From Foreclosure To Eviction...Why So Long?

Hi Everyone,

   Welcome back!

   A major trend that is (sadly) happening all around us is the foreclosure process, which entails a long and drawn-out process which usually ends in the eviction of the current homeowners...or not!

   Today, let's focus on the "or not!", and see what is really going on out there.

   A recent CNN story written by Les Christie, titled, "Squatter Nation: 5 years with no mortgage payment", examined this in detail, and said that Nationwide, "it takes an average of 565 days to foreclose on borrowers in default from their first missed payments to the final auction. In New York, the average is 800 days". One such example of "Squatters", as they are referred to, is a Florida couple, that, "have not made a mortgage payment in nearly five years -- but they continue to live in their five-bedroom West Palm Beach, Fla. home.". I find that absolutely incredible !

   As incredible as it may sound, this is not a new trend, says Patrick Hohman of Louisville, KY, who says that when his dad was a little boy, "they lived in their foreclosed home from 1933 to 1937. Due to the volume of foreclosures in the 1930s, they stayed in the home for 4 years before being put on the street."

   Lesley A. Hoenig, a bankruptcy attorney practicing in Michigan, says that "the foreclosure process can take an insanely long time in some cases, especially if the owner has filed chapter 13 to catch up.", and that, "Ultimately, the lender may eventually kick the person out (Likely if the person isn't making any effort to get the loan modified or catch up)", and adds that, "until the number of foreclosures die down, people are going to be able to spend up to two or three years in their house before getting kicked out".

   Hoenig thinks that the main reason people manage to stay in their house is, "because lenders aren't really itching to have vacant houses in their inventory.". Marc S Hyman JD, a Licensed Real Estate Agent in Santa Barbara CA, says basically the same thing; "The last thing a bank wants to do in this market is actually take possession of a home so banks are letting the foreclosure process drag out as much as possible.", he says, adding, "During a normal market banks foreclose quickly in order to get their "investment" back as soon as possible and put it back to work."

   The reason Hyman provides is that in this market, "a bank does not want to own a home that it will need to maintain and insure. The bank will become responsible if anyone gets hurt while on the property. Furthermore a bank will not be able to sell the house quickly. Banks are looking at any solution that does not mean taking back the house.".

   Hyman does say, though, that once it does complete the foreclosure, "it does quickly evict tenants in order to avoid the legal obligations of being a landlord eg timely repairs, insurance coverage etc.". Referring back to the Christie piece from CNN, one such "Squatter" says that, "Living in this foreclosure limbo is "Hell,"", and adds, "I feel like I'm locked in a box. I work for a financial organization and if this came out, it could cost me my job."

   Ultimately, Hyman offers up this interesting point, and perhaps something for everyone to chew on; "The squatters are getting a longer break than in the past but it will come to an end.", and says that, "The sad thing is that the squatters are spending everything they are saving while living rent free. If they did not have the squatter mentality they would be saving the money and looking to buy somewhere else with the windfall they are getting by squatting."

   Hyman makes a very good point. We need to realize that a lot of these "Squatters" are families (with children), who had been working hard for years to pay on time, until hardships arose with the Economic downturn. It does not make it right, but it's quite possible that this category of folks would never have imagined being in the foreclosure process and being a "Squatter". It seems as if the whole definition of everything we believe(d) in has taken a 180-degree turn. Tough Times!

   What are your thoughts on this hot topic?

Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

TAGS: #foreclosure #eviction #squatter #mortgage #foreclosureprocess #RealEstate

Housing Factors Contributing to Market Direction

Hi Folks,

   Hope you've had an outstanding week.

   Today, I'd like to share a very interesting and very informative story that I came across that fits perfectly within the framework of our discussions here on our Blog. The story, which was written by Ruth Simon and Jessica Silver-Greenberg for the Wall Street Journal (and appeared on Yahoo Real Estate), is titled, "Why It's Time To Buy".

   The story discusses what it calls the, "five-year national housing bust", and discusses some positive signs, short-term concerns, long-term concerns, a 5-Year Outlook, and touches on the topic of Renting vs. Buying.

   Among the positive signs that were cited are the 50-year lows that mortgage rates have dropped to, as well as the affordability of homes. They also referred to the inventory of homes as, "A historic glut of homes", that has created a buyer's market. They did point to the fact that changes are coming, and mentioned a reference from Moody's Analytics that says the number of distressed sales will begin to fall in 2013 (and prices will increase). Additionally, Home Building is at "standstill" (lower chance of inventory/supply getting worse), and they also cited "Household Formation" (a Demographic Indicator) is on the rise, which promises, as they say, "to take a bite out of the glut in coming years."

   When looking at the overall movement of the Housing Market, the short-term looks bleak, as the authors point to Weak Job growth, the fact that Foreclosure sales encompass the lion's share of market, and that Home Prices will fall more in the coming months, per some Economists. For the longer term, they point to the positives of home ownership, such as the ability to deduct the mortgage interest on your taxes, and well as the ability to decorate, paint, and change anything that you want on your own home, "without having to clear it with a landlord." They added to this a, "5-Year Outlook", that points to the coming era of post-foreclosure overload (after the majority of the foreclosure-related inventory), has been cleared, and as housing economists say, "the traditional drivers of the housing market—demographics, affordability, loan availability, employment and psychology—should take over."

Some of the more specific factors they names that will make or break local markets over the next few years, were as follows:

* Household formation is on the rise, per Moodys, and is projected to increase from 950,000 in 2010 to approx 1.2 million over the next decade.

* Higher demand for second homes, per Moodys, should begin, "sopping up excess inventory in much of the country over the next two years"

* Economic Conditions - "Rising incomes and increased employment tend to give more would-be buyers confidence and buying power."

* Mortgage financing is available for people with good credit, but, "nearly impossible" for people who do not meet the lending guidelines.

* Another interesting point that was mentioned was that, "higher down-payment standards are locking some would-be buyers out of the market.", and they pointed to a recent survey by Zelman Associates that showed that, "Just 35% of renters have the minimum 3.5% down payment needed for an FHA loan on the median-priced home in their market"

   As for the "Renting Vs. Buying" question that many people have pondered, the authors stated that, "Renting is still cheaper than buying in most markets, but rising rents and falling house prices mean that, in some areas, this won't be the case for long.". They said that according to Moody's Analytics, Buying a home is already cheaper than renting in Chicago, Cleveland, Detroit and Orlando, Fla., and that for markets such as Dallas, Las Vegas and Sacramento", "the equation is likely to soon turn in favor of homeownership if current trends persist,"

   One very practical suggestion mentioned was as follows: to compare rental prices for similar properties", and to, "wait until the monthly outlays, including taxes and insurance, are equal." and additionally, they said, "You also could factor in the tax savings of owning, which would make buying more attractive even if the gross monthly outlay is slightly higher."

   In light of the Economic & Housing Market Analysis information, coupled with the Rent to Own perspective that we try to bring to you, this story was a direct hit for you...whether you're a homeowner, home seller, a realtor, or real estate investor. What are your thoughts and comments on this story?

Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

TAGS: #Foreclosure #mortgagerates #realestateinvestor #rentalprices #renttoown #WallStreet

Foreclosures Flooding The Market And Diluting Prices

Good Morning,

   Hope you are making most of this short week (short for the lucky ones).

   The woes of the housing market surface and resurface in many different ways. The S&P/Case-Shiller Home Price Indices were just released, and the numbers indicate that home prices in the Nation hit a new low in Q1 of this year. The figures showed a 4.2% drop, along with a, "new recession low" with the latest data. Additionally, home prices posted an annual decline of 5.1% when compared to Q1 of 2010. The release of these figures from Standard and Poors indicate that, "Nationally, home prices are back to their mid-2002 levels."

   "There's a three-year inventory of homes in foreclosure for sale, and that's devastating home prices.", says Les Christie, in a story titled, "Foreclosures for sale: Big supply, low prices", in a story on Yahoo Real Estate/CNN Money. The story points to data from RealtyTrac, and says that more than half of homes sold in Nevada are, "in some stage of foreclosure". California and Arizona are not far behind, with foreclosures representing 45% of sales.

   Rich Sharga of RealtyTrac was quoted very accurately as saying that this, "is very bad for the economy.".

   Homes, such as REOs (bank-owned homes), are selling dramatically lower than comparable properties, at an average of 35% less, per RealtyTrac. On the high end of this data is New York State, with a 53% discount for REOs in Q1. It is also worth mentioning short sales, which average at a 9% discount.

   Sharga says that it will take 3 years to sell the nearly 2 Million distressed properties, and about 2 years to clear out the REOs, to which he says, is, "without any new foreclosures at all coming into the system."

   This goes along with the S&P/Case-Shiller figures, where Minneapolis, for example, posted a double-digit 10.0% annual decline ("the first market to be back in this territory since March 2010 when Las Vegas was down 12.0% on an annual basis."). Always eager to end on a bright note, Washington DC was the, "only city where home prices increased on both a monthly and annual basis."

   Where do you think we'll go from here in terms of home prices and inventory?

Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

TAGS: #foreclosure #realestate #REO #shortsales

The Appraisal Industry In The Post-Housing Meltdown Period

Good Morning,
   Glad you can make it with us on this Friday, and I hope your week has been outstanding.

   In the tumult of the Housing Crisis (or "meltdown", if you prefer to call it that), the Government has taken a stern look at all of the moving pieces of the Real Estate and Banking industry(ies). One vital piece included in this is the Appraisal Sector.

   "Appraisal companies must do more for less in today's market. In today's market they must be highly competitive and with foreclosures distorting comps, they are both rushed and pressured to bring in business.", says Robert Shemin, a NY Times Best Selling Real Estate Author-Expert. Shemin says that for example, "you'll find one block in a neighborhood where 3 home-buyers have paid $200, then 2 foreclosures happen at $110, and its a difficult business"

   Another professional, James Manning, says that "The banks & ABCs still control the appraiser by means of Appraisal Management Companies who distribute the appraisal orders and take a huge slice of the fee." He says that, "If you don't play ball, you are off the roster. I don't see how the industry can survive."

   Despite the market upheaval, Melinda Crump with Sageworks, Inc, has pointed to some private sector data for industries related to real estate, and said that, "sales in a number of industries trended downward alongside the housing market as expected. Sales, though, have increased now for the appraisers".

   Are you an Appraiser? How have recent changes and trends effected your business?

Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

HAMP, HPF, GMAC...Working For You or Against You?

Hi Folks,

   Hope you had a great weekend, and as always, ecstatic to have you back with me here today.

   Let me first preface this Blog post with a, "This is Just the Facts" disclaimer...it is not politicized, but just based on facts from a recent story titles, "Former Subprime Lender Runs Key HAMP Program", by Elizabeth MacDonald for FoxBusiness, which details, "Conflicts of interest accusations against a key player in the Treasury Dept.'s heavily criticized, $46 billion "Home Affordable Modification Program," or HAMP."

   As you may already know, the HAMP was launched in February 2009, with the administration, "vowing that it would stop foreclosures for three million to four million distressed homeowners." The HPF, or The Homeownership Preservation Foundation, provides free foreclosure counseling over a toll-free foreclosure prevention line.

   Now, as the story says, the chairman of HPF, Bruce Paradis, is the former chief executive of the failed big subprime lender GMAC-Residential Capital (Rescap), which originated, "more than $65 billion in rotten loans during the height of the bubble, from 2004 to 2007.", and the received, "$17.2 billion in taxpayer money from Treasury’s Troubled Asset Relief Program, or TARP to re float its operations."

   As for HPF, they received a lot of money from mortgage industry players (Fannie Mae, American International Group (AIG), and the now defunct Countrywide Financial), and as the story says, HPF also got, "tens of thousands dollars more from Ocwen Loan Servicing, Chase Manhattan Mortgage, and Washington Mutual."

   "HPF’s hot line number is on every HAMP denial notice sent to borrowers rejected by the federal modification program, and it also “appears on 4,927 government Web sites,” and “ is prominently featured" by "40 top lenders” in their mortgage operations" HPF tells Fox Business.

   The question is asked; "How serious are these conflicts of interest charges?". Apparently, the controversy could give, "impetus to a growing movement in Congress pushing legislation to repeal HAMP." A group of Congressmen say that HAMP, "is a costly, abject government failure that has more to do with political atmospherics than mortgage modifications, only 500,000 permanent loan modifications done to date at great taxpayer cost, says Sen. Demint." Incidentally, "that's a fraction of the Administration’s stated goal of reaching up to four million."

   Criticizing HAMP for, Neil Barofsky, the Special Inspector General for the Treasury’s Troubled Asset Relief Program, criticized HAMP and says that "failed trial modifications often leave borrowers with more principal outstanding on their homes", adding there is "near universal agreement that the program has failed to meet its goals." Additionally, Sen. Coburn says in a statement that HAMP "has done nothing but string alone homeowners and increase their hardship." Some borrowers have seen their credit scores worse, and under HAMP, more mortgage modifications have failed than been successful.

   HPF strongly agrees that they have checks and balances to stop mortgage servicers from influencing the advice they give on the phone, and that they focus on, "ensuring that the homeowner knows the counselor is on their side, seeking the best possible resolution of their problem". "Staying neutral between borrowers and lenders who back the nonprofit seems to be uppermost on the minds of HPF officials.", say the story.

   The most important factor that was pointed out here, was that both HAMP and HPF are voluntary programs, and that "No government official can force a loan modification on any borrower, lender or servicer", and thus, the "bottom line here is, HPF, HAMP, Treasury or HUD cannot pressure servicers to modify loans."

   Overall, it is a mess of Red Tape, some of it intertwined and just mangled. Bureaucracy at work. Love it or hate it, America is America, and we always emerge stronger from anything hurled at us!

Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

Combatting Home Loan Fraud

Hi Folks,
   Hope you had a good weekend, and as always, glad to have you back here today.

   In the wake of the mortgage crisis, today we pose the question, "Is enough being done to combat home loan fraud?".

   Linda Fleischmann, a Certified Mortgage Consultant, who is a mortgage broker that has been doing mortgage loans for over 12 years, says that she has, "seen fraud and I have seen the industries turning a blind eye to it when it was convenient". Currently, however, Fleischmann says that they are verifying more information now because of the previous fraud. and that, "There is an executed 4506T which gives the lender a copy of the taxpayers transcript of their tax return even for those borrowers who are not self employed and are W-2 employees. There are background reports such as Lexis/nexis that is pulled on all borrowers to make sure that they have all of their information, disclosed or not. There is much more investigation into fraud and all I's are dotted and T's crossed with lending today, even now to the extreme".

   Greg Cook, a Mortgage Professional, says that he thinks that lenders are using every tool at their disposal to combat house loan fraud, and he gives such examples as the fact that, "All income documentation is verified through the IRS (form 4506-T), Credit reports now have social security discrepancy warnings, which have to be investigated prior to closing, and All deposits in bank accounts, other than direct deposit paychecks have to be sourced and verified."

   One homeowner that fell victim to the crisis was Chris Moyer, who says that, "I lost a home to foreclosure some years ago. I had PMI and always wondered why it did not cover the outstanding balance on the mortgage. I received a form where I needed to claim the difference in the amount the house sold for and what I owed on the mortgage to claim on my income taxes that year. Could never figure that out?"

   Despite all of the measures, Cook says that, "Occupancy fraud is still the biggest problem, but the "buy and bail" guidelines make it more difficult to do it more than once."

   Is enough truly being done? What are your thoughts on this topic?

Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com


TAGS: #homeloan #foreclosure

A Look at Current Home Prices and Home Sales

Hi Folks,

   Hope you've had a great week!

   A few key Housing numbers were released this week, and I'd like to review them with you here today since they deal with two very important factors; Home Prices and Home Sales.

   In terms of Home Prices, both the S&P/Case-Shiller Home Price Indices and the FHFA Monthly House Price Index were released this week. The S&P Indices, which provided data through December 2010, showed that the, "U.S. National Home Price Index declined by 3.9% during the fourth quarter of 2010.", and that the, "National Index is down 4.1% versus the fourth quarter of 2009, which is the lowest annual growth rate since the third quarter of 2009, when prices were falling at an 8.6% annual rate." The FHFA Index didn't fare well, either, with a 0.8 Percent drop in the Fourth Quarter of 2010, as well as a drop of 3.9 percent from the fourth quarter of 2009 to the fourth quarter of 2010.

   Chris "CD" Dowell of RE/MAX Best Associates, says that, "A high percentage of home buyer are investors. They're not worried about list price when making offers. They're looking at market value." Similarly, Paul Gabrail from Select Investment Group, says that many thought that, "because we saw short term leveling of prices a few months ago that the problems were over. Yet, we still have 9%+ unemployment, over leveraged borrowers, and banks are still increasing their foreclosure filings, which lead to lower prices because of oversupply."

   In terms of Home Sales, Existing-Home Sales Rose Again in January, as per the National Association of REALTORS®. Existing-home sales figures, which marks, "the third consecutive month with a pace that is now above year-ago levels". New Residential Sales in January 2011 were 12.6 percent below the revised December rate, and 18.6 percent below the January 2010 estimate.

   In summary, as Gabrail says, "some of these hotter markets are even worse - 13%+ unemployment, one in 10 houses behind on their mortgage and houses sitting empty and on market for over 1 year. It's all supply and demand and there is no demand when unemployment is 9%, so we have both extremes: Low demand and over supply."

   Do you have any comments on the Housing numbers release this past week? We'd love to hear from you.

Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

Guidelines For Earnest Money and Down Payments, Part 2 of 2

Hi Folks,

   Welcome back here on this last day of the week.

   In part 1 of this 2-part series, we defined and discussed "Earnest Money", and today, we will do the same thing with "Down Payments".

   A Down Payment, as most of you know, is an amount that is "put down" towards the total purchase price of a home. This amount can vary by state, type of loan program, and the type of deal. We'll look at some real-word examples of this today.

   Joetta Talford, a Realtor with Keller Williams Realty in Fort Mill, South Carolina, suggests that you, "Make sure you figure out how much your closing costs will be and if you either have enough for your closing costs or the down payment.", and that, "If you don't have enough for both (i.e. Other house on the market, ask for help with closing costs), Be honest with your agent and they can really try to get it worked out on your behalf." Adam Cowgill, A Sales Associate/Realtor, says that any down payment today, "should be a minimum of 20%; sellers are aware of the present lending crunch and the likelihood that you will get a higher LTV than 80% is gone like the boom of yesterday."

   Jeff Tufford, a Mortgage Consultant, says that down payment amounts will be, "program driven". Most folks put the least amount down allowed, whether that is $0 or 20% for an investment property."

   Down-payments depend on, "whether the deal is lender-financed, or seller-financed", says Patrick E. Hudson, a Commercial Real Estate Attorney in Texas.

   Hudson says that in a lender-financed deal, "the buyer needs just enough of a down payment to persuade the lender to make the kind of loan the buyer desires. My advice is for a buyer is to determine what kind of loan they want, and will be able to get, before they shop for homes, and let that determine the down payment amount. The seller should not care about the down payment amount, as they get paid the same regardless of the source of funds." In a seller-financed deal, "it is essential to get enough money up front to (a) weed out deadbeats; (b) cover the costs of foreclosure; and (c) cover damages that may be caused by a defaulting buyer. This defensive position ensures that if everything goes wrong, the seller has enough money to get the house back and restore it to a good condition."

   In terms of down payment amounts in regards to home home builders, Talford says, "There are certain national residential builders that ask for 3.5% down or more before they begin the process of construction.", and that, "A custom home builder will ask for 10% down before they build. But everything in real estate is negotiable, especially if you have a home to sell or need to pay more for closing costs."

Have a Great Day, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

Guidelines For Earnest Money and Down Payments, Part 1 of 2

Hi Folks,

   Happy Monday to you, and a Happy President's Day, as well !

   We are starting a 2-part series covering some basic guidelines on both Earnest Money for Real Estate Deals, as well as Down Payment Money for purchasing a home. For today's installment, we will be examining Earnest Money, what it is, and what the right amount should be based upon.

   As Earnest Money is described on About.com, "It's a good faith deposit but not to be confused with a down payment. When buyers execute a purchase contract, the contract specifies how much money the buyer is initially putting up to secure the contract, to show "good faith," and how much money all together will be deposited as a down payment. The balance is generally financed as a mortgage or a combination of mortgages. An earnest money deposit says to the seller: "Yes, I am serious enough about buying your house that I'm willing to put my money where my mouth is."

   "After 12 years in the Real Estate industry my advice in this economy is this", says Adam Cowgill, A Sales Associate/Realtor; "you should still offer a deposit that is the maximum amount of money you are able to offer in exchange for asking the seller to remove their home from the market while you satisfy your contingencies". Marc Bulandr of Foreclosure and Short Sale Experts Reoassets, Inc., says that, if a buyer wishes to purchase a property, "the more the earnest money, the more favorable the offer will be viewed by the seller."

   Jeff Tufford, a Mortgage Consultant, says that Earnest Money should be, "market driven", and that in his market in Mid-Michigan, "the going amount is typically $500-1000", and the average home price, he says, is $75,000 to $100,000. Joetta Talford, a Realtor with Keller Williams Realty in Fort Mill, South Carolina, agrees that the amount of Earnest Money, depends on the market and the demand for the property". Talford says that typically, "most buyers purchasing a property for $100k or less can offer $500 in earnest monies", and "anything over $100-150k, the buyer should probably offer at least $1,000". Further, Talford says that, "If it is over $200k, the buyer can expect the seller to ask for 1% of the purchase price during negotiations on a resale. If it is a bank owned, HUD or VA property, expect to pay $1000 to 1% in earnest monies no matter what the price." The maximum amount, Talford says, "depends on the bank or government program and what their specific guidelines are.", and says, "HUD and VA have the guidelines for each of their programs on line. Banks do not and each bank is different."

   Kelsey Lane of The Look Team Realtors in Silicon Valley, says that in their area, "the standard earnest money or good faith deposit is 3%. Almost all contracts we write has this amount.", however, Lanes says that, "the exception to this" was as little as $1000 earnest money., and says that, "It was in 2006. On properties that have been on the market for awhile, or in lower income areas, we see a lower percentage. However, in the in-demand areas, we still have multiple offers and if a buyer doesn't have 3% for their deposit, they aren't considered to be competitive or serious."

   Patrick E. Hudson, a Commercial Real Estate Attorney in Texas, says that, "The guideline on earnest money that I constantly see is 1% of the total purchase price. I see 1% in so many contracts that it must be the norm in our residential market." Interestingly, Hudson also mentions, "option periods" or "free look periods", where he says that the buyer, "can walk the deal and be refunded their full earnest money are typically $10 a day (usually, a 10 day option period for $100)." That sounds like a great option for anyone truly looking for the try-then-buy factor. "I've been a broker focused solely on the sale of foreclosure and short sale properties", says Bulandr, who says that the Earnest Money guidelines are, "fairly rigid on cash offers for foreclosure properties. It's generally 10% (or higher) of the purchase price."

   As for the Earnest Money physical funds, Bulandr says that, "If a contract is being properly represented by the buyer's attorney, earnest money will be protected.", and that, "In most states, earnest money is held in a trust account that can only be released after agreement is reached by both parties. Thus, if in a non-financing situation, I would suggest as much earnest money as down payment, with a minimum of 10%." He says that, "Again, depending on the state, you can stipulate that Earnest Money can be held in an interest bearing account if its a significant amount. As for financed situations, he suggests, "less than $1,000, but frankly, depositing Earnest Money up to the amount of the down payment is suggested."

   As you can see, there are many determining factors for Earnest Money. In part 2, we will be discussing some basic guidelines and rules for down payments. Thoughts? Questions?

Have a Great Day, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

TAGS: #earnestmoney #realestate #foreclosure #shortsales

What Can Go Wrong During a Real Estate Deal?

Hi Folks,

   Glad to be back with you, and I hope you're week has been smooth sailing so far !

   Now, to take a look at some things that can go wrong and dampen your spirits, today we are looking at the wide spectrum of things that can go wrong during a Real Estate Sale. For the purpose of this story, I broke this down into 3 categories: Interpersonal Issues, Foreclosure-Related Issues, and all Other Issues that do not fall into the other two categories.

   Human beings tend to fudge things up on their own without much help. "The worst problem I ever encountered in a real estate deal arose from the Sellers trying to be nice people and letting the Buyer stay in the house the weekend before the closing", says Michael D. Caccavo, an attorney in Vermont. As Caccavo explains, " The Buyers got in, found a lot of problems that they hadn't noticed during inspection, and most of all claimed the plumbing, which was mostly galvanized pipe, needed to be replaced with copper. They raised the issues over the weekend, and continued pressing for concessions during the closing, including several long conversations with the realtor who was away on vacation. The closing took 4 hours instead of 1 and the realtor caved and gave back a lot of commission to the buyer just to make the deal happen". Learning a hard lesson, he says, "Never again will I allow a client to let the buyer stay in the property before closing".

   Vickie Smith of Ark Essentials Publishing says that she had a bad experience she bought a home and then the previous owner took over a month to vacate, and she says that during that time, "we were paying the mortgage and he lived there rent free. After two months he picked up his Bully Barn. We should've had some stipulation that he paid $x per day until he totally vacated!". Adam Kruse, a Broker with The Hermann London Group, says that he had someone who had to postpone their divorce at the last minute so the sale of their home could go through before the foreclosure happened, and he says that, "it was a really touchy deal, and we actually ended up closing it."

   Jennifer De Vivo, a Realtor with the De Vivo Team at Charles Rutenburg Realty, provides some things that can and will go wrong sometimes with Foreclosure-Related deals. As De Vivo, says, "Foreclosures cause people to do funny things that can ruin months of work in an instant". De Vivo describes one of the worst stories she has come across: "Once a week out before closing a vandal busted the garage door open. At first it was a dent, but then they came back and practically destroyed it leaving it hanging horizontally. The worst of it was that when I called the listing agent (I represented the buyer), they did absolutely nothing. I took matters into my own hands and pasted no trespassing signs in bright orange throughout the home exterior. My husband and partner went with one of our helpful investor clients and righted the garage door. My buyers were troopers through it all and still bought the home which was in foreclosure and the absentee owner was oversees.

   De Vivo also describes another incident: "We had another incident where we represented a buyer in a short sale situation. We closed on a home on a Friday, and over the weekend the original owner came in and stole the entire kitchen and bathroom vanities, even the toilets! Luckily my partner called the title company on Monday morning minutes before the title had been filed and was able to cancel the deal and get our clients' money back. Whew!"

   As a Real Estate Investor, Jeff Swaney has come across additional issues during Real Estate deals.

   Swaney says that Appraisal problems, which he calls, "the most rare issue from the past" is becoming more common now. He describes this as follows: "The lender orders an appraisal and then rejects their own ordered appraisal due to their underwriter initiated computer based desk top review (also called an Auto Valuation Model, or AVM). The problem for the buyer is that most standard purchase and sale agreements have an appraisal contingency, but NOT a lender initiated AVM value contingency. This means that a buyer would be contractually required to buy the home even if the lender cuts the value and the loan amount. The reason is that the actual appraisal was OK, but the lender did not like it. If the buyer has this situation occur, they must close and pay the difference in loan amounts out of pocket, or they will lose their earnest money. Buyers need to be aware of this possibility and have their agents draft a lender induced valuation reduction contingency in their contract, or they face significant exposure.

   Liens that are filed, but not yet recorded at the local courthouse, is another major issue Swaney has seen. he says that, "There is typically a gap period between the time a lien is filed and when it shows up in courthouse records. Most closing agents will require a seller to sign a gap provision that affirms the seller is not aware of any liens that have not been paid off against the house. The buyer's title insurance policy should discuss this as well. I have been to closings where prior liens were not caught and the title becomes "clouded" causing a delay or cancelling of the transaction.

   Finally, Swaney points to issues with Home Owners Association (HOA) liens, and says that, "For most foreclosures, junior liens are wiped out after the foreclosure auction or lawsuit. The only normal exceptions are property taxes and state and federal tax liens. HOA's get around this provision by simply reassessing the past due liens against the next homeowner. Beware of this because the second most powerful group to fight is the local HOA! You could find yourself as a seller stuck with paying an old (prior owners lien) off if you sell a property purchased at the local foreclosure auction. This can cause transactions to fail as the seller is not willing to pay the past bill and wants to fight the HOA. Good luck doing that. The HOA's know that it will cost you more to fight the bill than just pay it!"

   Real Estate Deals are tough! That's why it is a field that requires determination, guts, and meticulous attention to details...and sometimes a little bit of luck. Any comments? Suggestions?

Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

TAGS: #realestate #foreclosure #realtor #realestateinvesting

Do Banks Really Forgive a Mortgage Balance After a Short Sale?

Hi All,


   I hope you had a great week, and if you're in the bulls eye of the next snowstorm as we are, I ask you to be careful and drive slowly !

   We recently received the same question from a few different people, and we would like to address that question today. We were asked approximately, "how often is a mortgage balance "forgiven" after a Short Sale?". We posed a few related questions to some professionals with quite a bit of experience, and we'll cover each question along with the answers below.

Question #1: "Will the house loan company forgive an outstanding balance after a home is sold on a short sale"

   David Bartels, an agent and a short sale negotiator, tells us that, "Absolutely. This happens almost every time on transactions we negotiate". Greg Cook, a Mortgage Professional, says that, "In a short sale when the balance of a mortgage debt is "forgiven", the lender almost always will issue a 1099 for that amount.", and continues to say that, however, the "the Mortgage Debt Forgiveness Act of 2007, provides for no tax liability on owner occupied properties up to $2,000,000. So while the debt may be forgiven there is no income tax liability." Cook adds that, "Whether or not a lender chooses to pursue a deficiency judgement for that amount is 1) at their discretion (and) 2) subject to state laws, and this can vary from state to state". Robert Nagle, an attorney in Phoenix, says that he has, "represented over 200 homeowners regarding strategic default. In Arizona, due to the anti-deficiency statutes, most first mortgages (purchase money and refi) forgive deficiencies, and certainly purchase money seconds do, too."

Question #2: "Are there any "rules" that say what amount, if any, will be forgiven?":

   Bartels responds and says that, "Each lender has their own guideline they use to determine whether or not to pursue a deficiency balance. They are not disclosed to anyone. Pursuit of deficiency judgment varies widely and is determined by the investor (owner of the loan).". Additionally, he says that, "For the most part the lender you are negotiating with just services the loan. They do not own it and take direction from the actual investor (owner or the loan)."

Question #3: "Do these rules differ from state to state?":

   "Yes", says Bartels, "CA for instance is a no-deficiency state. This means a lender cannot pursue a deficiency on short sales in CA. On Jan 1 this was expanded to include non owner occupied homes. Exceptions are some(times) made if the homeowner took cash out and used it for something other than improvements on the subject home."

Question #4: "Do they differ between a first house loan and a second house loan (i.e. first is paid off, but a balance remains on the second)?":

   Bartels reminds us that, "A short sale cannot occur unless 2nd releases the lien on the property. This is done via the short sale negotiation. There is no circumstance where a short sale could occur, but the 2nd lien holder does not release the lien.". Cook adds that, "Second mortgages are an entirely different game and will depend on lender and state law.", and adds that, "I was on a conference call with the head of loss mitigation (western division) for Bank of America and he said he had not heard of one lender pursuing a deficiency judgment. Reason? "You can't get blood from a turnip" and pursuing the judgment only increases costs to the lender and the former homeowner is likely to BK out of it anyway." Nagle chimes in on the equity second loans, and says that, "The rule of thumb that I feel the lenders are following is 10 cents on the dollar and a full release IF the borrower does a short sale. The gloves come off if the home has gone through foreclosure."

Question #5: "If it is not forgiven, what happens then?":

   Bartels says that the short sale negotiation and the release of lien negotiation are separate, and that, "When we get an approval that is conditioned on a cash contribution or a deficiency, we have a 2nd negotiation to pay the amount or pay an amount in exchange for no deficiency judgment. There are several ways to do this. We have been successful 100% of the time eliminating deficiency judgements post short sale for our clients so far." Cook says that, "In California, there is no deficiency judgment allowed on owner occupied properties for the loan used to purchase or renovate. As of today, refinanced loans may still be subject to deficiency judgment, but that is likely to change once the new legislature gets their feet under them (it passed in the last session but was vetoed by the Governator)."

   Overall, if you are facing a short sale as an option, it is important that you speak with your mortgage company (all of them), obtain approval for the short sale, consult an agent and also a Real Estate attorney. Make sure you have a plan from A to Z in place before setting it in motion.

   Have we missed anything? Comments? Suggestions?

Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

Tags: #shortsale #foreclosure #lossmitigation #loan

Two Points: Selling An REO Property and Home Prices Dropping

Hi Folks,


   Hope you're having a peaceful week. 2011 is just a few days away. Doesn't 2011 sound like such a futuristic year?

   Well, today, I would like to share a post that was written by Bob Corcoran, titled, "Five Tips to Sell REO Properties Faster", and the reason that I am sharing this with you is that this post goes hand-in-hand with my post of November 26th, which is titled, "Post-Foreclosure REO Property Maintenance". Corcoran's post looks at how to prepare an REO for sale from a Realtors point of view, but is also applicable to investors or any other parties.

   Corcoran says that, "The house needs to look just like any other house on the market in the neighborhood.", and he points out his 5 tips as follows:

1. Be a cleaner: Corcoran emphasizes that you, "have to be willing to do what it takes to get the house sold."

2. Think colors: Corcoran states that, "Red says to stop and yellow adds a warmth and coziness."

3. Add smells: "If it smells like bad, it doesn’t matter what it looks like.", says Corcoran, who suggests using air fresheners and a fresh pot of coffee. He says that, "The smell of coffee imparts the best of emotions. It tells people this is a good place to raise kids, it gives a warm and a comforting feeling."

4. Put up signs: Corcoran says that when you're marketing an REO property, "you need to make sure that it’s depersonalized and use cue cards – white piece of paper on the wall – that explain to prospective buyers the positives on what’s been done to the property."

5. Communicate often and regularly: This tip refers to the relationship between the bank and the Realtor, and Corcoran advises that, "When banks assign the Realtor to a property, it expects them to become the eyes and ears for everything that has to do with that property."

   These are some fantastic tips, and are of great use to the entire Real Estate community.

   Now, on to Part 2 of this post: The S&P/Case-Shiller Home Price Indices were released yesterday, and as per the report, "Six markets – Atlanta, Charlotte, Miami, Portland (OR), Seattle and Tampa – hit their lowest levels since home prices started to fall in 2006 and 2007". Bright Side? It looks like the major cities in California bounced back. Do you live in California? If so, this might make you happy?

   Thanks for hearing me out! Comments? Questions? Suggestions? You have tons of options for feedback here.

Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

TAGS: #reo #foreclosure #realtor #realestate

Drumroll...Your Top 5 Favorite Blog Posts of 2010

Hi Folks,


   Welcome back to Christmas week. If you were anywhere near a mall or a shopping center this week, you know that the traffic was at a crawl and the stores were bursting with people. You would think there was no such thing as a recession !

   Well, it's time to get all nostalgic with you. You have all gravitated to certain posts this year, and we are going to give you your Top 5 Favorite Blog Posts of 2010, starting with #5 and rounding it down to the Top Post of the year !

   Coming in at #5 is the Blog Post titled, "Post-Foreclosure REO Property Maintenance", in which we investigated into how the REO properties are being maintained while they are unoccupied.

   Coming in at #4 is the Blog Post titled, "Buying a Foreclosure? What You Need to Know First...", in which we spoke to numerous experts and foreclosure "gurus" for their suggestions on how to navigate the foreclosure property marketplace.

   The #3 Top Blog Post is titled, "Private Money...Any Available For Real Estate Deals?". In this post, we spoke with members of the lending community to gauge the availability of private money to fund Real Estate deals, and we received a number of different perspectives on this topic.

   Coming in at #2 is the Blog Post titled, "Top 5 Concerns When Selling a Home FSBO", which received a lot of traction and was ReTweeted and used in many articles and write-ups, due to the useful tips provided in the post. The sub-topics of selling a home as a "For Sale By Owner" (FSBO) that were covered in this post were Legal Concerns, Preparation of the Home, Mechanics of the Sale, Addressing Security Concerns, and Marketing the Home.

   Drumroll Please !! Your #1 Blog Post based on views, Tweets, Diggs, etc, was, "Right Time to Buy? Top Real Estate Investing Markets", in which we discussed the hottest markets for Real Estate investments. We spoke with many experts and investors across the country to provide you the best possible information. Even though this post was written a few months back, not a lot has really changed, so it is still worth a read and worthy of sharing with your peers.

   So, there you have it; The Top 5 Blog Posts of 2010, based on your views and usage of the content. We hope that we can continue to provide you with valuable and useful content, and all we ask of you is your faithful readership, your valuable comments, and for you to Retweet and Share our posts using the handy little buttons and links below the posts and on the side column of the Blog.

Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com/


#realestate #foreclosure #realestateinvesting #reo #forsalebyowner #fsbo

Caveats When Using a Foreclosure Rescue Company

Hi Folks,

   Hope you're Holiday weekend was great, and I hope you remember to toss out any leftovers from Thanksgiving, as they should be spoiling just about now !

   We are proud to share some great coverage we received in an AOL Daily Finance article titled, "How to Avoid Getting Conned by Foreclosure Rescue Scams", by Sheryl Nance-Nash.

   The two excerpts where we are quoted are as follows:

   "The problem has skyrocketed, and may get worse before it gets better, predicts Robert Eisenstein, president of HomeRun Homes, a rent-to-own marketplace operator."

   And...

   "Don't panic," cautions Eisenstein of HomeRun Homes. "Once you panic, you lose. Don't take the bait from the first company you meet. Make sure you don't create exponential problems along with the current problems of impending foreclosure."

   This was a very good article, as there has been a spike in these tragic stories since the housing market turned sour, i.e., Rent to Own deals where the owner went into foreclosure and the tenant/buyer was left in a very, very bad position (we have suggestions to help minimize the risk of that happening - please contact me for details).

   For more on the topic(s) of Foreclosures and REO's, be sure to check out the following articles:

   Foreclosure Prevention, Improved Housing Markets...
  
   Buying a Foreclosure? What You Need to Know First
  
   Short Sales - What Do You Need to Know?

   Post-Foreclosure REO Property Maintenance
  
Have a Great Day, and Happy Rent-to-Owning !
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

UPDATED: Post-Foreclosure REO Property Maintenance

Hi All,

   I hope you had a wonderful and relaxing Thanksgiving dinner, and we are glad to have you back here with us today, from wherever you may be reading this.

   We have had a tremendous amount of requests to cover the topic of REO properties and the manner in which they are kept from becoming eyesores and danger zones. In order to garner the best information, we spoke with a few people who deal with REO properties on a daily basis, and we have received some valuable information from them that we would like to share with you today.

   How are Foreclosure/REO Properties being Maintained in while they are Unoccupied?

   Edward Harris, Owner of REO Clean Up, tells us that the REO maintenance process for his company starts once the, "HUD/Bank receives a foreclosed property into their inventory and that property is turned over to their integration contractor/Broker.". Once they receive the property they send his company a "work order to go out and perform an, 'initial inspection'." Harris say that this report provides detailed information of anything left behind by the previous owners and also any visual problems with the home. The next step after this report is sent back to the IC/Broker is that a, "a work order is generated from the 'initial inspection report' regarding any issues. This work order is referred to as. 'Initial Services'."

   Another professional we spoke with, Mia Melle, President of West Coast Property Specialists, says that, "How these properties are managed during times of vacancy differs from company to company and also depends on what the owner intends to do with the home - rent or sell or sometimes nothing at all.". Melle provides an example of Fannie Mae, which, "uses the agents who are going to list the home as interim property managers and usually they are unpaid!", so basically it is the listing agent's responsibility to, "coordinate lock changes, landscaping, board ups, etc.", and surmises that the fact that they are unpaid for this service, "speaks to the fact that so many homes go uncared for and turn into neighborhood eyesores."

   Adam Roberts, a Community Development Loan Specialist in the St. Louis/Midwest Region, concurs, and says that, "many of the REO properties are not being maintained to a "neighborhood friendly" level. Lenders are neglecting to manage these properties because there is an overwhelming(ly) large number."

   Melle says, however, that she has seen other types of financial institutions use property management companies to handle their vacant inventories but she reiterates that, "the companies are often doing this for the opportunity to either list or manage the property in the future and are offered next to nothing (in) compensation to oversee the homes."

   Who is Keeping these Properties from Becoming Overgrown?

   Harris says that once his company receives an "Initial Services work order", they perform the following; "trash out services, Janitorial, grass cut and any safety issues are given immediate attention. Once we receive a work order the property is in our inventory for routine services until the property is sold." He says that "Routine Services includes bi-weekly visual inspections, grass cuts, picking up any trash, re-fresh janitorial cleaning, re-fresh of winterization during the winter seasons, snow removal", and, "If a roof problem for example, is found during a routine inspection I would have someone rectify the problem ASAP."

   Roberts says that "fortunately" through local law enforcement and code enforcement the properties have some maintenance such as, "occasional lawn mowing and boarding up windows and doors." Still, however, Melle says that, "Landscaping is one of the issues that lack thereof is the most noticeable to the neighborhood and it's one of the harder services to obtain for anyone whether you are a bank, property manager, or listing agent.", and says that, "The reason for this is that gardeners are a very local type businesses and you cannot find them on the Internet, the yellow pages or elsewhere. Normally, if you live in the neighborhood they will drop a flyer off at your door periodically but other than that.they are extremely hard to locate and hire from off site. So, as a result the landscaping may or may not get done regularly or at all.", and says that, "It's definitely an issue that we've had in our company with these types of portfolios."

   Who is Protecting these Properties from being Burglarized (for Copper Tubing, etc)?

   Harris says that during the "initial inspection", the property is secured, locks changed, hasp/pad locks if needed.", but he says that, "Obviously we can’t have someone at the properties 24/7, the visits of the routine inspectors and neighbors aware of the home can be/hopefully a deterrent for any theft. But if there is a burglary we notify the authorities, find out how the burglar got into the home and re-secure the property."

   Roberts concurs and says that Local law and code enforcement, "report the break-ins and then requires the lender to board up windows and doors.", and that, "Unfortunately after this happens the home becomes unmarketable to "real people" and the best chance of the home moving on the market is now in the hands of an investor, which means another short sale."

   Who is Keeping Squatters from Living in the Property?

   "There have been cases of squatters but not many with our company.", says Harris, who continues to say that, "If our routine inspector doesn’t find evidence of a squatter then we are called by a neighbor. Keeping the squatters out can sometimes be a task." Harris says that, "At one property, the squatter broke the door three different times. The first two we re-hung the door and put two padlocks and hasp on the door. The third time our inspector arrived for his routine inspections and found the person in the house and was able to call the police. They were able to apprehend the squatters." On a positive and hopeful note, Harris says that, "Our continuous presence at the properties we hope prevents illegal activity."

   Roberts says that, "Unfortunately these homes are sitting unoccupied for extended periods of time which makes them highly susceptible to burglary and squatters." He says that, "After initial vacancy the home has windows and doors, (and) in a few months, squatters and burglars target the home. They begin by stealing the air conditioner. Then when they realize neighbors are too scared to come out and confront them, they break in doors and windows and start cutting out the copper and other valuable items in the home." he says that in the end, at best, "local law and code enforcement are mandating maintenance to the best of their ability", but, "unfortunately these dismal efforts are only making the public aware that these properties are foreclosed, unsafe and jeopardizing the stability of the neighborhood."

   How many vacant or unoccupied properties have you been seeing popping up lately? Have they been maintained fairly well or do they have the "REO 5'O'clock shadow". Let us know so we can all share some information and new ideas and strategies to help our neighbors.

Have a Great Weekend, and Happy Rent-to-Owning !
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com


TAGS: #foreclosure #shortsales #reo #realestateinvestors #realestate #propertymanagement #hud #property




UPDATED: Top 5 Blog post for 2010 (For more information, CLICK HERE)

Real Estate Contracts from a Legal Perspective

Hi Folks,

   Friday is upon us, and most of the leaves have already fallen here in the Northeast. The trees are bare, and this can only mean one thing - bare trees. OK, so the secret is out - I'm not a comedian.

   One thing that is not a laughing matter in Real Estate are the contracts that are used for the different flavors of deals. Today, we are going to take a look at these contracts from the perspective of Rent to Own, with input from Attorneys from 3 States; Florida, Ohio, and Texas. We will preface this with the caveat that this is not legal advice, we are not attorneys, and thus the title word, "perspective", and not guidance.

   In the State of Florida, which is always a hotbed for deals, we spoke with Charles P. Castellon, an Attorney and Counselor at Law in Florida. Castellon tells us that it is important to realize that, "The applicable protections depend on whether you’re entering the deal as seller or buyer.", and he says that from the seller's side, especially in Florida, that, "it’s helpful to draft 2 separate agreements — a residential lease and option agreement.", as, "the rationale is the buyer/option holder could more easily force the owner to file a foreclosure action rather than a simple eviction if both sides of the deal are integrated in one agreement." Castellon continues to say that, "In the latter situation, a court could deem the buyer to have equitable rights giving the buyer/tenant the same rights as a mortgage borrower, thus requiring a more costly and complex foreclosure rather than a relatively simple eviction." From what I personally understand, if a rent credit is being applied to the down payment each month, the tenant is building up equity.

   Castellon says that an owner can, "write into the agreements a waiver by the buyer of any claim that the buyer may be entitled to equitable rights requiring a foreclosure case and instead agree that a breach of the lease agreement would be litigated in an eviction case only.", and that, "Buyers should seek to have a portion of all rent payments credited toward the purchase price. Building equity for the buyer and a greater stake in the rental property is beneficial for both sides, as the buyer will think more like an owner than a tenant." Additionally, he says that, "Buyers should also insist that all cost responsibilities are clearly spelled out. For example, either side can be responsible for costs such as taxes, insurance and association fees and everything is negotiable. The buyer may want to seek some kind of protection of his/her interest in the property in the event the owner fails to pay property taxes and thus risks the loss of the property to the tax collector."

   In the State of Ohio, we spoke with Troy Doucet, a foreclosure defense and consumer litigation attorney, who says that, "Ohio law requires the inclusion of about 15 different terms into any land contract in order to make it valid. Someone unfamiliar with these requirements could generate a void contract, and cost themselves statutory damages in addition to having to refund money paid." Doucet says that, "Creating a lease that provides for the ability to purchase later creates other hurdles under Ohio law, especially with regards to recording any kind of security interest in the property", and says that his recommendation is to, "always consult an attorney in drafting these types of contracts because they can be considerably problematic for the seller and buyer if not drafted correctly."

   Finally, in the State of Texas, we spoke with Attorney Patrick E. Hudson, who says that, "Rent to own laws vary from state to state", and that "In Texas, sellers used to take advantage of rent to own buyers by taking the house back when the buyer missed the first payment, even if the buyer had paid on the home for years.", but that, "the Texas legislature stepped in and put burdensome regulations on rent to own sellers.". Hudson says that the regulations, "generally provide that the buyer has to be provided notices and opportunities to cure any default before the seller can take the property back.".

   Hudson says that the state regulations are so difficult to comply with that, "many law firms advise their sellers to avoid rent to own contracts". He does, however, mention an alternative, where, "A seller can lease the property and give the renter/buyer an option to purchase the home at the end of the lease for a good price.", which, "avoids all of the hurdles of a rent to own transaction.".

   We are looking for some additional input from real estate attorneys in other states, and we welcome your comments on this post.

Have a Great Weekend, and Happy Rent-to-Owning !
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

Lucky Number 100 !

Good Morning,

   As you may be wondering about the odd title of this post, today we're celebrating our 100th Blog Post (Woo Hoo!). In looking back over the past 99 previous posts, we have listed our top 5 posts (based on traffic and votes), in descending order:

#1: "5 Tips For Buying a Second Home/Condo for Investment or Vacation"

#2: "Has the Housing Market Impacted Curb Appeal?"

#3: "Short Sales - What Do You Need to Know?"

#4: "Are Timeshares Truly Related to Real Estate Investing?"

#5: "Right Time to Buy? Top Real Estate Investing Markets"


CONTEST NEWS FLASH:

   We want to take the time and thank you for being loyal readers of our Blog, and we invite you to receive a hard copy (PDF) of some of our earlier posts ("oldies, but goodies").
   For the first 10 people who send an E-mail to homebuyer@lease2buy.com with the subject, "Lucky Number 100 Blog Contest", we will send you a copy of this via return mail.

   Did you send the mail yet? These contests close very quickly, so don't delay.

   We hope to post 100,000 more entries that will entice you, inspire you, and enlighten you.

Have a Great Weekend, and Happy Rent-to-Owning !!

Short Sales - What Do You Need to Know?

Hi All,


   Happy Wednesday to you. In keeping with our promise to tackle every topic you threw at us a few weeks back in that now "famous" Blog Post, today we are going to discuss some tips and strategies when pursuing Short Sales.

   A conversation about Short Sales would be incomplete without looking at it from two viewpoints: that of the Buyer (Broker or Investor), and that of the Seller (The Homeowner), and we have spoken with a few experts in the field who will discuss both viewpoints.

   First, we will examine things from the vantage point of the homeowner (the Seller). Geena Becker, of Geena & Company/William Raveis Real Estate & Home Services reminds us that the credit score is bruised on a short sale vs a foreclosure - "whereas foreclosure your credit score is driven down 200 points and banks will loan money to a bankruptcy victim before they loan to a foreclosed victim.". Becker also states that the banks pay for the attorney, realtor commissions, and back taxes, but will, "not pay any liens on the property. Those liens have to be negotiated OFF before the approval."

   In addition, Allan S. Glass, President of ASG Real Estate Inc. adds that, "The bank is settling a bad debt. Anything and everything they can extract from you regarding financial information will be used to that end, there are no casual off the record conversations with the banks while they are collecting your debt". Glass warns that you need to make sure you are working with an expert in the field of short sales, and that, "not every agent/broker is created equal and there is a learned skill to negotiating a debt settlement."

   Glass also provides additional pointers, such as to never pay any fee under any circumstance up front ! ("Professional agents will not charge until they are successful in completing your short sale or modification"). Further, he says that you should never sign over title to an investor who will then negotiate with the banks, as you do not need to sign over title to your home to be helped with a short sale. Finally, Glass reminds us that investors who help you with short sales are attempting to buy your home for a discount in order to make a profit, and that, "Not that anything is wrong with that when reasonable, however make sure you ask what happens if they cannot negotiate a purchase price low enough for them to invest."

   From the Buyers point of view (broker or investor), Becker provides some important pointers:
   1. You Will be buying "as is"
   2. You may be subject to more than one banks approval
   3. The Buyer won't know if the seller's loan was an FNMA (takes longer).
   4. If seller has it in their contract to make it subject to not receiving a deficiency judgment tied with short sale appraisal - there is a 50/50 shot of getting that wish.

   Further, she says that she will, "always find out if the mortgage they are late on was their mortgage that they first had when they bought the house. If so, nationally the bank CAN NOT go after the sellers with a deficiency note or promissory note on the difference. With the bank knowing it can come into play in a short sale negotiation since they know they can't come after the seller or borrower for the deficiency. If they have re-fi'd meaning it was not the "original" mortgage they will not have that slam dunk protection."

   Glass also provides some pointers in reminding us that, "the banks are motivated by values. They will do a short sale if they make more money by doing so compared to completing the foreclosure process", and that, "the bank and the seller are NOT working together to get the highest price from the buyer." Glass tells us that the best strategy is, "for the seller and buyer to work as a team to deliver the best value to the bank.". He warns that you must, "understand the numbers (as a broker or investor) and have a strong understanding of market value. Compare what the bank will net as a short sale vs. foreclosure / REO sale".

   As for timing, Glass says that it is key to, "follow up, follow up, follow up. If you are not following up the bank is not working on your file!", and Becker suggests that you make sure the buyer is very clear that this will not be a normal closing time frame, and that the buyer has to be able to, "wait without having to move in." and tells us, "I have had a lot of short sales last year especially where the buyers walk 1/2 way through my negotiating process and I have to start all over again. The buyer's agent must get it through to their clients that they can not be in a hurry. Good deals come to those who wait..."

   This is good sound advice from some seasoned Short Sales Professionals. Do you have any additional tips to share with our readers? We welcome your comments below.

Have a Great Day, and Happy Rent-to-Owning !

New Widget with Scrolling Ads from our Site

Good Morning Everyone,


   We hope you have all had a great weekend.

   OK, so once again, we are referring to that "Magical Blog Post", where we asked for your input, and you gave it to us. Over the past few Blog posts, we have already addressed The Top Real Estate Investing Markets, What You Need to Know in Real Estate Investing, The Top 5 Things NOT TO DO When Selling a Home, and What You Need to Know when Buying a Foreclosure.

   Today, we are giving you access to a Free "Widget", which is a piece of code that you can add to your website or Blog, and it will continuously scroll with the latest Buyer and Seller Ads from our website (See Below). The Widget and the Code are shown below as follows:

WIDGET CODE:

   Once the code is inserted into your Web Page or Blog, it will look something like the image on top of this Blog Post.

   If you have any questions on how to use the code or any additional questions, please let us know via commenting on this post.

   Have a Great Week, and Happy Rent-to-Owning !

UPDATED: Buying a Foreclosure? This is a Must Read...

Hello Everyone,

Welcome to Friday !

We have been receiving a lot of questions about foreclosures from people who are asking us specific questions on how the foreclosure market works. In order to paint the best picture for you, we have spoken with some of our peers who are active in the foreclosure property marketplace in one function or another.

Sheriff Sale guru Marc Sherby uses a 10-point checklist to tackle all aspects of purchasing a foreclosure home. His Process is as follows:

1. Do Your Homework (research the liens, mortgages, comps, bid price, etc. before going to the auction). NEVER bid on a property without doing this first. Joanne Cleaver of ForSaleByOwner.com says that it is important to, "Understand the micro-economics of the neighborhood. On some blocks, a foreclosure is an exception. On others, it's the rule. This affects your ability to quickly get good comps when you've fixed up the foreclosure and are trying to resell; this also affects its marketability as a rental." Additionally, Jan Green, an Arizona Realtor, suggests to, "check the health of the Home Owners Association (HOA)" (if applicable), and to, "Check the date of the last reserve study that was done in the HOA, making sure it was within the last year if not 6 months. A lot can change in 6 months in a neighborhood. If it was 1 year, then check the number of foreclosures currently in the neighborhood and ask if more than 10 - 15% are overdue in paying, another hint." She also suggests checking to see if, "there is an Environmental Report available that will disclose information the surrounding area for airports, landfills, soil conditions or other abnormal findings that could pop up."

Alfred Miller President, Private Lending Solutions, LLC, adds that it is important to know, "how long it takes to sell a home in your price bracket", to, "study the sale prices of comparable homes in your area.", and to remember that, "the sale is for the home as is."

2. Set up your support team (real estate attorney, accountant, realtor, Title Company, contractors, insurance agent and so on). Find people you are comfortable working with. Miller concurs, and suggests that you, "Find an agent specializing in foreclosures."

3. Learn the rules for your particular area FIRST. Rules and “conditions of sale” are different for each county and for different types of sales. You can obtain a copy of these rules the Sheriff or auctioneer. Green, who works in the Hot Arizona market, states that, "The deed issued in Arizona for REO's is a "Special Warranty Deed" and not a "Warranty Deed" that is the typical deed in a regular sale. Why is this important? There is no title coverage for past problems with the title prior to the bank taking ownership of the home. And always always buy title insurance to cover the transaction against any liens on the property, no matter the type of financing used to purchase the home." Know your market !

4. Get the list of auction properties. In most cases depending on your area, you can obtain the list of properties going to auction for free. If the sheriff or auctioneer has a website many times the lists are also posted on them.

5. Line up your funds BEFOREHAND. In most cases you will not be able to obtain a traditional mortgage beforehand to pay for the property. This is one thing many people do not realize. Cleaver agrees, and suggests to, "Have lots of cash. Banks will negotiate a little, but they will mainly listen if your money talks loudly.", as well as Miller, who suggests that you get, "Get pre-approved for a mortgage."

6. Go look at the property (before you bid), and try and determine if it is occupied or unoccupied. Green suggests that you, "Knock on neighbors' doors to ask for details about the area. Neighbors can be your best source of information about a neighborhood and can provide the names of others serving on the HOA board.", and Cleave similarly says that you should, "Get neighbors on your side. They are well aware that the foreclosure next door has eroded the value of their own property. Position yourself as as hero, not as a bottom feeder."

7. Know how to bid. Bidding is a psychological game as well as numbers game.

8. Have a plan. What type of property are you looking for and where? Is the area up and coming or in decline? Are you buying as your own personal residence, as a rental, or to rehab and flip? If it’s a flip, what type of buyer will you be looking for? How much money and time can you commit to this project? Know these answers ahead of time because as the old saying goes “those who fail to plan, plan to fail.”

9. “Sit on your hands.” Begin by attending several sales and just watch what goes on. Most sales happen very quickly, usually in just a matter of minutes, so you’ll need to pay close attention. See who the players are and take lots of notes.

10. Get Educated. Many of the people you will be bidding against are auction pros and you’ll need to become one yourself. Reading books, attending training seminars, joining local real estate investing groups, or finding a mentor are just some of the ways you can educate yourself. Additionally, you can check out, "Will It Work In My Town" for some good suggestions, as well.

Green has some additional tips that will be of huge help:

1. Always change the locks immediately upon purchase. REO homes are oftentimes on master keys for other homes in your area. If a home will be vacant for some time, get a security system as the home has a history of being vacant. If it has a pool, make sure it's maintained weekly. Check any other systems around the house to make sure they are being maintained. This way you'll maintain your equipment and have activity at the home.

2. Purchase a home warranty from a company that will cover pre-existing conditions ("hidden defects") for foreclosures.

3. Obtain a very thorough home inspection by a licensed contractor (verify the inspector is licensed, bonded and insured - Lots of home inspectors are not renewing their state licenses in this economy).

4. Check under every sink and water source for past water leaks. If there were leaks and you're still interested in purchasing the home, get a MOLD inspection.

Do you have any additional tips that will help our readers? Please feel free to comment here and let us know.

Have a Great Weekend, and Happy Rent-to-Owning !




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