DEAN GRAZIOSI: DEAN GRAZIOSI REAL ESTATE

It happens more than you think; someone hears from a friend that a home they’ve always liked might be going up for sale.  Or someone mentions tells someone that if they ever consider selling their home they would be interested.  This is how many off the market sales get started.  The next thing for both parties is to determine exactly how serious the other side is and where do they go from there.  This type of sale can be beneficial for both sides; but sometimes parties may get a little too excited and begin the process without proper consideration.

In this type of deal the first thing that needs to be considered is whether both parties are serious.  This is the time when buyers need to determine whether the seller is really ready to sell their home.  Sellers also need to use this time to determine whether the buyer was serious when they made the offer.  This is the time of deal where both sides need to open the channels of communication and decide where they stand.

Once both parties have determined that a deal can be worked out, the next step is to agree on a price.  This can often be the trickiest part of a deal being done off the market.  In some cases deals can fall apart over a few thousand dollars.  If this happens to your deal there are many things that you can do to help keep the deal on track.  Both sides may choose to have appraisals done on the property to determine a fair market value for the home.  If the appraisals come up with different values, the two parties can decide to split the difference. 

This type of deal appeals to many sellers because there are no commissions involved.  This means that the seller will not have to pay an agent for their services and all of the money that is made on the sale goes directly to the seller.  Although, in some cases it might be wise to bring in a real estate agent; but it is not required to complete the sale.  The decision to bring in an agent is up to each party involved; there are both pros and cons, ultimately the decision is up to the buyer and seller of the property.

After both sides have agreed on a price, the next step is to decide whether or not an attorney or escrow company needs to be hired.  If the deal is moving along problem free, and there were no major problems discovered during the inspection process it may be time to consider hiring either an attorney or an escrow company that can help close the deal for their normal hourly fee.  By involving either of these parties, it will ensure that the deal is completed in the proper manner.

If you decide to sell or purchase a home in this manner, it is important that you ensure the deal is completed in the proper manner.  It is important that you protect yourself both legally and financially when participating in this type of sale.  If you begin to have doubts about the deal or you begin to feel that things may be moving too fast, it may be time to bring in a professional.  

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With interest rates the lowest they have been in many years, many homeowners are rushing to refinance their existing mortgages only to be met with a process that has become more difficult for borrowers to navigate.  One of the most problematic of these obstacles is the amount of time it now takes to secure a new loan at a lower mortgage rate.  In addition to a long wait time, homeowners are also being met with new credit requirements.  While a person with acceptable credit may have easily acquired a mortgage in previous years, that same person may find it more difficult to acquire the same loan with the new credit requirements in place. 

Once a homeowner has successfully met the credit requirements of a lender they may also be faced with a lower appraisal on their home than they were expecting.  But, if you feel that you can handle all of the additional stress that often accompanies refinancing, you may be rewarded with a lower interest rate and smaller monthly payments.  While many homeowners would enjoy a smaller monthly mortgage payment, they should be aware that refinancing often extends the mortgage payment period.  If you were planning on getting free of your mortgage payments before retirement, those plans may change when you refinance. 

When a homeowner refinances, payments made during their first seven years will pay down approximately 5% of their principal with the remainder being applied to the interest on the loan.  This means that homeowners who refinance won’t be making a noticeable dent in their principal until after the first seven years.  Basically, when refinancing, a homeowner is starting from scratch when it comes to paying down on the principal of their loan.  This is something that homeowners should consider when they are thinking of refinancing their existing mortgage.

Homeowners who choose to refinance are often required to pay the closing costs, which, in some cases can be more than the amount they are saving depending on how long they plan to keep their home.  Closing costs are typically 1.5% of the loan amount, borrowers should compare the amount to the amount they will be saving each month with a lower interest rate and find the break-even point, which refers to how long they will need to hold onto the home before they are able to recoup the closing costs.

Refinancing may also be confusing to homeowners because it now takes longer to process the paperwork required for refinancing.  This may leave the homeowner wondering when they should stop paying their original mortgage.  Typically homeowners do not pay the original mortgage payment the month that their new mortgage is expected to be put in place.  However, if there is a delay in the paperwork and the borrower doesn’t make a required payment they may find themselves behind on their mortgage payments which can put the whole refinancing process in jeopardy.

If you are considering refinancing, these are some things that you should be aware of to help you make a more educated decision.  Be sure to choose a certified mortgage lender to work with when refinancing, this will make the process go much smoother and you should experience a much easier refinancing process.

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Many people dream of buying their own home, and when they are finally ready to do so they are surprised by what they didn’t know. If you are planning on buying a home anytime in the next year or two, you need to prepare now for your first mortgage. There are several things you will need that you just can’t come by at the last minute.

Financial Records

You may be required to provide bank statements, tax returns, and paycheck stubs. Likely if you have not been on your job for at least six months to a year you will be turned down, although this is not always the case. In addition, you may be required to provide profit and loss statements if you are self employed or own your own business. Other financial documents may also be required, such as proof that your utilities have been kept up to date for at least a year.

While these records may be easy to come by when you need them, making sure that they are in good order is going to require some advance planning. You will have to make sure you have a bank account in good standing for at least a year before you apply for your first mortgage. You will also have to make sure that your tax returns and other proofs of income show that you can repay the mortgage. This means having to make a certain amount of money for at least a year prior to applying.

Credit Report

This is another document that is easy enough for the mortgage company to obtain, but requires some planning to make sure that it will be acceptable. You must have good credit, usually a score of over 600 minimum, to qualify for a mortgage. About one to two years before you plan on applying for your first mortgage you will need to obtain a copy of your credit report and find out what your credit score is. You can then work to bring up your score as high as possible over the next year or two by paying off debts, making payment arrangements on large debts, and removing any errors.

Other Requirements

The above sums up most of what you will need to apply for the mortgage and be prequalified. If you actually find a home and are ready to buy, you will likely have to meet other requirements as well before the mortgage will be final. You may have to provide proof of home owners insurance, or agree to have insurance through the mortgage company. Other requirements may need to be met as well, such as a home inspection and appraisal to ensure the home is worth the amount being borrowed.

If you plan ahead, once you are ready to buy a house you will be able to get everything you need to qualify for your first mortgage very easily. You will not have any troubles qualifying if you make sure that all is in order before hand.

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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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You searched for months for that perfect first home to buy.  You and your realtor looked at everything from foreclosures to new construction.  Finally you found the one that made you say “I could live here the rest of my life.”  You put in your offer and it was accepted.   After the initial joy wears off you realize you need to get your ducks in a row so you can close.  Below are 5 tips that if followed will help you on the road to a smooth and on-time closing.

Get All Back-up Ready for your Mortgage Company.

While you were searching for your home your mortgage company most likely provided you with a list of items you will need to give them before you can close.  Grab that list and start gathering everything you need.  That list will include things like recent tax returns, pay check stubs, identification and recent bank statements.   As you gather them get them to the mortgage provider so they can look them over and make sure they are what they need. 

Get Your Inspection Done

Most offers can be rescinded in the first few days if something is found to be fundamentally wrong with your future home.   A good realtor will have someone they recommend you don’t have to use that inspector, but often times it is good to use someone your realtor is familiar with because they know they can trust them.

No big purchases

Most mortgage companies will require you to have enough money in your bank accounts to cover the down payment as well as a month or two of mortgage payments.  Even after you have shown them your recent bank statements it is a good idea not to spend much money because they may ask to look again the day of closing.  If you need to purchase something for the new home wait until after closing. 

Don’t Use Credit Cards

Don’t use your credit cards for anything until after you are completely closed.  Using your credit cards can affect your overall credit score which could lead to your mortgage provider raising tour interest rate or worse.  Most mortgage companies will run your credit report the day of the closing to make sure you are still within the window of acceptance.  Anything you need should wait until after the closing.

Don’t Take Any New Lines of Credit or Open New Loans

It may be tempting to take a new line of credit to purchase the new floors you need for your new home, but wait until after the closing has been completed.  Opening a new line of credit or getting a new installment loan can lower your credit score and also increase your liabilities.  Both of which can cause your mortgage company to cancel the loan or raise your interest rates.  Anything you need for the new home should wait until you have completed closing. 

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Foreclosures are a great investment option. The key is knowing how to find just the right one. A bank foreclosure could be a house, apartment, condominium or any other type of property that has been seized by the bank. If you are planning on investing in such a property, you will want to consider the following tips.

Make sure the property is investment protected. Always take the time to research, learn more about and investigate any foreclosed property you are thinking of purchasing. Focus on its condition and history as well as the title. The age and location of the foreclosed property will provide answers to these questions. An inspector will also be able to give you advice on the condition of the property you are considering. By doing this, you won’t waste a lot of money on unnecessary renovations and repairs.

Learn as much as you can about the foreclosed property. Research its market value and stick to your budget when bidding. You will get the best deal by purchasing a foreclosed property at less than 50 percent of its market value. This is important as you may still need to spend quite a bit on renovations and repairs that are necessary to keep the property up to code.

Ask questions. This is what you give you some of the answers you are seeking. You will obtain the rest through tips you learn from others. These tips will point you in the right direction so you can continue your research.

Know what you are getting into when purchasing a foreclosed property. If you don’t have the money for renovations and repairs, or if this is just too much of a headache for you, buying a foreclosed property may not be the best option.

Foreclosures can make great new starter homes for some people who have saved up enough money to make the necessary changes and updates. While it is possible to find a foreclosed property that does not require such adaptations, most do so you will need to be prepared for that going into the proposition.

Purchasing a foreclosure will give you the opportunity to buy a lot of house for less than you would normally pay. You can then make the necessary changes, while adding your own personality into the mix. This can be a fun process and will definitely add value to your home. This will serve you well if and when you decide to sell.

Your foreclosure will be a great investment over time. Because you ppurchased it for less than you would have a brand new property, you will have the chance to make money on it in the near future. This, alone can make it a great option. The key is to research the property and carefully consider all you will have to deal with when purchasing a foreclosure. It may just turn out to be the best investment decision you’ve ever made.

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