Buying a Home – Karen's Perspective

A Second Recession is About to Hit?

A “second leg” down in housing. Too much inventory. What do you think? And how will this affect your decision to buy or sell?

07 / 21 / 2011
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Determining Property Values

There are 2 main methods for determining property value:

1. Comparable sales – This is the most commonly used method to determine property value. Comparable sales (comps) include characteristics as similar to the one you’re pricing as you can find. These include: lot size, square footage, home style, age, location. Heads up; an older 3 bedroom brick one story may not be comparable with a new 3 bedroom 2 story, even if they are on the same street.

When possible, use only houses that have sold within the past 6 months. The more recent the sale date the better. Use houses in the same, similar, or nearby neighborhoods. Stay as close as possible to the house you’re comping. The more similar the houses you’re comparing, the better. Try to use houses built within 5 years and within about 300 square feet of the size of the house you chose. It’s also best to use similar ages, style and lot sizes.

07 / 07 / 2011
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What is an REO and Where can You Find Them?

If a foreclosed property does not sell at public auction, the lender, usually a bank, takes title and it becomes Real Estate Owned (REO) by the lender. Since the lender does not want a non-performing asset on its books, it will clear the title (get rid of liens against it), maybe do some cosmetic repairs to the property, and put it back on the market at a discount to get it sold.

The reason you hear about so many REO’s right now is that most of the properties up for sale at foreclosure auction are worth less than the total amount owed to the bank. Typically, the minimum opening bid at these auctions equals the outstanding loan amount, plus the accrued interest plus any fees associated with the foreclosure sale. These properties aren’t selling at the foreclosure auctions because the opening bid is just too high. The lenders get these properties back then sell them at a discount to move them quickly.

REO’s are often listed with Realtors and you can find them on the MLS. You can also find out about them at the courthouse, often before they’re listed with a Realtor, so you’re able to negotiate directly with the bank.

There are many ways to find REO’s. Here are some resources for you:

06 / 22 / 2011
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Should You Hire a Real Estate Agent?

It is not required that you use a real estate agent when selling or purchasing a home. You can sell as for-sale-by-owner and you can buy on your own from anyone. If you decide to take this route, you will use a real estate attorney or title company to handle the paperwork and the closing giving you assistance and guidance once you have found a willing and able buyer or seller and reached a purchase agreement. You will, however, be on your own for many things including lining up inspections and repairs.

So, what does a real estate agent do for you?

06 / 15 / 2011
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Are We at the Bottom of the Real Estate Market

My immediate response is “no”. But how do we determine “at” or “near” bottom?

Your answer, as always, depends upon your local economic and housing market conditions. Real estate is always local. To research and learn your local area, check out newspapers, online news services and industry web sites for a wealth of data that can be used to analyze your local-market trends. CNN is not local.

Five of the best local indicators to consider are:

05 / 23 / 2011
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Loan Application Checklist

When applying for a loan, what are the first things a lender will ask for? Thanks to Jeff Geary, the Mortgage Lender for providing us with this list.

Loan Application Checklist
Income & Assets
Employer Name: ______________________ Contact:__________________ Phone: ______________

Pay Stubs for the last 30 days (most current)
W2’s for last 2 years

If Self Employed

05 / 16 / 2011
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7 Ways to Spot a Bad Deal

Many investors come to us with “deals” that are not “deals”! What they actually have is a lead, sometimes a bad lead, that they are emotionally attached to and then they want us to tell them how to make the deal work.

First of all, don’t get emotionally attached to a piece of real estate (unless you live in it). It’s just real estate and there’s plenty more where that came from. You have to look at all deals from a business prospective. It’s not usually difficult to know if it’s a bad deal so here’s a checklist:

05 / 03 / 2011
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Short Sale – Offer 100 Percent Deposit!

A short sale is a sale that occurs when the lender agrees to sell the property for less than the balance owed on the loan. This occurs when the homeowner can no longer afford the property but the lender acknowledges that selling the property at a slight loss is better than going through the foreclosure process.

A short sale does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, the deficiency. Being released from the deficiency is a part of the short sale negotiation. Many lenders will forgive the debt to the borrower but be sure you get this agreement in writing from the lender or they are within their rights to come after you even years after the short sale.

05 / 02 / 2011
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This Market is Tough..

This Market is Tough – What are you doing to survive?

Do you agree?

It’s hard right now to buy properties because so many are upside down! How do you buy a house and make a profit when the loan balance is higher than the value? Add to that the fact the banks don’t want to make loans right now and you’re really facing an up-hill battle. Even with a good job and great credit score, getting a loan is tough! Lenders are so afraid of making another mistake.

Selling is hard – really hard. House prices are depressed so you have to price your home well below what the market says it’s worth to attract any interested buyers. Everyone today wants to buy at foreclosure prices and they still want all the bells and whistles when they buy: hardwood floors, granite countertops, new faucets and light fixtures. You have to put a lot of money into a property just to prepare it to sell for a significant discount. Ugh.

And, there aren’t many qualified buyers. Why?

04 / 27 / 2011
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Never Bet on the Future

Crystal Ball

We are extremely conservative investors. When we buy, it has to be a deal the day we close, not the promise of a deal in the future.

This economy has proven that you can never bet on future appreciation in real estate. Certainly, real estate is worth more over the long term because the population continues to increase and there is no more land being made. However, unlike recent years where property values increased annually, we are now looking at years into the future for property value increase.

So, before you enter a deal, the deal has to work. If you plan to keep the property, there has to be equity and your monthly PITI (principle, interest, taxes and insurance) has to be at least $200 less than what you can get for the property in rent. Without that, you’ll be losing money from day one.

If you plan to sell (flip) the property, Read more…