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When buying or selling a property, it always helps to have a basic understanding of real estate terms. In this on going series of articles, we take a look at definitions starting with Pre-Approval Letter.
1) Pre-Approval Lender Letter a writing from a lender stating that a potential buyer has approval to borrow a stated amount of money from his firm based on having documented all the personal information needed. Final approval is subject only to the lenders receiving a copy of a contract to purchase real estate, a satisfactory appraisal of that real estate, and its underwriting departments review of all pertinent information. In other words, the buyer qualifies so long as the property does and no changes occur.
2) Pre-Qualification Lender Letter a writing from a lender stating that a potential buyer is able to get a loan in a named amount. It typically states the price of real property to be purchased, and what information the lender had when forming his opinion. When a lender has pulled a borrowers credit file, his opinion is worth more than if he just based it on what the borrower told him.
3) Real Estate, or Real Property ground, any plants growing in it, any minerals under it, and any buildings or other improvements built on it.
4) Septic System a self contained means of disposing of sewerage which tends to intimidate city dwellers. The simple version is a holding tank in which enzyme and bacterial action decomposes the waste material and buried lines in a drainage field which uses soil to strain out what remains. This works very well in soil which percolates well (water drains through it quickly). More elaborate septic systems are often needed in areas with heavy, clay soil and in areas with a high water table. Some properties are totally unsuited for septic systems and cannot be built on until public sewer is available.
5) Title Insurance insurance which will compensate the insured for the value of his ownership or collateral position in real property if a person not thought to be a current owner materializes as an owner. (Ive seen this come into play when property was owned by many heirs a generation or two ago.)
6) Townhouse – A single family attached dwelling unit with common walls.
Well, as promised, its not a be-all, end-all, but we have covered lots of the important definitions and concepts needed to successfully handle your for sale by owner transaction. If Ive missed something, dont hesitate to visit our site to read more.
TAGS: Amount Of Money, Borrowers, City Dwellers, Clay Soil, Final Approval, High Water, Holding Tank, Insurance Insurance, Lender Letter, Letter 1, Pre Approval Letter, Pre Qualification, Public Sewer, Selling A Property, Septic System, Septic Systems, Sewerage, Title Insurance, Waste Material, Water Table
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With national foreclosure default filings continuing to soar in the five months of 2006, evidence mounts that increasing numbers of U.S. homeowners are struggling to stay current on their monthly mortgage payments.
Now builders are facing a downward market pressure from the rising numbers of foreclosures. As evidenced by the drop in home sales reported by builders, speculators are realizing their “investment” are starting to lose equity as property prices drop, they in turn are forced to lower their asking price.
Add to the problem an increase in mortgage rates and a hit to the budget for gasoline, and home buyers have lost a huge number of their buying power
All these downward real estate market pressures continue to build and as foreclosures start to flood the market, prices will drop even faster.
Consideration points:
1. Foreclosures are adding to supply.
2. Home builders are still adding to supply.
3. Real estate investor psychology has changed, reducing demand.
It is these market conditions that will enable the shrewd real estate investor or first-time home buyer a unique opportunity to obtain real estate proerty during the market slowdown.
Foreclosure Process Overview
Each state has its variation on the foreclosure process: two processes a foreclosure can happen:
Judicial Foreclosure: (Time Period 10 to 11 months)
1. Homeowner defaults on payments for three consecutive months.
2. Lender retains services of an attorney.
3. The legal firm will file a Notice of Default (NOD) in the county court.
4. A notice of default will be published for four consecutive weeks for public information.
5. At the end of four weeks, the house will be auctioned off to the highest bidder at the steps of county court house.
6. The homeowners is given six months to bring their account current and pay off lender.
7. If the homeowner succeeds in refinancing or selling the house or some how raises the enough cash to pay the mortgage off, they can still save the house in this six-month window of time.
8. After six months, the bailiff from the courthouse will come the homeowner house and evicts the residence and change the locks.
9. The house is now officially foreclosed and belongs to the bank or the investor who purchased the house during the courthouse auction.
Non-Judicial Foreclosure: (Time Period 4 to 5 months)
1. Homeowner fails to make payments for three consecutive months.
2. Lender will transfer the matter to an attorney firm.
3. The legal firm will file a Notice of Default (NOD) in the county clerk office.
4. A notice of default will be published for four consecutive weeks for public information.
5. At the end of four weeks, the house will be auctioned off to the highest bidder at the steps of county court house.
6. The eviction process happens within 3-4 days after the auction and the property reverts back to the lender or the investor who bought the house at auction.
Foreclosure Profit Opportunities
There are three phases to a foreclosure opportunity: Before the trustee’s sale, at the trustee’s sale, or after the trustee’s sale.
* Before The Sale -Time between when the homeowner has stopped making mortgage payments and when the properly is actually put up for sale at auction. Investors take this opportunity to deal directly with the homeowner.
* At The Sale -When the courts seize the property from the homeowner and sell it to the highest bidder. The county sheriff or a trustee handles this process, depending on the state
* After The Sale -If the property fails to sell at auction, or if the lender ends up as the highest bidder, the home becomes REO, or “real estate owned” by the bank. Banks then try to sell these REO properties on the open market, often through a real estate agent or third-party marketing company.
Finding Foreclosure Listings
A number of on-line web sites offer trial memberships, try a number of foreclosure listings sites and evaluate which offers the best most current listings. Since foreclosure listings can be found by visiting the local recorder’s office and making photocopies this can be daunting since listings are added on a daily basis.
Using the Internet, a number of web sites allow searches by state, county, city, and zip code. Like with any product, performing your own comparison of foreclosure list sites will give you the best price and value for money. Take advantage of the free trial period offered evaluate their listings. The sites should offer the latest listings with dailymonthly updates.
TAGS: Asking Price, Consecutive Weeks, County Court House, Evidence Mounts, First Time Home, First Time Home Buyer, Foreclosure Process, Highest Bidder, Investor Psychology, Judicial Foreclosure, Market Pressures, Market Slowdown, Monthly Mortgage Payments, Mortgage Rates, National Foreclosure, Notice Of Default, Real Estate Investor, Real Estate Slowdown, Speculators, Time Home Buyer
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The single most common mistake that a note holder makes when creating a note is that they fail to check their buyers Credit Report. It seems so simple, but it is worth repeating “Most people fail to check the credit report of their prospective buyers!!” Can you believe this? Just by doing this one simple step can save you a bunch of money now and in the future.
How so? First and foremost by checking your potential buyers credit score can help resolve your worries of your buyers ability to repay their future debt to you. Heck, I don’t know of any bank that would not check the credit score of any one of their customers seeking a mortgage. So why shouldnt you?
The second benefit of checking your buyers credit score is what if you should ever decide to ever sell your real estate note, trust deed, or owner financed mortgage for all cash? By knowing your buyers credit score would not only benefit you now, but it would also make your real estate note more valuable in the future.
Here’s why. The first thing a promissory note buyerinvestor is going to require to sell your note is your payers credit score! Your buyers credit score is paramount to how much money you will ultimately receive for your real estate note. Of course the higher the credit score the less risky it is to a perspective promissory note buyer, thus making your note more valuable to them and ultimately you.
So, just what is an acceptable credit score concerning a real estate note? That is entirely up to you, but if it was my note I would not accept a score of less than a 550. The credit score counts for 40 percent of a total of 100 percent in rating your real estate notes value. So whether you are creating or selling your real estate note it pays to get your buyers credit score in more ways than one.
TAGS: Acceptable Credit, Benefit, Credit Report, Credit Score, First Mistake, How Much Money, Note Buyer, Owner Financed Mortgage, Perspective, Promissory Note, Prospective Buyers, Real Estate Note, Real Estate Notes, Trust Deed, Worries
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One of the crucial elements of real estate negotiation is time. Understand and master the use of time, and you can buy a home for thousands less. Here is one of the most important aspects of time:
Deadlines In Real Estate Negotiation
Time is of the essence. It even says as much on most real estate contracts. What does this mean? It means that whoever controls or understands the elements of time has the better negotiating position.
When I bought my first piece of property, I asked the seller why he was selling. He said he was moving. I asked him when he was moving, and he said in a couple weeks. He also mentioned that he wanted to close the sale before he moved. I offered him 20% less than he was asking, and he accepted.
He gave away too much information. Specifically, he gave away his deadline. One of the most important things to understand in real estate negotiation is deadlines. The two specific things to remember are: 1. Don’t give away your deadline(s), and 2. Find the other side’s deadline(s).
Find out whatever you can about any relevant deadlines. Sometimes there isn’t a clear deadline, or there are several deadlines for different parts of the negotiation. Whatever the case, the more information you can gather about those deadlines, the better.
How do you use that information once you have it? The crudest method is to simply delay and wait until the last moment to negotiate. This only works if the other side doesn’t walk away, and if your own deadline permits it. It also requires that you don’t violate any of the terms of your purchase offer, so the seller can’t sell to someone else.
A bit of sophistication is required to use this information effectively. You may want to start by identifying what is most important to you in the negotiation. For example, is the price or the terms the crucial element for you?
Let’s assume that price is most important to you. When you wrote the offer, you put some price on it, but you have inspections and other contingencies that allow for everything to be renegotiated. The process of inspections and negotiations ties up the property, so your competition is excluded for the moment. Then you learn that owner really wants to sell by the start of the school year, because he will be moving with his children.
Work on everything else in the negotiations except the price. Have inspections done, agree on what will be included with the property, etc. As the seller’s “deadline” approaches, he will be getting anxious to close the deal. Then you let him know you’re ready to close quickly. Of course, you’ll need the price adjusted due to the results of the inspections.
At this point the seller has the choice of throwing away the whole deal. This means starting over, and not moving when he wanted to. Alternately, he can be happy that he got what he wants most – a quick close. This means giving you your price.
This points up the importance of getting information on the other’s deadline, but also the importance of not revealing your own. When I was a real estate agent I heard the story of a man who sold his property for a large profit. He had to pay 80,000 in capital gains taxes unless he rolled the money into another property, as a “title 31 exchange.” He had 60 days to close on the new property.
Imagine the abuse he would open himself to if, with ten days to go, the seller learned of his deadline and the cost of missing it. He could threaten to delay closing unless the buyer paid 10,000 extra for some old coin-operated washing machines, for example. Overpay by a few thousand, or lose 80,000. What do you think he would do? You can see the power of time in real estate negotiation.
TAGS: Aspects Of Time, Contin, Couple Weeks, Element, Elements, Important Things, Last Moment, Real Estate Contracts, Real Estate Negotiation, Relevant Deadlines, Sophistication, Time Deadlines, Time Is Of The Essence, Time Power, Use Of Time
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You want to know whether the market is strong if you are buying or selling real estate. Having such information lets you know how flexible you need to be in offers.
Sales have slowed for large parts of the east and west coasts for sellers. Good news for buyers there. On the other hand, sales are picking up in parts of the interior of our country. A cheerful note for sellers. Lets look at what is happening, why and what it means to you.
A lot of things affect market strength, but some more than others. Is employment strong in your area? Are there jobs available that pay well? Plentiful jobs that pay well help to strengthen the real estate market.
Is there a high inventory of newly built, but unsold, housing in your area? Has this inventory been increasing or decreasing? Sales tend to slow and prices decrease when inventory is very high. This often happens when prices have moved above what average families in an area can afford.
Where Home Inventories Are High
In Washington, D.C., Miami, Florida, and Phoenix, Arizona inventories of new unsold housing have increased greatly in the last twelve months. Those markets tend to be better for buyers than in the recent past.
Where Home Inventories Are Low
In Texas, Dallas and Houston have very low housing inventory increases and a good employment picture. Prices are increasing there. Families are buying homes. Investors are scouting out the area and buying, too. This has created a situation that is very helpful to sellers, which is somewhat ironic given that Texas generally missed out on the housing boom of the last six years.
Whats Going On In Your Market
How do you figure out what the market is like in your area? Read the local news paper. Are there price reduced or buy now before the next price increase phrases in ads for homes being sold? Are there stories about lay-offs or about new employers coming to town? Call your local builders association, realtors association, Chamber of Commerce. Ask lots of questions about the number of unsold houses today as compared with the number a year ago. Ask the Chamber of Commerce about employers coming to town or leaving. Visit models in new communities and ask lots of questions there, too.
You will soon have your own opinion about what is going on in the part of the country in which you want to buy or sell. Your strategy needs to be adjusted to the strength of your position as a buyer or seller. Understanding the market you will be dealing in is a good place to start.
TAGS: Average Families, Chamber Of Commerce, Cheerful Note, Housing Boom, Inventories, Investors, Lay Offs, Local Builders, Local News, Market Strength, Miami Florida, News Paper, Phoenix Arizona, Phrases, Realtors Association, Six Years, Texas Dallas, Twelve Months, Washington D C, West Coasts
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Real Estate Investment in Buenos Aires: Buenos Aires, a one way trip
The city’s charm adds to the convenient exchange rate that sets Buenos Aires as an ideal city for international tourism and furthermore, a mine for investment. The investment opportunities are multiple and the channels are open for independent developments: real estate, independent business, technology, importing, and many more.
An attractive road for foreign investors is within the real estate market. It is a realistic option both for small investors and big economic groups. The initial investment cost for a property is quite low and the return is surprisingly high, in short and long term basis. The cost of property and land is beginning to increase in Buenos Aires due to the high demand for permanent housing and short-term rental. There is in fact a deficit of apartments, what also explains the springing of loads of new developments that are.
The acquisition of a property carries along a series of implicit business opportunities apart from its personal use as a private residence: remodeling and resale, traditional rental, temporary rental, among others.
Short-term rentals is one of the most simple and feasible directions for small investors and most especially for those not currently residing in Buenos Aires. Alojargentina, other than selling properties and providing counseling in real estate, offers a full “Property Management” service. This consists in renting the property to tourists and companies following a short-term manner and in the property’s maintenance according to each customer’s particular needs.
Someone using this service from abroad, for example, can forget about taking care of the property since it can be left in the company’s hands. It is a complete service that includes renting the apartment, the guest’s full assistance, bills and taxes payment, property maintenance and coordination of any required repairs. The proposal anticipates the property owner’s interest in being informed of what is going on with hisher apartment and this is why reports are sent regularly. Customers may choose between a full management or a temporary rent solely management.
Frequent visitors may have their property in Buenos Aires to enjoy during their trips and use it as an extra income source through temporary rent. So, purchasing an apartment in Buenos Aires is an opportunity for a double investment: generating short and long term profit added to having a vacation home in an evermore alluring destination as Buenos Aires.
The apartments apt to be offered for temporary rent have different characteristics but there are certain mandatory requirements such as full equipment, basic amenities and demanded location. The preferred neighborhoods are Recoleta, Downtown and Palermo, but guests often ask for Las Caitas, Barrio Norte, Belgrano and Puerto Madero as well.
The Real Estate Sales area in Alojargentina specializes in this type of investment. The firm sells properties for personal use but mostly assists on temporary rent investment opportunities. It holds extensive experience in handling sales for foreign citizens and thus has the necessary know how in regards to processes, paperwork and requirements for non-resident buyers.
To view the virtual catalog you may visit our website or you can send your inquiries directly to ventas@alojargentina.com.
TAGS: Business Opportunities, Complete Service, Economic Groups, Feasible Directions, Foreign Investors, Independent Business, Independent Developments, Initial Investment, International Tourism, Investment Opportunities, New Developments, Personal Use, Private Residence, Property Maintenance, Property Management Service, Real Estate Investment, Realistic Option, Remodeling, Short Term Rental, Term Basis
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Due to the upcoming expansion of the state of Oklahoma, neighborhoods around the city of Tulsa had forecast the rise of their homes value.
In Scranton, Pennsylvania, houses are expected to rise in value due to the efforts of the mayor to improve its neighborhoods and convert vacant homes into much more saleable empty lots.
The exterior of the house also affects its asking price. In Alabama, where people take pride in their southern heritage, lawns are kept well-manicured and the houses are well-maintained. Prices are expected to steadily grow.
In Texas, builders still show their confidence in the market through the steady inventory of new homes, especially in Edinburg where land is quite inexpensive. However, prices are expected to be more or less the same due to the prevalence of low-paying jobs in the area.
Real estate agents in Florida are expressing confidence over the strength of the local economy and are expecting market stability as result of low interest rates.
In Nevada, however, prices are expected to drop due to rising inventory, with exception of houses near amenities like golf and spa.
California real estate is expected to maintain its tight inventory as population continues to grow.
The recent slump in house prices, however, have affected several states in the country. Due to several layoffs especially in the manufacturing industry, houses in the Midwest area are lowered in value and homes with price tags of more than a million may be discounted just to get it off the market.
If you are looking for value in your real estate investment, it might pay to determine first which localities are considered most ideal. According to a survey done by CNN, the town of Fort Collins in Colorado is chosen as the best town to live in, followed by Naperville, Illinois and Sugar Land, Texas where diverse communities abound. http:www.States-RealEstate.com provides essential resources for buyers, sellers, home owners, real estate professionals, real estate investors, or any one seeking to connect with the world of real estate.
TAGS: American States, California Real Estate, City Of Tulsa, Cnn, Diverse Communities, Essential Resources, Low Interest Rates, Market Stability, Midwest Area, Naperville Illinois, Price Tags, Professionals Real Estate, Real Estate Agents, Real Estate Agents In Florida, Real Estate Investment, Real Estate Professionals, Scranton Pennsylvania, Southern Heritage, State Of Oklahoma, Sugar Land Texas
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The popularity of real estate auctions are growing in the USA. Commercial and residential property are available to upper and middle class people. No longer is being wealthy a prerequisite of having the ability to bid on property.
Why are real estate auctions so popular? This is something you should investigate before you commit to your first auction. Some believe that both buyer and seller are benefiting from such auctions. It is a fact, the popularity a real estate auction will drive up the sales price.
As the seller, you can determine the selling date of your home. This means, if you are currently sitting in a home valued at 235,000 and the opportunity arises for you to get your hands on a newer home because of a builder’s buy-out sale, you can place your home in a real estate auction and know it will sell. It won’t be long before you are packing up the kids, the dog, and moving into your new home.
When real estate property values are down, the easiest way to unload a home is with a real estate auction. You can work a real estate auction as an independent auction company who obtains its own properties to sell or a partner with a real estate broker who provides you with properties to sell. The benefit of being an independent is a full commission.
Some states require that you have a realtor’s license. If you attend an auction, I would recommend following the guidelines of that state. You will more and likely invest some capital into marketing your services to home sellers or real estate firms. The most work you’ll do is what has to be accomplished through advertising.
Working a real estate auction is really a comfortable way of selling properties. There is not protocol to attending, except for the real estate license, and it is up to you how much money you can make.
Please visit some of my other site at State-real-estate-Auctions.blogspot.com” title=”State Real Estate AuctionsState Real Estate Auctions and government-Real-estate-auctions.blogspot.com” title=”Government Real Estate AuctionsGovernment Real Estate Auctions
TAGS: Auction Company, Benefit, Government Auctions, Helpful Tips, Home Sellers, Popularity, Prerequisite, Property Auctions, Protocol, Real Estate Auction, Real Estate Auctions, Real Estate Broker, Real Estate Firms, Real Estate License, Real Estate Property, Real Estate Property Values, Realtor, Residential Property, State Auctions, State Real Estate
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Real estate appraisal for rental properties isn’t the same as for single family homes. If you were looking at a 24-unit building, it would be difficult to find similar ones nearby that have recently sold. Therefore, a market analysis using comparable sales isn’t normally used.
It is also not ideal to use replacement costs either. How do you figure replacement cost if there is no land for sale nearby with proper zoning? This is used as a secondary method, though, and can tell you if maybe you should be building instead of buying.
Real Estate Appraisal Using Capitalization
Investors buy rental properties for the income. Therefore it is the income that is used to determine value. The rate of return expected by investors in a given area gives you the capitalization rate, and this is what you use to accurately appraise an income property.
Start with the gross income. Subtract all expenses, but not including loan payments. If a building’s gross income is 82,000 per year, and the expenses 30,000, you have a net before debt-service of 52,000. Now apply the capitalization rate to this figure.
If the common capitalization rate is .10, for example (ask a real estate agent), divide the income of 52,000 by .10, and you get 520,000. This is the value of the building. If the usual rate is .08, meaning investors in the area expect an 8% return, the value would be 650,000.
Easy Real Estate Appraisal?
Net income before debt-service, divided by the “cap rate:” It really is a simple formula. The tough part getting accurate income figures. Is the seller showing you ALL the normal expenses, and not exagerating income? If he stopped repairs for a year, and is showing “projected” rents, the income figure could be 15,000 too high. This would mean the building is worth 187,000 less (.08 cap rate) than your appraisal shows.
Another thing smart investors do when buying, is to separate out income from vending machines and laundry machines. If these provide 6,000 of the income, that would add 75,000 to the appraised value (.08 cap rate). Do the appraisal without this income included, then add back the replacement cost of the machines (probably much less than 75,000).
Be careful when using any real estate appraisal method. No formula is perfect, and all are only as good as the figures you plug into them. Used wisely, though, real estate appraisal using capitalization rates is one of the most accurate methods.
TAGS: Buying Real Estate, Cap Rate, Capitalization Rate, Comparable Sales, Debt Service, Gross Income, Land For Sale, Laundry Machines, Loan Payments, Net Income, Properties Real Estate, Rate Of Return, Real Estate Agent, Real Estate Appraisal, Rental Properties, Rents, S Gross, Single Family, Smart Investors, Vending Machines
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As one journey’s through the rough terrain of real estate. You will find yourself amongst the company of those who share similar emotions: self-doubt, fear, concerns of risk, and an endless stream of questions. So why would one subject him or herself to such things if it causes so much of a headache in the short term?
The answer to that is simple: Real Estate is where the bling bling is! Seriously folks, no industry on earth has made millionaires of more people than those two words.
OK so now you’ve decided it’s worth the risk, but you’ve heard so many different perspectives on results, methods, and a million different courses all claiming to be the cure to launch your own career in real estate.
You may look into creating new homes and then selling the properties when the timing is right, or even rent them out. Many people follow this method and rehash the process over and over till they reach their financial goals.
Others go about it a different way- such as finding a run down home (or constructing a new one) and then learn the tricks and trades of fixing up a home and finding out where the “pressure points” are that can drive the value of the property up like like firewords on the Fourth of July. Then they’d flip or sell it once it is done.
Each method has it’s highlights and lowlights. Perhaps you should look into the one that “feels right” to you, and look into it a bit more. It’s not possible to become a master of everything in the beginning so just find something, learn how to make money from it, and make it happen as many times as it takes till you get your desired results.
Eventually, you will develop a sixth sense for “where the money is”. This is something that can only be learned through hard work, and experience, period!
TAGS: Bling Bling, Career In Real Estate, Desired Results, Different Perspectives, Emotions, Endless Stream, Financial Goals, Firewords, Fourth Of July, Headache, Highlights And Lowlights, How To Make Money, Hurdle, Millionaires, New Homes, Pressure Points, Rough Terrain, Self Doubt, Sixth Sense, Worth The Risk
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