DEAN GRAZIOSI: DEAN GRAZIOSI REAL ESTATE

When you get ready to purchase a new home, chances are you already know the asking price. You can then come up with an offer which you will present to the seller or the seller’s agent. If you are also utilizing the services of your own agent, the two of you will talk it over and your agent will present your offer. So how do you determine your offer?

Determining what you will offer to purchase the home for is a three step process. You will first look at the prices of recent sales on properties similar to the one you would like to purchase. This will help you come up with a price range. Your agent will be able to supply you with this information. If you aren’t using an agent, you can research some of this information via the Internet. You could also call real estate companies in your area to see if you can obtain these prices.

Next, you will need to analyze various pieces of data to determine where in that particular range to make your offer. This data can include: the condition of the home, improvements recently made to the property as a whole, the current market conditions, and the specific circumstances of the seller. This is what will help you settle on a price you feel is fair.

The third step is where you, the buyer, get to negotiate. Here is where you will adjust your price and figure out exactly what you want to put into the offer.

Typically, an offer made on a single family home can vary from the asking price be several thousands. Other property types, however, such as condos and duplexes may not see nearly as much variation. While you can always offer a price significantly lower than what is being asked, you may actually need to go up on your offer to make the purchase.

Typically, you will make an offer, then wait to find out whether or not it is accepted. If the seller does not accept it, you may be given the option of making another offer, provided someone else hasn’t already beaten you to it. Again, if you choose to enlist the help of a real estate agent, he or she will be able to provide assistance and give advice on what is actually considered a fair offer.

Your agent will also be able to provide you a report on sales of other properties in the neighborhood where your prospective home is located. This will give you information concerning each property, how many times it has been sold within a certain timeframe, and the selling price for each instance of sale. This will show you the selling and buying trends in that particular area and can help you when making your offer decision.

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The neighborhood is one of the most important aspects of buying a home. You’ve probably thought of this factor for in terms of safety, but have you considered the impact of the neighborhood on the actual resale value of your home?

When you are buying a home, location can be everything. The term “local neighborhood” will often be used. This encompasses not only the area where your new home is actually located, but also surrounding stores and other businesses. The neighborhood you choose will depend on your specific preferences. For example, if you do not want to live near a business district, you wouldn’t look at homes in or near shops, restaurants, or dry cleaners, ETC. If, on the other hand, you wish to be conveniently located near such businesses so you can access them easily, purchasing property in a residential area nearby would be a good idea.

Whether your new home is located in a secluded area with a lot of land or in a busier yet quiet neighborhood, it will have resale value. Those who come to look at your property when it comes time to sell will have an idea of the type of neighborhood in which they want to live. Like you, they will know their own particulars and research them accordingly.

Just as there are many features that can help resell a home, the environment of its location can influence future sales. If your home doesn’t have a pool, one in the neighborhood could be an important selling point to families who have children. Likewise, parks located in the immediate area can also help resell a home.

Neighborhoods with well-manicured lawns and houses that are kept up will speak volumes to potential home buyers. A gated community or one that requires its residents to make regular payments may also be of interest to prospects.

The presence of nearby public transportation may be important to some residents, especially those who are unable to drive or do not own a car. Here, quick access is necessary. Not all neighborhoods allow public bus systems to run regular routes, so finding this feature can sometimes be difficult.

The state of the neighborhood is also an important factor to consider when buying a home. If the nearby shopping center you appreciate because of its convenience is in decline, chances are you may have trouble selling your home in the future. The same goes for any other businesses in the area. Another factor to consider is the number of businesses who are closing up shop. Several abandoned buildings may indicate trouble on the horizon. This is especially true if they have been abandoned for a significantly long period of time.

Before buying a home, choose your neighborhood carefully. This will serve you well both for the duration of your stay, and when you decide to sell. A good neighborhood can be just as important as the home itself and can definitely influence the future of your investment.

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A title defect is sometimes called a “cloud on the title.” This is a very colorful term, but offers a good description of what a title defect really is. Basically it is something that casts a shadow or doubt on a title, so that it may be disputed at some time in the future. There are many different types of circumstances that would cause a cloud on the title.

Misspellings

It may seem trivial, but legal documents must be written up with correct spellings. This is a requirement to make sure everyone knows the exact details of the transaction. If the address is misspelled, it might be obvious to you what is meant. The truth is that no matter how sure you are about what the title is referring to, unless it is spelled correctly, others may find room for doubt.

Failures to Record

In several different instances, something concerning the title may not have been filed or recorded properly. The deed itself may not have been recorded at some point along its history. If a mortgage or other lien has been paid off on the property but not recorded, there could be cause for alarm. An easement may have been granted but not properly recorded. This, too, could put the title in murky waters.

Unpaid Taxes

Governments do not always notice immediately if taxes are unpaid. Sometimes title can pass from person to person without anyone realizing that the taxes are behind. It is not supposed to happen, but it is a possibility. If it turns out that there is a year sometime when the taxes were not paid, it could be a problem for you if you had bought the property.

Pending Litigation

If the previous owner is involved in a lawsuit that may include forfeiting the property, the title is not clear at that point. The lawsuit must be concluded in such a way that the property is free to be sold, or the title will not be in the hands of the original seller.

What to Do About Title Defects

The first thing you should always do is to get title insurance. The title company will do a search on the title. If the title company Okays the title, it means that they have not found any clouds on the title in their search. It does not mean that there is absolutely no risk of defect. It does, however, mean that the title insurance will cover your losses if there is a defect.

Finally, if you are negotiating to buy a property and discover a cloud on the title, you have to decide what to do before continuing with the deal. In most cases, it is best to withdraw and look for another investment somewhere else. Having a clear title is essential for your security and peace of mind, as well as for your wallet.

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A few short years ago experts were predicting that by 2012 the housing market and foreclosure rates would return to normal. Now that 2012 is almost here, it seems that the predictions were not as accurate as everyone hoped. The down economy is certainly a factor, but this time, there is another culprit in the situation.

The primary reason 2012 is likely to be heavy on foreclosures is due to recent irregularities in the mortgage industry. Specifically, the paperwork was not being handled properly. Low-level employees were rubber stamping documents at an alarming rate.

It would have been impossible for the workers to review the paperwork and get the correct information and signatures in the flash of time they spent on each document. Perhaps they were under pressure to get a certain amount of work done. Maybe they were just poorly trained. For whatever reason, the foreclosure documents were signed thoughtlessly and mistakes were made. Eventually, legal action was taken to halt these foreclosures.

Now the mortgage companies have begun to revamp their processes and clear up these bad practices. They are now meeting with government approval and are getting back in the business of handing out foreclosure notices. By 2012, the big players should be in full swing, working on reclaiming properties from non-paying owners.

The bottleneck could have been avoided with proper training and supervision of all employees at these mortgage lenders companies. Yet, the number of foreclosures overall may not be much different. Instead of coming spaced out evenly over the months, there was a time when the process slowed down, and now there will be a time when the mortgage companies make up for lost time with their foreclosures.

The good news for homeowners is that it gives them a longer period of time to come up with the money to catch up their mortgages. If they have a chance of saving their home at all, they are more likely to do it with this extra time they have been given.

The good news for people who want to buy a home is that there will likely be a glut of REO homes on the market after awhile. Because of this, there will be inexpensive houses for them to choose.

Real estate investors will also see benefits, as they snap up the foreclosed properties, rehab them, and sell them again at a profit. They may have opportunities to buy homes to rent if they prefer. Investors can make the most of this bad situation if they have enough contacts and are good at reselling or renting homes.

It is a good time to raise capital to be ready for the 2012 housing situation. It is the best way for homeowners to keep their homes, potential owners to be ready to buy, and investors to be ready to make the best deals. There is no need to fear what will happen in 2012. Instead, look it as an opportunity, and get your ducks in a row.

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Many people think that they can determine the value of a house on their own. They either take the seller’s word for it that the house is worth what they say it is worth, or they try to research the value of the house online. There are many reasons why this is a bad idea.

First, you don’t want to make a mistake and pay too much for a house. At the same time, if you underestimate the value of a house and make a low offer, it will not be accepted. It is important that you know the true value of a house, and the only way to do that is to have the house appraised by a local real estate appraiser.

Second, the information found on websites is not to be trusted. It is often gathered from out of date sources, and information is usually gathered by people that are not local to the area. This means two things. First, it means that the housing value given online is not accurate for the time frame. Secondly, it means that the housing value provided is not usually based on location at all, which plays a large role in determining the value of a house.

In fact, housing value is calculated based on several factors. The majority of the housing value is determined by the condition of the house. This is not well known in public data, so websites cannot accurately describe or value these homes. In addition, the housing value is based on the values of other homes in the area. This data may be available online, but it is usually outdated. Finally, the housing value is based on what the market will bear, which is also generally outdated on the internet.

Third, it is important to get a local real estate appraiser to appraise your home. This is because a local appraiser will be familiar with the area, making it easier for them to determine the actual value of the house.

Finally, it is important to get a local real estate appraiser to determine the value of a house because this is required by most mortgage lenders. Most lenders will require that you get the house appraised so that you know exactly what the house is worth. This appraisal amount is the highest amount that the mortgage company will lend you for purchasing the property. It is often the determining factor in the sale price of a home as well.

Even if a property has been appraised recently by someone else or the seller, it is important to get your own appraisal done of the home. This way you know that the appraised amount is accurate, and if there are any discrepancies they can be addressed.

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No one will tell you that the economy is not struggling right now. It is in a major downturn and will probably be slow to recover in most areas. Housing prices are still down for most of the country. However, there are a few markets where the housing market is beginning to recover.

1. El Paso, Texas

The Base Realignment and Closure (BRAC) Act of 2005 has been steadily improving the economy of El Paso. The post is expected to more than triple its contributions to the El Paso economy by 2013, and it is well on its way to that goal. The post not only provides military jobs, but also construction jobs for El Paso workers, as well as jobs in almost every field off post. Because of this, El Paso’s economy is doing well, and housing prices continue to rise.

2. Tri-Cities, Washington State

The Tri-Cities is facing a housing shortage, which is causing housing prices to go up. Unlike many other parts of the country, there are more people who want to buy houses than there are houses on the market.

3. Omaha, Nebraska

If you look at the overall figures for Omaha, they still look bad. The averages for the city have stalled at low prices and some areas still seem to be headed down. However, if you go to the right areas of Omaha, you will see prices beginning to lift. Areas like Benson, Hanscom Park, Hillsborough, Clairmont Heights, and Fort Redman are going for more now than they were in the recent past. In Omaha, it is wise to research the area you are looking into, and have a Realtor you can trust.

4. New Orleans, Louisiana

New Orleans is a tricky town when it comes to real estate. Nice new apartment buildings have cut down on the needs in other sectors of the real estate market. Many of the older apartment buildings are scrambling for tenants. The residential housing market is nearly level, but what makes New Orleans special is that there are very few distressed homes on the market – only about 5% compared to about 20% elsewhere. Right now, New Orleans is a good place to find a nice house at a reasonable price. At the same time, the prices are not so low that you are likely to lose everything if you are the seller.

5. Anchorage, Alaska

In Anchorage, housing prices overall have stayed pretty even. While the rest of the country was seeing big drops in their prices, Anchorage houses seemed to hold onto their value well. There have been some gains in certain areas, and the average sales price rose 2% in the city over the last year.

6. Bangor, Maine

The recovery in the Bangor housing market is not so much in the pricing of the houses as it is in the number of sales that are being completed. More people are out shopping for homes now. Younger people are buying houses now, as opposed to baby boomers. They are more optimistic about the long term value of the home and less concerned about making a profit quickly.

The climate is beginning to change in the housing market, at least in pockets here and there. Careful study of the different markets will help you determine the best places to buy and the best times and prices for selling. You do not have to figure it out all on your own; a Realtor or fellow investor will help you succeed.

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In recent years, online real estate bidding has been added to the incredible number of tasks you can do online. Like most online activities, it makes sense to examine whether it is better to do it on the Internet or in person. With online bidding, there are several pros and cons to consider.

Pro:

You are more likely to get fuller information and a larger variety of pictures for an online auction than one that is done at a physical location. Organizers of the auction realize that you may be too far away to see the property in person, so they use Internet tools to show the properties virtually. This gives you easier access to certain facts you need.

Con:

Assuming you are bidding from a location other than where the property is located, you may not have had the opportunity to see the property up close. Even though potential bidders often only get to see the outside of the home, that real-life look can be very eye opening in some cases. Pictures do not show everything and a personal view of the property is worth a great deal of cold data at times.

Pro:

You can bid from the comfort of your own home. You do not have to get caught up in the distracting noises and sights as you try to decide what to bid. Without the intense pressure of the crowds, you can easily keep a cool head. You may make much better decisions in the long run.

Con:

You might be more conservative in your bids without the tense mood of the in-person auction. Is this a bad thing? Possibly it is, if you plan on taking enormous risks. If you are a big-time real estate gambler, bidding in person might give you the competitive atmosphere that spurs you on to take greater chances. If you want more safety, online bidding might actually be better.

Pro:

If you do your real estate bidding online, you will have easy access to any notes, pictures and information you have gathered for each property. You can keep it all right there on your desktop as you keep up with the bidding. You can refer to it just before a property auction is starting, and have it there to glance at anytime you need to as the bid goes up.

Con:

When bidding online, it is easy to get hooked up with a disreputable real estate auction company, or a downright scam artist. The Internet is much easier to manipulate in this way than an in-person auction site. However, you can avoid this problem if you do your homework.

Check out the auction company before you enter the online auction. Then, type in the right website yourself to avoid getting sidetracked to a fake website. Read their terms of service and make sure you agree with them. Protect yourself, and the Internet can provide a very advantageous way to buy real estate.

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With the real estate market changing at what seems every second of the day it is important that buyers do their research before they make on offer on a house.  What many people find out these days is that sellers are putting their home on the markets without a real understanding of the current market.  A good realtor can help you do your research before you put an offer in, but the more you know on your own.

The first thing you want to do is to check the other houses that are for sale in your target neighborhood or neighborhoods.  When you do this make sure you are comparing apples to apples.  If the house you are looking at is 3 bedrooms, 2 baths with a garage than make sure the comps you look at are also 3 bedrooms, 2 baths with a garage. 

When comparing properties it is also important to know what type of upgrades your unit has compared to the other houses in the area.  If the comparable house has upgraded appliances and the one you are looking at doesn’t than they are not technically the same house.  This is potentially a place where you can get a little bit better of a deal. 

It is also important to do your research on the area you are looking at as a whole.  Even if you don’t have children it is important to know what the schools are like in the area and how far they are from the house.  Houses in bad school districts are often hard to sell while ones in good districts are often easier to sell.  Parents also need to look at if their child will need to take a bus or if they can get their other ways. 

Once you have settled on a house your realtor will send you a report on the area and the house.  This report will tell you everything you need to know about the house.  It will show any mortgages on the house, when the house was purchased, what it was purchased for, if there was ever any refinancing and if there are any liens on the house. 

Dig through this report very carefully to look for clues on what an owner may accept.  If the report shows the house fully paid off that may mean the buyer is willing to take a lower price so they can get rid of it and move on.   On the other hand the report may show that they are underwater on the house which usually means they won’t budge very much on the asking price.

Just remember that right now this is a buyer’s market so the buyer has the control.  There are far more sellers than buyers.  With the proper research you will be amazed at how much money you can save.

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Just because you have bad credit, it doesn’t automatically mean that you cannot purchase a home.  You may be required to pay a higher interest rate than other people, but you are not disqualified from pursuing a home purchase merely because you have bad credit.

If you have recently filed for bankruptcy it is recommended that you wait at least four years before applying for a mortgage.  If you have a foreclosure in your past it is recommended that you wait two years before applying for a mortgage, this means that in the case of a foreclosure you may qualify for as little as 3.5% down.

If you find a lender who will approve you sooner than the recommended waiting period, you may be forced to come up with a 20 – 35% down payment.  Along with the large down payment, you will also have a much higher interest rate and loan terms that are not favorable.  If you cannot meet these strict requirements, it may be better for you to wait the allotted amount of time before trying to purchase a home.

Proving to lenders that you are a good risk requires that you have reliable employment, a low amount of outstanding debt and are working to improve your rating regularly.  Lenders like to see that you are steady and can handle the responsibility of a mortgage payment.  Proving this to them may take some time, but once they recognize that you are not a high risk loan, they may approve your application.

If you have any outstanding debts, it is important that you pay off as many as possible.  This will show lenders that you are serious and you are working towards repairing your credit.  If a debt has reached the point of being sent to a collection agency, you will have to contact each agency and request that a payment arrangement be set up or if you able to pay the debt in full.  Many collection agencies will offer a discount of your balance just to get the account off of their books.  If they offer a discount take advantage of it, this means that you will be paying off the creditor for a lesser amount.

If for any reason you are not satisfied with the rates offered by a lender you may want to consider purchasing a home that offers seller financing.  In this case the seller would take the place of a lender and you would pay them directly.  Choosing to go this route means that you may not have to meet the strict guidelines set forth by lenders, your interest rate will be lower and you will close fast.  This is a very good solution for those who can’t meet the requirements of many lenders.

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REO’s are Real Estate Owned properties. REO in the real estate investment business usually refers to those homes that the banks hold for one reason or another. The most common reason a bank would have an REO is if the homeowner defaulted on the home and the bank foreclosed. Then, the bank would take possession and the house would become an REO. It might seem to the untrained observer that banks could hold onto these homes until the market improved or other conditions were right for the sale. However, there are several reasons banks need to get rid of their stock of REO’s as quickly as possible.

Classification

There is a problem with the classification of REO properties for lenders. They are literally bad debt, but lenders are only allowed to claim a certain amount of bad debt on their books. Otherwise, the lender may be termed as insolvent. Selling the REO property will take care of this problem in the sense that there will be no excess bad debt to be added to the lender’s financial reports.

Focus

The bank’s focus is on dealing with money. They are not in the business of maintaining homes, getting them ready for market, or even selling them. This creates a dilution of the bank’s objectives. The more REO property they can sell off, the more they can stay on track to accomplish their financial goals. A bank which keeps its REO’s to a minimum is a healthy bank, and one which is focused on being a bank above all else. 

Use of Bank Resources

REO properties do not sit empty and take care of themselves. If a bank allowed that to happen, they would be asking for the home to go down in value rapidly. What is more, REO homes do not ordinarily sell themselves. The bank has to devote manpower and money to maintaining and selling every REO home they hold. This diverts resources away from the main purposes of the bank, such as lending money. If you can offer the bank an acceptable price for an REO home, they will be happy. They will be able to free up more of their human and financial resources to be put to use for the bank’s primary goals.

Auction Problems

One way banks try to get rid of REO’s is through foreclosure auctions. However, there are several problems that plague these auctions. For one, banks may place a minimum bid on the property as the amount the homeowner still owes. Yet, the home may not be worth that much. When no one bids on that home, it reverts to the bank. If you can come in and make an offer that will keep the bank from going through that useless process, the bank may jump at the chance to make it happen. It is rarely if ever a good deal for the bank to hold onto an REO property. That leaves you, as the investor, in a position to acquire properties that you might not have otherwise.

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