How to Make an Offer to a Seller

Invest

By now, I’m sure you know that I invest in real estate. And that I recommend it to everyone. And that I think this is a fabulous time to be buying.

Last night, at our Mastermind meeting, the main topic was how to present your offer to the seller.   This is the most important part of the entire buying process and, done right, it takes time. Don’t just hit someone over the head with your offer, take time to sit and talk with them, in depth, about how you came up with your offer.

Before you meet with the seller you’ve already done your homework and determined that you want the property, the market value and what you can pay for it. You’ve determined that you can resell for a profit if you plan to resell, or cash flow it every month if you plan to hold it and rent it out.

So you go to the seller armed with your research.  There are a number of things you need to take with you.

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Is this a good time to buy a home in Greensboro?

Here are the Greensboro, NC city statistics according to Money Magazine.

Looks like we’re predicted to hit bottom at the end of 2010. Even so, our drop from our peak in the first quarter of 2009 will only be about 3% total. We live in a great area of the country!

Population:
(2006)		 685,378
Median family income:
(2008)		 $56,100
Median home price:
(2009)		 $132,000
Affordability index:
(Median home price/family income 2009)		 2.4
Prices peaked in: 2009:Q1
Total climb during the boom:
(2000 to peak)		 29.1%
Total decline so far:
(Peak through 2009)		 -1.2%
One-year change:
(Q4 2008 to Q4 2009)		 -0.2%
Additional price change to bottom: -2.0%
When we’ll hit bottom: 2010:Q4

*(Q1 2010 – Q1 2011)

† Data is for Greensboro-High Point, NC Metropolitan Statistical Area

Sources: Fiserv and Moody’s Economy.com

Happy Birthday, Karen’s Perspective!

Happy Birthday!

My blog just turned One!

Thank you to my readers for faithfully following my perspective!

Have you signed up with me yet by clicking on the RSS feed icon to the right of this post?  I would certainly appreciate it!  If you do, you will receive my new posts automatically!

My very first post one year ago was entitled Benefits to Buying a Home Now.  Interestingly, for the most part, it still applies so.. here it is again!:

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Mortgage Resets – Here comes the next wave

Mortgage Resets

I know everyone really wants to believe the housing market is going to get better in 2010. I know we’ve all had enough of the gloom and doom, but it appears we have to brace ourselves for more of the same, at best.

We’re so used to turning the channel when we get bored with what’s on. We expect to drive up to the window and have our food ready. We swallow a pill in anticipation of instant headache relief.

But, from the looks of this graph, we’re going to be in this one for a while.

From the graph, you can see the first wave that’s already passed, the grey wave.  It peaked mid ’07 then again in January ’09.  Those were the sub-prime loans resetting that put us into the tailspin we’re just now trying to come out of.

The next, and far more layered wave is just beginning to form.  You can see the dotted line where it began in January 2010.  It is 4 layers deep – the grey sub-primes, the red prime loans, the blue Alt A’s and the yellow Option Arms.  Everything peaks mid year 2011.

Add to that all the “shadow inventory” the banks have taken back and are still holding that some people say is more than they’ve already released.  Hang on, boys and girls, it’s going to be a bumpy ride.

It’s better to know ahead of time to be prepared. Stop spending. Save what you can, when you can. Scale back, downsize, reuse, recycle.

The real estate market will come back strong. It always does. We’ll just have to be patient a while longer.

So, what’s the good news?  There’s never been a better time to invest in real estate.

If you live in the Triad area of North Carolina, we’d love to help you with your investing.  Check out our Triad Master Mind. It’s a great group of local investors and we’re all working together to help each other profit through real estate.

Don’t wait to invest, invest and wait!  Huge returns will be there to reap in your future.

Happy investing!

Buying a Home in a Grocery Store

Remax

Wait.  What? Seriously?

Apparently.  At least in New England.  Massachusetts, Connecticut, Rhode Island and New Hampshire to be exact.

ReMax has signed a 5 year contract to open “micro real estate offices” in New England Stop & Shop stores.  Up to 17 of these micro offices are expected to open this year.

I think it’s kind of funny.  I can’t imagine trying to conduct such serious business as a real estate transaction in the chaos of a grocery store, carts clanking, announcements blaring.  And, not much privacy, huh?

I guess they figure if its good enough for a bank, its good enough for a real estate endeavor.

New times call for new thinking.  Would you be comfortable buying a home in a grocery store?

Shopping Cart

What Does It Mean to You, the Buyer, that You Have to Go “Full Doc”

Guest Post

Following is another Guest Post. This one was written by Lisa Delzompo. Lisa sells real estate in Temecula, CA. I appreciate her allowing me to re-post her article here.

What Does It Mean to You, the Buyer, that You Have to Go “Full Doc”

Over the past year, lending guidelines have tightened so much that, if you’re paying attention at all you know, buyers have to qualify “full doc” for loans. That means, full documentation of the buyer’s income, debts, and assets.

It is to the point that I provide my clients an overview letter, explaining the buying process in detail, including the fact that you’re going to be asked for information up front, during, and at the end of the loan process.

That sounds straightforward, but let’s take a look at what that means. First, keep in mind that if you provide an item of information, it needs to be Legible. I capitalize the word to point to its importance. The item you provide will be faxed or scanned another time after you send it to your loan officer; the people receiving that last copy are the underwriters, the ones whose job it is to sign off on every item of the checklist for your loan, saying you fulfilled that condition. Their job is on the line; they don’t know you from anyone; they don’t trust you; and they don’t distrust you. It simply is their job on the line to make sure that the loan they approve contained each item required on their checklist. If an item is blurry enough that they can’t read enough of the important details there, they will not sign off on that condition. If you have provided the same copy several times, and they are still saying they cannot read it, then you should go get a new, clean copy and send it in, asap. If you take several days to provide items you’ve been asked for, the process will take that much longer. In this age of internet and fax, it is common for clients to be able to provide items within minutes of being asked for them.

Let’s get to more details:

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New RESPA rules take effect 1/1/10

HUD

The Real Estate Settlement Procedures Act or RESPA, as defined on the HUD site, is about closing costs and settlement procedures.

Federal regulations have just changed RESPA requirements.

Some of the major changes are:

  • There is a new HUD-1 statement. The old one was 2 pages, the new one is 3.
  • There is a new GFE, Good Faith Estimate, which gives you an estimate of your settlement charges and loan terms you are likely to incur to obtain a specific loan.
  • The government has eliminated the cap on FHA origination fees.
    Previously HUD limited origination fees to 1 percent of the mortgage amount for most FHA loans.

According to the HUD site, the intent of the standardized GFE and HUD-1 is to provide borrowers an easier means of comparing loan offers, and to determine that they are getting the loan at settlement that they were offered in the GFE.

If you already had a loan in process, HUD states that, if your GFE was issued on the old form prior to January 1, 2010, then the old HUD-1 form must be used even if closing will occur after January 1, 2010.

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Ready to Buy/Sell a Home? Now’s the time..

FHA is tightening underwriting standards. Housing Secretary Shaun Donovan announced in December that FHA has plans to:

  • increase the amount of upfront cash homebuyers need to bring to closing

    • Right now, the amount is a minimum 3.5%.

  • raise minimum FICO scores for new borrowers

    • I’ve heard that the increase will be from 620, where it is now, to 640.

  • reduce seller concessions from 6% to 3%

    • How much the seller can offer to help the buyer with things like closing costs.

  • and raise mortgage insurance premiums

These new standards could take place as early as April. If you’re thinking about buying or selling, looks like the best time in 2010 will be the first quarter.

Read more…

Home Inspections – What to look for

Home Inspection

First of all, always get a home inspection.

Why? Because you don’t know what you don’t know. You need to have a licensed home inspector to go through any property you plan to buy. This is your opportunity to learn what to expect after the deal is closed.

Even with new construction, don’t assume the builder or contractors did everything right simply because the house passed code.

Be sure you hire someone who is competent, thorough and trustworthy. Get dependable referrals and do some research before choosing an inspector. Always ask about licensing, professional affiliations and credentials and whether the inspector carries errors and omissions insurance.

When having a property inspected, go along with the inspector, ask questions and listen as he gives his professional opinion about the house. Reading a written report is not nearly as valuable as being there, discussing items as they’re found, and leaving with a truer picture of the condition of the property.

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Turned Down for a Mortgage? What’s Next?

First of all, you’re not alone. Hope that helps… According to the Mortgage Bankers Association in Washington, D.C., about half of all mortgage applicants are now being turned down. Half. Good grief, that’s a lot.

Did you receive a formal rejection spelling out the reasons you were turned down? If you were turned down because of information on your credit report, federal law entitles you to something called an “adverse action” notice.

According to the Federal Trade Commission, when credit is the issue, you’re entitled to a copy of the results showing the reason for the negative report from the credit reporting agency that provided the data on which the lender based its decision.  Whew!   You’re also entitled to a free credit report; see the FTC web site for more information.

You’ll want to know the reason for the rejection so you can fix what’s wrong, if anything is, and make sure you clear it up.  You also want to make sure that the reason is valid and not a mistake on your credit report.

Read more…