1) Locate homes which are in default, as early as possible, even possibly before the formal non-judicial foreclosure begins.
2) Search foreclosed homes with plenty of lead time before the Trustee’s Sale (you may need weeks or months of lead time.)
3) Once you have created short list of such homes, narrow that list to only those homes you would likely purchase for yourself.
4) Complete an accurate Comparative Market Analysis (CMA) using sold homes with similar features, via a good database such as the local MLS.
5) Determine the exact mortgage balance and status of default or foreclosure.
6) Be sure to find out if there is a second or third mortgage on the house.
7) Research the possibility of other liens (tax liens, mechanic’s liens, labor liens, state liens, etc.)
8) Determine how best to talk and negotiate with the loss mitigation department of the bank or mortgage holder (email, fax, phone, etc)
9) Determine whether or not purchasing via the short sale will negate any subordinate loans or liens (another trap for the unwary.)
10) Know which costs and fees in addition to the mortgage balance can be compromised and by how much (experience is the best teacher.)
11) Prepare a comprehensive package to present to the mortgage holder, which is the most critical step in closing a short sale. This should include the Purchase & Sale Agreement, and a thorough analysis of the home, prices, the local market, and justification of your offering price. Your offer must be prepared very professionally or the bank will merely overlook you, without giving your offer a second look. You have to be able to make a case to the bank, as to why they should sell to you at this price.
12) In order to close on a deal in a short sale, you must follow through with all parties involved.
Monday, August 31, 2009
Monday, August 24, 2009
10 Steps to Sell You Home Faster In A Slow Market
You probably already know that real estate across most of the country is not appreciating as fast as it was at one time. This isn't necessarily a bad thing, unless of course you purchased last year and are now selling. People who have owned a property for several years are still generally well ahead in the game. We can't predict what 2009 will bring, but so far, most markets have slowed, if not declined. For the majority of established home owners in the prevailing market, prior property appreciation will ensure at least some degree of profit, though today's sales might not be as prosperous as they would have been in 2006. But all homeowners want to get the highest possible profits. How do you go about this? There are 10 negotiating steps that a seller can follow to assure that a person's home gets the best price and is sold quickly.
Step 1: Use a broker from the local area. When the market is down, so is the number of buyers. That means that you need to expose your property to as many potential buyers as possible. Who do prospective buyers get in touch with when they are house hunting? Real estate brokers. National Association of Realtors statistics show that 85% of purchasers count on real estate brokers for their home selections, while the Internet accounts for 80%. Who creates all of those online real estate postings? Real estate brokers from the local area.
Step 2: Familiarize yourself with the entire sale agreement. Nearly all jurisdictions have standardized real estate contract which have become lengthy and complex over many years. If you use one of those, read it carefully and be aware that you are agreeing to every unmodified term and condition. Make sure there is nothing in the agreement that needs to be taken out, rewritten or added. The brokers should offer a copy of the sale agreement that they might use at listing presentations and the sale deed should be read to avoid misunderstandings. As these are agreements on forms, whatever is not stated as a requirement by the law can be changed by a cross-out or addendum. Consult your attorney or broker for further detailed information.
Step 3: Be completely familiar with the current real estate market. For the sake of negotiations, knowing what the recorded sale prices were isn't sufficient because often they don't give the complete picture. As an example, two houses might have both sold for $300,000. A person might have sold for $350,000 while the other for $300,000 but the owner gave the buyer a 6 percent seller credit for a new roof and appliances, which is $18,000. Local brokers who are familiar with the details of recent sales are able to provide the best negotiation advice.
Step 4: Understand all of the terms you are willing to offer. You are confident that your home is going to sell at some satisfactory price, but instead of starting out with an inflexible amount, consider the property sale as a combination of price and terms. For example, it might make more sense in a slow market to help reduce the buyer's closing costs by offering a "seller contribution "instead of lowering the price of the property. Often the seller contribution could be significantly less than a reduction in price, and buyers who require cash to close the sale could find it more attractive as well.
Step 5: Request a smaller deposit. In order to bind a legal contract, the buyer needs to make a deposit. In an ideal marketplace, a seller will receive a large deposit, but in a down or "off" market, a much smaller deposit may have to be accepted. The buyers prefer to make the lowest possible deposit because a huge deposit indicates a big financial and psychological commitment. You can ask for a lower deposit if the buyer has a mortgage pre-approval or if the buyer shows a strong interest in the property and you have no other offers.
Step 6: Sweeten the pot. Are you really planning to take large items like a swing set or washing machine? In certain cases it may be better to leave such items if a buyer makes an offer.
Step 7: MLS photos have to be updated. If your MLS photo shows snow around your home in the middle of the summer, potential buyers will know your house has been on the market a while. They may interpret this as meaning that you might be desperate to sell and will expect to lower your initial offer. Make sure your broker posts recent photographs.
Step 8: Fully understand the marketing plan. The broker's marketing plan should be reviewed quite often to see that it is being followed and is changed whenever it is needed.
Step 9: Check out open houses. Going to open houses, also known as your competition is a great idea. It isn't always easy to be objective. However, do other owners have selling ideas that might work in regards to your home? Is there something you can use to bargain with? You could consider offering to do some painting or other cosmetic repairs.
Step 10: Keep everything in context. Don't worry about nickels and dimes when your main goal is to get the house sold.
As an example, just before closing the deal, we had a buyer request an extra $600 to resolve last minute concerns. That gesture seemed like nothing more than a case of buyer's remorse, so we agreed to it, received an otherwise ideal price, and closed the sale. It wasn't long before the prices softened in the local market. It was better to lose $600 than to find another buyer later when the market was harsher and the final sale price might have been less by several thousands of dollars. Would we have preferred to save that $600? Certainly. However, six hundred dollars was a small price to pay considering that the delays could have meant a big reduction in price.
Step 1: Use a broker from the local area. When the market is down, so is the number of buyers. That means that you need to expose your property to as many potential buyers as possible. Who do prospective buyers get in touch with when they are house hunting? Real estate brokers. National Association of Realtors statistics show that 85% of purchasers count on real estate brokers for their home selections, while the Internet accounts for 80%. Who creates all of those online real estate postings? Real estate brokers from the local area.
Step 2: Familiarize yourself with the entire sale agreement. Nearly all jurisdictions have standardized real estate contract which have become lengthy and complex over many years. If you use one of those, read it carefully and be aware that you are agreeing to every unmodified term and condition. Make sure there is nothing in the agreement that needs to be taken out, rewritten or added. The brokers should offer a copy of the sale agreement that they might use at listing presentations and the sale deed should be read to avoid misunderstandings. As these are agreements on forms, whatever is not stated as a requirement by the law can be changed by a cross-out or addendum. Consult your attorney or broker for further detailed information.
Step 3: Be completely familiar with the current real estate market. For the sake of negotiations, knowing what the recorded sale prices were isn't sufficient because often they don't give the complete picture. As an example, two houses might have both sold for $300,000. A person might have sold for $350,000 while the other for $300,000 but the owner gave the buyer a 6 percent seller credit for a new roof and appliances, which is $18,000. Local brokers who are familiar with the details of recent sales are able to provide the best negotiation advice.
Step 4: Understand all of the terms you are willing to offer. You are confident that your home is going to sell at some satisfactory price, but instead of starting out with an inflexible amount, consider the property sale as a combination of price and terms. For example, it might make more sense in a slow market to help reduce the buyer's closing costs by offering a "seller contribution "instead of lowering the price of the property. Often the seller contribution could be significantly less than a reduction in price, and buyers who require cash to close the sale could find it more attractive as well.
Step 5: Request a smaller deposit. In order to bind a legal contract, the buyer needs to make a deposit. In an ideal marketplace, a seller will receive a large deposit, but in a down or "off" market, a much smaller deposit may have to be accepted. The buyers prefer to make the lowest possible deposit because a huge deposit indicates a big financial and psychological commitment. You can ask for a lower deposit if the buyer has a mortgage pre-approval or if the buyer shows a strong interest in the property and you have no other offers.
Step 6: Sweeten the pot. Are you really planning to take large items like a swing set or washing machine? In certain cases it may be better to leave such items if a buyer makes an offer.
Step 7: MLS photos have to be updated. If your MLS photo shows snow around your home in the middle of the summer, potential buyers will know your house has been on the market a while. They may interpret this as meaning that you might be desperate to sell and will expect to lower your initial offer. Make sure your broker posts recent photographs.
Step 8: Fully understand the marketing plan. The broker's marketing plan should be reviewed quite often to see that it is being followed and is changed whenever it is needed.
Step 9: Check out open houses. Going to open houses, also known as your competition is a great idea. It isn't always easy to be objective. However, do other owners have selling ideas that might work in regards to your home? Is there something you can use to bargain with? You could consider offering to do some painting or other cosmetic repairs.
Step 10: Keep everything in context. Don't worry about nickels and dimes when your main goal is to get the house sold.
As an example, just before closing the deal, we had a buyer request an extra $600 to resolve last minute concerns. That gesture seemed like nothing more than a case of buyer's remorse, so we agreed to it, received an otherwise ideal price, and closed the sale. It wasn't long before the prices softened in the local market. It was better to lose $600 than to find another buyer later when the market was harsher and the final sale price might have been less by several thousands of dollars. Would we have preferred to save that $600? Certainly. However, six hundred dollars was a small price to pay considering that the delays could have meant a big reduction in price.
Monday, August 17, 2009
10 "Green" Home Tips
These "Greenest" homes are already built to be "Green". But that does not mean that you cannot take an existing home and make it more eco-friendly. This is how you can do that:
1) Keep original windows intact. Studies show that older windows can perform as well as vinyl replacements. Weatherstrip them so that they seal tightly, caulk the exterior trim, and repair cracked glazing or putty around glass panels. You'll reduce landfill waste and the demand for vinyl, a non-biodegradable material that gives off toxic by products when it is made.
2) Use light paint colors for your house exterior. Lighter colors reflect heat better than darker ones.
3) Insulate the attic, basement, and crawl space. About 20% of energy costs come from heat loss in those areas.
4) Reuse old materials such as brick, stone, glass, and slate when making home improvements. If you are rebuilding a staircase, for example, use wood from the summer kitchen or shed that could not be saved.
5) Install fireplace draft stoppers, attic door covers, and dryer vent seals that open only when your dryer is in use. An open dampener in a fireplace can increase energy costs by 30%, and attic doors and dryer vent ducts are notorious energy sieves.
6) Plant trees. Evergreen trees on the north and west sides of your house can block winter winds, and leafy trees on the south and west provide shade from the summer sun.
7) Have an energy audit done by your local utility company. Audits can help pinpoint problem areas and measure energy savings after you improve your home's efficiency.
8) In the summer, open the windows and use fans and dehumidifiers, which consume less energy than air conditioning. Many old houses were designed with good cross ventilation; take advantage of your home's layout.
9) Keep doors airtight by weatherstripping, caulking, and painting them regularly. Recent studies suggest that installing a storm door is not necessarily cost-effective.
10) Restore porches and awnings. Porches, awnings, and shutters were intended for shade and insulation. To save energy, draw shades on winter nights and summer days.
1) Keep original windows intact. Studies show that older windows can perform as well as vinyl replacements. Weatherstrip them so that they seal tightly, caulk the exterior trim, and repair cracked glazing or putty around glass panels. You'll reduce landfill waste and the demand for vinyl, a non-biodegradable material that gives off toxic by products when it is made.
2) Use light paint colors for your house exterior. Lighter colors reflect heat better than darker ones.
3) Insulate the attic, basement, and crawl space. About 20% of energy costs come from heat loss in those areas.
4) Reuse old materials such as brick, stone, glass, and slate when making home improvements. If you are rebuilding a staircase, for example, use wood from the summer kitchen or shed that could not be saved.
5) Install fireplace draft stoppers, attic door covers, and dryer vent seals that open only when your dryer is in use. An open dampener in a fireplace can increase energy costs by 30%, and attic doors and dryer vent ducts are notorious energy sieves.
6) Plant trees. Evergreen trees on the north and west sides of your house can block winter winds, and leafy trees on the south and west provide shade from the summer sun.
7) Have an energy audit done by your local utility company. Audits can help pinpoint problem areas and measure energy savings after you improve your home's efficiency.
8) In the summer, open the windows and use fans and dehumidifiers, which consume less energy than air conditioning. Many old houses were designed with good cross ventilation; take advantage of your home's layout.
9) Keep doors airtight by weatherstripping, caulking, and painting them regularly. Recent studies suggest that installing a storm door is not necessarily cost-effective.
10) Restore porches and awnings. Porches, awnings, and shutters were intended for shade and insulation. To save energy, draw shades on winter nights and summer days.
Monday, August 10, 2009
Truth in Lending Act Changes!
The Housing and Economic Recovery Act of 2008 included several revisions to TILA. These important revisions go into effect July 30, 2009.
The key changes effective with all applications on or after July 30, 2009 are:
1) Collection of fees: Lenders cannot collect a fee from the consumer, other than a reasonable fee for obtaining the consumer's credit history, until the consumer is in receipt of the initial TIL.
2) TIL disclosure applicability: Lenders must now provide a TIL on refinance transactions.
3) New statement added to all TIL disclosures: You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.
4) Initial TIL waiting period: A loan cannot close until seven business days from the delivery of the initial TIL. For example: Lender places loan disclosures in the mail Monday, August 3rd, the loan cannot close until on or after Tuesday, August 11th. Business days are the same used for rescission--Monday through Saturday excluding legal public holidays.
5) APR re-disclosure tolerance: After the initial TIL is given if there are any changes that effect the APR and cause the APR to go up by .125% for fixed rate products (or .25% for ARM products) a new TIL must be given to the borrower. The new waiting period is three business days after the borrower receives the revised disclosures. A borrower is presumed to have received the new disclosures within three business days if placed in the mail. This creates a six day waiting period, three days to receive the disclosures and three days waiting period.
The key is for a buyer to lock their loans early enough so new waiting periods do not effect their closing date.
This information was provided by:
Richard Watkins
Sr. Mortgage Consultant
National City Mortgage
Richard.Watkins@ncmc.com
The key changes effective with all applications on or after July 30, 2009 are:
1) Collection of fees: Lenders cannot collect a fee from the consumer, other than a reasonable fee for obtaining the consumer's credit history, until the consumer is in receipt of the initial TIL.
2) TIL disclosure applicability: Lenders must now provide a TIL on refinance transactions.
3) New statement added to all TIL disclosures: You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.
4) Initial TIL waiting period: A loan cannot close until seven business days from the delivery of the initial TIL. For example: Lender places loan disclosures in the mail Monday, August 3rd, the loan cannot close until on or after Tuesday, August 11th. Business days are the same used for rescission--Monday through Saturday excluding legal public holidays.
5) APR re-disclosure tolerance: After the initial TIL is given if there are any changes that effect the APR and cause the APR to go up by .125% for fixed rate products (or .25% for ARM products) a new TIL must be given to the borrower. The new waiting period is three business days after the borrower receives the revised disclosures. A borrower is presumed to have received the new disclosures within three business days if placed in the mail. This creates a six day waiting period, three days to receive the disclosures and three days waiting period.
The key is for a buyer to lock their loans early enough so new waiting periods do not effect their closing date.
This information was provided by:
Richard Watkins
Sr. Mortgage Consultant
National City Mortgage
Richard.Watkins@ncmc.com
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