DEAN GRAZIOSI: DEAN GRAZIOSI REAL ESTATE – REAL ESTATE FEED BY DEAN GRAZIOSI

Pre-foreclosure residential short sales can be very profitable ventures.  The idea of buying low and selling high has immediate potential in just about every county in the United States.  With $1 trillion of REO inventory expected to be back on Fannie Mae and Freddie Mac books and with several billion dollars in REO inventory scheduled to land in the laps of private lenders, short sale opportunities have never been more abundant.

For short sales involving properties backed by Fannie, Freddie or the Veteran’s Administration, the new Home Affordable Foreclosure Alternative Program (HAFA) offers viable opportunities for smooth transactions.  A subdivision of the Home Affordable Modification Program, (HAMP), much of the heavy lifting has been performed by the government.

In addition to setting the stage for the investor, HAFA carries some attractive financial payouts for both the buyer and seller.  Inasmuch as the selling price and the relocation arrangements are clearly established under HAFA, sellers are often easier to work with than sellers of conventional short sales.

However, successful negotiations with private lenders in pre-foreclosure sales provide solid profit potential. The investor should begin the process by meeting with the seller and establishing the seller’s willingness to stay the course.  If the seller is not committed, the investor should move on without hesitation.

Assuming the seller is motivated, the investor then must connect with the lending institution’s short sale contact.  All future communication should involve this individual.  Each private institution will have its own shirt sale package.

Once the investor has the package, the package should be completed thoroughly.  Do not create time gaps.  Dot every “i” and cross every “t” before returning the package to the contact.  If questions arise, call the contact to get explanations.

When the package is complete and the investor is pre-qualified, the process begins in earnest.  At this point, the contact will arrange for the procurement of the Broker’s Price Opinion.  The BPO is the main figure in negotiations.  The lender will want to sell as close to the price opinion as possible.  There is some latitude but not a lot. 

The investor must be ready to walk away if the BPO is out of line or does not allow room for profit. That lack of emotion is one of the advantages of being an investor.  Use it to your full advantage. 

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Unemployment and the abnormally high foreclosure rate continue to weigh heavily on a full-scale housing recovery, but there are signs of hope.  According to Lawrence Yun, chief economist of the National Association of Realtors, pending sales increased for the ninth consecutive month ion November.

Yun credits more determined short sale lenders, low interest rates and the extension of the 2009 Homebuyer Tax Credit with contributing factors.  The expansion of the tax credit bill to existing homeowners should spark even more sales.  Existing homeowners are still reluctant to carry two mortgages, but existing homeowners are helping to clear some of the abundant upscale housing inventory.

Yun also points to the availability of more qualified renters who are anxious to turn rent into equity and tax deductions.  Yun asserts that these buyers have been on the sidelines, waiting to find the bottom of the market.  The reality that they can now acquire more space than in the past ten years is certainly motivating a new wave of prospective purchasers.  With 15-year interest rates at the lowest rate since 1970, buyers are gaining confidence that the time is right.

Meanwhile, newly constructed home sales jumped by 6.2 % in November.  For existing sales, the northeast still remains the most stable area.  November existing sales increase by 20% in year over year comparisons.  The Midwest rose by 12 % and the south surprised with a 6% increase.  Only the west showed a November decline of 5%.

To add hope to a muddled picture, November layoffs decreased to 50,000 compared to 182,000 in November 2008.  With the Obama Administration aggressively tackling unemployment and willing to pump billions into employment initiatives, housing may begin to emerge in the spring of 2010.  That makes this a great time for investors to buy low with the idea of selling high in a relatively short time.      

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4,000 American homeowners will enjoy a less stressful holiday season thanks to a new stance taken by Citigroup.  The bank has announced that it will suspend all foreclosure activity for the next 30 days beginning December 17, 2009.  That means that 4000 homeowners have some extra time to try to work out their financial re-arrangements.

Loans owned by CitiMortgage and City Financial North America whose owners meet certain criteria will not be subjected to foreclosure sales or notifications until January 17^TH.  CEO Sanjiv Das said, “We hope that with this suspension we can make the holidays a little less stressful for our customers who are going through a very difficult time.” 

The Citigroup announcement came less than one week after the bank met with President Obama.  Financial institutions and various Wall Street banks have come under fire by the administration. As they have announced $30 billion of intended bonuses and had a record year for profitability. Wall Street followed this announcement with reports that record profits were reaped as a result of the taxpayer bailout.

The Citi foreclosure suspension gives temporary relief to 2000 homeowners already in foreclosure and anther 2000 scheduled for foreclosure in the next 30 days.  The hope is that these owners will pursue alternative measures to remedy their delinquencies.  Citigroup services $20 billion o mortgages.  These 4000 loans represent about 20% of the portfolio.

In related news, Fannie Mae released a similar announcement.  The agency revealed that it will suspend foreclosure activity from December 19 2009, through January 3^rd 2010.  Owners and tenants living in foreclosed properties will not be evicted during this time frame.

In addition to creating a sense of goodwill, these actions may be representative of a social consciousness not previously exhibited by the American banking industry.  Of course, the banks may want to hold off on absorbing so many homes in the dead of winter, but at least homeowners will have the holiday season to weight their options. 

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Here I was, a woman, having gone through foreclosure, and yet still having the firm belief that I could purchase another home (no one in my family believed in me).  Everyone told me to “forget it.” There was just no way I was going to be able to purchase another home. I would get comments like: “Don’t worry! You’re a woman, when you get married your husband can help you purchase another home.”

I didn’t want that! I didn’t want to live with the failure of never being able to buy my own home. It had nothing to do with whether I was a woman or not!  So, one day, as I was lamenting my situation I saw a comment on twitter about how it was possible to purchase a home again, even after going through a foreclosure.

The twitter comment redirected me to a Wiki, that went on to give me the basic steps which needed to be followed to be able to purchase a home again:

The Wiki went on to say that the first thing that needed to be done was to re-establish credit. I read all the way through it, and then continued to do research elsewhere, and that’s when I found Dean Graziosi , who confirmed a lot of what I was reading on blogs, wikis and on twitter.  From the weeks of research I did, I learned the following.

The First Year after Foreclosure is the Toughest. When the foreclosure has been discharged you can start reestablishing credit, but the first year after a foreclosure is the most difficult.  Your credit score will sit somewhere around 550 or lower, and with this score you could qualify for a home loan but you will qualify for the highest rate. If you wait a year then your score can increase to 600 and drop your mortgage rate by a point or two, and by the second year, if you play your card right you can have a good credit standing and get a normal mortgage loan.

So, I decided to wait a little over a year before I started home shopping again, but during that time I also worked on improving my credit score. I opened a new credit card account, and started paying everything on time. I started saving for that down payment, which also helped my credit score.

Then once I was ready, I first checked my credit report to make sure that everything was correct and accurate. I didn’t want to have to pay for other people’s mistakes!

Another great thing I learned from Dean Graziosi was how to plan out my house payments, and figure out what my mortgage payment was going to be even before “shopping for the home.” I learned about different types of mortgages, and what type I wanted, or needed, what type of home I could afford and what to look for in a home, what features were important and which weren’t.

Today, my family and friends have realized that a woman can do more for herself without having to depend on her spouse, and that it is in a woman’s best interest to be financially independent.

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It was a little over a year ago when I started my own business. I had decided, after careful consideration to go into real estate investing. You see the problem is that many people go into real estate investing without really thinking things through, and without investing the initial time to make things work. I didn’t do this! I did a lot of research, reading, investigating over the Internet. I read different twitter comments etc. Among many of the things I found that came in handy were the seminars, and information I got from Dean Graziosi.

After reading Dean Graziosi´s books I decided to look for foreclosure property. After all I was investing in a time when many other people were facing foreclosure. I had also learned that  foreclosures were caused by many different reasons, and not just because of a lack of funds to pay the mortgage payments, some because of loss of job, others because of a death in the family, a divorce, or illness.

From all my studies I realized that I needed to choose a foreclosure carefully, because most of these properties got into foreclosure for a lack of money or because of negligence, so it was highly likely that the house would need some maintenance attention. After all, if there isn’t money to pay the mortgage then there isn’t money to pay for home repairs.

There are several things I always check for when I am thinking about buying a foreclosure property and especially if you want to profit from that real estate right now, and these are items I learned to check for from Dean Graziosi. Of course, I learned many other things but these are the basics I always tell and write everyone I know to look for. These are such basic items that I continually twitter about it, put it on my wiki, and still people forget.

Check the Physical Condition of the Property

Always…always physically inspect the property. Seeing it through pictures is just not enough. If you don’t see the property you don’t know what you are buying. Its sort of like buying a car, clothes or anything else. If you don’t physically see what you are buying, you are bound to have problems.

Make Sure the Foreclosure is all Legal

Be sure you go through all the legal documents especially if you plan to profit from that real estate right now. You don’t want to get caught in legal complications, so have a professional make sure the documents are in order.

Make Sure You Know the Real Worth of the Property

Just because you are buying a foreclosure doesn’t necessarily mean you are getting a great deal. Before getting to investor happy and trying to make a profit from that real estate right now find out what the real current market value of that property is. Don’t buy a foreclosure that isn’t going to save you a nice amount of money.

These are just a few basic rules I learned from Dean Graziosi and believe me this information has saved me many a time, and put me on the path to becoming a real millionaire.

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