Buyers Need to Get Real About Foreclosures & Flipping Property

In my real estate business I am constantly approached with questions like “how can I get into a foreclosure?” “Can you get me access to bank owned homes?” “Where can I find foreclosures to flip?”

I decided to share with you some vital information to help dispel some of the myths about getting rich quick with foreclosure homes.

Slogans such as “Make $600,000 in less than a year! Buy houses for pennies on the dollar!” are common in the business of marketing the ‘foreclosure industry.’ They may also have you believing that you can just take a seminar or buy a book and you'll be on your way to millions in no time.

With foreclosure filings up more than 30% from a year ago, it's easy to entertain visions of buying cheap houses and flipping them for quick profits.

The only trouble is that the reality of the process is not so simple. Recent dramatic shifts in the real estate markets have changed the foreclosure business as well. An impetuous investor may not always get what they set out for. If you are looking to buy a “pre-foreclosure” or a “foreclosed” home read this and do your research before jumping in full force.

Sometimes the best investment is the one that no one is looking at because of the flexibility it gives you (these days everyone is looking at foreclosures!)

My advice is to buyers is to not dismiss a property or real estate listing because it is a “normal sale” thinking that it is not a great deal …sometimes those transactions are the more profitable ones and the sellers are easier to work with and will give you incentives, concessions and more time to close escrow.

Here is a list of three changes and some things you need to watch out for before diving in:

1. No Equity: Previously, investors used to send out letters to distressed homeowners and get responses from about 5-10% of their initial mailings. Of that 10% an investor maybe able to help several families by carrying paper so they can stay in their homes or by purchasing the home from them to avoid a foreclosure, and turn a good profit. A lot of these seminars and books about buying pre-foreclosures are using a version of this method. However, it is not as effective these days, especially in the Los Angeles market where most houses that are in trouble or in default are over leveraged or "underwater". Homeowners owe more on their homes than the homes are worth.

2. Media & Social Repercussions: Foreclosures are on the forefront of emotionally charged and political debates. The existence of such groups as the “Moratorium Now” a coalition are working to stop foreclosures and evictions nationwide has made it more difficult to profit from foreclosed homes.

Believe it or not, an investor/buyer may have trouble taking possession of a home -- or keeping it. For instance, a sheriff in Chicago who believed some people, especially renters, have been evicted without proper notice and told all deputies to stop evictions. In February, the Association of Community Organizations for Reform Now, also known as ACORN, announced a campaign of civil disobedience designed to help families resist eviction and remain in their homes after foreclosure.

The homeowners are also not as likely to accept a buyer’s attempts to purchase the home either. They feel like they were pushed into a bad loan or just emotionally drained by the possibility of losing their home. They don't exactly welcome your contact; sometimes, they're hostile.

3. Competition: Once a homeowner receives a notice of default, the foreclosure process is public. Some homeowners report being contacted by as many as 65 people offering to "help" during the pre-foreclosure period. At an auction, it's no better. You register and get a bidder's card or paddle, but so do as many as 2,000 other people. You could skip auctions and look for REOs, or real-estate-owned properties, where the bank has already foreclosed and owns the home. But those are put on the Multiple Listing Service rolls along with every other property. There's really no way to get around the competition. (MSN Money)

• Unethical Tactics: There is a seminar market that teaches you how to find people who are about to lose their homes and pretend to be their hero. The seminars teach you to pitch to owners that they will lose their home but at least save their credit. You use complicated contracts and high-pressure and scare tactics, and misrepresent what the homes are worth. What you're hoping is that your target homeowner has about 60 grand in equity. You take over his/her property, his/her loan -- AND his/her equity. This is unethical for obvious reasons and a deceitful way to do business.

• Overpaying at Auctions: Auctions are designed to create a buying frenzy. I have seen people buy homes at a premium because of the auction atmosphere and extra fees added on in some cases. It's easy to get caught up in it. There are a lot of auction companies advertising bank owned homes but they usually add a 5-10% to your winning bid price and homes sometimes go for current market value with little equity.

Also, lenders do not always take a loss by selling foreclosed homes. Short sales are very frequent these days but the properties are still being sold close to or at the current values in most cases. Remember, when a house sells for far less than both the market price and the mortgage, it makes the news exactly because that's the exception, not how it usually works. At trustee auctions, which occur in California after a home has been foreclosed, buyers have to come in with all cash offers and most of the time the bank ends up not accepting the bids if they are too low and prefers to place it on the regular market as and REO (real estate owned.)

• Rushed Decisions: Foreclosure auctions are a quick process, so when you find out a property is coming up for auction; you don't have much time to research it. You will still owe property taxes if there are any due. You will also have to pay the HOA fees, supplements, and dues (which can be really high in some buildings and PUDs in LA) and you will not have time for a home inspection. You will be receiving the home as is. If there is structural damage or major repair, permit, or city violation issues, you will be in for a big contractor bill!

My response to anxious foreclosure buyers is to be aware and knowledgeable about the process. Jumping into the foreclosure frenzy may not be the best move for a first time investor. Everyone has a different strategy for success. If someone is trying to sell you their strategy, I doubt that it will be a good fit. Find out what works for you first and stick with it!

Compliments of Zeina Zeitouni

LA Women's Business Examiner

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A Division of Richard Realty Groups, Inc 6986 El Camino Real, Ste. H, Carlsbad, CA. 92009 Cell: (760) 583-2107 eFax: (760) 496-1649

Find Out if Your Home Loan Qualifies..

Are you interested in refinancing your current home loan or modify your existing loan under the Ohama plan?

There are two websites you must visit to see if you have a Fannie Mae or a Freddie Mac loan.

If your mortgage loan is owned by Fannie Mae or Freddie Mac, you may be eligible for a Home Affordable Refinance to take advantage of lower interest rates. Only loans owned or guaranteed by Fannie Mae or Freddie Mac are eligible. Your mortgage company can tell you who owns your loan, or you can contact Fannie Mae and Freddie Mac directly by clicking on the links below and completing the forms for each company.

http://www.makinghomeaffordable.gov/loan_lookup.html

If your home is eligible follow the link below and answer the questions.

http://www.makinghomeaffordable.gov/refinance_eligibility.html

If your home is not eligible and you have exhausted all your options I might be able to help you with a short sale. Please visit my website to learn more about Foreclosure & Short Sales.

Homes4SaleSanDeigo.com

Always check with a CPA and/or real estate attorney about the impact a foreclosure or a short sale will have on you and your family.

Feel free to contact me with any questions or concerns.

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A Division of Richard Realty Groups, Inc 6986 El Camino Real, Ste. H, Carlsbad, CA. 92009 Cell: (760) 583-2107 eFax: (760) 496-1649

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IPhone. Why didn't someone tell me?

I been an iphone user for a little over a year and I've hated that phone.

I could not understand the adamant follower and why people loved it.

I had trouble with the speaker volume, the camera and most of all the keypad. No matter how hard I tried I couldn't strike that "A" or the "J" or the enter with somehow getting the letter beside it or above it.

Here I am thinking my finger is too fat. My eyes are really going. I don't have any co-ordination.

Well, sometime this week, I had a light bulb moment. With all the other phones, people use their thumbs to type. Sure enough, I tried it and low and behold I hit the correct type 90% of the time.

Why didn't anyone tell me?

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A Division of Richard Realty Groups, Inc 6986 El Camino Real, Ste. H, Carlsbad, CA. 92009 Cell: (760) 583-2107 eFax: (760) 496-1649

National Existing Home Sales Data

Home Sales Pace

Existing U.S. home sales rose in April, according to data from the National Association of Realtors. Sales were up 2.9 percent to a seasonally adjusted annual rate of 4.68 million units during the month, up from the upwardly revised 4.55 million units in March. Total sales were still down from a year earlier however, when the annual pace reached 4.85 million units.

The national median home price in April fell, though, to $170,200 from $175, 200 in March. The current price is down 15.4 percent from the same time last year.

The NAR defines existing homes as all previously-owned single-family homes, townhouses, condominiums, and co-ops. The group "seasonally adjusts" the sales numbers to factor in things like inclement weather, school sessions, winter holidays, etc to smooth out the trends. The NAR also describes its sales data based on an annual pace. The monthly figure represents the total number of housing units that sold in one year if the current rate were to continue unchanged.

Sales Pace by Region

Sales rose in all areas but the Midwest in April. The Northeast led the rise with an 11.6 percent increase in the annual pace of its sales. The rate quickened to 770,000 units. Sales are still down 10.5 percent from April 2008.

The West saw a 3.5 percent increase in sales in the latest month, with the rate climbing to 1.17 million. Sales are also up a whopping 19.4 percent from last year.

Sales in the South inched up by 1.8 percent to an annual rate of 1.74 million, but in a year-over-year comparison, they were down 8.9 percent.

The Midwest experienced a 2.0 percent drop in sales as the pace slipped to 1.00 million units, accounting for a 9.9 percent decrease from the previous year.


Home Prices

The median home price, the point at which half of all homes sold for more and half sold for less, fell in April led by losses in the West and the Midwest, and tempered by gains in the Northeast and South.

The median price for the West fell dramatically in April to $222,600, down from $252,400 in March, continuing to reflect the high volume of foreclosed properties on the market. The new figure is also down 21.8 percent from the previous year.

In the Midwest, the median sales price fell to $138,800 from $141,300 in March. The price is down 11.7 percent in year-over-year comparisons.

The median price in the South grew to $148,000 in April up from $146,900, but it has fallen 12.8 percent in the past year.

In the Northeast, the sales price rose to $237,400, an increase from $231,700 in March. The price is down 9.6 percent from April 2008 though.

Inventory

As sales grew in April, so did the number of homes for sale. Market inventory rose to 3.97 million units, an 8.8 percent increase from 3.737 million in March. At the current sales pace, the current total inventory represents a 10.2-month supply of homes. In March, there was only a 9.6-month supply.

Personally, I feel that the numbers are inaccurate because of all the moratoriums placed on foreclosures. Homeowners are long over due for receiving notice of defaults on their properties. The lenders and the government continue to hold onto these toxic assets in order to try and stabilize the economy but this is just delaying the inevitable.

Statistics tell us that even those who are able to obtain a loan modification on their current loans more than 60% still end up back in foreclosure.

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Foreclosure Crisis Spreads to Good Credit Homeowners

Foreclosure Crisis Spreads to Good Credit Homeowners

The current recession has finally pushed even homeowners with good credit ratings to start filing in droves for foreclosure. What started with mass defaults of subprime, or poor credit loans, has now spread in the form of general economic downturn to those who actually took on mortgage debt sensibly.

According to the latest Mortgage Bankers Association National Delinquency Survey released Thursday, a record 9.12 percent of all homeowners were behind on their mortgage payments in the first quarter of 2009, an increase of 2.77 percent from last year and an all-time record high. The total percentage of mortgages already in foreclosure during the first three months of the year grew to 3.85 percent, also a record high.

It is no surprise that a significant portion of these mortgages are those of subprime borrowers with risky adjustable rate mortgages (ARMs). In fact, almost half of all such poor credit loans are in default or foreclosure, confirming that it was never a good idea to start lending willy-nilly to those who hadn't been able to keep up with their financial obligations in the past.

What was a surprise, however, is that prime or good credit borrower loans are now rapidly entering foreclosure territory.

"In looking at these numbers, it is important to focus on what has changed as well what continue to be the key drivers of foreclosures," said MBA chief economist Jim Brinkmann

"What has changed is the shifting of the problem somewhat away from the subprime and option ARM/Alt-A loans to the prime fixed-rate loans. The foreclosure rate on prime fixed-rate loans has doubled in the last year, and, for the first time since the rapid growth of subprime lending, prime fixed-rate loans now represent the largest share of new foreclosures. In addition, almost half of the overall increase in foreclosure starts we saw in the first quarter was due to the increase in prime fixed-rate loans. More than anything else, this points to the impact of the recession and drops in employment on mortgage defaults."

The MBA report found that almost 6 percent of all prime borrowers with fixed rate loans are now in foreclosure or behind on their payments. The subprime crisis of 2006 that led to the broader financial market crisis has now left many generally fiscally responsible people jobless and without means to keep up with their loan payments. The number of people filing for unemployment benefits has dropped in each of the past two weeks, but the overall unemployment rate in the U.S. has risen to 8.9 percent, with 13.7 million Americans out of work as of April, according to government figures.

Are we likely to see an end to these good credit delinquencies anytime soon? Well, if you consider the end of next year soon, then yes. Brinkmann made it clear he thinks the broader economy will have to stabilize first.

"MBA's forecast, a view now shared by the Federal Reserve and others, is that the unemployment rate will not hit its peak until mid-2010. Since changes in mortgage performance lag changes in the level of employment, it is unlikely we will see much of an improvement until after that," said Brinkmann.

If you enjoyed this post you may also want to check out.....

Buyers Don't Know about Short Sales.

Short Sale Before Foreclosure

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Buyers Don't Know about Short Sales.

Buyers don't know what a short sale is. Many real estate agents don't even know what a short sale is. So why would we, in the real estate profession, expect a buyer to understand the process?

I talk to buyer's almost every day. One of the first questions I ask is, "Do you know what a short sale is?" Even if they tell me they do, I explain the process.

We all need to do a better job at educating our buyers.

I would love it if all my buyer agents would educate their buyers about how the Short Sale process works.

Just a few things to talk to our buyer's about:

1. Short Sales can take a long time. Every lender is different, and every negotiator who is assigned a file is different. Some are very good and do their job well, others not so good.

2. Short Sale Lenders are not like traditional sellers. The transaction is only about the numbers. There is no emotion involved. The lenders do not care about the buyer’s time lines nor the sellers.

3. Every Short Sale approval letter is specific to one buyer. They are not interchangeable. The process starts all over again with each buyer.

4. Short Sale lenders will communicate only when they want to. Nothing we as agents can say will light a fire under them to hurry. Most asset manager won't communicate with the agent until they are ready to approve the file. At best, we get to speak to customer service and they will tell us if there are any notes in the file.

My short sale listings have all been approved.

My shortest listing went 50 days from listing date to close of escrow. Not one bump in the road. Many thanks to the buyer's agent.

My longest short sale listing is going on 524 days. It's a lovely property and I have had many offers but every one of the 6 buyers, got tired of waiting for the approval and canceled. The agent's always tell me they have counseled the buyer and the buyer understands, but obviously they don't really understand how frustrating this process can take.

My short sale buyers always stay the course with the contracts we write. Sure they get discouraged and frustrated but I tell them of the successes. They have all gotten great buys and always thank me.

Spending time and educating our buyers will save us all alot of time and energy.

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2009 Summer Season at the Moonlight Amphitheatre

When I first moved to North San Diego county, a wonder neighbor introduced me to the Moonlight Amphitheatre, located at Brengle Terrace Park‎ right here in Vista.

I fell in love and have been a season ticket holder ever since.

The amphitheatre offers summer musicals with full orchestra and a mixture of professional and local artists.

This summer, there are three staged productions each running for two weeks.

Guests can sit in reserved seats, or sit on the lawn in lawn chairs. Almost everyone brings a picnic dinner (alcohol is allowed). The productions are always first rate and of extremely high quality. There is not a bad seat in the place.

The tickets are very affordable and a good time is had by all, both young and old. Tickets run from $22.00 to $44.00 for a most pleasant fun-filled evening. Season tickets run from $54.00 to $102.00.

The first production is 42nd Street which will run from Jul 15 to Aug 1. Click here for more details.

Second production will be Phantom which will run from Aug 12 to Aug 29. Click here for more details.

The third production is Cats and it's run is Sep 9 to Sep 26. Click here for more details.

Call Vistix 760.724.2110 for more information.

I hope you will give it a try and tell your friends!