Buying and selling real estate definitely has an emotional element. If you let emotions run you, there is a very good chance everything will fall apart.

Don’t Let Emotions Ruin Your Purchase or Sale of A Home

One of the biggest stumbling blocks in the sale of a home is the emotional reactions of the parties. It doesn’t matter if you are buying, selling, using a real estate agent or handling it on your own. If either party lets emotions rule the day, things will fall apart. If both parties let it happen, the transaction will get very ugly.

For sellers, emotions arise from the fact that they typically have lived in the home for some time. Major life events may have occurred in the property including raising a family, weddings and so on. In simple terms, sellers don’t view the home as a property to be sold. They view it as a part of themselves, which they are letting go like a child going off to college. This personal attachment leads to ruffled feelings when a buyer offers practically any criticism of the property.

For buyers, emotions arise from the conscious or subconscious nervousness about taking on such a big debt. Whether you like to admit it, committing to a ton of debt is a scary experience. Inevitably, this emotion is expressed as suspicion that the seller is trying to pull a fast one or there is something wrong with the property. Regardless of the manifestation, such emotions are the stuff of failed, nightmarish real estate transactions that often end up in court.

For example, a couple I am friends with recently sold a very pricey home they had lived in for over 14 years. Simply put, there were a lot of memories from that time period. On the other side, the buyers were making a major step up in price from their previous home. In fact, they were committing to well over seven figures of debt with their mortgage loan. Put in simple terms, both parties were keyed up and sparks eventually flew.

I will not get into the details in respect for their privacy, but the deal almost fell through over an argument about who got to keep three bar stools. Three…bar…stools. This was a million dollar home! In the end, the seller kept them and then realized they didn’t go with their new home. In retrospect, they now realize that the conflict with idiotic and really had nothing to do with the stools. Instead, it was emotions that almost ruined the day.

If you are going to buy or sell a home, make sure to control your emotions. The transaction is a business transaction, not a personal insult to your pride.

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Filed Under: Articles Tagged with Adsense, buyer, buying, Contracts, Emotion, Emotional Element, Emotional Reactions, Emotions, Family Weddings, Feelings, Good Chance, Google, homes, Houses, loan, Manifestation, Memories, Mortgage, Mortgage Loan, Nervousness, Personal Attachment, Real Estate, Real Estate Agent, Real Estate Transactions, Scary Experience, seller, selling, Selling Real Estate, Suspicion, Time Period

Miami has its share of drive by violence. But we are talking about a different type of bad drive by, being the victim of a drive by BPO as a real estate investor. We have been victims and want to help you from becoming a statistic.

We are real estate investors and work extensively in the pre-foreclosure market. Many times sellers are financed 100% or close to it and there is no deal to be had so we try to negotiate with their lender to do a short sale or short payoff. As part of the process the lender needs a BPO to determine fair market value.

What is a BPO? A Broker’s Price Opinion is a market value assessment usually performed by a licensed real estate agent or broker. These are most often done on properties that are in foreclosure. A lot of times when the property is not sold before or at auction, the BPO that did the opinion will get to list the property. Sometimes it can be a full time appraiser looking for extra work that may do the BPO. Because of the fact the agent may eventually get a listing they tend to sometimes give a high appraisal.

Now realize that market value generally assumes a home in great shape needing no repairs. 90% of retail buyers will not buy a home that needs any repairs. Many lenders will not finance a home that needs wood replaced or roofing done.

What is a Drive By? A drive by consists of a BPO going to the house and stopping in front, taking a picture of the outside and driving off. They never get out of the vehicle, never to see the inside or any damage or repairs needed on the property. Comparable sales, past appraisals and tax records will be used to determine the value of the home without taking needed repairs into account. A lot of houses have good curb appeal, once you step thru the front door it’s a different story. We have had the BPO agent miss the fact that a tarp was on the roof to stop the rain from coming in the house because the holes in the roof were on the back of the house and the agent never stepped out of their vehicle.

How can I get an accurate BPO Appraisal? Be there early. Bring pictures and the list of repairs from your first visit. Develop rapport and become best friends with the appraiser. Do your homework on the neighborhood. Look for true comps. Example: If you are looking at a stucco home and the rest of the neighborhood is brick. You can’t find true comps. For future reference if you are in a mid to high humidity area, get a moisture test on the stucco and bring the results with you.

How can I keep from being a victim? Arrive 45-60 minutes before appt. Do not allow the home owner to greet the BPO instead of you. Stay where you can see the road. If you see a vehicle pull up and stop, jump out and holler politely,” Would you like to see the inside of the home”? To make the experience better for yourself and the BPO offer help. Tell them what you have found. Don’t take it personally if they don’t want help from you. Do your homework. Don’t let the homeowner show them around as they will try to point out nice things. Your job is to point out the flaws of the house and drive the appraisal down. Make sure the lender knows you are the point of contact for the BPO agent and to contact you to set up the appointment for the BPO. The pictures that you took on the first visit need to be printed out; if digital take them to a kiosk that makes prints. Have 3 copies made. Put two to a piece of paper, go with colorful construction paper, yellow is a happy color, go to your local office supply store and get printable file folder labels. In detail tell what’s wrong in the picture. Give the BPO agent 1 copy. Let them know what you have found wrong with the house or yard. Give them a repair list. Any true comparable sales you have found within a 5 mile radius will also help. Always pick the lowest comps. You will document a lot more problem area’s with the house than the BPO will see. This will be the difference of making 30k or 5k on a house.

Filed Under: Articles , Foreclosures Tagged with Adsense, appraisal, Appraisals, BPO, Broker Price Opinion, comparable sales, Curb Appeal, Different Story, Foreclosure, Foreclosure Market, Full Time, Google, Great Shape, Holes, Lenders, Licensed Real Estate, Market Value Assessment, Pre Foreclosure, Real Estate, Real Estate Agent, Real Estate Investing, Real Estate Investor, Real Estate Investors, Retail Buyers, Roofing, Short Sale, Statistic, Tarp

Get Short Sales Approved in 24 Hours and Learn How to become a “Super Wholesaler” all at the same time!

You’re about to discover my proven strategy for BECOMING THE BANK and getting Short Sale Approvals in as little as 24-HOURS!

(NO ONE ELSE in the country even knows this strategy exists, but it’s amazingly simple and I do it every day to make a KILLING! You can too…)

Filed Under: Articles , Foreclosures Tagged with 24 Hours, 24 Hours Short Sales, bank owned, Bank Owned Properties, Bulk REO Investing, Bulk REO Trader, Discover, Kenny Rushing, Real Estate, Real Estate Investment, Short Sale Approvals, short sales, Wholesaler

All those folks who can’t buy a home are producing smiles on the faces of landlords. For many months vacancy rates were forcing sobs from rental property owners. The pool of potential tenants had been greatly reduced, because everyone was buying a home. Home prices were still relatively affordable and there were big buckets full of mortgage money available at historically low rates. People didn’t need to rent when they could buy.

The high Foreclosure rates changed all that. Now more people are seeking good homes to rent, so the supply of available rentals becomes slim. Demand for rental homes has also been stimulated by a reduction in the number of available apartments.

But it’s not all good news for landlords.

Some eager investors bought investment homes near the top of the real estate price cycle. They paid high prices for the homes they are now offering for rent. Many are learning that the cost of mortgage payments, taxes, insurance and other normal costs are leaving them with negative cash flow. That means it is costing them more each month to own the property than they can collect in rent.

The investor’s negative cash flow can amount to as much as $500 or more. Each month the owner must take those hundreds of dollars out of his/her pocket to make up the short fall between rents collected and money paid out in loan payments and so forth. That’s called an alligator property, because it can eat you alive.

Negative cash flow can be avoided by making a larger down payment on the property. You then have a smaller mortgage loan with smaller monthly payments. If you have planned correctly your rental income should then cover all your costs and expenses of owning. The down side is that you have a large amount of cash locked into one property.

The wise investor always buys at a price that will allow him to prosper no matter what happens to real estate values.

Filed Under: Articles Tagged with Adsense, Alligator, Apartments For Rent, Available Apartments, Buckets, Buying A Home, Cash Flow, Condos, Eager Investors, Foreclosure Rates, Google, Google Adsense, Home Values, Investing, Investment Property, Landlords, Loan Payments, Low Interest Rates, Mortgage Loan, Mortgage Money, Mortgage Payments, Mortgages, Negative Cash Flow, Real Estate, real estate values, Rental Property Owners, Rents, Smiles, Sobs, Vacancy Rates, Wise Investor

Investing In Foreclosure And Reo Properties

By: Brian S. Icenhower

The investment quandary as to the best method for acquiring foreclosed property at heavily discounted prices inevitably surfaces at the same stage in the real estate cycle every ten to twenty years. After housing booms and home prices correct back to affordable levels, real estate investors are suddenly inundated with an almost overwhelming supply of potential homes to choose from. These prospective buyers peruse city blocks searching for evidence of distressed properties that might lead to investment opportunity by taking dead lawns, unpaid utility notices, and default notices all into account. They investigate “For Sale” signs with “Bank Owned” or “Foreclosure” riders attached. Technologically savvy bargain hunters browse websites online to identify properties in default. These opportunists also compare notes with one another at various social functions, water coolers, chat rooms, and anywhere else real estate is spoken. Here they may learn that in order to obtain the most lucrative price, investors are best served to purchase property directly at a foreclosure sale on the court house steps. Regardless of the preferred method for locating distressed properties, it is imperative to thoroughly comprehend the different foreclosure processes in order to develop and implement a successful investment strategy.

If a homeowner fails to make prescribed loan payments to the bank, the borrower is deemed to have defaulted on the loan. If the delinquent payments are not cured in a timely fashion, the lender is permitted to foreclose on the property to acquire title to the home as security for the unpaid debt. For national investors it is important to understand that lending practices and foreclosure procedures vary from state to state. For example, some states are considered “mortgage” states while other states prefer the “deed of trust” method of lending and holding title as security for the loan.

MORTGAGES

Mortgage states utilize a two party security system where a mortgagor (or borrower) provides a promissory note to a mortgagee (or lender), along with a voluntary lien called a mortgage that serves as security for the borrower’s promise to make the loan payments described in the promissory note. Since title to the property resides with the borrower when the mortgage is created, foreclosures in mortgage states can be relatively lengthy and costly for banks to pursue. Further, mortgages also provide borrowers redemption rights that allow borrowers a specified period of time after the foreclosure and ultimate sale to a third party to pay off the original loan amount and regain title to the property. As a result, buyers at foreclosure sales in mortgage states must be aware that they will often be unable to obtain clear title to foreclosed homes as the previous owner will likely be afforded the opportunity to pay off the original promissory note and reclaim the property.

DEEDS OF TRUST

A minority of states that include California favor the three party deed of trust system due to the relative cost efficiency and expediency provided to lenders in the foreclosure process. Additionally, lenders are often able to provide buyers of foreclosed property clear title as no right of redemption exists for borrowers. The Deed of Trust process involves a trustor (or borrower) that gives a promissory note to the beneficiary (or lender), and the trustor also gives title through a trust deed to a trustee (neutral third party) as security for the note. The important difference here is that title to the property is held by the trustee rather than the borrower. The trustee is typically a neutral third party designated by the lender to hold the deed of trust during the loan period with the power to more easily administer a foreclosure sale in case of default by the borrower.

It is clearly important to determine whether one is bidding on a property that was subject to a mortgage or a trust deed at a foreclosure sale. This differentiation can often be confusing as many real estate professionals and experts in deed of trust states will often casually refer to home loans as mortgages. Many lenders in these states will refer to themselves as mortgage brokers or mortgage companies when they actually originate promissory notes secured by deeds of trust. Deed of Trust states also refer to foreclosure sales as trustee’s sales, where the highest bidder purchases the property in an auction setting. However, purchasing a home at a trustee’s sale can be a risky proposition as the buyer has little or no opportunity to inspect the home prior to purchase. Further, the buyer must pay with all cash as financing is typically not permitted at trustee’s sales. There is also no guarantee that the property is not currently occupied by tenants or a previous owner. Finally, purchasers at a trustee’s sale are not protected against clouds on the property’s title like tax liens from a previous owner’s unpaid property taxes, so title insurance is often unattainable for buyers at trustee’s sales.

REAL ESTATE OWNED (REO)

If a home is not sold to a new buyer through the foreclosure process, the lender holding the promissory note will often acquire the property and attempt to sell it on the open market to a new buyer. Once title to the home that once served as security for the unpaid promissory note is transferred to the bank, the property is deemed real estate owned (REO) by the bank. The bank will then typically retain a REALTOR® to market the property for sale at a price below market value, remedy any defects on title, remove any tenants or squatters occupying the property, and often retain contractors to repair any major physical defects in existence on the property. Although the typical price paid for an REO property may in theory be slightly higher than buying at a foreclosure sale, purchasing an REO property is clearly a much less risky proposition. REO sales also provide investors adequate opportunity to inspect homes prior to making offers to purchase, and buyers are permitted to utilize financing when purchasing these bank-owned properties.

Whether purchasing foreclosed or REO properties, the various risks and rewards associated with an investment may not only depend on the characteristics of the home itself, but also the type of security the home provided to the previous owner’s lender. In order to avoid the displeasure of telling foreclosure horror stories in real estate investment circles, an ounce of diligent research into a property’s financial history can prevent a pound of investment headaches.

About the Author

Brian S. Icenhower, Esq., BS, JD, CRB, CRS, ABR, a California Association of Realtors Director, practicing real estate attorney, a real estate expert witness and litigation consultant, a prosecution consultant of Tulare County District Attorney Real Estate Fraud. He may be contacted at bicenhower@icenhowerrealestate.com, or www.icenhowerrealestate.com

(ArticlesBase SC #774513)

Article Source: http://www.articlesbase.com/ – Investing In Foreclosure And Reo Properties

Filed Under: Articles , Foreclosures Tagged with Bargain Hunters, City Blocks, Court House Steps, Deed Of Trust, Default Notices, Delinquent Payments, Distressed Properties, Economics, Foreclosure, Google, housing, Investment, Investment Opportunity, Mortgage, Mortgages, National Investors, Opportunists, Preferred Method, Properties, Prospective Buyers, Quandary, Real Estate, Real Estate Investors, Reo, Reo Properties, Social Functions, Timely Fashion, Unpaid Debt, Water Coolers