DIY Buyers….Due diligence

Due diligence is the name of the game when buying a home online. Craigslist & eBay … all chances to be scammed.

Advice boils down to research.

  • Research the house,
  • find out who has the title,
  • confirm the square footage and lot measurements,
  • find out if that lot can be built on or subdivided.
  • The estimated value of the property could be out of date. Find out if there are any development plans for the neighborhood.
  • Are there code violations, back taxes, demolition orders?
  • Does the seller really own the house?  <<< This is a good one for renters, yes, many folks are now renting from someone repping a vacant house they don’t own !

Real Estate May Be The Buying Opportunity of the Decade

After you read the below article I posted in 2012, jump on forward to this:

Investing: then and now

 

… so said Time mag back in July 2011. Click the photo to check their logic.

I wouldn’t have called out the buyers quite so quick, but now I’m bullish on buying. Why now ? Here’s a couple Detroit area articles showing recent price movements.

BTW, nationally, the big increases are right now happening in the areas that took the biggest hits….no surprise in that, to wit: Miami, Detroit, Arizona, LasVegas…etc.

 

The new rules for buyers and sellers

Real Estate Resurgence � How Buying and Selling Has Changed

See more: http://networthaffiliates.com/pinterest-cac09.html

Moving up: Whats that big dream house cost in time and money ?

There are some good articles and checklists on why owning a home, moving, or large home vs a smaller one is more expensive. Based on many factors I typically discuss w/ a buyer/seller up front, I agree on most points – based on planned usage, time you plan to stay there and many other factors.

Up front I give a buyer/seller a questionnaire to help them sort thru variables as well as help me understand how to better service them as a brokerage customer/client &/or how to screen other professionals if retained for a referral situation.

For as many costs of more time and money, with some pre-planning you might come out ahead with a larger home or a larger yard. Whats the time savings of a soccer space in the back yard over a regular trip to the park. How about a vegetable garden, in-law apartment, in-home office/studio for your business, renting storage space in the pole barn, Christmas tree stock, pumpkins the kids will sell, hardwoods for the woodstove,  closing off outer/ northern rooms in winter to buffer the main rooms for easier heating ? There are tax savings & income possibilities if done right.

But I do prefer one start with the downside of reality in case one never uses the beneficial aspects.

Better than “house hunters”

Before I rehabbed my first investment property back in my college days, I read and Anibal-Group-LLCs-RealtyNetWorth-Handyman-Short-Sale-old-housereread 2 books by the investing couple Sam and Mary Weir, e.g.: How We Made A Million Dollars Recycling Great Old Houses.    I remember taking a trip east to look up these addresses and see if it was all real – it was !

The books are a bit dated, but the ideas in them are not – still one of the best quick easy but realistic reads for the just starting out investor I can think of. Clients that retain me I actually give them a free copy of this upon request via Facebook.

Fast forward to the HGTV days. I’m not a TV watcher, but these guys seem to be the modern rough equivalent primer for the wannabe/current investor.  Here’s the quip and link:

Property Brothers.” features people who buy a fixer-upper and renovate it into their dream home with the help of twins Jonathan (the contractor) and Drew (the real estate agent) Scott. 

decent article


 

Adaptive reuse / flexible use

I tend to look at properties from a “multi-use” perspective.

I might say to a prospective buyer client “will you ever work from home ?…have customers stop by ?…. want rent out part for future/retirement income stream ?… have retired parent(s) live with you ?… have a business & residence at the same location ?

In our up/down economy that has become more of the norm in recent years these are valid considerations. I prefer to start with “when will you move” or “what might cause you to have to move”, to help a buyer consider liquidity – and the “what if you can’t sell” perspective.

I’ve linked to an article on an adaptive reuse option that has always intrigued me. Converted factories turned dazzling homes

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 not so surprising.  CEO of ForSalebyOwner.com, Colby Sambrotto sold his home using a Realtor! said the article title.Anibal-Group-LLC-RealtyNetWorth-Marketing-Open-House-Signs_3_In-Yard_Open_ForSale_Website-2

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, that’s why.

With face to face buyer/seller situations 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 in a better negotiating position 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 anibal-group-llc-realty-net-worth-all-over-usa-seal-beach-california.pngbetter 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, silent fraud, implied warranties,….

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 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 an 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?'”