price index, HPI, came in at a positive 0.7% when analysts were expecting a negative 0.7%. That’s a full point! On the sales front, existing new home sales were less that expected by.11 million. Not a bad number really. People are buying, just not in droves yet. When the flood of buyers start, prices will react quickly. Builders and homeowners alike have been taking much lower prices than their homes warrant. Whether buying a home for the first time, buying a second or vacation home or just investing in Real Estate you will want to buy while prices are low.

The last really bad inflation we had was in the 1970s and 80s. I remember my family paying 17% interest on the home we lived in. Back then it certainly didn’t bother me, that was my Dads problem. Now it will be mine. When the economy becomes inflated the Federal reserve is inclined to raise interest rates to try and tame it. Just as the Feds started to drastically reduced rates around 1999-2000 to stimulate the economy they will easily go the other way to slow it down. Inflation is coming. With all the money the Government and Fed have had to print and borrow in 2009, inflation will surely come around. Inflation happens when there is to much money supply. It reduces demand making money not so important, causing the price of goods and services go up.

The Government has made available an $8000 dollar tax credit to first home buyers for this year only. That’s the time period between January 1st to December 1st. This does not have to be repayed. It is a big incentive to get people to buy. There are many economists that believe the health of the recovery we are beginning to feel depends on the housing market. The Government is doing everything it can to promote this. Extraordinary measures are being taken. When the recovery comes, and it will, home prices and interest rates will rise quickly. The Government will not be so generous as the next task will be to repay all the money that was borrowed and printed.

Now is the time to buy and this is the perfect market. A perfect storm of good news for investors and potential homeowners alike.