Hidden Problems in Older Properties

When I first started investing in homes, This Old House was popular, oil was going to run out, and Mother Earth News was all the rage. How I Made a Million Dollar Recycling AnibalGroupLLC_RealtyNetWorth_tax-savings-with-buy-sell-brokerageGreat Old Homes was my favorite book, so much so I actually took a trip the east coast to drive by most of the homes in the book ! I was going to find an old house “with charm”, rehab it, and make my fortune.

Since that time I’ve owned quite a few properties, built some, rehabbed some. I typically urge buyers to favor homes built after WWII – similarly I greatly urge couples NOT to build new…. this is another blog post.

In my “historic properties” I found 6 layers of roof on one, mice and skunks in the crawl space in another, flooding basements you wouldn’t believe – but lots of “charm”.

These older ( pre 1940 ish ) homes take an extra layer of investigating – if you want to call out an inspector, these are prime targets.

DIY’s ? Take a flashlight, foldup ladder, level, tape measure, outlet tester, binoculars, power screwdriver, camera ( for memory jog ), photograph the electical panel(s)/ furnace/ waterheater/ and any other mechanicals to forward to a specialist should you want a second opinion. I have checklists AND a few insights to offer.

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For Sale By Owner com Founder used an agent

Today I learned something no so surprising.  CEO of ForSalebyOwner.com, Colby Sambrotto sold his home using a Realtor! said the article title.

He’d used his FSBO site for 6 months, then listed the property and sold it in weeks, …. for thousands more than he’d been asking no less. Why  is this NOT surprising to me ? I’ve been in the business 30 yrs as a 2nd generation multi-state broker and even I know the value of NOT representing property yourself – yes, I too have listed more than 1 property with other offices. Why ? I practice what I preach, thats why.

Face to face buyer/seller I see many opportunities for immediate loss of strategy.

The buyers may think:

  • Well, you’re not paying an agent so I’d like to save that cost ( you get nothing extra for all your work ).
  • They ask a question, seller answers, they move in and have a problem and say ” well you said such and such and now I have this problem. ( extra pain, no financial gain )
  • Or buyer is  old, seller is young – buyer thinks, we’ll offer much less since we should be better off due to our age.
  • Or seller is old, buyer is young – buyer thinks, we’re young and craftier then seller, we’ll make sure we get the better deal.
  • Or seller is _____ and buyer is ______, the list goes on what personality and etc things can get in the way.
  • Forget the possibility for sellers violating disclosure requirements, HUD Fair Housing parameters.

So what about me a buyer going it alone and buying from a FSBO ? Been there done that didn’t go well. Did it once and never again. If an agent isn’t there to talk sense into a seller on my behalf re: price/ repairs/ etc etc, it always ends up a waste of my time. Unrealistic sellers that don’t have a plan of attack may even say YES to my fair price, but then I have to do all the work from then on with little to no help or cooperation  from them. So I have to earn my discount running things about, setting up appraisals, closings, inspections, and no lockbox makes for a really (not) fun time getting back in the property after acceptance of offer.

I’m not surprised the FSBO chief used and agent, after all, I – a broker – prefer not to rep my own properties !

5 things needed to make an offer

Its not the same as going to a garage sale – here, you want more than just the “garage” !

Yes you need qualification to buy, but as a buyer, you also want a mapped out strategy and the tools in hand to execute it. When we submit an offer, well typically be ready to defend & “sell” our buyers as best as possible with specific goals and strategy in mind.

  • Proof of ability to purchase: bank statement or lender letter
  • Our valuation packet – how we arrived at our buyers offer, support documents and calculations, why this is the sellers best expectation from a legitimate purchaser offering an amount a legitimate appraiser will confirm.
  • Fully signed by all buyers and witnessed offer packet, with full set of disclosures signed buy all buyers.
  • Strategy. This is were we are ready to act in a pre-discussed/ predetermined way. Will the seller ignore your offer ? counter ? accept ? or simply move on to other waiting offers. What you’d like to ultimately accomplish affects how we approach “the negotiating table”. Here’s were you’ll want someone who can speak knowledgeably on your behalf in matters involving timing, valuation, construction techniques relative to possible inspection results.

43 Steps to sell a house

In case you wondered. I’m thinking I’ve counted well over 100 on most.

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ps:

33 Steps REALTORs® do to complete a Purchase .

Yes, we can help you out of our local area.

Why I Love Referring People to Others

When I give someone a referral, it says that I trust that the person will do as thorough a job as I would.  I don’t pick names out of a hat.  I research who they are, what markets they work in, what type of personality they have, how conscientious they are, etc.  They know a fellow professional is looking over their shoulder. Then I talk to them over the phone to pick up more cues.  I don’t work for free; I earn a referral fee.  Most of the time, the referral works out great and it beats taking chances with unknown agents.

Why Home Prices Won’t Bottom

In theory, it should be a good time to buy a home. In the worst-hit areas, properties have lost more than half their value.

Yet as the average 30-year mortgage rate has slipped below 4 percent, the combination of employment insecurity and unusually tight standards for lending are discouraging buyers en masse. Lenders are asking for extensive income verification and tax returns. One lender I contacted for refinancing even wanted me to get an accountant to certify that I wasn’t lying to the IRS…….

FHA APPRAISAL REQUIREMENTS

Effective April 1, 2009, FHA appraisers must now provide the following:

  • The Market Conditions Addendum (Fannie Form 1004MC/Freddie Form 71)
  • At least two comparable sales that occurred within 90 days of appraisal date
  • A minimum of two active listings or pending sales in addition to the three closed comparables
  • Bracketed listings using both dwelling size and sales price when possible
  • Adjusted active listings to reflect the list-to-sales price ratio
  • Adjusted pending sales to reflect contract sales price when possible
  • The original list price and any revised list prices
  • Reconciliation of adjusted values of active or pending sales with adjusted values of closed comparable sales
  • Absorption rate analysis
  • Known or reported sales concessions on active and pending sales

This update includes this warning: “Direct Endorsement Lenders are reminded that if the appraiser they selected provides a poor or fraudulent appraisal that leads FHA to insure a mortgage at an inflated amount, the lender is held responsible equally with the appraiser for the integrity, accuracy and thoroughness of an appraisal submitted to FHA.”

Federal Retreat on Big Loans Rattles Housing

“We’re looking at more price drops, more foreclosures,” said Rick Del Pozzo, a loan broker. “This snowball that’s been rolling downhill is going to pick up some speed.”

For the last three years, federal agencies have backed new mortgages as large as $729,750 in desirable neighborhoods in high-cost states like California, New York, New Jersey, Connecticut and Massachusetts. Without the government covering the risk of default, many lenders would have refused to make the loans. With the economy in free fall, Congress broadened its traditionally generous support of housing to a substantial degree.       more

Housing Market is 3x Worse Than You Think

The states with the most distressed housing inventory are New Jersey, Illinois, Maryland, and Florida,… read more

For real estate, a giant spring clearance sale

Despite record affordability of homes, buyers are still spooked and staying on the sidelines 

..Existing home sales plunged nearly 10 percent in February to their lowest level in nine years. It was the largest drop since July. Forty percent of those sales were on distressed properties. And new home sales are on track to come in at just 250,000 this year, the fewest since the Kennedy administration, when there were 120 million fewer people in the United States….

Nationwide, forecasters expect house prices to drop at least 5 percent more this year.

..A recent study by Capital Economics found that 60 percent of sales are to foreigners and investors, most of them paying cash. In fact, in international real estate circles, the U.S. is viewed as the “new emerging market,”………..

“Why I Am Never Going to Own a Home Again”

Lady saying "Huh?"YAHOO’s reason for not buying, and a Realtors rebuttal. Obviously, having been a long time owner AND landlord myself, do you think I’d rent at a loss to you making it better for YOU to rent ? Please, after having rented to 50+ parties, I’ll own & gladly rent to you. Noted omission to reasons for owning: at the end you own something ( or me your landlord owns something ! ). signed, webmaster

30-Year Mortgage May Fade Away

nytforsale.jpg

How might home buying change if the federal government shuts down the housing finance giants Fannie Mae and Freddie Mac?

The 30-year fixed-rate mortgage loan, the steady favorite of American borrowers since the 1950s, could become a luxury product, housing experts on both sides of the political aisle say.

Interest rates would rise for most borrowers, ……

Life without Fannie and Freddie is the rare goal shared by the Obama administration and House Republicans,………..The reasons by now are well understood. Fannie and Freddie, created to increase the availability of mortgage loans, misused the government’s support to enrich shareholders and executives by backing millions of shoddy loans. Taxpayers so far have spent more than $135 billion on the cleanup.

Make Money in 2011: Your Home

………..What to Watch: Signs of an improving market: three straight months of rising sales and a decreasing inventory of homes (a six-month supply is considered healthy; today it’s 11 months). A local agent or realtor’s association can supply you with that data.

Action Plan: Buyers. Don’t try to time the market perfectly. Even if prices fall a bit more in your area, mortgage rates could rise later in the year, offsetting the drop. Initially bid about 10% below what comparable homes have sold for over the past three months; go even lower if the area is rife with foreclosures………………….

So you bought a foreclosed home. Now what?

But now thousands of foreclosures around the country may be invalid because of bank paperwork problems. Should you worry?

“Anyone who’s purchased a foreclosed property in the last three years should really be concerned,” says George Babcock, a Providence, R.I., attorney who represents homeowners who have been foreclosed on.

“They should call the attorney that did their closing and say, ‘Hey, do I have a problem?'”

Tax Auction Sales coming up, Call if you need a rep!

  • Step 1, look at the list of offerings…  http://www.michigan.gov/taxes/0,1607,7-238-43535_55601_55604—,00.html
  • #2: look up the property online/ local gov’t office/ physically inspect in person
  • #3: review the FAQ’s then go bid – OR send us on your behalf.
  • Subdivision plat maps for the entire state are available via the Department of Energy, Labor and Economic Growth (DELEG) at http://www.dleg.state.mi.us/platmaps/sr_subs.asp.

If the property doesn’t sell at the first “reserve” auction, or the 2nd “no reserve auction”, it can then be aquired via the Land Bank.  http://www.thelandbank.org/prop_acquisition.asp http://www.thelandbank.org/prop_find.asp?LRCsearch=setredo

RECENT RELATED ARTICLES/ INFO:

Where tax foreclosures are not handled by the state, the local governments are given option to sell properties themselves, typically thru the use of an auction company such as this one that offers online bidding at the first of 2 sales. Recall the spring sale is usually w/ reserve, often the fall sales ( for properties left over )  are no reserve and typically in person bidding is required: http://www.tax-sale.info/

Wayne County Treasurer to Auction Tax Foreclosed Properties Online

American Land Title Association (ALTA) policy, gives more coverage

ALTA’s expanded coverage policies cost about 10 percent more, but offer significantly more benefits. For example, the policies will pay up to 125 percent of the original insurance amount in case of claims to help account for inflation. Other expanded coverages include:

  • encroachments on the land made by neighbors after the date of the policy,
  • inability to access the property by vehicle or a pedestrian, and
  • zoning violations made by previous owners that must be corrected by the insured owner.
  • ( Paul pays for professional ed. classes, you hire him and get the knowledge at no extra charge ! …. back to class, p )

Detroit area long term prices headed up.

Housing Markets That Will Be Strongest by 2014

By Venessa Wong, Bloomberg Businessweek
Aug 4, 2010

Since reaching a peak in 2006, home prices in the Detroit area have fallen 60.5 percent, according to the Fiserv Detroit, MichiganCase-Shiller Indexes. As homes have become more affordable—the median home price in Detroit is lower than median family income—demand is expected to pick up. Prices are forecast to jump 33.1 percent over the next four years.

REO bargain hunting ? READ THE FINE PRINT

  • Some interesting posts I’m passing along
  • “…REO addendum are very extensive and put a lot of responsibilities and costs on the buyer
  • “…I’ve sold quite a number of REO’s to buyer clients. Prior to showing these properties I explain that if an offer is written, the bank will send us back their addenda, which will essentially be their new contract, weighted to the seller.  I also add that these bargain properties, are bargain priced for a reason and the sellers are removing any current and/or future liability once these properties are sold. I advise buyers in writing to review the offer AND addenda and  let them know that these addenda evolve with each sale meaning the sellers are updating the addenda to prevent a problem that occurred with their last deal.

Protected: Like new 1800 s/f 3BD/2bth/2car WATERFRONT Linden Schools 

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Housing’s Big “Shadow”: Up to 10M More Homes Could Be for Sale

So how big is the “shadow” hanging over housing? A recent Zillow.com survey shows 8% of homeowners, or about 10 million Americans, are “very likely” to sell if and as local conditions improve.