Category — Real Estate

With the current market real estate investors have to look at other “back to basics” ways to move investor properties. The three alternative options for investors below are not new but seem to be forgotten, great ways to rethink the marketing and selling of your properties and get your asking price and even more. First you can move your property very quickly. Second, you can name your selling price and most often it can be much higher than the general market will bear. Third, all of these strategies can actually increase your investment return exponentially more than just out right selling your property on the market.

Seller Held Seconds – This is a great option for those rehab investors to get their initial capital out of their property and move on to the next project and also opens the market to many more potential buyers. Let’s say you buy a property for $150,000 and spend $15,000 in renovations. Let’s say after renovations the property is worth $200,000.

The potential home buyer secures a conventional 1st deed loan at 80% of the value of the home and takes out a mortgage for $160,000. This pays your loan off and also you’re out of pocket expense renovating or updating the property. It’s essential, that there is a down payment from the buyer of at least 3% to 5 %. In this instance, you hold a second deed for $30,000.

You become the second deed of trust with all the rights of any 2nd trust deed holder. Most often the terms of the loan are higher rates and shorter balloon terms; let’s say a 36 month balloon (36 months is typically the shortest balloon term a first deed lender will accept) at 12% interest rate with an interest first payment option. So during the 36 months you’re receiving interest payments of 12% and by the end of 36 months the buyer needs to refinance the property to pay your loan off. [Read more →]

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First off I want to stress that I am not a licensed Real Estate Agent nor am I a licensed Appraiser but I want to take a quick view at the 3 most recent home sales in a neighborhood in Midlothian, VA. I just could not resist posting this as its such a glaring example of hiring a professional not only for real estate but hiring a professional in any field. Its so much cheaper in the long run.

There were three recent home sales in the Lenox Forest Section of Riverdowns. Two of the sales were full service listed homes and one was For Sale by Owner. Riverdowns subdivision is located off Robious Rd. in Midlothian, VA about a .5 mile east of Rt 288. [Read more →]

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For those in the market to buy a home in the next 6 months you better act fast because its about to get more expensive. Already mortgage lenders have cut back dramatically and totally removed loan programs off the market and now Freddie Mac and Fannie Mae are starting to increase fees on loans making buying a home more expensive and maybe even pricing out some home buyers altogether.

Freddie Mac states “In response to continuing volatility and turmoil in the mortgage market, including the deteriorating performance of higher-risk mortgage products, we are expanding our use of risk-based pricing by adding fees based on Indicator Score and loan-to-value ratio. We are also increasing our delivery fees for certain Mortgages with increased risks.”

Reason 1: Starting in March 2008 there is going to be a .25% delivery fee called a Market Condition Delivery Fee. So for a $200,000 purchase price this would equate to a charge of $500. The Market Condition Delivery Fee is in addition to the announced Indicator Score/Loan-to-Value delivery fee.

Reason 2: The Indicator Score/Loan-to-Value Delivery Fee is the most significant. You will see by the chart below that depending on your credit score this fee can range from a fee of $1,000 to $4,000 based on a hypothetical $200,000 purchase price, this is IN ADDITION to normal closing costs.

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It’s not a surprise to investors out there that properties are staying on the market for what seems like a lifetime, if they sell at all. The Census Bureau estimated that there are approximately 2.1 million vacant homes for sale nationwide, up over 7% from a year ago. The total number of vacant properties not for sale or rent is estimated an astounding 17.9 million units.

For many the one option may be to wait out the market downturn and rent out the properties until the inventory glut clears out. For those that have no history of renting properties be prepared for a whole new world. Mike Mulligan of Property Managers of Virginia states that “investing in real estate is serious business and a big investment. Knowing and keeping up with regulations, legal issues and liabilities in the State of Virginia can seem overwhelming.”

Its is true, there is a whole new world out there of fair housing requirements, landlord tenant laws that may vary from county to county, tenant screening, property maintenance and expense and pricing your property for rental. For those that are not prepared with professional help and professional advice can be set up for disaster.

Of course just by hiring a property manager does not mean that you will be trouble free. But it does mean that you can have a life outside of managing your properties.

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There is a debate going on between those that feel the Federal Government, Mortgage Lenders, Builders and Banks are under an obligation to assist homeowners whose loans are getting ready to and have adjusted and to assist those that are already facing foreclosure. The other side of the debate says that there should be no assistance and let the cards fall where they may, that a government bailout is a free license to go out without caution and the government will save you.

Side One: What are the government leaders saying by bailing out these borrowers? These home owners were given an opportunity; an opportunity that they otherwise would not have had. Subprime loans where designed, in theory anyway, to help those with bad credit get a loan and over the course of the next 2 to 3 years repair their credit and get into a low rate good credit loan. Problem with that is 90% of the people with bad credit have bad credit because they never pay their bills and can not manage their debt. The majority of subprime borrowers did nothing once the loan closed to repair their credit. They already have bad credit let them go to foreclosure. Bailing them out is just giving a green light to go out and mismanage their finances again. Give them tough love do not enable them. Screw ‘em. Let them drown. These borrowers need to learn from their mistakes. [Read more →]

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Image Courtesy of Indymedia Ireland

The writing is on the wall for discount realty companies……..Foxtons, the fourth largest real estate company in New Jersey (and one of the largest in the NYC Metro area) is closing up shop for good. What happened to them?This company arrived on the scene in 2000 with a big splash, promising rock bottom commissions from their agents. Sellers lined up quickly to get their home sold on the cheap. Everything looked great - until the downturn, when it went south in a hurry. Now they are looking for someone to take over the 4,400 listings left in the dust.

The reason Foxtons came and went so quickly is that the lowest possible commission is a promise that is full of problems. Low prices always mean that you have to make it up on volume, which is to say the pressure to “churn
and burn” felt by Realtors is even stronger. There isn’t as much incentive to get the best possible price for the client, but there’s a lot of incentive to move houses quickly. The seller is the loser, and it’s all because they were too cheap to realize that the investment in a house has to be matched by a small investment in the best Realtor possible. Now whose going to take and market 4,400 listings in this market at a 2% commission?

What did Foxtons in is the simple fact that we are in a market where you can’t make it up in volume. A few bad months were bound to break them, and now they are gone. Clearly, being the rock bottom on commissions didn’t make for a good business model. Sellers need to understand that they aren’t in their own best interest, either. You usually do get what you pay for.

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Consumer confidence came out this morning. The figure at 105, down from 111.9 in July but up from August 2006. Of course the doom and gloom headlines to quote “Consumer Confidence Falls To Lowest Level in a Year”, I mean come on, expectations were for 104.5 so how come the headline does not say “consumer confidence comes in much better than expected.” Listen to the media as an investor and you will be sure to go broke. That I can GUARANTEE you!

What I can tell you is,,,,,,,, 105 is a far cry from a recession (so far), considering the consumer is 1/3 of GDP, wages are another component and wages are growing at 4% and corporate profits are expected to be in the low double digits so I think the chances of a recession are slim, unless the consumer confidence number falls another 35 points. What this does show is the resiliency of the American consumer in wake of the so called “subprime crisis” or mortgage meltdown or any other name the media has created. Gas prices are still high although a lot lower than the highs, food costs increasing and mortgage rates have ticked up a bit. So IMO, I think the number is strong considering the environment.

The biggest worry for the number is that it was not worse and may be a reason for the stock sell off. Obviously over the next month or so this number could be dramatically lower and with back to school coming we will see if the retail sales numbers are any indication. But as always the media plays a big role in consumer sentiment so we will see how they spin the recession talk and what effect this has on the number going into the coming months.

The 10 year note is trading off its highs up .25bps and less effected is the 6% mortgage backed securities trading up .6bps and seems to be hitting a ceiling of resistance at 100.16. Bond prices have been on a tear since the end of July and rates have came down nicely but may be running out of steam.

At 2pm ET today the Fed will release the Minutes from the August 7th meeting. It will be interesting to get the Fed’s views on the credit crunch, since it was just beginning to unfold at the time they met. The Fed Fund Futures are currently showing a 72% probability of a .25% cut at the September 18th meeting, with some predicting a chance of a .50% rate cut.

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Well Countrywide CEO, Chief Executive Angelo Mozilo, was on CNBC today and uttered the dreaded R word. Mr. Mozilo seems to think that the current housing market will throw the US economy into a recession. I guess anything is possible, though highly unlikely. Funny thing is you never know you are in a recession until you are out of one. “Recession” by definition, is two consecutive quarters of negative GDP growth. Yes, the housing is bad, yes many jobs will be lost within construction, real estate and mortgage divisions. Seems I heard around 40,000 jobs have been lost so far but really, a recession? When I hear this “R Word” I always want to ask them what a recession really means. Its so funny to hear these people that catch on to these “buzzwords” and talk like they know what they are talking about. I would have loved to say “well Mr. Countrywide CEO, tell me sir, how exactly would you define a recession?”

The only real losers in the game where and will be those that came to the party a little too late. [Read more →]

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Over the last few weeks there has been a lot of action from the Federal Reserve. First the Federal Reserve implemented two cash infusions into the market and very unexpectedly cut the Fed Discount Rate. Its important to understand what led up to this and I will put into perspective what all this means. [Read more →]

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There are currently dramatic and sweeping changes occurring within the mortgage industry. If you or any one you know needing a mortgage within the coming months, you need to read this!

Just last week there were two high profile lenders that shut their doors. One being the Wells Fargo subprime unit and more importantly American Home Mortgage and its wholesale counterpart, American Brokers Conduit. American Home Mortgage was no small potato. American Home Mortgage was the 10th largest lender in the U.S. and last year closed over $58 BILLION in loans. Its been reported, this shutdown left billions in UNFUNDED loans. Imagine a day, a week or an hour before closing and you get the call from a mortgage loan officer that the loan is not closing. [Read more →]

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Applying for a mortgage? Be prepared for your phone to ring off the hook with unscrupulous lenders calling offering their services. How did they get the information when you did not give it to them? From the credit bureaus. Equifax, Transunion and Experian all sell your personal information to lenders and lead providers. [Read more →]

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I am a regular reader of Ken Harney’s articles in the Washington Post. Sundays article “Buyers often clueless on their loans” just caught my eye and I continued to read through. At the end I just thought how off base the article was.
Come on Ken, give us credit. First off don’t you think ADJUSTABLE RATE is about a clear disclosure as you can get. Remember these people sit on front of a closing attorney, in most cases. Which leads me to make another point. [Read more →]

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It is very important that home buyers choose the right real estate agent. I can not stress this enough. A real estate agent is more than someone to show you homes for sale. The majority of the real estate markets in Virginia such as, Northern Virginia real estate market, Fredericksburg Real Estate, Tidewater real estate and Richmond real estate markets are hot. More often then not, when you submit a contract there is already a contract on that home. When it comes to having someone represent you as a buyer, it is incredibly important that you have a strong negotiator. [Read more →]

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There is a little known way that you can own a home with no money. No down payment and no “out of pocket” closing costs. The idea is called a “seller concession”. Seller concessions are when the home seller agrees to offer a percentage of the sales price, anywhere from 1% to 6%, as a credit for your down payment or closing costs.Very simply, Lets say you were buying a home for $150,000. In the contract to buy the home its written that the seller agrees to pay 3% or $4,500 towards all closing costs, pre-paids or points. [Read more →]

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