When planning a home office remodel, consider the specific needs of your profession for space, light, storage, technology, and security.If you’re looking for a remodeling project that will make your house more salable in the future, a home office may well be it. When the National Association of Home Builders asked builders, architects, manufacturers, and marketing experts to predict the features that will be important to buyers of upscale properties in 2015, 94% said a home office would be “critical” or “very critical.”
That said, while an office may make your home more attractive to potential buyers, it won’t add significantly to value. According to Remodeling Magazine’s Cost vs. Value Report, converting a 12-by-12-foot bedroom into an office costs a national average of around $28,000 and recoups slightly less than half the investment. But if you’re among the more than 20% of Americans who do some or all of their job at home, a comfortable, functional work space is a must-have.
Where to put a home office
A spare bedroom is the most common place for an office, but it’s not the only adaptable space in the house. The formal living rooms and dining rooms in many older homes often don’t get a lot of use and make great offices, says Lisa Kanarek, founder of WorkingNaked.net, a service for people “stripped of the support” of the corporate office. “They’re spacious, have good light, and are easy to close off,” Kanarek says.
Architect Sarah Susanka, author of “Not So Big Remodeling,” converted her formal living room into an office for her therapist husband. It’s close to the front door and has easy access to the powder room, both important considerations if your business brings visitors into the home. Attics, basements, dens, sunrooms, garages, even laundry rooms are similarly convertible.
One important question is whether you’ll be taking the home office deduction on your taxes. If so, your work area can’t be used for any other purpose; the IRS bases the deduction on square footage used “exclusively and regularly” for business activities. Consult your accountant about whether the deduction makes sense for you.
What to spend on a home office
The home office in the Cost vs. Value report cost just over $28,000 to set up, a figure that includes custom cabinetry, 20 linear feet of laminate desktop, wall-mounted storage, upgraded electrical and data wiring, and new woodwork, paint, and flooring.
Of course, you don’t have to spend that much. By using off-the-shelf products and materials and doing some of the work, such as painting, yourself, you can transform an existing room into a home office for a lot less money. At minimum, though, budget $3,000 to $5,000 for paint, flooring, lighting, office furniture, and equipment.
Consider the needs of your profession
When evaluating space, start by making a list of the needs of your profession. An architect, for example, might want natural light and ample counter space for rolling out blueprints, while a vendor needs easily accessed storage for shipping supplies. In general, every office requires a work surface, storage, place for a computer and other electronics, and adequate lighting. Consider also your needs for the following:
Power, phone, and data wiring. A bedroom may already have enough outlets and at least one phone or cable jack, but if you’re taking over a formal dining room, you’ll likely need new wiring. It’s a relatively easy job for an electrician to add outlets (typically $100 to $250 per receptacle, depending on whether you also need to run new circuits). Internet connections can often be handled wirelessly, but for maximum reliability and security, ask your phone or cable company about installing additional lines.
Privacy. Susanka says the biggest mistake her clients make is putting their office in the middle of their home’s hustle and bustle. “The environment for work needs to be off the main living area,” she says. That doesn’t mean you need to hide out in the basement, but you’re better off out of the major traffic zones, especially with children at home.
Security. If your work involves financial or other confidential records, think about how you’ll keep them secure. “I have client credit card numbers in my office,” says Paige Rien, designer for the HGTV show “Hidden Potential.” “I close the door and lock it.” (For more on keeping important documents safe, take our home office security checkup.)
When dedicated space isn’t an option
Not everyone has a spare room to devote to an office. In that case, you need to find creative ways to carve out space. Offices can often be tucked into little-used locations, such as under stairs, in dormers, and on second-floor landings. One of Kanarek’s clients set up in a walk-in closet. “She lined the walls with counters and put in mirrors to make the space feel bigger,” Kanarek says.
Closets offer a good compromise because you can close the doors on your job at the end of the day. Another option is a computer armoire; starting at around $500, you can get one with shelves for a computer and peripherals, a slide-out keyboard tray, organizers for files, even built-in cork boards. If that’s out of your budget, set off a corner of the living room or family room with a room divider, bookcases, or a folding screen.
Whatever you do, Kanarek advises, try working in the space for a few weeks before investing any money in remodeling. “I have clients who spend thousands of dollars on built-ins,” she says, “and then sit on their bed or at the kitchen table to work because they like the light there better.”
Pat Curry is a contributing editor to HousingZone.com, a former senior editor at BUILDER, the official magazine of the National Association of Home Builders, and a frequent contributor to real estate and home-building publications.
Tuesday, February 9, 2010
Home Office: Return on Investment
A home office adds to comfort, convenience, and salability, but isn’t among the top projects for adding home value.
If you’re one of the more than 20% of Americans who do some or all of their work at home, a comfortable, functional home office is a must-have. And it’s a feature that’s growing in popularity: When the National Association of Home Builders asked builders, manufacturers, and marketing experts what features would be important to future home buyers, 94% said a home office would be “critical” or “very critical.”
Still, when it comes to adding value, a home office ranks last among the 21 midrange projects analyzed in Remodeling Magazine’s annual Cost vs. Value report. Converting a 12-by-12-foot bedroom into an office costs a national average of $28,375 and recoups $13,648 at resale, for a 48% return on investment, according to the 2009-2010 report. Construction costs include custom cabinetry and work surface, wall-mounted storage, a wiring upgrade, and new floor and wall finishes.
Regionally, returns varied only slightly, with the highest rate of return, 56%, in the Pacific region, and the lowest, 41%, in the upper Midwest.
National average cost to convert an existing 12 x 12 room into a home office:
Job cost: $28,375
Resale value: $13,648
Cost recoup: 48.1%
If you’re one of the more than 20% of Americans who do some or all of their work at home, a comfortable, functional home office is a must-have. And it’s a feature that’s growing in popularity: When the National Association of Home Builders asked builders, manufacturers, and marketing experts what features would be important to future home buyers, 94% said a home office would be “critical” or “very critical.”
Still, when it comes to adding value, a home office ranks last among the 21 midrange projects analyzed in Remodeling Magazine’s annual Cost vs. Value report. Converting a 12-by-12-foot bedroom into an office costs a national average of $28,375 and recoups $13,648 at resale, for a 48% return on investment, according to the 2009-2010 report. Construction costs include custom cabinetry and work surface, wall-mounted storage, a wiring upgrade, and new floor and wall finishes.
Regionally, returns varied only slightly, with the highest rate of return, 56%, in the Pacific region, and the lowest, 41%, in the upper Midwest.
National average cost to convert an existing 12 x 12 room into a home office:
Job cost: $28,375
Resale value: $13,648
Cost recoup: 48.1%
Friday, January 22, 2010
Create a Marketing Plan
Create a Personal Marketing Plan
Now that you’ve embarked on your new real estate career, one of the most important things to do is to let people know about it. Personal marketing is the process of getting your name “out there,” so that people think of you when they need to buy or sell a home.
How do you do that? The first step is to develop a Personal Marketing Plan, a written document that describes your business goals and how you plan to achieve them. The plan should include:
Objectives and goals. Clearly state what you want to accomplish for yourself in your new career—is it letting all of your family and friends know that you’re in real estate, attaining 10 listings in your first year, or achieving name recognition in 50 percent of your target market area? Be sure to quantify your goals so you can measure your accomplishments.
Audience. Who is your target market? Is it everyone within a particular geographic area? Is it certain type of homes or a particular group of like-minded people? You shouldn’t try to be all things to all people. It’s a good idea to select one or two groups to target with your marketing efforts.
Differentiation. What makes you unique? Setting yourself apart from other salespeople is essential in a crowded marketplace. Decide how you’ll approach real estate sales to set yourself apart from others in your market. Also determine whom you will appeal to, and tailor your message to this audience.
Media. Determine which media—print advertising, brochures, Web site, in-person marketing, community involvement—you’ll use to get the word out about your services. Focus on two or three media initially to control marketing costs and determine effectiveness.
Action plan and schedule. Establish a detailed to-do list to execute your marketing plan. You need to be consistent in your marketing and stick to a marketing approach for at least six months. Repetition is the key to having prospects remember you. For a sample action plan for a salesperson with limited marketing funds, click here .
Budget. Once you have a marketing plan, establish a budget. It may be tough to think about spending money when you may not have made much, or any, money in real estate yet. But most veteran practitioners agree that setting a marketing budget from the beginning of your career to promote yourself and your services is essential to achieving success in real estate. (See the following section, Develop Marketing Materials , for a list of the marketing materials—business cards, brochures, and so on—you’ll need.)
Determine how much you need to spend to acquire the basic marketing materials by getting estimates from vendors. To get started, you can spend a small amount to have your business cards and personal brochures made now and then allocate, say, 10 percent of your commission in the first few years to develop other marketing materials.
Once you have a marketing plan and budget in place, be sure to re-evaluate it each year. It’s important to determine if you’ve met your goals for the year, and if you haven’t, decide what you need to do differently the following year to accomplish your goals. You also should increase your goals or set new priorities each year to ensure that you continue to grow your success.
Now that you’ve embarked on your new real estate career, one of the most important things to do is to let people know about it. Personal marketing is the process of getting your name “out there,” so that people think of you when they need to buy or sell a home.
How do you do that? The first step is to develop a Personal Marketing Plan, a written document that describes your business goals and how you plan to achieve them. The plan should include:
Objectives and goals. Clearly state what you want to accomplish for yourself in your new career—is it letting all of your family and friends know that you’re in real estate, attaining 10 listings in your first year, or achieving name recognition in 50 percent of your target market area? Be sure to quantify your goals so you can measure your accomplishments.
Audience. Who is your target market? Is it everyone within a particular geographic area? Is it certain type of homes or a particular group of like-minded people? You shouldn’t try to be all things to all people. It’s a good idea to select one or two groups to target with your marketing efforts.
Differentiation. What makes you unique? Setting yourself apart from other salespeople is essential in a crowded marketplace. Decide how you’ll approach real estate sales to set yourself apart from others in your market. Also determine whom you will appeal to, and tailor your message to this audience.
Media. Determine which media—print advertising, brochures, Web site, in-person marketing, community involvement—you’ll use to get the word out about your services. Focus on two or three media initially to control marketing costs and determine effectiveness.
Action plan and schedule. Establish a detailed to-do list to execute your marketing plan. You need to be consistent in your marketing and stick to a marketing approach for at least six months. Repetition is the key to having prospects remember you. For a sample action plan for a salesperson with limited marketing funds, click here .
Budget. Once you have a marketing plan, establish a budget. It may be tough to think about spending money when you may not have made much, or any, money in real estate yet. But most veteran practitioners agree that setting a marketing budget from the beginning of your career to promote yourself and your services is essential to achieving success in real estate. (See the following section, Develop Marketing Materials , for a list of the marketing materials—business cards, brochures, and so on—you’ll need.)
Determine how much you need to spend to acquire the basic marketing materials by getting estimates from vendors. To get started, you can spend a small amount to have your business cards and personal brochures made now and then allocate, say, 10 percent of your commission in the first few years to develop other marketing materials.
Once you have a marketing plan and budget in place, be sure to re-evaluate it each year. It’s important to determine if you’ve met your goals for the year, and if you haven’t, decide what you need to do differently the following year to accomplish your goals. You also should increase your goals or set new priorities each year to ensure that you continue to grow your success.
Thursday, December 17, 2009
What Your Remodeling Contract Should Say
Review your remodeling contract carefully and adjust it to make sure it protects you in terms of payments, work schedules, and project specifications.
Even if you never intend to pick up a hammer for your remodeling project, there's one tool that's absolutely essential-a solid contract. But just having one often isn't enough. That's because the document a contractor gives you is designed to protect him. It's up to you to add in some basic protections for yourself. Here's what you need to know to make sure the remodeling contract you sign includes solid legal protection for you and your home.
Hiring a lawyer to review and make changes to a contract is a safe bet, especially since each state has its own construction-contract statutes. But not many homeowners are willing to shell out $500 for an attorney review, plus $1,000 to $1,500 additional fees to make wholesale revisions to a flawed contract. However, you can hand-write changes and additions in plain English and make sure both you and the contractor initial each change to the document, says Tampa, Fla., attorney George Meyer, who is chair-elect of the American Bar Association's Forum on the Construction Industry. Here's what you want to add (and subtract).
Project specs
Start by reviewing your contract, a process that should take several hours. The most important element of a contract is a thorough and complete description of the project, and the materials and the products that will be used. "It should say that the contractor will secure all necessary permits and approvals as well as what walls are being moved where, what type of countertops are going in, what type of sink, what type of faucet, and so forth," says Meyer. "You can't rely on everyone's memory because if there's a problem later, people may remember different things." The contract needn't contain these specs on its pages, it can simply refer to the contractor's attached itemized bid. Avoid allowances, which are pools of money set aside for work to be determined later, and which often lead to cost overruns.
Payment schedule
The contract should also state the total price for the job, and that it's a fixed price-not an estimate. It should provide a schedule of how the payments will be made by linking them to milestones in the work-such as when the foundation, rough plumbing, and electricity will be completed-so you're paying for work only after it's done. "You should always have enough money left to hire someone else to finish the work if need be," says Meyer. In general, the first payment should be no more than 10% of the total job and the final payment should be at least a few thousand dollars to ensure that it's a big enough incentive to get the contractor back for the final niggling details. If you're unsure whether the payment schedule is proportional to the milestones your contractor suggests, ask a friend who's familiar with construction process or consult a construction attorney.
Start and end dates
A contractor's boilerplate contract rarely includes dates for when he will begin work and when he will complete the job, so make sure those details are included. It's not that he'll be penalized if it runs late, only that if you ever have a major problem and need to sue him-or defend yourself from a suit he brings-showing that the contractor is, say, two months behind schedule will help you make your case. The dates needn't be too exacting. If he says it's a six to eight week job, eight or even nine weeks is fine for the contract, says Meyer.
Statement about change orders
Make sure the contract contains a line stating that any changes that will affect the cost of the job must be priced in writing and countersigned by both the contractor and homeowner before that work commences. That ensures that an offhand discussion about a possible change to the project won't result in a huge unforeseen additional cost. It also helps you, as the homeowner, keep track of exactly how much you've added to the bottom line, so you can avoid the very common urge to keep expanding the job.
Binding arbitration
Many contractors include a line that says that rather than going through the courts, disputes will be resolved by an arbitrator. Some legal experts feel that this is a quicker and lower-cost solution to problems, so a binding arbitration clause isn't necessarily a problem. What can be trouble is if the contract requires a specific arbitrator. "There are some big, national, well-respected arbitrators, like the American Arbitration Association," says Meyer. "And there are other questionable arbitrators that always side with the contractor. If a particular arbitrator is specified, I'd do some internet research about the agency to make sure it's legit."
Warranty
Having the contractor's warranty in the contract seems like a good thing, right? Well including it is often actually a technique for limiting how much liability the contractor has. "It's usually loaded up with exclusions and time limits," says Meyer, "and you're actually better off with no mention of warranty at all because then the only limits on his warranty are what's in the state statutes." In other words, keeping the contractor's warranty language in the contract will likely mean you're agreeing to less than what state law provides. For example, state law may specify a longer warranty term than what the contractor's warranty offers. So, unless you're having a lawyer review the contract, strike the warranty clause.
Technicalities
There are numerous state-by-state requirements for construction contracts. He may have to include his contractor's license number, for example, and he may have to include a clause saying you have the right to rescind the contract within a certain time period after signing. And unless you and the contractor sign the document, it doesn't matter what it says-it's not a valid contract.
A former carpenter and newspaper reporter, Oliver Marks has been writing about home improvements for 16 years. He's currently restoring his second fixer-upper with a mix of big hired projects and small do-it-himself jobs.
Even if you never intend to pick up a hammer for your remodeling project, there's one tool that's absolutely essential-a solid contract. But just having one often isn't enough. That's because the document a contractor gives you is designed to protect him. It's up to you to add in some basic protections for yourself. Here's what you need to know to make sure the remodeling contract you sign includes solid legal protection for you and your home.
Hiring a lawyer to review and make changes to a contract is a safe bet, especially since each state has its own construction-contract statutes. But not many homeowners are willing to shell out $500 for an attorney review, plus $1,000 to $1,500 additional fees to make wholesale revisions to a flawed contract. However, you can hand-write changes and additions in plain English and make sure both you and the contractor initial each change to the document, says Tampa, Fla., attorney George Meyer, who is chair-elect of the American Bar Association's Forum on the Construction Industry. Here's what you want to add (and subtract).
Project specs
Start by reviewing your contract, a process that should take several hours. The most important element of a contract is a thorough and complete description of the project, and the materials and the products that will be used. "It should say that the contractor will secure all necessary permits and approvals as well as what walls are being moved where, what type of countertops are going in, what type of sink, what type of faucet, and so forth," says Meyer. "You can't rely on everyone's memory because if there's a problem later, people may remember different things." The contract needn't contain these specs on its pages, it can simply refer to the contractor's attached itemized bid. Avoid allowances, which are pools of money set aside for work to be determined later, and which often lead to cost overruns.
Payment schedule
The contract should also state the total price for the job, and that it's a fixed price-not an estimate. It should provide a schedule of how the payments will be made by linking them to milestones in the work-such as when the foundation, rough plumbing, and electricity will be completed-so you're paying for work only after it's done. "You should always have enough money left to hire someone else to finish the work if need be," says Meyer. In general, the first payment should be no more than 10% of the total job and the final payment should be at least a few thousand dollars to ensure that it's a big enough incentive to get the contractor back for the final niggling details. If you're unsure whether the payment schedule is proportional to the milestones your contractor suggests, ask a friend who's familiar with construction process or consult a construction attorney.
Start and end dates
A contractor's boilerplate contract rarely includes dates for when he will begin work and when he will complete the job, so make sure those details are included. It's not that he'll be penalized if it runs late, only that if you ever have a major problem and need to sue him-or defend yourself from a suit he brings-showing that the contractor is, say, two months behind schedule will help you make your case. The dates needn't be too exacting. If he says it's a six to eight week job, eight or even nine weeks is fine for the contract, says Meyer.
Statement about change orders
Make sure the contract contains a line stating that any changes that will affect the cost of the job must be priced in writing and countersigned by both the contractor and homeowner before that work commences. That ensures that an offhand discussion about a possible change to the project won't result in a huge unforeseen additional cost. It also helps you, as the homeowner, keep track of exactly how much you've added to the bottom line, so you can avoid the very common urge to keep expanding the job.
Binding arbitration
Many contractors include a line that says that rather than going through the courts, disputes will be resolved by an arbitrator. Some legal experts feel that this is a quicker and lower-cost solution to problems, so a binding arbitration clause isn't necessarily a problem. What can be trouble is if the contract requires a specific arbitrator. "There are some big, national, well-respected arbitrators, like the American Arbitration Association," says Meyer. "And there are other questionable arbitrators that always side with the contractor. If a particular arbitrator is specified, I'd do some internet research about the agency to make sure it's legit."
Warranty
Having the contractor's warranty in the contract seems like a good thing, right? Well including it is often actually a technique for limiting how much liability the contractor has. "It's usually loaded up with exclusions and time limits," says Meyer, "and you're actually better off with no mention of warranty at all because then the only limits on his warranty are what's in the state statutes." In other words, keeping the contractor's warranty language in the contract will likely mean you're agreeing to less than what state law provides. For example, state law may specify a longer warranty term than what the contractor's warranty offers. So, unless you're having a lawyer review the contract, strike the warranty clause.
Technicalities
There are numerous state-by-state requirements for construction contracts. He may have to include his contractor's license number, for example, and he may have to include a clause saying you have the right to rescind the contract within a certain time period after signing. And unless you and the contractor sign the document, it doesn't matter what it says-it's not a valid contract.
A former carpenter and newspaper reporter, Oliver Marks has been writing about home improvements for 16 years. He's currently restoring his second fixer-upper with a mix of big hired projects and small do-it-himself jobs.
When It Pays to Do It Yourself
Doing home-improvement jobs yourself can be a smart way to save money, but choose the right DIY projects or you'll end up paying dearly.
Why pay someone big bucks to do something you can just as easily do yourself? That's the thinking that has gotten more Americans than ever swinging their own hammers. In a recent Time magazine poll, nearly a quarter of people said they were taking on more home-improvement projects themselves-understandably so, when you consider that it usually means a 50% to 75% discount, since all you pay for is materials.
But sometimes doing it yourself costs more than it saves, like when you decide to replace the toilet, end up flooding the basement, and have to pay a pro to fix your mistakes. Or, worse, if you become one of the more than 100,000 people injured each year doing home-improvement jobs. Here are some guidelines for deciding when DIY can save you money and when it could cost you.
Stick to routine maintenance for savings and safety
Seasonal home maintenance is ideal work for the DIY weekend warrior, since you can plan tasks in advance and get to them when your schedule allows. Because these are repeat projects, your savings will add up to big bucks over the years. Just by mowing your own lawn, for example, you can save $55 to $65 a week for a half-acre lawn during the growing season. The bigger the lot, the bigger the savings: with two acres, you'll pocket around $150 per week.
When It Pays: Look for maintenance jobs that are relatively easy and need to be done regularly, so you can hone your skills over time. In addition to mowing, other good ones are snow removal, pruning shrubs, washing windows, sealing the deck, painting fences, fertilizing the lawn, and replacing air conditioner filters.
When It Doesn't: Unless you have skill and experience on your side, stay off of any ladder taller than six feet; according to the U.S. Consumer Product Safety Commission, more than 164,000 people end up in emergency rooms every year because of ladder injuries. The same goes for operating power saws or attempting any major electrical work-it's simply too risky if you don't have the experience.
Act as your own GC on small jobs
If you're more comfortable operating an iPhone than a circular saw, you may be able to act as your own general contractor on a home-improvement project and hire the carpenters, plumbers, and other tradesmen yourself. You'll save 10% to 20% of the job cost, which is the contractor's typical fee.
When it Pays: If it's a small job that requires only two or three different tradesmen, and you have good existing relationships with top-quality professionals in those fields, consider DIY contracting.
When It Doesn't: Unless you have an established network of contacts who will show up as promised, the time to spend on oversight, enough construction experience to spot potential problems, and the skill to negotiate disputes between the various subcontractors, trying to manage your own project can quickly send the schedule and budget off the rails.
Pitch in with sweat equity on big jobs
Contributing your own labor on a big job being handled by a professional crew can cut hundreds or even thousands of dollars off the contractor's bill. Tear the cabinets and appliances out of your old kitchen before the contractor gets started, say, and you might knock $800 off the cost of your remodel, says Dean Bennett, a design/build contractor in Castle Rock, Colorado.
When it Pays: Grunt work-jobs that are labor intensive but require relatively little skill-makes the best homeowner contribution. Offer to do minor interior demolition like removing cabinets and pulling up old flooring, daily jobsite cleanup, product assembly, and simple landscaping like planting foundation shrubs and grass seed around your new addition.
When It Doesn't: If you get in the crew's way, you may slow them down far more than you help. Make your contributions when the workers aren't around, such as in the morning before they arrive, or on nights and weekends after they've left.
Put on some of the finishing touches
Unlike the early phases of a construction job, which require skilled labor to frame walls, install plumbing pipes, and run wiring, many of the finishing touches on a project are comparatively simple and DIY-friendly. If you do the painting yourself for a new basement rec room, for instance, you can easily save $1,800, Bennett says.
When it Pays: If you have the skill-or a patient temperament and an experienced friend to teach you-finish work like setting tile, laying flooring, painting walls, and installing trim are all good DIY jobs.
When It Doesn't: The downside to attempting your own finish work is that the results are very visible. Hammer dents in woodwork, for example, or sander ruts in your hardwood floors may cause you aggravation every time you see them. So unless you have a sure eye and a steady hand, it may not pay to embark on these tasks.
A former carpenter and newspaper reporter, Oliver Marks has been writing about home improvements for 16 years. He's currently restoring his second fixer-upper with a mix of big hired projects and small do-it-himself jobs.
Why pay someone big bucks to do something you can just as easily do yourself? That's the thinking that has gotten more Americans than ever swinging their own hammers. In a recent Time magazine poll, nearly a quarter of people said they were taking on more home-improvement projects themselves-understandably so, when you consider that it usually means a 50% to 75% discount, since all you pay for is materials.
But sometimes doing it yourself costs more than it saves, like when you decide to replace the toilet, end up flooding the basement, and have to pay a pro to fix your mistakes. Or, worse, if you become one of the more than 100,000 people injured each year doing home-improvement jobs. Here are some guidelines for deciding when DIY can save you money and when it could cost you.
Stick to routine maintenance for savings and safety
Seasonal home maintenance is ideal work for the DIY weekend warrior, since you can plan tasks in advance and get to them when your schedule allows. Because these are repeat projects, your savings will add up to big bucks over the years. Just by mowing your own lawn, for example, you can save $55 to $65 a week for a half-acre lawn during the growing season. The bigger the lot, the bigger the savings: with two acres, you'll pocket around $150 per week.
When It Pays: Look for maintenance jobs that are relatively easy and need to be done regularly, so you can hone your skills over time. In addition to mowing, other good ones are snow removal, pruning shrubs, washing windows, sealing the deck, painting fences, fertilizing the lawn, and replacing air conditioner filters.
When It Doesn't: Unless you have skill and experience on your side, stay off of any ladder taller than six feet; according to the U.S. Consumer Product Safety Commission, more than 164,000 people end up in emergency rooms every year because of ladder injuries. The same goes for operating power saws or attempting any major electrical work-it's simply too risky if you don't have the experience.
Act as your own GC on small jobs
If you're more comfortable operating an iPhone than a circular saw, you may be able to act as your own general contractor on a home-improvement project and hire the carpenters, plumbers, and other tradesmen yourself. You'll save 10% to 20% of the job cost, which is the contractor's typical fee.
When it Pays: If it's a small job that requires only two or three different tradesmen, and you have good existing relationships with top-quality professionals in those fields, consider DIY contracting.
When It Doesn't: Unless you have an established network of contacts who will show up as promised, the time to spend on oversight, enough construction experience to spot potential problems, and the skill to negotiate disputes between the various subcontractors, trying to manage your own project can quickly send the schedule and budget off the rails.
Pitch in with sweat equity on big jobs
Contributing your own labor on a big job being handled by a professional crew can cut hundreds or even thousands of dollars off the contractor's bill. Tear the cabinets and appliances out of your old kitchen before the contractor gets started, say, and you might knock $800 off the cost of your remodel, says Dean Bennett, a design/build contractor in Castle Rock, Colorado.
When it Pays: Grunt work-jobs that are labor intensive but require relatively little skill-makes the best homeowner contribution. Offer to do minor interior demolition like removing cabinets and pulling up old flooring, daily jobsite cleanup, product assembly, and simple landscaping like planting foundation shrubs and grass seed around your new addition.
When It Doesn't: If you get in the crew's way, you may slow them down far more than you help. Make your contributions when the workers aren't around, such as in the morning before they arrive, or on nights and weekends after they've left.
Put on some of the finishing touches
Unlike the early phases of a construction job, which require skilled labor to frame walls, install plumbing pipes, and run wiring, many of the finishing touches on a project are comparatively simple and DIY-friendly. If you do the painting yourself for a new basement rec room, for instance, you can easily save $1,800, Bennett says.
When it Pays: If you have the skill-or a patient temperament and an experienced friend to teach you-finish work like setting tile, laying flooring, painting walls, and installing trim are all good DIY jobs.
When It Doesn't: The downside to attempting your own finish work is that the results are very visible. Hammer dents in woodwork, for example, or sander ruts in your hardwood floors may cause you aggravation every time you see them. So unless you have a sure eye and a steady hand, it may not pay to embark on these tasks.
A former carpenter and newspaper reporter, Oliver Marks has been writing about home improvements for 16 years. He's currently restoring his second fixer-upper with a mix of big hired projects and small do-it-himself jobs.
Wednesday, December 16, 2009
CENTURY 21 JRS Realty Christmas Party
CENTURY 21 JRS Realty had a great Holiday Party last night at Bistro 1051 in Clark NJ. CENTURY 21 JRS Realty agents had a great time eating Sushi and other sea food dishes prepared by the wonderful chief at the Bistro. Congratulations to Joe Piizzi and Eddie Kefalas for the awards they earned as the number 1 and #2 agents in CENTURY 21 JRS Realty for 2009.
Thursday, December 10, 2009
7 Smart Strategies for Remodeling Your Kitchen
When planning a kitchen remodeling project, keep the same footprint, add storage, and design adequate lighting to preserve value and keep costs on track.
If you're contemplating a kitchen remodel, you're also weighing a considerable investment. But a significant portion of the upfront costs may be recovered by the value the project brings to your home. Kitchen remodels in the $50,000 range recouped 76% of the initial project cost at the home's resale, according to recent data from Remodeling magazine's Cost vs. Value Report. To make sure you maximize your return, consider these seven smart kitchen remodeling strategies.
1. Establish your priorities
Simple enough? Not so fast. The National Kitchen and Bath Association (NKBA) recommends spending at least six months planning before beginning the work. That way, you can thoroughly evaluate your priorities and won't be tempted to change your mind during construction. Contractors often have clauses in their contracts that specify additional costs for amendments to original plans. Planning points to consider include:
Avoid traffic jams. A walkway through the kitchen should be at least 36 inches wide, according to the NKBA. Work aisles for one cook should be a minimum of 42 inches wide and at least 48 inches wide for households with multiple cooks.
Consider children. Avoid sharp, square corners on countertops, and make sure microwave ovens are installed at the heights recommended by the NKBA-3 inches below the shoulder of the principle user but not more than 54 inches from the floor.
Access to the outside. If you want to easily reach entertaining areas, such as a deck or a patio, factor a new exterior door into your plans.
Because planning a kitchen is complex, consider hiring a professional designer. A pro can help make style decisions and foresee potential problems, so you can avoid costly mistakes. In addition, a pro makes sure contractors and installers are sequenced properly so that workflow is cost-effective. Expect fees around $50 to $150 per hour, or 5% to 15% of the total cost of the project.
2. Keep the same footprint
No matter the size and scope of your planned kitchen, you can save major expense by not rearranging walls, and by locating any new plumbing fixtures near existing plumbing pipes. Not only will you save on demolition and reconstruction, you'll greatly reduce the amount of dust and debris your project generates.
3. Match appliances to your skill level
A six-burner commercial-grade range and luxury-brand refrigerator might make eye-catching centerpieces, but be sure they fit your lifestyle, says Molly Erin McCabe, owner of A Kitchen That Works design firm in Bainbridge Island, Wash. "It's probably the part of a kitchen project where people tend to overspend the most."
The high price is only worth the investment if you're an exceptional cook. Otherwise, save thousands with trusted brands that receive high marks at consumer review websites, like www.ePinions.com and amazon.com, and resources such as Consumer Reports.
4. Create a well-designed lighting scheme
Some guidelines:
· Install task lighting, such as recessed or track lights, over sinks and food prep areas; assign at least two fixtures per task to eliminate shadows. Under-cabinet lights illuminate clean-up and are great for reading cookbooks. Pendant lights over counters bring the light source close to work surfaces.
• Ambient lighting includes flush-mounted ceiling fixtures, wall sconces, and track lights. Consider dimmer switches with ambient lighting to control intensity and mood.
5. Focus on durability
"People are putting more emphasis on functionality and durability in the kitchen," says McCabe. That may mean resisting bargain prices and focusing on products that combine low-maintenance with long warranty periods. "Solid-surface countertops [Corian, Silestone] are a perfect example," adds McCabe. "They may cost a little more, but they're going to look as good in 10 years as they did the day they were installed."
If you're not planning to stay in your house that long, products with substantial warranties can become a selling point. "Individual upgrades don't necessarily give you a 100% return," says Frank Gregoire, a real estate appraiser in St. Petersburg, Fla. "But they can give you an edge when it comes time to market your home for sale" if other for-sale homes have similar features.
6. Add storage, not space
To add storage without bumping out walls:
· Specify upper cabinets that reach the ceiling. They may cost a bit more, but you'll gain valuable storage space. In addition, you won't have to worry about dusting the tops.
• Hang it up. Install small shelving units on unused wall areas, and add narrow spice racks and shelves on the insides of cabinet doors. Use a ceiling-mounted pot rack to keep bulkier pots and pans from cluttering cabinets. Add hooks to the backs of closet doors for aprons, brooms, and mops.
7. Communicate effectively-and often
Having a good rapport with your project manager or construction team is essential for staying on budget. "Poor communication is a leading cause of kitchen projects going sour," says McCabe. To keep the sweetness in your project:
Drop by the project during work hours as often as possible. Your presence assures subcontractors and other workers of your commitment to getting good results.
Establish a communication routine. Hang a message board on-site where you and the project manager can leave each other daily communiques. Give your email address and cell phone number to subs and team leaders.
Set house rules. Be clear about smoking, boom box noise levels, which bathroom is available, and where workers should park their vehicles.
Consumers spend more money on kitchen remodeling than any other home improvement project, according to the Home Improvement Research Institute, and with good reason. They're the hub of home life, and a source of pride. With a little strategizing, you can ensure your new kitchen gives you years of satisfaction.
John Riha has written six books on home improvement and hundreds of articles on home-related topics. He's been a residential builder, the editorial director of the Black & Decker Home Improvement Library, and the executive editor of Better Homes and Gardens magazine. His standard 1968 suburban house has been an ongoing source of maintenance experience.
If you're contemplating a kitchen remodel, you're also weighing a considerable investment. But a significant portion of the upfront costs may be recovered by the value the project brings to your home. Kitchen remodels in the $50,000 range recouped 76% of the initial project cost at the home's resale, according to recent data from Remodeling magazine's Cost vs. Value Report. To make sure you maximize your return, consider these seven smart kitchen remodeling strategies.
1. Establish your priorities
Simple enough? Not so fast. The National Kitchen and Bath Association (NKBA) recommends spending at least six months planning before beginning the work. That way, you can thoroughly evaluate your priorities and won't be tempted to change your mind during construction. Contractors often have clauses in their contracts that specify additional costs for amendments to original plans. Planning points to consider include:
Avoid traffic jams. A walkway through the kitchen should be at least 36 inches wide, according to the NKBA. Work aisles for one cook should be a minimum of 42 inches wide and at least 48 inches wide for households with multiple cooks.
Consider children. Avoid sharp, square corners on countertops, and make sure microwave ovens are installed at the heights recommended by the NKBA-3 inches below the shoulder of the principle user but not more than 54 inches from the floor.
Access to the outside. If you want to easily reach entertaining areas, such as a deck or a patio, factor a new exterior door into your plans.
Because planning a kitchen is complex, consider hiring a professional designer. A pro can help make style decisions and foresee potential problems, so you can avoid costly mistakes. In addition, a pro makes sure contractors and installers are sequenced properly so that workflow is cost-effective. Expect fees around $50 to $150 per hour, or 5% to 15% of the total cost of the project.
2. Keep the same footprint
No matter the size and scope of your planned kitchen, you can save major expense by not rearranging walls, and by locating any new plumbing fixtures near existing plumbing pipes. Not only will you save on demolition and reconstruction, you'll greatly reduce the amount of dust and debris your project generates.
3. Match appliances to your skill level
A six-burner commercial-grade range and luxury-brand refrigerator might make eye-catching centerpieces, but be sure they fit your lifestyle, says Molly Erin McCabe, owner of A Kitchen That Works design firm in Bainbridge Island, Wash. "It's probably the part of a kitchen project where people tend to overspend the most."
The high price is only worth the investment if you're an exceptional cook. Otherwise, save thousands with trusted brands that receive high marks at consumer review websites, like www.ePinions.com and amazon.com, and resources such as Consumer Reports.
4. Create a well-designed lighting scheme
Some guidelines:
· Install task lighting, such as recessed or track lights, over sinks and food prep areas; assign at least two fixtures per task to eliminate shadows. Under-cabinet lights illuminate clean-up and are great for reading cookbooks. Pendant lights over counters bring the light source close to work surfaces.
• Ambient lighting includes flush-mounted ceiling fixtures, wall sconces, and track lights. Consider dimmer switches with ambient lighting to control intensity and mood.
5. Focus on durability
"People are putting more emphasis on functionality and durability in the kitchen," says McCabe. That may mean resisting bargain prices and focusing on products that combine low-maintenance with long warranty periods. "Solid-surface countertops [Corian, Silestone] are a perfect example," adds McCabe. "They may cost a little more, but they're going to look as good in 10 years as they did the day they were installed."
If you're not planning to stay in your house that long, products with substantial warranties can become a selling point. "Individual upgrades don't necessarily give you a 100% return," says Frank Gregoire, a real estate appraiser in St. Petersburg, Fla. "But they can give you an edge when it comes time to market your home for sale" if other for-sale homes have similar features.
6. Add storage, not space
To add storage without bumping out walls:
· Specify upper cabinets that reach the ceiling. They may cost a bit more, but you'll gain valuable storage space. In addition, you won't have to worry about dusting the tops.
• Hang it up. Install small shelving units on unused wall areas, and add narrow spice racks and shelves on the insides of cabinet doors. Use a ceiling-mounted pot rack to keep bulkier pots and pans from cluttering cabinets. Add hooks to the backs of closet doors for aprons, brooms, and mops.
7. Communicate effectively-and often
Having a good rapport with your project manager or construction team is essential for staying on budget. "Poor communication is a leading cause of kitchen projects going sour," says McCabe. To keep the sweetness in your project:
Drop by the project during work hours as often as possible. Your presence assures subcontractors and other workers of your commitment to getting good results.
Establish a communication routine. Hang a message board on-site where you and the project manager can leave each other daily communiques. Give your email address and cell phone number to subs and team leaders.
Set house rules. Be clear about smoking, boom box noise levels, which bathroom is available, and where workers should park their vehicles.
Consumers spend more money on kitchen remodeling than any other home improvement project, according to the Home Improvement Research Institute, and with good reason. They're the hub of home life, and a source of pride. With a little strategizing, you can ensure your new kitchen gives you years of satisfaction.
John Riha has written six books on home improvement and hundreds of articles on home-related topics. He's been a residential builder, the editorial director of the Black & Decker Home Improvement Library, and the executive editor of Better Homes and Gardens magazine. His standard 1968 suburban house has been an ongoing source of maintenance experience.
Should You Convert from Oil to Gas Heat?
If you're replacing your old oil-burning heating equipment, you may want to crunch the numbers on switching to cheaper, cleaner gas.
Last winter, heating a house with oil cost an average of $1,700, while natural gas averaged less than $900, according to the US Energy Information Administration. The year before, when oil prices peaked, oil heat cost an average of $2,000; natural gas was again around $900. Since 2002, oil heat has averaged 30% to 50% more than gas every year. So, if it's time to replace your old oil-burning system, you might be wondering if it makes sense to switch. Here's how to crunch the numbers.
What fuel types are available in your area?
About half of the country uses natural gas already, and only about 8% uses oil. Most of the rest use costlier heating-electricity accounts for 34%, propane 6%-typically because that's what is available locally. The vast majority of oil-burners are concentrated in the Northeast, where they account for 31% of residential heating systems. That's largely because of the region's proximity to the ports where oil barges deliver their loads and the fact that oil was a cheaper option back when these houses were built.
Unlike oil, which gets delivered by truck, natural gas gets piped right into your house by a utility company. So making the switch requires having a gas main under your street. Even in oil-dominated neighborhoods of the Northeast, most urban and suburban areas have gas lines. If yours doesn't, you may be able to convince the local utility to install a gas main if enough neighbors band together to make the request.
How much will the equipment cost?
Gas-fired equipment costs less than oil-fired gear. For a basic furnace (for a forced air heating system) or boiler (for hot-water heat), you'll pay around $1,500 to $3,000 for gas and $2,000 to as much as $8,000 for oil, says Ellis Guiles of TAG Mechanical in Syracuse, New York. If you select a high efficiency system, you'll pay $3,500 to $5,500 for gas, compared with $4,500 to $10,000 for oil. A high-efficiency unit of either kind may be eligible for a 30% tax credit, up to $1,500, as well as local incentives.
How much will the hookup cost?
There are two aspects to the connection process for gas: outside the house and inside. The utility company will run an underground pipe from the gas main to your house, where it will install a meter. This requires using a backhoe to dig a trench from the road to the house and typically costs $1,000 to $1,500, according to Jim Ranfone, managing director of the American Gas Association, a trade group. But it's possible that the utility will waive or reduce that charge as an inducement to add you to its customer rolls. Your contractor will handle the second part of the job, piping the gas from the meter to your heating plant, typically at a cost of $500 to $1,000.
What other expenses are involved?
Switching to gas may require you to line your chimney ($750 to $2,000), because the moisture in gas exhaust can damage the masonry. A liner isn't necessary with a high-efficiency gas system, which, combined with tax incentives, explains why nearly all of Guiles' conversion customers choose high-efficiency equipment. Although it's probably not required, you'll likely choose to remove your oil tank for another $750 or so if it's above ground to $3,000 if it's buried.
The bottom line
So is it worth spending potentially a few grand in conversion costs to switch to gas? Well, at last year's prices, your fuel-cost savings alone would pay you back in less than five years. But as the stock-market caveat goes, past performance is no guarantee of future results. Most natural gas is mined in North America, so some say its pricing less volatile than oil, which is a global commodity. But the truth is, there's no way to know for sure if gas will continue its substantial price advantage. The decision usually comes down to how complicated the conversion will be for your house-and how good the incentives are that the utilities and state agencies are offering, says Mark Wolfe, executive director of the National Energy Assistance Directors' Association, a trade group of state officials who help homeowners cut their energy costs.
Still, there are reasons other than money to make the switch. Gas has lower carbon emissions than oil, so it's better for the environment. Plus, once you have a gas line, you can get that commercial-style, six-burner stove you've always wanted.
A former carpenter and newspaper reporter, Oliver Marks has been writing about home improvements for 16 years. He's currently restoring his second fixer-upper with a mix of big hired projects and small do-it-himself jobs.
Last winter, heating a house with oil cost an average of $1,700, while natural gas averaged less than $900, according to the US Energy Information Administration. The year before, when oil prices peaked, oil heat cost an average of $2,000; natural gas was again around $900. Since 2002, oil heat has averaged 30% to 50% more than gas every year. So, if it's time to replace your old oil-burning system, you might be wondering if it makes sense to switch. Here's how to crunch the numbers.
What fuel types are available in your area?
About half of the country uses natural gas already, and only about 8% uses oil. Most of the rest use costlier heating-electricity accounts for 34%, propane 6%-typically because that's what is available locally. The vast majority of oil-burners are concentrated in the Northeast, where they account for 31% of residential heating systems. That's largely because of the region's proximity to the ports where oil barges deliver their loads and the fact that oil was a cheaper option back when these houses were built.
Unlike oil, which gets delivered by truck, natural gas gets piped right into your house by a utility company. So making the switch requires having a gas main under your street. Even in oil-dominated neighborhoods of the Northeast, most urban and suburban areas have gas lines. If yours doesn't, you may be able to convince the local utility to install a gas main if enough neighbors band together to make the request.
How much will the equipment cost?
Gas-fired equipment costs less than oil-fired gear. For a basic furnace (for a forced air heating system) or boiler (for hot-water heat), you'll pay around $1,500 to $3,000 for gas and $2,000 to as much as $8,000 for oil, says Ellis Guiles of TAG Mechanical in Syracuse, New York. If you select a high efficiency system, you'll pay $3,500 to $5,500 for gas, compared with $4,500 to $10,000 for oil. A high-efficiency unit of either kind may be eligible for a 30% tax credit, up to $1,500, as well as local incentives.
How much will the hookup cost?
There are two aspects to the connection process for gas: outside the house and inside. The utility company will run an underground pipe from the gas main to your house, where it will install a meter. This requires using a backhoe to dig a trench from the road to the house and typically costs $1,000 to $1,500, according to Jim Ranfone, managing director of the American Gas Association, a trade group. But it's possible that the utility will waive or reduce that charge as an inducement to add you to its customer rolls. Your contractor will handle the second part of the job, piping the gas from the meter to your heating plant, typically at a cost of $500 to $1,000.
What other expenses are involved?
Switching to gas may require you to line your chimney ($750 to $2,000), because the moisture in gas exhaust can damage the masonry. A liner isn't necessary with a high-efficiency gas system, which, combined with tax incentives, explains why nearly all of Guiles' conversion customers choose high-efficiency equipment. Although it's probably not required, you'll likely choose to remove your oil tank for another $750 or so if it's above ground to $3,000 if it's buried.
The bottom line
So is it worth spending potentially a few grand in conversion costs to switch to gas? Well, at last year's prices, your fuel-cost savings alone would pay you back in less than five years. But as the stock-market caveat goes, past performance is no guarantee of future results. Most natural gas is mined in North America, so some say its pricing less volatile than oil, which is a global commodity. But the truth is, there's no way to know for sure if gas will continue its substantial price advantage. The decision usually comes down to how complicated the conversion will be for your house-and how good the incentives are that the utilities and state agencies are offering, says Mark Wolfe, executive director of the National Energy Assistance Directors' Association, a trade group of state officials who help homeowners cut their energy costs.
Still, there are reasons other than money to make the switch. Gas has lower carbon emissions than oil, so it's better for the environment. Plus, once you have a gas line, you can get that commercial-style, six-burner stove you've always wanted.
A former carpenter and newspaper reporter, Oliver Marks has been writing about home improvements for 16 years. He's currently restoring his second fixer-upper with a mix of big hired projects and small do-it-himself jobs.
Tuesday, December 8, 2009
Best Ways to Green Up Your Kitchen Remodel
If you're ready to remodel your kitchen and want to go green, here's how to create the healthy, energy-efficient, eco-friendly kitchen of your dreams.
Going green with your kitchen remodeling project means making choices based on your lifestyle and your budget. The decisions aren't always simple. For example, a certain green product may outlast and use less energy but cost more than a similar product that performs equally well. Fortunately, an expanding marketplace for smart, stylish green products is helping to lower costs-making it easier to have a green kitchen and love it, too.
If products you'd like to add to your project aren't readily available, schedule visits to showrooms or green home improvement expos to examine materials first-hand before making decisions. To help you plan, here are key products, ideas, and tips to put the green in your kitchen.
Major components
are made from wood and wood products certified by the Forest Stewardship Council to be produced using sustainable forest management practices. They feature formaldehyde-free glues and finishes with low volatile organic compounds that give off little or no toxic fumes. Check product literature closely to ensure the cabinets you choose meet these criteria.
· Sustainable kitchen cabinets
When shopping for cabinets, ask if the cabinet boxes are built with wheat board or straw board. These products are made from agricultural waste, such as the chaff left over from farmers' wheat crops. As a rule, they feature formaldehyde-free binders. They're strong and rated to exceed the standards set by the American National Standards Institute for medium density particleboard-the material commonly used to make cabinet boxes.
· Green countertops
offer variety but all share similar characteristics: recycled or sustainable content, low-toxicity binders, and eco-friendly manufacturing processes. In addition, they're highly durable. Examples: Squak Mountain Stone is made from recycled paper, recycled glass, reclaimed fly ash, and cement. The finished countertop slabs resemble limestone and soapstone. Eco-top counters consist of renewable bamboo fiber, post-consumer recycled paper, and water-based resin glue. Vetrazzo makes countertops that are 85% recycled glass-almost all the glass comes from curbside recycling programs. Craft-Art includes a line of wood countertops made of reclaimed wood from older barns, warehouses, and commercial buildings.
· Eco-friendly flooring
includes linoleum and cork. Both are made with renewable resources that make them sustainable choices. They're good-looking and durable, but require periodic maintenance.
Linoleum is made from renewable, biodegradable materials including linseed oil and cork. It produces no harmful vapors and comes in many patterns and colors. Linoleum stands up well to traffic and offers some cushioning underfoot. It's resistant to moisture but susceptible to staining, so some manufacturers add a coating to protect against spills and scratches. Without this protection, linoleum must be cleaned and polished every two years. Cost: $2 to $4 per sq.ft.; installation adds $5 to $7 per sq.ft.
Cork is a sustainable flooring product made from tree bark; the bark grows back and can be harvested repeatedly. Harvesting practices are carefully regulated to ensure future supplies, reducing environmental impact. Cork is waterproof and slightly soft underfoot, which makes it both moisture-resistant and comfortable. It's made in 12x12-inch tiles and 1x3-foot planks, each with a distinctive grain pattern. The surface is slightly textured and slip-resistant.
Treat cork flooring with a sealant every 3 to 4 years to prevent scratches and stop moisture from penetrating seams between tiles. Natural wax and water-based polyurethane work well. Cost: $2-$6 per sq.ft.; installation, $5-$10 per sq.ft.
Appliances
reduces energy consumption and saves utility costs. Energy Star appliances are tested and rated to be the most energy-efficient models in any product category. In addition, some states and regional utility companies offer rebates for buying Energy Star appliances.
· Choosing Energy Star products
· Dishwashers go green
when they feature an energy-saving or quick-wash cycle. These cycles operate for shorter periods of time, saving water and energy. Also, look for dishwashers that include an air-dry option, which dries dishes with circulation fans rather than energy-draining heating elements. Or, simply open up the dishwasher door when the wash cycle is complete and let dishes air dry.
Energy Star models are 25% more energy efficient than the federal standards for energy consumption. If you replace your pre-1994 dishwasher with an Energy Star model, you'll save as much as $40 a year on energy costs.
· Buy a new refrigerator
and you'll save on energy costs. That's because manufacturers are constantly improving technology and insulating techniques. In fact, today's new models are 75% more energy efficient than those manufactured just 20 years ago, saving about $100 per year on energy costs. An Energy Star-rated model will save an additional $20-$30 per year.
Choose models featuring the freezer on top and use 10% to 25% less energy than a same-sized model with a side-by-side configuration.
Green essentials
cleans water of contaminants before it reaches the kitchen tap; it has about 10 times the filtering capacity of a faucet-mounted purifier. A model with a top-quality activated carbon filter will remove heavy metals, bacteria, and pesticides. In addition, it removes odors and bad tastes. Expect to pay $150-$200 for an activated charcoal purifier with a replaceable cartridge.
· An under-the-counter water purifier
• Energy-efficient lighting includes fluorescent and compact fluorescent lamps that use 50% to 90% less energy than comparable incandescent lamps. In fact, according to EnergyStar.gov, a single compact fluorescent bulb will save $30-$40 during its expected lifespan of 10,000 hours over conventional incandescent bulbs of similar luminosity. However, consider the correct quality of light, such as an efficient halogen and LED lighting sources, for task areas.
• Being an active recycler is one way to ensure your kitchen is green. Most cabinet manufacturers offer options for lower cabinets that include pull-out recycling bins that keep contents organized and out of sight. In some instances, these bins are designed to be positioned conveniently beneath holes in countertops so that you can sweep food scraps into them. You can also retrofit existing cabinets with recycling bins-rotating lazy Susan-type recycling centers feature multiple bins and are designed to fit in lower corner cabinets.
John Riha has written six books on home improvement and hundreds of articles on home-related topics. He's been a residential builder, the editorial director of the Black & Decker Home Improvement Library, and the executive editor of Better Homes and Gardens magazine. His standard 1968 suburban house has been an ongoing source of maintenance experience.
Going green with your kitchen remodeling project means making choices based on your lifestyle and your budget. The decisions aren't always simple. For example, a certain green product may outlast and use less energy but cost more than a similar product that performs equally well. Fortunately, an expanding marketplace for smart, stylish green products is helping to lower costs-making it easier to have a green kitchen and love it, too.
If products you'd like to add to your project aren't readily available, schedule visits to showrooms or green home improvement expos to examine materials first-hand before making decisions. To help you plan, here are key products, ideas, and tips to put the green in your kitchen.
Major components
are made from wood and wood products certified by the Forest Stewardship Council to be produced using sustainable forest management practices. They feature formaldehyde-free glues and finishes with low volatile organic compounds that give off little or no toxic fumes. Check product literature closely to ensure the cabinets you choose meet these criteria.
· Sustainable kitchen cabinets
When shopping for cabinets, ask if the cabinet boxes are built with wheat board or straw board. These products are made from agricultural waste, such as the chaff left over from farmers' wheat crops. As a rule, they feature formaldehyde-free binders. They're strong and rated to exceed the standards set by the American National Standards Institute for medium density particleboard-the material commonly used to make cabinet boxes.
· Green countertops
offer variety but all share similar characteristics: recycled or sustainable content, low-toxicity binders, and eco-friendly manufacturing processes. In addition, they're highly durable. Examples: Squak Mountain Stone is made from recycled paper, recycled glass, reclaimed fly ash, and cement. The finished countertop slabs resemble limestone and soapstone. Eco-top counters consist of renewable bamboo fiber, post-consumer recycled paper, and water-based resin glue. Vetrazzo makes countertops that are 85% recycled glass-almost all the glass comes from curbside recycling programs. Craft-Art includes a line of wood countertops made of reclaimed wood from older barns, warehouses, and commercial buildings.
· Eco-friendly flooring
includes linoleum and cork. Both are made with renewable resources that make them sustainable choices. They're good-looking and durable, but require periodic maintenance.
Linoleum is made from renewable, biodegradable materials including linseed oil and cork. It produces no harmful vapors and comes in many patterns and colors. Linoleum stands up well to traffic and offers some cushioning underfoot. It's resistant to moisture but susceptible to staining, so some manufacturers add a coating to protect against spills and scratches. Without this protection, linoleum must be cleaned and polished every two years. Cost: $2 to $4 per sq.ft.; installation adds $5 to $7 per sq.ft.
Cork is a sustainable flooring product made from tree bark; the bark grows back and can be harvested repeatedly. Harvesting practices are carefully regulated to ensure future supplies, reducing environmental impact. Cork is waterproof and slightly soft underfoot, which makes it both moisture-resistant and comfortable. It's made in 12x12-inch tiles and 1x3-foot planks, each with a distinctive grain pattern. The surface is slightly textured and slip-resistant.
Treat cork flooring with a sealant every 3 to 4 years to prevent scratches and stop moisture from penetrating seams between tiles. Natural wax and water-based polyurethane work well. Cost: $2-$6 per sq.ft.; installation, $5-$10 per sq.ft.
Appliances
reduces energy consumption and saves utility costs. Energy Star appliances are tested and rated to be the most energy-efficient models in any product category. In addition, some states and regional utility companies offer rebates for buying Energy Star appliances.
· Choosing Energy Star products
· Dishwashers go green
when they feature an energy-saving or quick-wash cycle. These cycles operate for shorter periods of time, saving water and energy. Also, look for dishwashers that include an air-dry option, which dries dishes with circulation fans rather than energy-draining heating elements. Or, simply open up the dishwasher door when the wash cycle is complete and let dishes air dry.
Energy Star models are 25% more energy efficient than the federal standards for energy consumption. If you replace your pre-1994 dishwasher with an Energy Star model, you'll save as much as $40 a year on energy costs.
· Buy a new refrigerator
and you'll save on energy costs. That's because manufacturers are constantly improving technology and insulating techniques. In fact, today's new models are 75% more energy efficient than those manufactured just 20 years ago, saving about $100 per year on energy costs. An Energy Star-rated model will save an additional $20-$30 per year.
Choose models featuring the freezer on top and use 10% to 25% less energy than a same-sized model with a side-by-side configuration.
Green essentials
cleans water of contaminants before it reaches the kitchen tap; it has about 10 times the filtering capacity of a faucet-mounted purifier. A model with a top-quality activated carbon filter will remove heavy metals, bacteria, and pesticides. In addition, it removes odors and bad tastes. Expect to pay $150-$200 for an activated charcoal purifier with a replaceable cartridge.
· An under-the-counter water purifier
• Energy-efficient lighting includes fluorescent and compact fluorescent lamps that use 50% to 90% less energy than comparable incandescent lamps. In fact, according to EnergyStar.gov, a single compact fluorescent bulb will save $30-$40 during its expected lifespan of 10,000 hours over conventional incandescent bulbs of similar luminosity. However, consider the correct quality of light, such as an efficient halogen and LED lighting sources, for task areas.
• Being an active recycler is one way to ensure your kitchen is green. Most cabinet manufacturers offer options for lower cabinets that include pull-out recycling bins that keep contents organized and out of sight. In some instances, these bins are designed to be positioned conveniently beneath holes in countertops so that you can sweep food scraps into them. You can also retrofit existing cabinets with recycling bins-rotating lazy Susan-type recycling centers feature multiple bins and are designed to fit in lower corner cabinets.
John Riha has written six books on home improvement and hundreds of articles on home-related topics. He's been a residential builder, the editorial director of the Black & Decker Home Improvement Library, and the executive editor of Better Homes and Gardens magazine. His standard 1968 suburban house has been an ongoing source of maintenance experience.
Saturday, November 28, 2009
5 Essential Questions to ask before hiring a Contractor
You're ready to remodel but you want to make sure you get the best contractor for the job. Here's what to ask the candidates before you decide.
For all of the excitement of choosing plumbing fixtures, cabinets, and tiles for a remodeling project, the most important decision you make won't involve color swatches or glossy brochures. It's the contractor you pick that makes or breaks the job. That choice will determine the quality of the craftsmanship, the timeliness of the work, and the amount of emotional and financial stress the process puts on you. To make sure you're getting the best contractor for the job, here are five questions to ask the candidates.
1. Would you please itemize your bid?
Many contractors prefer to give you a single, bottom-line price for your project, but this puts you in the dark about what they're charging for each aspect of the job. For example, let's say the original plan calls for beadboard wainscot in your bathroom, but you decide not to install it after all. How much should you be credited for eliminating that work? With a single bottom-line price, you have no way to know.
On the other hand, if you get an itemized bid, it'll show the costs for all of the various elements of the job-demolition, framing, plumbing, electrical, tile, fixtures, and so forth. That makes it easier to compare different contractors' prices and see where the discrepancies are. If you need to cut the project costs, you can easily assess your options. Plus, an itemized bid becomes valuable documentation about the exact scope of the project, which may eliminate disputes later.
The contractor shouldn't give you a hard time about itemizing his bid. He has to figure out his total price line by line anyway, so you're not asking him to do more work, only to share the details. If he resists, it means he wants to withhold important information about his bid-a red flag for sure.
2. Is your bid an estimate or a fixed price?
Homeowners generally assume that the bid they're seeing is a fixed price, but some contractors treat their proposals as estimates, meaning bills could wind up being higher in the end. If he calls it an estimate, request a fixed price bid instead. If he says he can't offer a fixed price because there are too many unknowns about the job, then eliminate the unknowns.
"Have him open up a wall to check the structure he's unsure about or go back to your architect and solidify the design plans," says Tampa, Fla., attorney George Meyer, who is chair-elect of the American Bar Association's Forum on the Construction Industry. If you simply cannot resolve the unknowns he's concerned about, have the project specs describe what he expects to do-and if he needs to do additional work later, you can do a change order (a written mini-bid for new work).
3. How long have you been doing business in this town?
A contractor who's been plying his trade locally for 5 or 10 years has an established network of subcontractors and suppliers in the area and a local reputation to uphold. That makes him a safer bet than a contractor who's either new to the business or new to the area-or who's planning to commute to your job from 50 miles away.
You want to see a nearby address (not a PO box) on his business card-and should ask him to include one or two of his earliest clients on your list of references. This will help you verify that he hasn't just recently hung his shingle-and will give you perspective from a homeowner who has lived with the contractor's work for years. After all, the test of a quality job, whether it's a bluestone patio or a family room addition, is how well it stands the test of time.
4. Who are your main suppliers?
You've found a few potential contractors, you've talked to the happy former clients on each of their reference lists, now it's time for one additional bit of homework: talking to their primary suppliers. There's no better reference for a tile setter, for example, than his preferred tile shop; for a general contractor than his favorite lumberyard or home center pro desk; for a plumber than the kitchen and bath showroom where he's on a first name basis.
The proprietors of these shops know a contractor's professional reputation, whether he has left a trail of unhappy customers in his wake, if he's reliable about paying his bills-and whether he's someone you'll want to hire. The contractor should have absolutely no qualms about telling you where he gets his materials, as long as he's an upstanding customer.
5. I'd like to meet the job foreman-can you take me to a project he's running?
Many contractors don't actually swing hammers. They spend their days bidding new work and managing their various jobs and workers. In some cases, the contractor you hire may not visit the jobsite every day-or may not even show himself again after you've signed the contract. So the job foreman-the one who's working on your project every day-is actually the most important member of your team.
Meeting him in person and seeing a job that he's running should give you a feel for whether he's someone you want managing your project. Plus, it gives the general contractor an incentive to assign you one of his better crews since you're more likely to hire him if you see his A Team. If the contractor says he'll be running the job himself, ask whether he'll be there every day. Again, he'll want to give you a positive response-something you can hold him to later on.
It's not only the answers to these questions that will help you judge potential contractors-it's the way they answer them. Were they easy to talk to and forthcoming with details or did they hem and haw and make you ask more than once? Difficulty communicating now means difficulty communicating on the job later. But clear, timely and thoughtful responses-combined with terrific references, great completed work that you've seen, and a smart take on your project-may mean you've found the right pro for your job.
A former carpenter and newspaper reporter, Oliver Marks has been writing about home improvements for 16 years. He's currently restoring his second fixer-upper with a mix of big hired projects and small do-it-himself jobs.
For all of the excitement of choosing plumbing fixtures, cabinets, and tiles for a remodeling project, the most important decision you make won't involve color swatches or glossy brochures. It's the contractor you pick that makes or breaks the job. That choice will determine the quality of the craftsmanship, the timeliness of the work, and the amount of emotional and financial stress the process puts on you. To make sure you're getting the best contractor for the job, here are five questions to ask the candidates.
1. Would you please itemize your bid?
Many contractors prefer to give you a single, bottom-line price for your project, but this puts you in the dark about what they're charging for each aspect of the job. For example, let's say the original plan calls for beadboard wainscot in your bathroom, but you decide not to install it after all. How much should you be credited for eliminating that work? With a single bottom-line price, you have no way to know.
On the other hand, if you get an itemized bid, it'll show the costs for all of the various elements of the job-demolition, framing, plumbing, electrical, tile, fixtures, and so forth. That makes it easier to compare different contractors' prices and see where the discrepancies are. If you need to cut the project costs, you can easily assess your options. Plus, an itemized bid becomes valuable documentation about the exact scope of the project, which may eliminate disputes later.
The contractor shouldn't give you a hard time about itemizing his bid. He has to figure out his total price line by line anyway, so you're not asking him to do more work, only to share the details. If he resists, it means he wants to withhold important information about his bid-a red flag for sure.
2. Is your bid an estimate or a fixed price?
Homeowners generally assume that the bid they're seeing is a fixed price, but some contractors treat their proposals as estimates, meaning bills could wind up being higher in the end. If he calls it an estimate, request a fixed price bid instead. If he says he can't offer a fixed price because there are too many unknowns about the job, then eliminate the unknowns.
"Have him open up a wall to check the structure he's unsure about or go back to your architect and solidify the design plans," says Tampa, Fla., attorney George Meyer, who is chair-elect of the American Bar Association's Forum on the Construction Industry. If you simply cannot resolve the unknowns he's concerned about, have the project specs describe what he expects to do-and if he needs to do additional work later, you can do a change order (a written mini-bid for new work).
3. How long have you been doing business in this town?
A contractor who's been plying his trade locally for 5 or 10 years has an established network of subcontractors and suppliers in the area and a local reputation to uphold. That makes him a safer bet than a contractor who's either new to the business or new to the area-or who's planning to commute to your job from 50 miles away.
You want to see a nearby address (not a PO box) on his business card-and should ask him to include one or two of his earliest clients on your list of references. This will help you verify that he hasn't just recently hung his shingle-and will give you perspective from a homeowner who has lived with the contractor's work for years. After all, the test of a quality job, whether it's a bluestone patio or a family room addition, is how well it stands the test of time.
4. Who are your main suppliers?
You've found a few potential contractors, you've talked to the happy former clients on each of their reference lists, now it's time for one additional bit of homework: talking to their primary suppliers. There's no better reference for a tile setter, for example, than his preferred tile shop; for a general contractor than his favorite lumberyard or home center pro desk; for a plumber than the kitchen and bath showroom where he's on a first name basis.
The proprietors of these shops know a contractor's professional reputation, whether he has left a trail of unhappy customers in his wake, if he's reliable about paying his bills-and whether he's someone you'll want to hire. The contractor should have absolutely no qualms about telling you where he gets his materials, as long as he's an upstanding customer.
5. I'd like to meet the job foreman-can you take me to a project he's running?
Many contractors don't actually swing hammers. They spend their days bidding new work and managing their various jobs and workers. In some cases, the contractor you hire may not visit the jobsite every day-or may not even show himself again after you've signed the contract. So the job foreman-the one who's working on your project every day-is actually the most important member of your team.
Meeting him in person and seeing a job that he's running should give you a feel for whether he's someone you want managing your project. Plus, it gives the general contractor an incentive to assign you one of his better crews since you're more likely to hire him if you see his A Team. If the contractor says he'll be running the job himself, ask whether he'll be there every day. Again, he'll want to give you a positive response-something you can hold him to later on.
It's not only the answers to these questions that will help you judge potential contractors-it's the way they answer them. Were they easy to talk to and forthcoming with details or did they hem and haw and make you ask more than once? Difficulty communicating now means difficulty communicating on the job later. But clear, timely and thoughtful responses-combined with terrific references, great completed work that you've seen, and a smart take on your project-may mean you've found the right pro for your job.
A former carpenter and newspaper reporter, Oliver Marks has been writing about home improvements for 16 years. He's currently restoring his second fixer-upper with a mix of big hired projects and small do-it-himself jobs.
Tuesday, November 24, 2009
Remodeling a Bathroom the Green Way
If you want to make sure your bathroom remodeling project is as green as possible, here's how to save energy, conserve resources, and protect your budget.
You care about the environment. You also happen to have a bathroom badly in need of remodeling. How do you get the job done with minimal impact on both our fragile planet and your precious budget? Thankfully, the growth of the green building movement has given rise to many eco-responsible products and resources that allow you to create the water-conserving, healthy, energy-wise bath you've always wanted-all without busting your bottom line. Here's what you need to know.
It's all about the water
Thinking about greening your bathroom means considering how you use water in terms of consumption and energy. According to the American Water Works Association, your humble toilets are the thirstiest water users in the house, accounting for 27% of consumption. This fact inspired conservation schemes like placing something hefty in the toilet tank to reduce flushing capacity, and those low-flow toilets that too often didn't flush what needed flushing.
A more successful approach is the dual-flush toilet. It has two flush buttons, one for light work, one for heavy. Long a mainstay in Europe, dual-flush toilets are available in the U.S. for $250-$400, a price in line with top-quality conventional toilets. A dual flush toilet can save 17,000 gallons of water a year-about $50 off your water bill. If you wish to keep your old toilet (a very green decision), you can retrofit it with a dual flush mechanism costing only $70.
The shower is another squanderer of water. Showers use 16% to 20% of a home's water, most of it heated. The flow rate of a typical shower head is 2.5 gallons per minute. Switching it out with a low-flow head of 1.5 to 2 gallons per minute still offers adequate cleansing power with a substantial savings in water usage. (If you cherish a really forceful blast of hot water, consider a full-flow shower head with a lever that lets you shut it off while you lather.)
In addition to conserving water, you'll want to take a close look at the way your water is heated. Second only to the kitchen, the bathroom is your home's most intensive energy user, with most of that energy going towards those nice hot showers and baths. Curbing wasted energy can be as simple as adding an insulating blanket to your tank-type heater (reducing energy use by 4% to 9%) and insulating all accessible hot water pipes. In addition, most water heaters are set to 140 degrees; you can turn down the water heater temperature setting to a still-toasty 120 degrees and save up to $60 per year on energy costs.
If your old water heater is nearing the end of its 15-year life cycle and you're considering investing in a new water heater, you can achieve some handsome energy savings. One smart option is a condensing storage water heater. Using technology similar to that of high-efficiency furnaces, the condensing heater puts nearly every possible BTU into the water instead of sending it up the flue. Currently, a 50-gallon gas unit costs $1,700 (versus $380 for a standard tank-type heater), a price that is expected to drop as demand takes hold. Installation costs are around $400, slightly higher than that of standard units. Those higher costs are offset by a $300 tax credit and an EPA estimated annual fuel savings of more than $100.
A tankless water heater heats water only as it is needed, avoiding the heat loss that occurs with a conventional tank. A unit costs about $2,000 installed, and your annual energy savings will be $70 a year. Be aware that these units take some getting used to; expect a shot of cold water before the hot kicks in.
Move that air
A bathroom remodel is an excellent time to consider installing a new exhaust ventilator fan to remove odors, moisture, and mold spores. Many bathroom fans only vent to the space between ceiling joists, creating an environment for mold and dampness that can damage walls and ceilings. Make sure your new fan vents completely to the outside of your house.
Unfortunately, even properly installed fans that push the moist outdoors can carry away a lot of heated air as well. A clever solution to this problem is a heat-exchange ventilator that uses outgoing air to warm the cold incoming air. Such units cost about $250 uninstalled, twice the price of a standard fan. Whatever fan you have, avoid an on-off switch; it's too easy to forget to turn it off. Replace it with a timer switch or, better yet, buy a new fan unit with a motion- or humidity-sensing switch.
Selecting green materials
A green bathroom remodel need not stint on style. Classic ceramic tile comes in limitless colors and patterns, and is a green choice due to its low maintenance, durability, and low toxicological impact. Some tiles have high recycled content; recycled glass tiles are a lovely way to do the right ecological thing. Not buying something new can be good green idea too. Consider refinishing your old tub or sink. Use the pros for the best results. Expect to pay $500 for a tub, $300 for a sink. You'll save as much on installation costs.
LED illumination now produces pleasing light quality in fixtures that sip only 2 to 15 watts, emit little heat, and have a life span of 15-20 years. They cost about three times as much as conventional fixtures but use so little electricity that the payback can be as short as a year.
Paint and vinyl coverings often come loaded with VOCs (volatile organic compounds) that threaten indoor air quality. Look for building materials with Green Seal certification. Green Seal is a non-profit, independent organization that certifies products claiming to be environmentally friendly. Low-VOC options in paints and adhesives can be found at your local home center.
Waste not
Much of our landfill (estimates range from 22% to 40%) comes from construction debris. Any steps that reduce landfill potentially reduce the chance of ground water pollution, the odor and unsightliness of a local landfill, and in some cases the high cost of shipping waste elsewhere. Much of the debris that comes from a remodeling tear-out is not salvageable, but old toilets, sinks, light fixtures, medicine cabinets, and vanities can be donated to an organization like Habitat for Humanity's ReStore. In fact, it may be just what someone is seeking for their own green remodeling.
Dave Toht has written or edited more than 60 books on home repair and remodeling, including titles for The Home Depot, Lowe's, Better Homes & Gardens, Sunset, and Reader's Digest. A former contractor with decades of hands-on experience, Dave was editor of Remodeling Ideas magazine and continues to contribute to numerous how-to publications. He is currently putting the finishing touches on a green addition to his Olympia, Wash., home.
You care about the environment. You also happen to have a bathroom badly in need of remodeling. How do you get the job done with minimal impact on both our fragile planet and your precious budget? Thankfully, the growth of the green building movement has given rise to many eco-responsible products and resources that allow you to create the water-conserving, healthy, energy-wise bath you've always wanted-all without busting your bottom line. Here's what you need to know.
It's all about the water
Thinking about greening your bathroom means considering how you use water in terms of consumption and energy. According to the American Water Works Association, your humble toilets are the thirstiest water users in the house, accounting for 27% of consumption. This fact inspired conservation schemes like placing something hefty in the toilet tank to reduce flushing capacity, and those low-flow toilets that too often didn't flush what needed flushing.
A more successful approach is the dual-flush toilet. It has two flush buttons, one for light work, one for heavy. Long a mainstay in Europe, dual-flush toilets are available in the U.S. for $250-$400, a price in line with top-quality conventional toilets. A dual flush toilet can save 17,000 gallons of water a year-about $50 off your water bill. If you wish to keep your old toilet (a very green decision), you can retrofit it with a dual flush mechanism costing only $70.
The shower is another squanderer of water. Showers use 16% to 20% of a home's water, most of it heated. The flow rate of a typical shower head is 2.5 gallons per minute. Switching it out with a low-flow head of 1.5 to 2 gallons per minute still offers adequate cleansing power with a substantial savings in water usage. (If you cherish a really forceful blast of hot water, consider a full-flow shower head with a lever that lets you shut it off while you lather.)
In addition to conserving water, you'll want to take a close look at the way your water is heated. Second only to the kitchen, the bathroom is your home's most intensive energy user, with most of that energy going towards those nice hot showers and baths. Curbing wasted energy can be as simple as adding an insulating blanket to your tank-type heater (reducing energy use by 4% to 9%) and insulating all accessible hot water pipes. In addition, most water heaters are set to 140 degrees; you can turn down the water heater temperature setting to a still-toasty 120 degrees and save up to $60 per year on energy costs.
If your old water heater is nearing the end of its 15-year life cycle and you're considering investing in a new water heater, you can achieve some handsome energy savings. One smart option is a condensing storage water heater. Using technology similar to that of high-efficiency furnaces, the condensing heater puts nearly every possible BTU into the water instead of sending it up the flue. Currently, a 50-gallon gas unit costs $1,700 (versus $380 for a standard tank-type heater), a price that is expected to drop as demand takes hold. Installation costs are around $400, slightly higher than that of standard units. Those higher costs are offset by a $300 tax credit and an EPA estimated annual fuel savings of more than $100.
A tankless water heater heats water only as it is needed, avoiding the heat loss that occurs with a conventional tank. A unit costs about $2,000 installed, and your annual energy savings will be $70 a year. Be aware that these units take some getting used to; expect a shot of cold water before the hot kicks in.
Move that air
A bathroom remodel is an excellent time to consider installing a new exhaust ventilator fan to remove odors, moisture, and mold spores. Many bathroom fans only vent to the space between ceiling joists, creating an environment for mold and dampness that can damage walls and ceilings. Make sure your new fan vents completely to the outside of your house.
Unfortunately, even properly installed fans that push the moist outdoors can carry away a lot of heated air as well. A clever solution to this problem is a heat-exchange ventilator that uses outgoing air to warm the cold incoming air. Such units cost about $250 uninstalled, twice the price of a standard fan. Whatever fan you have, avoid an on-off switch; it's too easy to forget to turn it off. Replace it with a timer switch or, better yet, buy a new fan unit with a motion- or humidity-sensing switch.
Selecting green materials
A green bathroom remodel need not stint on style. Classic ceramic tile comes in limitless colors and patterns, and is a green choice due to its low maintenance, durability, and low toxicological impact. Some tiles have high recycled content; recycled glass tiles are a lovely way to do the right ecological thing. Not buying something new can be good green idea too. Consider refinishing your old tub or sink. Use the pros for the best results. Expect to pay $500 for a tub, $300 for a sink. You'll save as much on installation costs.
LED illumination now produces pleasing light quality in fixtures that sip only 2 to 15 watts, emit little heat, and have a life span of 15-20 years. They cost about three times as much as conventional fixtures but use so little electricity that the payback can be as short as a year.
Paint and vinyl coverings often come loaded with VOCs (volatile organic compounds) that threaten indoor air quality. Look for building materials with Green Seal certification. Green Seal is a non-profit, independent organization that certifies products claiming to be environmentally friendly. Low-VOC options in paints and adhesives can be found at your local home center.
Waste not
Much of our landfill (estimates range from 22% to 40%) comes from construction debris. Any steps that reduce landfill potentially reduce the chance of ground water pollution, the odor and unsightliness of a local landfill, and in some cases the high cost of shipping waste elsewhere. Much of the debris that comes from a remodeling tear-out is not salvageable, but old toilets, sinks, light fixtures, medicine cabinets, and vanities can be donated to an organization like Habitat for Humanity's ReStore. In fact, it may be just what someone is seeking for their own green remodeling.
Dave Toht has written or edited more than 60 books on home repair and remodeling, including titles for The Home Depot, Lowe's, Better Homes & Gardens, Sunset, and Reader's Digest. A former contractor with decades of hands-on experience, Dave was editor of Remodeling Ideas magazine and continues to contribute to numerous how-to publications. He is currently putting the finishing touches on a green addition to his Olympia, Wash., home.
Friday, November 20, 2009
Congrats to Jessie Hoff-Agent fo the MONTH
Congratulations to Jessie Hoff for earning the CENTURY 21 JRS Realty Agent of the Month for October 2009. Jessie has worked hard all your and finally put the right pieces together in the same month. In October Jessie had multiple listings and a sale as well. This is the second time Jessie has earned the Agent of the Month Trophy. CENTURY 21 JRS Realty is very proud to have and agent of Jessies caliber working in the company. Jessie has been a top agent for many years and will continue to help buyers and sellers reach their goals. Congratulations again to Jessie Hoff.
Saturday, November 7, 2009
Bergen Catholic rolls over St. Joseph (Mont.)
Bergen Catholic
(5 - 2 - 0) November 7th, 2009
2 p.m.
St. Joseph (Mont.)
Montvale, NJ
St. Joseph (Mont.)
(6 - 2 - 0)
28 7
Bergen Catholic 28, St. Joseph (Mont.) 7 (High school Football scores and results)
The Star Ledger, November 07, 2009 7:36 p.m.
There were many outstanding performers on defense for Bergen Catholic yesterday, but none better than senior linebackers Brendan McGovern and Sam Shirak.
McGovern scored the first touchdown and Shirak was all over the field, especially in the opponent's backfield, when Bergen Catholic, No. 6 in The Star-Ledger top 20, scored early and then coasted to a 28-7 victory over its rival, ninth-ranked St. Joseph, in Montvale.
Both powers will now prepare for the state playoffs that open this coming weekend. Bergen Catholic has qualified in Non-Public, Group 4 and St. Joseph will play in the Non-Public, Group 3 field.
St. Joseph quarterback Devin O'Connor was harassed and hurried all afternoon and sacked seven times. Shirak collected two and a half sacks and eight tackles, McGovern collected eight tackles and a sack, linebacker Doug Rigg and end Chris Bush collected one and a half sacks and lineman Hunter Kiselick recorded a sack and an interception.
``They have a great team. And every time we play St. Joe's we have to prepare for a battle,'' McGovern said. ``We had to shut down their skilled players (runner Kamal) Hogan and O'Connor. We did a lot of blitzing and didn't let O'Connor get comfortable in the backfield.''
O'Connor was sacked for minus 51 yards and passed for 130 yards and Hogan rushed for 103 of his team's 113 yards. He also had a touchdown.
On St. Joseph's first drive, it moved to the Bergen Catholic 31 but fumbled and McGovern scooped it up in stride and dashed 65 yards for the touchdown with 6:33 left in the first period. Mike Halligan kicked the extra point.
On Bergen Catholic's first drive, it moved 80 yards in just six plays. Spencer Kulcsar caught a 25-yard pass from Mike Halligan before Rigg raced for a 44-yard score.
The defenses dominated in the second period. The team from Oradell grabbed a 21-0 advantage on its initial push in the second half as it marched 63 yards in eight maneuvers. Three passes by Halligan totaling 25 yards helped advance the ball to the 36. From there, Kulcsar motored around the left side for a score.
But St. Joseph responded with a touchdown after Hogan returned the kickoff to the 34 and a 15-yard horse collar penalty brought the ball to the 49. Hogan churned out all the yardage on four carries including the final 15 to the end zone. Jason Checke followed with the kick.
The Montvale team made things interesting in the fourth quarter as it went 45 yards to the 13. But Shirak sacked O'Connor for a 9-yard loss and Rigg and Chris Bush combined to bring down the quarterback for a 5-yard loss on fourth down.
St. Joseph got the ball back but not for long as Kiselick intercepted a pass at the middle of the field and brought it back 22 yards for a score.
``We have a lot of quickness on defense and didn't let them get to the outside,'' Shirak said. ``We worked hard to prepare for this game and this put us back in the big three (with Don Bosco Prep and St. Peter's Prep). I can't wait for the state playoffs to start.''
1st 2nd 3rd 4th Final
St. Joseph (Mont.) (6-2) 0 0 7 0 7
Bergen Catholic (7-2) 14 0 7 7 28First Quarter
Bergen Catholic: Brendan McGovern 65 fumble return (Mike Halligan kick)
Bergen Catholic: Doug Rigg 44 run (Mike Halligan kick)
Third Quarter
Bergen Catholic: Spencer Kulcsar 36 run (Mike Halligan kick)
St. Joseph (Mont.): Kamal Hogan 15 run (Jason Checke kick)
Fourth Quarter
Bergen Catholic: Hunter Kiselick 22 interception return (Mike Halligan kick)
(5 - 2 - 0) November 7th, 2009
2 p.m.
St. Joseph (Mont.)
Montvale, NJ
St. Joseph (Mont.)
(6 - 2 - 0)
28 7
Bergen Catholic 28, St. Joseph (Mont.) 7 (High school Football scores and results)
The Star Ledger, November 07, 2009 7:36 p.m.
There were many outstanding performers on defense for Bergen Catholic yesterday, but none better than senior linebackers Brendan McGovern and Sam Shirak.
McGovern scored the first touchdown and Shirak was all over the field, especially in the opponent's backfield, when Bergen Catholic, No. 6 in The Star-Ledger top 20, scored early and then coasted to a 28-7 victory over its rival, ninth-ranked St. Joseph, in Montvale.
Both powers will now prepare for the state playoffs that open this coming weekend. Bergen Catholic has qualified in Non-Public, Group 4 and St. Joseph will play in the Non-Public, Group 3 field.
St. Joseph quarterback Devin O'Connor was harassed and hurried all afternoon and sacked seven times. Shirak collected two and a half sacks and eight tackles, McGovern collected eight tackles and a sack, linebacker Doug Rigg and end Chris Bush collected one and a half sacks and lineman Hunter Kiselick recorded a sack and an interception.
``They have a great team. And every time we play St. Joe's we have to prepare for a battle,'' McGovern said. ``We had to shut down their skilled players (runner Kamal) Hogan and O'Connor. We did a lot of blitzing and didn't let O'Connor get comfortable in the backfield.''
O'Connor was sacked for minus 51 yards and passed for 130 yards and Hogan rushed for 103 of his team's 113 yards. He also had a touchdown.
On St. Joseph's first drive, it moved to the Bergen Catholic 31 but fumbled and McGovern scooped it up in stride and dashed 65 yards for the touchdown with 6:33 left in the first period. Mike Halligan kicked the extra point.
On Bergen Catholic's first drive, it moved 80 yards in just six plays. Spencer Kulcsar caught a 25-yard pass from Mike Halligan before Rigg raced for a 44-yard score.
The defenses dominated in the second period. The team from Oradell grabbed a 21-0 advantage on its initial push in the second half as it marched 63 yards in eight maneuvers. Three passes by Halligan totaling 25 yards helped advance the ball to the 36. From there, Kulcsar motored around the left side for a score.
But St. Joseph responded with a touchdown after Hogan returned the kickoff to the 34 and a 15-yard horse collar penalty brought the ball to the 49. Hogan churned out all the yardage on four carries including the final 15 to the end zone. Jason Checke followed with the kick.
The Montvale team made things interesting in the fourth quarter as it went 45 yards to the 13. But Shirak sacked O'Connor for a 9-yard loss and Rigg and Chris Bush combined to bring down the quarterback for a 5-yard loss on fourth down.
St. Joseph got the ball back but not for long as Kiselick intercepted a pass at the middle of the field and brought it back 22 yards for a score.
``We have a lot of quickness on defense and didn't let them get to the outside,'' Shirak said. ``We worked hard to prepare for this game and this put us back in the big three (with Don Bosco Prep and St. Peter's Prep). I can't wait for the state playoffs to start.''
1st 2nd 3rd 4th Final
St. Joseph (Mont.) (6-2) 0 0 7 0 7
Bergen Catholic (7-2) 14 0 7 7 28First Quarter
Bergen Catholic: Brendan McGovern 65 fumble return (Mike Halligan kick)
Bergen Catholic: Doug Rigg 44 run (Mike Halligan kick)
Third Quarter
Bergen Catholic: Spencer Kulcsar 36 run (Mike Halligan kick)
St. Joseph (Mont.): Kamal Hogan 15 run (Jason Checke kick)
Fourth Quarter
Bergen Catholic: Hunter Kiselick 22 interception return (Mike Halligan kick)
Saturday, October 31, 2009
Top 7 Strategies for Real Estate Sales Success
Top 7 Strategies for Real Estate Sales Success
With over 2 million real estate agents according to the National Association of Realtors (NAR), becoming a successful real estate agent takes more than just a license and a knowledge of current laws and regulations. The first year drop out range estimated to be from 40% to 80% demonstrates that many real estate agents are not as successful as they could be and research suggests that 90% give up after 3 years. The following 7 tips may help you avoid becoming one of these statistics.
First and Foremost YOU are a business!
Real estate agents work for a broker, but are independent, commissioned sales people. This means that you are a small business and must run your practice as a business. Again, remember you are a small business owner.
Embrace a Planning Attitude
If you don’t have a plan, then you are on some else’s plan – usually the successful real estate agent. Most people place more value in planning a trip to the grocery store or a vacation than planning their lives either professionally or personally.
Research Your Market Plan
Since you as the real estate agent are responsible for your own expenses, do your research specific to your marketing plan within your strategic plan. Time spent in constructing your marketing plan is definitely well spent. NOTE: Remember a business plan usually is data driven, while a strategic plan identifies who does what by when.
Establish Sales Goals
Using your strategic plan, establish sales goals. If you are new to this industry, it may take 6 months before the first sale. HINT: Use the W.H.Y. S.M.A.R.T. criteria for goal setting.
Create a Financial Budget
Budgeting is critical given the up and down of this volatile market place. Your financial budget should plan for your marketing costs, any additional costs such as education and your forecasted income.
Make Managing Yourself a Priority
Building a business is not easy. You must learn how to manage yourself especially in the area of time management, ongoing real estate sales training (continuing education units), real estate coaching and personal life balance. Real estate is said to be a 24/7 business much like any small business. However, it is important not to lose sight of your personal life including family, friends, physical health, etc.
Find a Mentor or Real Estate Coach
Going it alone is not easy. Take the time to find a mentor who can help you steer through some of the known obstacles and help you during the “peaks and valleys.” If you have the resources, you may wish to hire a real estate coach, small business coach or an executive coach who specializes in small business help.
With over 2 million real estate agents according to the National Association of Realtors (NAR), becoming a successful real estate agent takes more than just a license and a knowledge of current laws and regulations. The first year drop out range estimated to be from 40% to 80% demonstrates that many real estate agents are not as successful as they could be and research suggests that 90% give up after 3 years. The following 7 tips may help you avoid becoming one of these statistics.
First and Foremost YOU are a business!
Real estate agents work for a broker, but are independent, commissioned sales people. This means that you are a small business and must run your practice as a business. Again, remember you are a small business owner.
Embrace a Planning Attitude
If you don’t have a plan, then you are on some else’s plan – usually the successful real estate agent. Most people place more value in planning a trip to the grocery store or a vacation than planning their lives either professionally or personally.
Research Your Market Plan
Since you as the real estate agent are responsible for your own expenses, do your research specific to your marketing plan within your strategic plan. Time spent in constructing your marketing plan is definitely well spent. NOTE: Remember a business plan usually is data driven, while a strategic plan identifies who does what by when.
Establish Sales Goals
Using your strategic plan, establish sales goals. If you are new to this industry, it may take 6 months before the first sale. HINT: Use the W.H.Y. S.M.A.R.T. criteria for goal setting.
Create a Financial Budget
Budgeting is critical given the up and down of this volatile market place. Your financial budget should plan for your marketing costs, any additional costs such as education and your forecasted income.
Make Managing Yourself a Priority
Building a business is not easy. You must learn how to manage yourself especially in the area of time management, ongoing real estate sales training (continuing education units), real estate coaching and personal life balance. Real estate is said to be a 24/7 business much like any small business. However, it is important not to lose sight of your personal life including family, friends, physical health, etc.
Find a Mentor or Real Estate Coach
Going it alone is not easy. Take the time to find a mentor who can help you steer through some of the known obstacles and help you during the “peaks and valleys.” If you have the resources, you may wish to hire a real estate coach, small business coach or an executive coach who specializes in small business help.
Read this today to have Sales Success Tomorrow
Creating Daily Success in Real Estate
The journey to a successful life should be enjoyed. True success comes from accomplishing the activities daily that will lead you to your ultimate goals in life. Failing or neglecting to accomplish the daily disciplines will lead you down the path of lost opportunities and lost income. If the penalty for not accomplishing your daily activities or disciplines was implemented or assessed today, we would look at neglecting them differently. The truth is that the penalty for neglect is more visible in the future than it is today. The person who eats fried foods does not pay the penalty at 35, he pays at 55. The person who fails to save 10% of his income for retirement is not penalized at 40, but at 60. The prospecting we fail to do today does not hurt our income today, but 90 to 120 days from now.
If we were zapped today from neglecting the daily disciplines rather than in the future, our daily disciplines would change. We need to associate pain today with not doing our daily disciplines in the real estate business. We have to make the neglect more painful than the activity pain. The truth is we have a tendency to move away from pain and towards pleasure.
There are three disciplines that must be done daily in real estate for success. They are working on growth, administration, and working ON your business. Let’s look at each individual area comprehensively.
Growth:
Growth is the part of the business that brings in the revenue for your business. The more time you spend of your day in growth, the more income that you will make. Most agents focus little time on growth activities daily. They work on growth activities at the last minute, when they are running short on funds. The problem is that is too late. To have a steady business income you need a steady approach to growth.
Growth is the prospecting that you do daily. It is the listing appointments that you have for the day. It is the lead follow-up that you are doing on the people who want to buy or sell. It is the meeting with your lender to work on your competitive advantage in the marketplace.
Growth is the critical part to any business. Without growth a business will fail. I know a lot of agents who are highly skilled in growth and poorly skilled in administration and working on their business who earn large amounts of money. I know of very few successful agents who are not highly skilled at growth. You can have huge deficiencies in administration and working on your business but still win the game. You can not be deficient in growth and win. My focus is to help our clients achieve a high level of skill in all three areas. Growth is the engine that powers the train; you must first pay attention to growth.
Growth demands a minimum of three hours daily in the activities of growth: prospecting, appointments, lead follow-up, and meeting with affiliates. Prospecting should comprise 65% of the growth time daily. If the prospecting does not happen, the other growth areas will wither. Remember the higher the hours spent on growth, the higher the income and profit.
Administration:
These are the activities that complete the income stream:
Processing the listing so agents can find it in the MLS
Processing the sold property through escrow
Communicating with your clients on a regular basis
Directing your staff and monitoring their progress
These activities done well will enable you to turn clients into fans who will look for new business for you. You will need one to two hours daily for administration. If you create a good system and have a highly trained and skilled staff, your time spent in this area will be reduced. In the perfect system administration gets done well, but the agent spends little of his personal time on it.
On your business:
This is the time that most people neglect. This working on your business really separates long-term success and growth from just running faster on the treadmill of life. Long-term financial success lies in this section of your day. The ability to earn more profit is also located here.
We are all really employees of our own little real estate business. We are the ones who bring in the business and make the system go. The more time we plan, read, strategize, practice, role play, and implement our ideas, the more ownership we gain. Becoming the owner of your real estate business only happens through diligent work on your business. Instead of being the employee who works to draw a salary and pay the bills, why not become the one who orchestrates the company? Be the one who has something to sell when he wants to try something else and/or retire.
Working on your business is truly taking a step back from the daily rat race and to look at your growth and administration areas for ways to improve them. Look at your productivity and profitability then evaluate your progress. You cannot make meaningful change without evaluation as an owner, rather than as an employee on a tread mill.
Working on your business is critical to helping you move to the next level of production, or to decrease time worked without reducing income, or finding where to cut expenses by 10%. Working on your business will help you create economies of scale in administration and new ways to produce growth and income in your business. You need one hour per day of working on time. For every minute you plan you will save ten minutes in implementation.
What do you think your business would look like in 90 days or even six months if you were to implement the below daily routine?
Growth: 3 hours
Administration: 1 to 2 hours
Business: 1 hour
Time block these activities into your daily routine. You will be amazed at the results you will achieve, even in one week. Do not allow the distractions to overtake you and your new daily focus. Do not neglect to do the things that will lead you to success. Do them daily without fail.
The journey to a successful life should be enjoyed. True success comes from accomplishing the activities daily that will lead you to your ultimate goals in life. Failing or neglecting to accomplish the daily disciplines will lead you down the path of lost opportunities and lost income. If the penalty for not accomplishing your daily activities or disciplines was implemented or assessed today, we would look at neglecting them differently. The truth is that the penalty for neglect is more visible in the future than it is today. The person who eats fried foods does not pay the penalty at 35, he pays at 55. The person who fails to save 10% of his income for retirement is not penalized at 40, but at 60. The prospecting we fail to do today does not hurt our income today, but 90 to 120 days from now.
If we were zapped today from neglecting the daily disciplines rather than in the future, our daily disciplines would change. We need to associate pain today with not doing our daily disciplines in the real estate business. We have to make the neglect more painful than the activity pain. The truth is we have a tendency to move away from pain and towards pleasure.
There are three disciplines that must be done daily in real estate for success. They are working on growth, administration, and working ON your business. Let’s look at each individual area comprehensively.
Growth:
Growth is the part of the business that brings in the revenue for your business. The more time you spend of your day in growth, the more income that you will make. Most agents focus little time on growth activities daily. They work on growth activities at the last minute, when they are running short on funds. The problem is that is too late. To have a steady business income you need a steady approach to growth.
Growth is the prospecting that you do daily. It is the listing appointments that you have for the day. It is the lead follow-up that you are doing on the people who want to buy or sell. It is the meeting with your lender to work on your competitive advantage in the marketplace.
Growth is the critical part to any business. Without growth a business will fail. I know a lot of agents who are highly skilled in growth and poorly skilled in administration and working on their business who earn large amounts of money. I know of very few successful agents who are not highly skilled at growth. You can have huge deficiencies in administration and working on your business but still win the game. You can not be deficient in growth and win. My focus is to help our clients achieve a high level of skill in all three areas. Growth is the engine that powers the train; you must first pay attention to growth.
Growth demands a minimum of three hours daily in the activities of growth: prospecting, appointments, lead follow-up, and meeting with affiliates. Prospecting should comprise 65% of the growth time daily. If the prospecting does not happen, the other growth areas will wither. Remember the higher the hours spent on growth, the higher the income and profit.
Administration:
These are the activities that complete the income stream:
Processing the listing so agents can find it in the MLS
Processing the sold property through escrow
Communicating with your clients on a regular basis
Directing your staff and monitoring their progress
These activities done well will enable you to turn clients into fans who will look for new business for you. You will need one to two hours daily for administration. If you create a good system and have a highly trained and skilled staff, your time spent in this area will be reduced. In the perfect system administration gets done well, but the agent spends little of his personal time on it.
On your business:
This is the time that most people neglect. This working on your business really separates long-term success and growth from just running faster on the treadmill of life. Long-term financial success lies in this section of your day. The ability to earn more profit is also located here.
We are all really employees of our own little real estate business. We are the ones who bring in the business and make the system go. The more time we plan, read, strategize, practice, role play, and implement our ideas, the more ownership we gain. Becoming the owner of your real estate business only happens through diligent work on your business. Instead of being the employee who works to draw a salary and pay the bills, why not become the one who orchestrates the company? Be the one who has something to sell when he wants to try something else and/or retire.
Working on your business is truly taking a step back from the daily rat race and to look at your growth and administration areas for ways to improve them. Look at your productivity and profitability then evaluate your progress. You cannot make meaningful change without evaluation as an owner, rather than as an employee on a tread mill.
Working on your business is critical to helping you move to the next level of production, or to decrease time worked without reducing income, or finding where to cut expenses by 10%. Working on your business will help you create economies of scale in administration and new ways to produce growth and income in your business. You need one hour per day of working on time. For every minute you plan you will save ten minutes in implementation.
What do you think your business would look like in 90 days or even six months if you were to implement the below daily routine?
Growth: 3 hours
Administration: 1 to 2 hours
Business: 1 hour
Time block these activities into your daily routine. You will be amazed at the results you will achieve, even in one week. Do not allow the distractions to overtake you and your new daily focus. Do not neglect to do the things that will lead you to success. Do them daily without fail.
Friday, October 30, 2009
Types of Lenders
Today's choices include banks, mortgage brokers, home builders, and Internet lenders. Each has its advantages and disadvantages, and rates vary from lender to lender.
Types of Mortgage Lenders
Type Advantages Disadvantages
Banks Regulated by state and federal agencies
Current banking relationship can get you a reduced mortgage rate
Numerous branches provide you with face-to-face access
Limited to products only the bank has to offer
May not have the best rates
May lack negotiation leverage when it comes to publicized rates
Mortgage Brokers Access to a variety of mortgages and lenders
Can save you money by shopping for the best rates
Can quickly find another lender if your loan initial application is turned down
Some function as the lender's agent and have the lenders best interest at heart
Free to set their own pricing and may mark-up wholesale rates to whatever they want
Service may vary from broker to broker
Home Builders Good way for the first-time home buyer to qualify
The buyer does not take title to the property until the home is completed
May favor certain lenders who offer higher rates
Can pressure you into getting their loan instead of using a different lender
Internet Lenders Allows you to shop for competitive rates online
A greater learning curve for the borrower to understand the lending process
Typically, most lenders do not keep money on hand but instantly sell conforming loans to third parties like the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). The most common source of home lending is a retail financial institution or credit union. They offer specific loan products and handle their own direct financing by taking consumer deposits and lending them to home buyers.
Mortgage brokers, on the other hand, act as the middleman and don't fund the loans themselves, but handle the mortgage financing for the borrower. Most earn their fees directly as a percentage from the lender and some from the borrower, or a combination of both. Since mortgage brokers have access to a wide variety of lenders they are usually on top of the latest rates, fees and lending practices.
Home builder financing is common in new developments where there is a single builder. The builder carries the construction costs until the homes are built. The builder works with a lender to set-up financing for the buyer and finances the construction costs. The buyer doesn't make mortgage payments until the property is finished.
The popularity of finding a mortgage on the Internet mortgage has grown in recent years. Many lenders offer competitive rates and the convenience of tracking your application through the approval process. Some can save you a significant amount in closing costs, since everything is automated and the time to get approved can be shortened.
Types of Mortgage Lenders
Type Advantages Disadvantages
Banks Regulated by state and federal agencies
Current banking relationship can get you a reduced mortgage rate
Numerous branches provide you with face-to-face access
Limited to products only the bank has to offer
May not have the best rates
May lack negotiation leverage when it comes to publicized rates
Mortgage Brokers Access to a variety of mortgages and lenders
Can save you money by shopping for the best rates
Can quickly find another lender if your loan initial application is turned down
Some function as the lender's agent and have the lenders best interest at heart
Free to set their own pricing and may mark-up wholesale rates to whatever they want
Service may vary from broker to broker
Home Builders Good way for the first-time home buyer to qualify
The buyer does not take title to the property until the home is completed
May favor certain lenders who offer higher rates
Can pressure you into getting their loan instead of using a different lender
Internet Lenders Allows you to shop for competitive rates online
A greater learning curve for the borrower to understand the lending process
Typically, most lenders do not keep money on hand but instantly sell conforming loans to third parties like the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). The most common source of home lending is a retail financial institution or credit union. They offer specific loan products and handle their own direct financing by taking consumer deposits and lending them to home buyers.
Mortgage brokers, on the other hand, act as the middleman and don't fund the loans themselves, but handle the mortgage financing for the borrower. Most earn their fees directly as a percentage from the lender and some from the borrower, or a combination of both. Since mortgage brokers have access to a wide variety of lenders they are usually on top of the latest rates, fees and lending practices.
Home builder financing is common in new developments where there is a single builder. The builder carries the construction costs until the homes are built. The builder works with a lender to set-up financing for the buyer and finances the construction costs. The buyer doesn't make mortgage payments until the property is finished.
The popularity of finding a mortgage on the Internet mortgage has grown in recent years. Many lenders offer competitive rates and the convenience of tracking your application through the approval process. Some can save you a significant amount in closing costs, since everything is automated and the time to get approved can be shortened.
Thursday, October 29, 2009
Buying your First Home
Finding the right first home starts with a price range and a short list of desirable neighborhoods. But there are many other factors you'll need to consider before investing in what may be your biggest asset.
Before You Start:
Grab your current household budget so you can consider your financial situation and your ability to make mortgage payments.
Ask family and friends if they can recommend experts, like a lawyer and an inspector, who can help with the home buying process.
Think about your lifestyle and how it might affect your choice of home and neighborhood.
Do a little research on current home prices in the neighborhoods you plan to target.
Buying Your First Home
Home ownership is the cornerstone of the American Dream. But before you start looking, there are a number of things you need to consider. First, you should determine what your needs are and whether owning your own home will meet those needs. Do you picture yourself mowing the lawn on Saturday, or leaving your urban condo for the beach? The best advice is to look at buying a home as a lifestyle investment, and only secondly as a financial investment.
Even if housing prices don't continue to increase at the torrid pace seen in recent years in many areas, buying a home can be a good financial investment. Making mortgage payments forces you to save, and after 15 to 30 years you will own a substantial asset that can be converted into cash to help fund retirement or a child's education. There are also tax benefits.
Like many other investments, however, real estate prices can fluctuate considerably. If you aren't ready to settle down in one spot for a few years, you probably should defer buying a home until you are. If you are ready to take the plunge, you'll need to determine how much you can spend and where you want to live.
How Much Mortgage Can You Afford?
Many mortgages today are being resold in the secondary markets. The Federal National Mortgage Association (Fannie Mae) is a government-sponsored organization that purchases mortgages from lenders and sells them to investors. Mortgages that conform to Fannie Mae's standards may carry lower interest rates or smaller down payments. To qualify, the mortgage borrower needs to meet two ratio requirements that are industry standards.
The housing expense ratio compares basic monthly housing costs to the buyer's gross (before taxes and other deductions) monthly income. Basic costs include monthly mortgage, insurance, and property taxes. Income includes any steady cash flow, including salary, self-employment income, pensions, child support, or alimony payments. For a conventional loan, your monthly housing cost should not exceed 28 percent of your monthly gross income.
The total obligations to income ratio is the percentage of all income required to service your total monthly payments. Monthly payments on student loans, installment loans, and credit card balances older than 10 months are added to basic housing costs and then divided by gross income. Your total monthly debt payments, including basic housing costs, should not exceed 36 percent.
Many home buyers choose to arrange financing before shopping for a home and most lenders will "pre-qualify" you for a certain amount. Prequalification helps you focus on homes you can afford. It also makes you a more attractive buyer and can help you negotiate a lower purchase price. Nothing is more disheartening for buyers or sellers than a deal that falls through due to a lack of financing.
In addition to qualifying for a mortgage, you will probably need a down payment. The 28 percent to 36 percent debt ratios assume a 10 percent down payment. In practice, down payment requirements vary from more than 20 percent to as low as 0 percent for some Veterans Administration (VA) loans. Down payments greater than 20 percent generally buy a better rate. Lowering the down payment increases leverage (the opportunity to make a profit using borrowed money) but also increases monthly payments.
How Much Home Can You Afford?
Bob and Janet's combined income is $50,000 a year, or $4,166 a month. Their housing expense ratio of 28 percent yields a monthly maximum of $1,166 for mortgage, insurance, and taxes ($4,166 x 0.28 = $1,166).
Their total debt ceiling of 36 percent is $1,583 (4,166 x 0.36 = $1,500). Their monthly debt payments include a $200 car payment, credit card payments of $100, and student loan payments of $200. Subtracting this total of $500 from the $1,500 permitted leaves $1,000 in monthly housing payments.
Costs of Buying a Home
Many home buyers are surprised (shocked might be a better word) to find that a down payment is not the only cash requirement. A home inspection can cost $200 or more. Closing costs may include loan origination fees, up-front "points" (prepaid interest), application fees, appraisal fee, survey, title search and title insurance, first month's homeowners insurance, recording fees and attorney's fees. In many locales, transfer taxes are assessed. Finally, adjustments for heating oil or property taxes already paid by the sellers will be included in your final costs. All this will probably add up to be between 3 percent and 8 percent of your purchase price.
Ongoing Costs
In addition to mortgage payments, there are other costs associated with home ownership. Utilities, heat, property taxes, repairs, insurance, services such as trash or snow removal, landscaping, assessments, and replacement of appliances are the major costs incurred. Make sure you understand how much you are willing and able to spend on such items.
Condominiums may not have the same costs as a house, but they do have association fees. Older homes are often less expensive to buy, but repairs may be greater than those in a newer home. When looking for a home, be sure to check the actual expenses of the previous owners, or expenses for a comparable home in the neighborhood.
Choosing a Neighborhood
Before you start looking at homes, look at neighborhoods. Schools and other services play a large part in making a neighborhood attractive. Even if you don't have children, your future buyer may. Crime rates, taxes, transportation, and town services are other things to look at. Finally, learn the local zoning laws. A new pizza shop next door might alter your property's future value. On the other hand, you may want to run a business out of your home.
Look for a neighborhood where prices are increasing. As the prices of the better homes increase, values of the lesser homes may rise as well. If you find a less expensive home in a good neighborhood, make sure you factor in the cost of repairs or upgrades that such a house may need.
Finding a Broker
If you are a first-time home buyer, you will probably want to work with a broker. Brokers know the market and can be a valuable source of information concerning the home buying process. Ask lots of questions, but remember that most brokers are working for the seller, and in the end, their primary obligation is to the seller and not to you. An alternative is a so-called buyer's broker. This individual does work for you, and therefore is paid by you. Seller's brokers are paid by the seller.
Make sure that the broker has access to the Multiple Listing Service (MLS). This service lists all the properties for sale by most major brokers across the country. Brokerage commissions average 5 percent to 7 percent and are split between the listing broker and the broker that eventually sells the home. Don't be surprised if your broker is eager to sell you their own listing since they would then earn the entire commission.
Home Buying Costs
Down Payment 0% - 20% of purchase price
Home Inspection $200 - $500
Points $1,000 and up for 1% - 3%
Adjustments 3% - 8% of purchase price
Once you've determined a price range and location, you're ready to look at individual homes. Remember that much of a home's value is derived from the values of those surrounding it. Since the average residency in a house is seven years, consider the qualities that will be attractive to future buyers as well as those attractive to you.
Although it can be difficult, try to remember that you will probably want to sell this home someday. The more research you do today, the better your decision will look in the years to come.
Summary:
Buying a home can mean building significant value through the years.
Think carefully about how much you can afford to spend and consider borrowing guidelines like those used by Fannie Mae.
Pre-qualifying with your lender is a good way to determine how much house you can afford.
You will need cash for a down payment and closing costs. Generally speaking, the higher the down payment, the lower the interest rate and monthly mortgage payment.
In addition to your mortgage payments, you will also need to consider the other costs of home ownership.
Schools, taxes, services, crime rates, transportation, and zoning are important considerations when selecting a neighborhood.
Brokers usually represent the seller, but they can be valuable sources of information for buyers as well. A broker that belongs to the Multiple Listing Service will be able to offer a wider variety of homes to choose from.
Remember to consider resale value when buying your home.
Before You Start:
Grab your current household budget so you can consider your financial situation and your ability to make mortgage payments.
Ask family and friends if they can recommend experts, like a lawyer and an inspector, who can help with the home buying process.
Think about your lifestyle and how it might affect your choice of home and neighborhood.
Do a little research on current home prices in the neighborhoods you plan to target.
Buying Your First Home
Home ownership is the cornerstone of the American Dream. But before you start looking, there are a number of things you need to consider. First, you should determine what your needs are and whether owning your own home will meet those needs. Do you picture yourself mowing the lawn on Saturday, or leaving your urban condo for the beach? The best advice is to look at buying a home as a lifestyle investment, and only secondly as a financial investment.
Even if housing prices don't continue to increase at the torrid pace seen in recent years in many areas, buying a home can be a good financial investment. Making mortgage payments forces you to save, and after 15 to 30 years you will own a substantial asset that can be converted into cash to help fund retirement or a child's education. There are also tax benefits.
Like many other investments, however, real estate prices can fluctuate considerably. If you aren't ready to settle down in one spot for a few years, you probably should defer buying a home until you are. If you are ready to take the plunge, you'll need to determine how much you can spend and where you want to live.
How Much Mortgage Can You Afford?
Many mortgages today are being resold in the secondary markets. The Federal National Mortgage Association (Fannie Mae) is a government-sponsored organization that purchases mortgages from lenders and sells them to investors. Mortgages that conform to Fannie Mae's standards may carry lower interest rates or smaller down payments. To qualify, the mortgage borrower needs to meet two ratio requirements that are industry standards.
The housing expense ratio compares basic monthly housing costs to the buyer's gross (before taxes and other deductions) monthly income. Basic costs include monthly mortgage, insurance, and property taxes. Income includes any steady cash flow, including salary, self-employment income, pensions, child support, or alimony payments. For a conventional loan, your monthly housing cost should not exceed 28 percent of your monthly gross income.
The total obligations to income ratio is the percentage of all income required to service your total monthly payments. Monthly payments on student loans, installment loans, and credit card balances older than 10 months are added to basic housing costs and then divided by gross income. Your total monthly debt payments, including basic housing costs, should not exceed 36 percent.
Many home buyers choose to arrange financing before shopping for a home and most lenders will "pre-qualify" you for a certain amount. Prequalification helps you focus on homes you can afford. It also makes you a more attractive buyer and can help you negotiate a lower purchase price. Nothing is more disheartening for buyers or sellers than a deal that falls through due to a lack of financing.
In addition to qualifying for a mortgage, you will probably need a down payment. The 28 percent to 36 percent debt ratios assume a 10 percent down payment. In practice, down payment requirements vary from more than 20 percent to as low as 0 percent for some Veterans Administration (VA) loans. Down payments greater than 20 percent generally buy a better rate. Lowering the down payment increases leverage (the opportunity to make a profit using borrowed money) but also increases monthly payments.
How Much Home Can You Afford?
Bob and Janet's combined income is $50,000 a year, or $4,166 a month. Their housing expense ratio of 28 percent yields a monthly maximum of $1,166 for mortgage, insurance, and taxes ($4,166 x 0.28 = $1,166).
Their total debt ceiling of 36 percent is $1,583 (4,166 x 0.36 = $1,500). Their monthly debt payments include a $200 car payment, credit card payments of $100, and student loan payments of $200. Subtracting this total of $500 from the $1,500 permitted leaves $1,000 in monthly housing payments.
Costs of Buying a Home
Many home buyers are surprised (shocked might be a better word) to find that a down payment is not the only cash requirement. A home inspection can cost $200 or more. Closing costs may include loan origination fees, up-front "points" (prepaid interest), application fees, appraisal fee, survey, title search and title insurance, first month's homeowners insurance, recording fees and attorney's fees. In many locales, transfer taxes are assessed. Finally, adjustments for heating oil or property taxes already paid by the sellers will be included in your final costs. All this will probably add up to be between 3 percent and 8 percent of your purchase price.
Ongoing Costs
In addition to mortgage payments, there are other costs associated with home ownership. Utilities, heat, property taxes, repairs, insurance, services such as trash or snow removal, landscaping, assessments, and replacement of appliances are the major costs incurred. Make sure you understand how much you are willing and able to spend on such items.
Condominiums may not have the same costs as a house, but they do have association fees. Older homes are often less expensive to buy, but repairs may be greater than those in a newer home. When looking for a home, be sure to check the actual expenses of the previous owners, or expenses for a comparable home in the neighborhood.
Choosing a Neighborhood
Before you start looking at homes, look at neighborhoods. Schools and other services play a large part in making a neighborhood attractive. Even if you don't have children, your future buyer may. Crime rates, taxes, transportation, and town services are other things to look at. Finally, learn the local zoning laws. A new pizza shop next door might alter your property's future value. On the other hand, you may want to run a business out of your home.
Look for a neighborhood where prices are increasing. As the prices of the better homes increase, values of the lesser homes may rise as well. If you find a less expensive home in a good neighborhood, make sure you factor in the cost of repairs or upgrades that such a house may need.
Finding a Broker
If you are a first-time home buyer, you will probably want to work with a broker. Brokers know the market and can be a valuable source of information concerning the home buying process. Ask lots of questions, but remember that most brokers are working for the seller, and in the end, their primary obligation is to the seller and not to you. An alternative is a so-called buyer's broker. This individual does work for you, and therefore is paid by you. Seller's brokers are paid by the seller.
Make sure that the broker has access to the Multiple Listing Service (MLS). This service lists all the properties for sale by most major brokers across the country. Brokerage commissions average 5 percent to 7 percent and are split between the listing broker and the broker that eventually sells the home. Don't be surprised if your broker is eager to sell you their own listing since they would then earn the entire commission.
Home Buying Costs
Down Payment 0% - 20% of purchase price
Home Inspection $200 - $500
Points $1,000 and up for 1% - 3%
Adjustments 3% - 8% of purchase price
Once you've determined a price range and location, you're ready to look at individual homes. Remember that much of a home's value is derived from the values of those surrounding it. Since the average residency in a house is seven years, consider the qualities that will be attractive to future buyers as well as those attractive to you.
Although it can be difficult, try to remember that you will probably want to sell this home someday. The more research you do today, the better your decision will look in the years to come.
Summary:
Buying a home can mean building significant value through the years.
Think carefully about how much you can afford to spend and consider borrowing guidelines like those used by Fannie Mae.
Pre-qualifying with your lender is a good way to determine how much house you can afford.
You will need cash for a down payment and closing costs. Generally speaking, the higher the down payment, the lower the interest rate and monthly mortgage payment.
In addition to your mortgage payments, you will also need to consider the other costs of home ownership.
Schools, taxes, services, crime rates, transportation, and zoning are important considerations when selecting a neighborhood.
Brokers usually represent the seller, but they can be valuable sources of information for buyers as well. A broker that belongs to the Multiple Listing Service will be able to offer a wider variety of homes to choose from.
Remember to consider resale value when buying your home.
How Does Escrow Work?
If you've ever made an informal bet with a friend, you may have asked a third person to hold the money until the wager was resolved. When you take out a mortgage to buy a home, you're doing something similar by opening an escrow account.
How it works
When you put money in escrow it is held by a neutral third party (called an escrow agent) who works for both the lender and the borrower. The agent's role is to carry out the instructions agreed upon by both parties. The money is released when all the terms of the agreement are met. Escrow can be involved in anything from multimillion-dollar building projects to purchases made on online auction sites.
When it's used
When your mortgage closes, your lender will usually require you to open an escrow account to cover property taxes and homeowner's insurance. You'll make an initial deposit, followed by payments to the account every month. (Usually these are added to your regular mortgage payment.) The escrow agent will then release these funds as your taxes and insurance premiums come due.
Its purpose
The idea is to protect the lender by ensuring that you pay your taxes and insurance on time. If you default on your property tax, for example, your municipality can put a lien on the house, which would make it difficult to sell. Or if your house burns down and you've neglected to pay the insurance, the lender would be left with no collateral.
How you benefit
Escrow can benefit borrowers by helping them spread insurance and tax expenses evenly over 12 payments. For example, assume your yearly property taxes are two payments of $1,000 each, and your insurance is $400 annually. If you paid these directly, it would mean three large payments a year; your escrow costs, however, would be a manageable $200 a month.
Escrow payments
Your escrow account will have a built-in cushion -- if you miss a payment, the lender must still be able to pay your accounts on time. However, federal law prohibits lenders from requiring more than two months. expenses in escrow. And because your tax and insurance costs will change slightly from year to year, the lender will review and adjust your escrow payments annually.
When escrow may be waived
In most states, the money you place in an escrow account earns no interest for you. For that reason, many borrowers prefer to pay their taxes and insurance directly. Lenders may agree to this if your down payment is more than 20 percent, although some will raise your interest rate slightly to compensate. Once you agree to putting funds into an escrow account, however, it is difficult to cancel it, so make sure you fully understand the arrangement before your mortgage closes.
How it works
When you put money in escrow it is held by a neutral third party (called an escrow agent) who works for both the lender and the borrower. The agent's role is to carry out the instructions agreed upon by both parties. The money is released when all the terms of the agreement are met. Escrow can be involved in anything from multimillion-dollar building projects to purchases made on online auction sites.
When it's used
When your mortgage closes, your lender will usually require you to open an escrow account to cover property taxes and homeowner's insurance. You'll make an initial deposit, followed by payments to the account every month. (Usually these are added to your regular mortgage payment.) The escrow agent will then release these funds as your taxes and insurance premiums come due.
Its purpose
The idea is to protect the lender by ensuring that you pay your taxes and insurance on time. If you default on your property tax, for example, your municipality can put a lien on the house, which would make it difficult to sell. Or if your house burns down and you've neglected to pay the insurance, the lender would be left with no collateral.
How you benefit
Escrow can benefit borrowers by helping them spread insurance and tax expenses evenly over 12 payments. For example, assume your yearly property taxes are two payments of $1,000 each, and your insurance is $400 annually. If you paid these directly, it would mean three large payments a year; your escrow costs, however, would be a manageable $200 a month.
Escrow payments
Your escrow account will have a built-in cushion -- if you miss a payment, the lender must still be able to pay your accounts on time. However, federal law prohibits lenders from requiring more than two months. expenses in escrow. And because your tax and insurance costs will change slightly from year to year, the lender will review and adjust your escrow payments annually.
When escrow may be waived
In most states, the money you place in an escrow account earns no interest for you. For that reason, many borrowers prefer to pay their taxes and insurance directly. Lenders may agree to this if your down payment is more than 20 percent, although some will raise your interest rate slightly to compensate. Once you agree to putting funds into an escrow account, however, it is difficult to cancel it, so make sure you fully understand the arrangement before your mortgage closes.
Thursday, October 15, 2009
10 Things I Wish My First Broker Had Told Me
It's never to late to learn. Experienced salespeople share their valuable, and hard-won, knowledge with you. Ever wish you had a time machine test and could start your real estate career over-with all the experience and skills it's taken you years to develop? Well, you can't turn back the clock, but you move forward- with the benefits of your own knowledge, plus these great lessons learned.
Here are some of the challenges experienced real estate practitioners faced and overcame, plus some advice from practitioners, brokers, and trainers on how to leap those hurdles.
1. You can't ever know enough.
Cheryl Schlehuber, GRI, ABR, e-PRO® associate broker/owner of the Mackinac Properties Team, St. Ignace, Mich., wished she'd obtained her GRI (Graduate REALTOR ® Institute) earlier in her career. "Having the designation increased my knowledge and made me a better practitioner," she says. "Knowing you're in control and having the answers-or knowing where to get them- ;boost confidence, believability, and trust." She intends to be a lifelong learner and believes new skills can translate into more sales.
They can also translate into more dollars. Salespeople holding the GRI earn at least 35 percent more than those without it, says the Professional Realty Institute, Pasadena. Calif. NAR figures show that the 33 percent of its members who've earned a professional designation earned a median salary of $73,100, compared to $38,700 without.
"Only a tiny part of what people learn in licensing school has any bearing on what salespeople actually do. The bottom line is that brokers need to teach concrete skills-how to find clients, how to work FSBOs and expireds, how to close. Many new licensees have no idea what to even say once they get a client," comments Lynn Madison, Lynn Madison Seminars, Palatine, Ill.
2. You only have 15 seconds to sell yourself.
"It's fine to say that a salesperson should gather leads through open houses and floor time, but I wasn't adequately trained to know how to be persuasive and get critical information in a 15-second encounter," says Jeff Auen of Heritage Real Estate-Century 21, Lafayette, Calif."Without proper training, these are lost opportunities."
Personality profiling-learning to read people-is one way to build rapport quickly. "Practitioners can adapt their communications style to mirror prospects'demeanor, so there's feeling of a deeper connection. Attending continuing education classes that expand your knowledge of personality types can be beneficial," comments Joeann Fossland, a master certified coach who specializes in real estate through her company, Joeann Fossland Advantage Solutions Group, LLC, Cortaro, Ariz. Developing good listening skills and focusing on the prospects interests instead of yours will also help you make a good instant impression.
3.Some deals will fall apart.
"You can't always figure out who is ‘for real.' Someone may say they're writing an offer and will call in an hour, and then disappear," says Ruth Friedman, Troop Real Estate, Inc., Westlake, Calif. "Flaky buyers just come with the job. If they get you down or you quit, you're the one who loses."
"Even experienced salespeople sometimes miss red flags that indicate unmotivated buyers," says Harley Rouda, Jr. of Real Living, Columbus, Ohio. "For example, an unwillingness to get preapproved or to put their current home on the market before finding a new one are signals that buyers aren't committed to you or the home-buying process. "When practitioners are hungry, they're sometimes willing to work on more of a hope than a certainty. That's when they get disappointed," he adds. If buyers can't seem to make a commitment, it may be time to cut your losses and refer them to another associate-hopefully for a referral fee.
4. Don't confuse experience with skill.
"When you're new and unsure of your knowledge, it's natural to hang around more experienced practitioners, but be careful who you emulate," observes David Oliverson,e-PRO® , associate broker, West USA Realty, Phoenix, Ariz. In his early days, he discovered that successful practitioners were out hustling business, not sitting around the office. He picked a handful of top performers in his market and used them as his models. Oliverson interviewed the clients of top salespeople to find out what clients liked, then incorporated it into his business. For example, he found that clients valued salespeople who stay in constant touch. Now, he makes it a point to call them regularly. He also found that clients gave top salespeople high marks for the wealth of knowledge and statistics about the market they provided. Today, Oliverson never goes to a listing without a book full of market stats.
5. You're selling yourself as much as the home.
"I never really realized that clients had to buy you before you get the chance to sell their home," said Tony Hawkins ABR , broker and instructor, Realty World/Investment Marketing, Raleigh, N.C. As a former radio announcer, Hawkins considered himself a good talker, but " what I missed was a method to transition existing skills into techniques to help real estate clients," he says.
"A broker shouldn't paint too rosy picture of the job," says Bob Scholz, regional director of corporate training, Hunt Real Estate ERA, Williamsville, N.Y. He advises brokerage companies to spend time during training teaching skills such as personal money management and budgeting as well as listing skills. And whatever your skill level, it's critical to chose a brokerage company with regular training on both the basics and on new
industry trends.
6. Hook up with a mentor
"There is so much to learn that it's quite often overwhelming to face each day, " says Mary Pat Yarusites, RE/MAX Classic, Falmouth, Mass. "Having someone who knows the ropes can shed a light on areas that are seem unclear." Seek mentors who have demonstrated credibility in the business and are geographically accessible so you can have regular face time.
"With a mentor, you can see concepts in motion, emulate their techniques, and tailor them to fit your personality and business," says Gayle Bailey, RE/MAX Preferred Properties, Vienna, Va. "People hear good ideas in a class but can't always apply them." Even 30 years later, he considers his mentor, Harold Helm of RE/MAX Commercial, Louisville, Ky., "the key that turned the lock in my career." Mentoring isn't just for newcomers either. Two experienced people can team up, mentor each other- often referred to as parallel mentoring--and take both their businesses to the next level. "With parallel mentoring, it's not a matter of learning new skills, but finding how something old can be done better," says Bailey.
7.A transaction is made up of a million details, and you can't forget any of them.
"When you start out and you have only one transaction, you may be able to do it all. But when you have multiple transactions, it's even more difficult to keep track of every date and deadline," says Gwynn Teal Carpenter, broker, co-owner, and vice president of Home and Hearth Realty, Inc., Austin, Tex.
To help herself stay on top of transactions, Teal Carpenter developed a series of simple forms and checklists, such as "Getting From Contract to Possession" and "Contract Timeline," to give buyers, sellers, and herself an outline for every step of a transaction. "The approach not only saves me time, but also gives clients guidelines to follow," says Carpenter. The checklists also reduce phone calls between her office and clients and make her look professional and organized. And she never misses a deadline.
8. Don't overspend on technology you won't use.
"At first I thought that the ones with the best gizmos would get the farthest, the fastest," says Lori Bee, a broker with Helen Adams Realty, Charlotte, N.C. After getting her e-PRO® certification, she thinks the best technologies are the ones you understand and will use.
Stephen Canale CRB, CRS, GRI, an instructor for GRI programs for a number of state associations as well as a speaker and a technology columnist for REALTOR® Magazine, cautions that indiscriminate spending can drain precious financial resources and that time invested in learning new hardware or software can never be recovered. He suggests making an inventory of what technologies you have and use regularly. Seek their common traits (such as an indication that you're dependent on mobile devices like PDAs and cell phones) to help you decide which technologies are making the biggest contributions to your productivity.
Canale also suggests looking for holes or inefficiencies in your current technology lineup. Perhaps there's a tool that can automate what you do and boost productivity. An autoresponder, for example, might help you reply to clients quickly. Look for programs that combine two functions-managing mailing lists and creating brochures, for instance. But be leery about buying the latest technologies. They're expensive and manufacturers usually need time to work out the bugs. A year after a technology's debut often means a product is less expensive and more refined. Also, buy only what you can implement immediately.
9. Don't work without a business plan.
Marilyn Urso, CRB, e-PRO®, owner/broker of Long Island Village Realty, Inc., Syosset, N.Y. , "My husband and I got very involved in working in our business-taking listings, show homes, and other day-to-day task--and lost sight of our goals," she comments. "I can say I want to do $10,000,000 in sales this year, but if I don't have a plan to get the listings and I don't have a handle on what I spend, I'll never reach the goal."
"So many people just try to fly by the seat of their pants," observes Fossland. "A business plan helps you align your strengths and values with your business." It's also critical to create long- and short-term goals. You can make a plan quantifiable by nailing down the number of transactions, sales, and weekly working hours necessary to reach the goals. It can even include a schedule for vacations and time off.
"Check the goals monthly to see what's working and what's not and shift course if something isn't effective. From the time you set a goal, market conditions-and your plan of action--could change," says coach Joeann Fossland. She also recommends looking at weekly activities to see what has been most effective in getting you closer to your goals and what steps you can take that will provide the highest payoff.
10.Sometimes you have to say "no."
"I had a need to give clients the best service and the highest degree of expertise, says Patty Johnston, ABR, GRI , broker RE/MAX Elite, Brentwood, Tenn. "I put so much pressure on myself that I nearly burned myself out of real estate."
Patti Brotherton, who manages the Prudential California Realty offices in Santa Barbara and Montecito and is the company's district manager for Santa Barbara County, suggests managing your time efficiently and sticking to your schedule as much as possible. For instance, rather than answering each call when it comes in, she suggests answering calls in clusters--returning morning calls at 11 a.m. and afternoon calls at 3 p.m., for example.
"I think practitioners let clients dictate to them," she says. " If you control your time and efforts, everyone wins and the service you provide is exceptional." There were years when she planned her schedule so she could take summers off to be with her children. If you're booked up or want to take time off, consider referring incoming business to others in the office. And remember, the approach can yield a hefty chunk in referral fees.
Here are some of the challenges experienced real estate practitioners faced and overcame, plus some advice from practitioners, brokers, and trainers on how to leap those hurdles.
1. You can't ever know enough.
Cheryl Schlehuber, GRI, ABR, e-PRO® associate broker/owner of the Mackinac Properties Team, St. Ignace, Mich., wished she'd obtained her GRI (Graduate REALTOR ® Institute) earlier in her career. "Having the designation increased my knowledge and made me a better practitioner," she says. "Knowing you're in control and having the answers-or knowing where to get them- ;boost confidence, believability, and trust." She intends to be a lifelong learner and believes new skills can translate into more sales.
They can also translate into more dollars. Salespeople holding the GRI earn at least 35 percent more than those without it, says the Professional Realty Institute, Pasadena. Calif. NAR figures show that the 33 percent of its members who've earned a professional designation earned a median salary of $73,100, compared to $38,700 without.
"Only a tiny part of what people learn in licensing school has any bearing on what salespeople actually do. The bottom line is that brokers need to teach concrete skills-how to find clients, how to work FSBOs and expireds, how to close. Many new licensees have no idea what to even say once they get a client," comments Lynn Madison, Lynn Madison Seminars, Palatine, Ill.
2. You only have 15 seconds to sell yourself.
"It's fine to say that a salesperson should gather leads through open houses and floor time, but I wasn't adequately trained to know how to be persuasive and get critical information in a 15-second encounter," says Jeff Auen of Heritage Real Estate-Century 21, Lafayette, Calif."Without proper training, these are lost opportunities."
Personality profiling-learning to read people-is one way to build rapport quickly. "Practitioners can adapt their communications style to mirror prospects'demeanor, so there's feeling of a deeper connection. Attending continuing education classes that expand your knowledge of personality types can be beneficial," comments Joeann Fossland, a master certified coach who specializes in real estate through her company, Joeann Fossland Advantage Solutions Group, LLC, Cortaro, Ariz. Developing good listening skills and focusing on the prospects interests instead of yours will also help you make a good instant impression.
3.Some deals will fall apart.
"You can't always figure out who is ‘for real.' Someone may say they're writing an offer and will call in an hour, and then disappear," says Ruth Friedman, Troop Real Estate, Inc., Westlake, Calif. "Flaky buyers just come with the job. If they get you down or you quit, you're the one who loses."
"Even experienced salespeople sometimes miss red flags that indicate unmotivated buyers," says Harley Rouda, Jr. of Real Living, Columbus, Ohio. "For example, an unwillingness to get preapproved or to put their current home on the market before finding a new one are signals that buyers aren't committed to you or the home-buying process. "When practitioners are hungry, they're sometimes willing to work on more of a hope than a certainty. That's when they get disappointed," he adds. If buyers can't seem to make a commitment, it may be time to cut your losses and refer them to another associate-hopefully for a referral fee.
4. Don't confuse experience with skill.
"When you're new and unsure of your knowledge, it's natural to hang around more experienced practitioners, but be careful who you emulate," observes David Oliverson,e-PRO® , associate broker, West USA Realty, Phoenix, Ariz. In his early days, he discovered that successful practitioners were out hustling business, not sitting around the office. He picked a handful of top performers in his market and used them as his models. Oliverson interviewed the clients of top salespeople to find out what clients liked, then incorporated it into his business. For example, he found that clients valued salespeople who stay in constant touch. Now, he makes it a point to call them regularly. He also found that clients gave top salespeople high marks for the wealth of knowledge and statistics about the market they provided. Today, Oliverson never goes to a listing without a book full of market stats.
5. You're selling yourself as much as the home.
"I never really realized that clients had to buy you before you get the chance to sell their home," said Tony Hawkins ABR , broker and instructor, Realty World/Investment Marketing, Raleigh, N.C. As a former radio announcer, Hawkins considered himself a good talker, but " what I missed was a method to transition existing skills into techniques to help real estate clients," he says.
"A broker shouldn't paint too rosy picture of the job," says Bob Scholz, regional director of corporate training, Hunt Real Estate ERA, Williamsville, N.Y. He advises brokerage companies to spend time during training teaching skills such as personal money management and budgeting as well as listing skills. And whatever your skill level, it's critical to chose a brokerage company with regular training on both the basics and on new
industry trends.
6. Hook up with a mentor
"There is so much to learn that it's quite often overwhelming to face each day, " says Mary Pat Yarusites, RE/MAX Classic, Falmouth, Mass. "Having someone who knows the ropes can shed a light on areas that are seem unclear." Seek mentors who have demonstrated credibility in the business and are geographically accessible so you can have regular face time.
"With a mentor, you can see concepts in motion, emulate their techniques, and tailor them to fit your personality and business," says Gayle Bailey, RE/MAX Preferred Properties, Vienna, Va. "People hear good ideas in a class but can't always apply them." Even 30 years later, he considers his mentor, Harold Helm of RE/MAX Commercial, Louisville, Ky., "the key that turned the lock in my career." Mentoring isn't just for newcomers either. Two experienced people can team up, mentor each other- often referred to as parallel mentoring--and take both their businesses to the next level. "With parallel mentoring, it's not a matter of learning new skills, but finding how something old can be done better," says Bailey.
7.A transaction is made up of a million details, and you can't forget any of them.
"When you start out and you have only one transaction, you may be able to do it all. But when you have multiple transactions, it's even more difficult to keep track of every date and deadline," says Gwynn Teal Carpenter, broker, co-owner, and vice president of Home and Hearth Realty, Inc., Austin, Tex.
To help herself stay on top of transactions, Teal Carpenter developed a series of simple forms and checklists, such as "Getting From Contract to Possession" and "Contract Timeline," to give buyers, sellers, and herself an outline for every step of a transaction. "The approach not only saves me time, but also gives clients guidelines to follow," says Carpenter. The checklists also reduce phone calls between her office and clients and make her look professional and organized. And she never misses a deadline.
8. Don't overspend on technology you won't use.
"At first I thought that the ones with the best gizmos would get the farthest, the fastest," says Lori Bee, a broker with Helen Adams Realty, Charlotte, N.C. After getting her e-PRO® certification, she thinks the best technologies are the ones you understand and will use.
Stephen Canale CRB, CRS, GRI, an instructor for GRI programs for a number of state associations as well as a speaker and a technology columnist for REALTOR® Magazine, cautions that indiscriminate spending can drain precious financial resources and that time invested in learning new hardware or software can never be recovered. He suggests making an inventory of what technologies you have and use regularly. Seek their common traits (such as an indication that you're dependent on mobile devices like PDAs and cell phones) to help you decide which technologies are making the biggest contributions to your productivity.
Canale also suggests looking for holes or inefficiencies in your current technology lineup. Perhaps there's a tool that can automate what you do and boost productivity. An autoresponder, for example, might help you reply to clients quickly. Look for programs that combine two functions-managing mailing lists and creating brochures, for instance. But be leery about buying the latest technologies. They're expensive and manufacturers usually need time to work out the bugs. A year after a technology's debut often means a product is less expensive and more refined. Also, buy only what you can implement immediately.
9. Don't work without a business plan.
Marilyn Urso, CRB, e-PRO®, owner/broker of Long Island Village Realty, Inc., Syosset, N.Y. , "My husband and I got very involved in working in our business-taking listings, show homes, and other day-to-day task--and lost sight of our goals," she comments. "I can say I want to do $10,000,000 in sales this year, but if I don't have a plan to get the listings and I don't have a handle on what I spend, I'll never reach the goal."
"So many people just try to fly by the seat of their pants," observes Fossland. "A business plan helps you align your strengths and values with your business." It's also critical to create long- and short-term goals. You can make a plan quantifiable by nailing down the number of transactions, sales, and weekly working hours necessary to reach the goals. It can even include a schedule for vacations and time off.
"Check the goals monthly to see what's working and what's not and shift course if something isn't effective. From the time you set a goal, market conditions-and your plan of action--could change," says coach Joeann Fossland. She also recommends looking at weekly activities to see what has been most effective in getting you closer to your goals and what steps you can take that will provide the highest payoff.
10.Sometimes you have to say "no."
"I had a need to give clients the best service and the highest degree of expertise, says Patty Johnston, ABR, GRI , broker RE/MAX Elite, Brentwood, Tenn. "I put so much pressure on myself that I nearly burned myself out of real estate."
Patti Brotherton, who manages the Prudential California Realty offices in Santa Barbara and Montecito and is the company's district manager for Santa Barbara County, suggests managing your time efficiently and sticking to your schedule as much as possible. For instance, rather than answering each call when it comes in, she suggests answering calls in clusters--returning morning calls at 11 a.m. and afternoon calls at 3 p.m., for example.
"I think practitioners let clients dictate to them," she says. " If you control your time and efforts, everyone wins and the service you provide is exceptional." There were years when she planned her schedule so she could take summers off to be with her children. If you're booked up or want to take time off, consider referring incoming business to others in the office. And remember, the approach can yield a hefty chunk in referral fees.
Wednesday, October 7, 2009
#1 Homes Selling Mistake
There's a great saying in the real estate business. To succeed in life, you want to be:
The First Child
The Second Spouse
The Third Realtor
And like with most sayings, there is some truth in that statement, as agents who pick up listings after sellers have made major mistakes will attest.
But We Want More Money
When the average seller sits down to interview real estate agents, it's easy to get caught up in the excitement over choosing a sales price. More money means more financial opportunities for the homeowner. Perhaps it means the seller can afford to buy a more expensive home, help pay for her child's college education or take that greatly overdue vacation. Unfortunately, uninformed sellers often choose the listing agent who suggests the highest list price, which is the worst mistake a seller can make.
Establishing Value
The truth is it doesn't really matter how much money you think your home is worth. Nor does it matter what your agent thinks or ten other agents just like her. The person whose opinion matters is the buyer who makes an offer. Pricing homes is part art and part science. It involves comparing similar properties, making adjustments for the differences among them, tracking market movements and taking stock of present inventory, all in an attempt to come up with a range of value, an educated opinion. This method is the same way an appraiser evaluates a home. And no two appraisals are ever exactly the same; however, they are generally close to each other. In other words, there is no hard and fast price tag to slap on your home. It's only an educated guess and the market will dictate the price.
Is it Too Low?
Homes sell at a price a buyer is willing to pay and a seller is willing to accept. If a home is priced too low, priced under the competition, the seller should receive multiple offers to drive up the price to market value. So there is little danger in pricing a home too low. The danger lies in pricing it too high and selecting your agent solely on opinion of value.
How It Starts To Go Wrong
The seller of the Spanish home pictured on this page didn't even interview her real estate agents. She plucked the first one off the Internet because, "He looked like such a nice guy." He priced her home at $1.3 million. This agent never heard the local agents chuckling behind his back because he worked in a different city. After 90 days, the listing expired.
Continues To Go Wrong
The next agent, also from another town, listed the home at $1.1 million. Months passed. Eventually the price dropped to just under $900,000. Still no takers. A few lookie-loos, but no serious buyers.
More Than a Year Later
By the time the last agent was hired to list this home, the seller had grown weary and exhausted. It was now 12 months later. Together, the seller and her agent priced the home at $695,000. It immediately sold for all cash. The sad part is the comparable sales in the neighborhood fully justified a price of $835,000, but the home had been on the market for too long at the wrong price, and now the market had softened.
Agents Specialize in Expired Listings
There is an agent in my office whose basic real estate practice is comprised of calling sellers of expired listings and relisting them at market value. He sits in a small room with a phone, desk and chair, dialing number after number. Last year he sold more than 34 homes valued at more than $13,600,000, and he has 18 active listings right now. He makes a pretty good living repackaging overpriced homes.
Protect Yourself
The question is how much money have those expired listings cost the sellers? The financial loss often exceeds the extra mortgage payments paid and goes beyond the uncompensated hassle factor of trying to keep a home spotless during showings. It affects the value that a buyer ultimately chooses to pay because it's not a fresh listing anymore. It's now stale, dated, a market-worn home that was overpriced for too long. Don't let it happen to you. Don't be that seller of an expired listing.
The First Child
The Second Spouse
The Third Realtor
And like with most sayings, there is some truth in that statement, as agents who pick up listings after sellers have made major mistakes will attest.
But We Want More Money
When the average seller sits down to interview real estate agents, it's easy to get caught up in the excitement over choosing a sales price. More money means more financial opportunities for the homeowner. Perhaps it means the seller can afford to buy a more expensive home, help pay for her child's college education or take that greatly overdue vacation. Unfortunately, uninformed sellers often choose the listing agent who suggests the highest list price, which is the worst mistake a seller can make.
Establishing Value
The truth is it doesn't really matter how much money you think your home is worth. Nor does it matter what your agent thinks or ten other agents just like her. The person whose opinion matters is the buyer who makes an offer. Pricing homes is part art and part science. It involves comparing similar properties, making adjustments for the differences among them, tracking market movements and taking stock of present inventory, all in an attempt to come up with a range of value, an educated opinion. This method is the same way an appraiser evaluates a home. And no two appraisals are ever exactly the same; however, they are generally close to each other. In other words, there is no hard and fast price tag to slap on your home. It's only an educated guess and the market will dictate the price.
Is it Too Low?
Homes sell at a price a buyer is willing to pay and a seller is willing to accept. If a home is priced too low, priced under the competition, the seller should receive multiple offers to drive up the price to market value. So there is little danger in pricing a home too low. The danger lies in pricing it too high and selecting your agent solely on opinion of value.
How It Starts To Go Wrong
The seller of the Spanish home pictured on this page didn't even interview her real estate agents. She plucked the first one off the Internet because, "He looked like such a nice guy." He priced her home at $1.3 million. This agent never heard the local agents chuckling behind his back because he worked in a different city. After 90 days, the listing expired.
Continues To Go Wrong
The next agent, also from another town, listed the home at $1.1 million. Months passed. Eventually the price dropped to just under $900,000. Still no takers. A few lookie-loos, but no serious buyers.
More Than a Year Later
By the time the last agent was hired to list this home, the seller had grown weary and exhausted. It was now 12 months later. Together, the seller and her agent priced the home at $695,000. It immediately sold for all cash. The sad part is the comparable sales in the neighborhood fully justified a price of $835,000, but the home had been on the market for too long at the wrong price, and now the market had softened.
Agents Specialize in Expired Listings
There is an agent in my office whose basic real estate practice is comprised of calling sellers of expired listings and relisting them at market value. He sits in a small room with a phone, desk and chair, dialing number after number. Last year he sold more than 34 homes valued at more than $13,600,000, and he has 18 active listings right now. He makes a pretty good living repackaging overpriced homes.
Protect Yourself
The question is how much money have those expired listings cost the sellers? The financial loss often exceeds the extra mortgage payments paid and goes beyond the uncompensated hassle factor of trying to keep a home spotless during showings. It affects the value that a buyer ultimately chooses to pay because it's not a fresh listing anymore. It's now stale, dated, a market-worn home that was overpriced for too long. Don't let it happen to you. Don't be that seller of an expired listing.
Are For Sale Signs Importanty?
Hardly a day goes by that I don't receive a call from an interested buyer on one of my For Sale Signs. In some markets, buyers drive by a home, spot a For Sale Sign and slam on the brakes. The question isn't whether you should have a For Sale Sign in the yard, unless you want to keep secret the fact that your home is for sale -- and some sellers do. It's whether the For Sale Sign will generate buyer calls.
Types of For Sale Signs
Some homeowner associations do not allow For Sale Signs in the yard, or the HOA may have restrictions about size and placement. If you live in a planned community, you may want to read your HOA regulations before putting a sign in your yard.
Standard types of For Sale signs vary depending on inherent weather conditions where you live, type of brokerage that has listed your home and, in some cases, simply personal preference.
For Sale By Owner Signs
Sellers who try to sell without representation generally don't want to spend a lot of money on signage. In fact, a less expensive sign may play to a For Sale By Owner's advantage because a buyer might believe the seller is desperate to sell and the buyer can get a great deal.
You can buy a For Sale By Owner sign at a hardware store, some Boards of REALTORS or online. Most of these For Sale Signs are made from metal or plastic and secure to the ground through the usage of stakes or wires.
Real Estate Agent For Sale Signs
The two most common types are small signs with stakes, which are pounded into the ground, or larger sign panels, which generally hang from a sign post. Materials for the signage can range from wood to plastic to metal. Sandwich boards are inexpensive but portable enough that some kid might run off with them.
For Sale Sign Content
A REALTOR'S For Sale Sign will catch the eye of a buyer, and promote the real estate brokerage and the agent. It may contain the following:
Name of the brokerage
Office phone number with area code
Web site
Company logo
Brokerage address
Some agents utilize space on top of the sign post and below the sign panel. They may secure a smaller sign on top. Examples for the top of the post are:
Virtual tour web site
The actual asking price
Price reduction
Slogan
Buyer benefit such as a home warranty
Here are examples of a sign rider, which may hang by hooks below the sign panel:
Agent's cell phone number
Co-Agent's name / number
Home feature such as number of bedrooms / pool / horse property
Placement of For Sale Signs
The For Sale Sign should be easily visible from the street. If I don't like where the installers place my For Sale Signs, I call them and submit a move order. Sometimes signs can be blocked by cars parked on the street, trees or telephone poles.
It seems less intrusive to place the For Sale Sign near the sidewalk or street than close to the home.
If the home is located on a corner, consider installing a sign on each street.
For out-of-the-way homes such as those on secluded streets or in an area where traffic is limited, you might ask home owners who live on a busy street if you can place a directional sign in their yard.
Number of For Sale Signs
Sometimes problems crop up when the listing expires with one agent and the seller signs a listing agreement with a new agent. It's possible that the first agent may be reluctant or slow to remove that agent's For Sale Sign. A delay could mean more sign calls for that agent.
I'm not suggesting that you yank the sign out of the yard yourself, but if calling the brokerage leads to a dead end, you might have to do it. The absolutely last thing that you want to happen is for a buyer to call your former listing agent.
Sometimes, when agents lose listings, they develop a bitter attitude. If a buyer calls your former agent by mistake, it's possible that agent may do everything in his or her power to talk the buyer out of viewing your home.
Types of For Sale Signs
Some homeowner associations do not allow For Sale Signs in the yard, or the HOA may have restrictions about size and placement. If you live in a planned community, you may want to read your HOA regulations before putting a sign in your yard.
Standard types of For Sale signs vary depending on inherent weather conditions where you live, type of brokerage that has listed your home and, in some cases, simply personal preference.
For Sale By Owner Signs
Sellers who try to sell without representation generally don't want to spend a lot of money on signage. In fact, a less expensive sign may play to a For Sale By Owner's advantage because a buyer might believe the seller is desperate to sell and the buyer can get a great deal.
You can buy a For Sale By Owner sign at a hardware store, some Boards of REALTORS or online. Most of these For Sale Signs are made from metal or plastic and secure to the ground through the usage of stakes or wires.
Real Estate Agent For Sale Signs
The two most common types are small signs with stakes, which are pounded into the ground, or larger sign panels, which generally hang from a sign post. Materials for the signage can range from wood to plastic to metal. Sandwich boards are inexpensive but portable enough that some kid might run off with them.
For Sale Sign Content
A REALTOR'S For Sale Sign will catch the eye of a buyer, and promote the real estate brokerage and the agent. It may contain the following:
Name of the brokerage
Office phone number with area code
Web site
Company logo
Brokerage address
Some agents utilize space on top of the sign post and below the sign panel. They may secure a smaller sign on top. Examples for the top of the post are:
Virtual tour web site
The actual asking price
Price reduction
Slogan
Buyer benefit such as a home warranty
Here are examples of a sign rider, which may hang by hooks below the sign panel:
Agent's cell phone number
Co-Agent's name / number
Home feature such as number of bedrooms / pool / horse property
Placement of For Sale Signs
The For Sale Sign should be easily visible from the street. If I don't like where the installers place my For Sale Signs, I call them and submit a move order. Sometimes signs can be blocked by cars parked on the street, trees or telephone poles.
It seems less intrusive to place the For Sale Sign near the sidewalk or street than close to the home.
If the home is located on a corner, consider installing a sign on each street.
For out-of-the-way homes such as those on secluded streets or in an area where traffic is limited, you might ask home owners who live on a busy street if you can place a directional sign in their yard.
Number of For Sale Signs
Sometimes problems crop up when the listing expires with one agent and the seller signs a listing agreement with a new agent. It's possible that the first agent may be reluctant or slow to remove that agent's For Sale Sign. A delay could mean more sign calls for that agent.
I'm not suggesting that you yank the sign out of the yard yourself, but if calling the brokerage leads to a dead end, you might have to do it. The absolutely last thing that you want to happen is for a buyer to call your former listing agent.
Sometimes, when agents lose listings, they develop a bitter attitude. If a buyer calls your former agent by mistake, it's possible that agent may do everything in his or her power to talk the buyer out of viewing your home.
Thursday, September 17, 2009
Loan Process
The Loan Application
If you're like most people, you'll probably need to secure a mortgage loan for your new house. Application for a home loan can take as little as one week and up to a month, depending on the type of mortgage.
Your lender or mortgage broker will be able to give you a better idea of the actual time it will take from application to approval. However, in general, conventional loans are processed more quickly than FHA or VA home loans.
Read more about types of mortgage loans.
The following is a step-by-step outline of what to expect during the loan application process:
1. Application
Bring all required documentation. (Also, see the Application Checklist.)
Good Faith Estimate of Closing Costs
Truth-in-Lending statement
2. Processing
Verification of employment
Verification of deposits
Credit report
3. Underwriting
Clear conditions
4. Purchase Homeowner's Insurance
5. Escrow
Determine funds needed for closing
Schedule appointment for closing
Prepare deed and mortgage note
Closing and Title Transfer
Application Checklist
To speed up the application process, bring the applicable following items to your loan application appointment.
Signed copy of Purchase Agreement plus all Addendums.
Tax and Legal description on subject property.
Residence addresses for the past two (2) years.
Past two years' W-2 statements or 1099’s.
Computer generated paycheck stubs for last 30 days.
Names, addresses and phone numbers of Employers for past two (2) years.
Past two (2) month’s statements for all Checking, Savings, IRAs, 401Ks, Money Markets, Profit Sharing and evidence of Stocks and Bonds. Document all recent large deposits.
In income received for commissions, bonuses, partnership(s), corporation(s), or if self-employed, requires two (2) year’s Personal Federal Tax Returns with all Schedules along with a current P&L Statement and Business Balance Sheets and past two (2) years’ Partnership and/or Corporate Returns, if applicable.
Cancelled checks from rent or mortgage for the last 12 months, and name and address of any landlord(s) within the last 12 months.
Names, addresses, account numbers, monthly payments and balances on all open loans and revolving credit accounts.
Copy of Bankruptcy Petition listing all creditors and copy of Bankruptcy Discharge Papers (if applicable). Please provide letter of explanation as to why the Bankruptcy occurred.
Copy of Driver’s License and Social Security Card (VA Loans Only).
Certificate of Eligibility and DD214 Discharge Paper (VA Loans Only).
Application fee (check or money order).
Copy of divorce decree and/or separation agreement.
A "Friend of the Court" letter stating the amount of any alimony/child support payments and notification that the account is current.
1040 tax forms (if you’re self-employed) for the past two years, 1120 Corporate Tax Returns (or Form 1065 for Partnerships) for the previous two years, year-to-date profit-and-loss statement and balance sheet signed by your accountant.
1040 tax forms for the past two years (including schedules) if you own income properties or if your income is based on commission or bonuses.
Fortunately, as you work one-on-one with your chosen home mortgage consultant, he/she should be able to offer valuable lending expertise and advice and answer all your questions while ensuring that your loan application process progresses as smoothly and quickly as possible.
Century 21 JRS Realty is affiliated with Century 21 Mortgage, LLC.
If you're like most people, you'll probably need to secure a mortgage loan for your new house. Application for a home loan can take as little as one week and up to a month, depending on the type of mortgage.
Your lender or mortgage broker will be able to give you a better idea of the actual time it will take from application to approval. However, in general, conventional loans are processed more quickly than FHA or VA home loans.
Read more about types of mortgage loans.
The following is a step-by-step outline of what to expect during the loan application process:
1. Application
Bring all required documentation. (Also, see the Application Checklist.)
Good Faith Estimate of Closing Costs
Truth-in-Lending statement
2. Processing
Verification of employment
Verification of deposits
Credit report
3. Underwriting
Clear conditions
4. Purchase Homeowner's Insurance
5. Escrow
Determine funds needed for closing
Schedule appointment for closing
Prepare deed and mortgage note
Closing and Title Transfer
Application Checklist
To speed up the application process, bring the applicable following items to your loan application appointment.
Signed copy of Purchase Agreement plus all Addendums.
Tax and Legal description on subject property.
Residence addresses for the past two (2) years.
Past two years' W-2 statements or 1099’s.
Computer generated paycheck stubs for last 30 days.
Names, addresses and phone numbers of Employers for past two (2) years.
Past two (2) month’s statements for all Checking, Savings, IRAs, 401Ks, Money Markets, Profit Sharing and evidence of Stocks and Bonds. Document all recent large deposits.
In income received for commissions, bonuses, partnership(s), corporation(s), or if self-employed, requires two (2) year’s Personal Federal Tax Returns with all Schedules along with a current P&L Statement and Business Balance Sheets and past two (2) years’ Partnership and/or Corporate Returns, if applicable.
Cancelled checks from rent or mortgage for the last 12 months, and name and address of any landlord(s) within the last 12 months.
Names, addresses, account numbers, monthly payments and balances on all open loans and revolving credit accounts.
Copy of Bankruptcy Petition listing all creditors and copy of Bankruptcy Discharge Papers (if applicable). Please provide letter of explanation as to why the Bankruptcy occurred.
Copy of Driver’s License and Social Security Card (VA Loans Only).
Certificate of Eligibility and DD214 Discharge Paper (VA Loans Only).
Application fee (check or money order).
Copy of divorce decree and/or separation agreement.
A "Friend of the Court" letter stating the amount of any alimony/child support payments and notification that the account is current.
1040 tax forms (if you’re self-employed) for the past two years, 1120 Corporate Tax Returns (or Form 1065 for Partnerships) for the previous two years, year-to-date profit-and-loss statement and balance sheet signed by your accountant.
1040 tax forms for the past two years (including schedules) if you own income properties or if your income is based on commission or bonuses.
Fortunately, as you work one-on-one with your chosen home mortgage consultant, he/she should be able to offer valuable lending expertise and advice and answer all your questions while ensuring that your loan application process progresses as smoothly and quickly as possible.
Century 21 JRS Realty is affiliated with Century 21 Mortgage, LLC.
Tuesday, August 25, 2009
Loan Process
Loan Process
The Loan Application
If you're like most people, you'll probably need to secure a mortgage loan for your new house. Application for a home loan can take as little as one week and up to a month, depending on the type of mortgage.
Your lender or mortgage broker will be able to give you a better idea of the actual time it will take from application to approval. However, in general, conventional loans are processed more quickly than FHA or VA home loans.
Read more about types of mortgage loans.
The following is a step-by-step outline of what to expect during the loan application process:
1. Application
Bring all required documentation. (Also, see the Application Checklist.)
Good Faith Estimate of Closing Costs
Truth-in-Lending statement
2. Processing
Verification of employment
Verification of deposits
Credit report
3. Underwriting
Clear conditions
4. Purchase Homeowner's Insurance
5. Escrow
Determine funds needed for closing
Schedule appointment for closing
Prepare deed and mortgage note
Closing and Title Transfer
Application Checklist
To speed up the application process, bring the applicable following items to your loan application appointment.
Signed copy of Purchase Agreement plus all Addendums.
Tax and Legal description on subject property.
Residence addresses for the past two (2) years.
Past two years' W-2 statements or 1099’s.
Computer generated paycheck stubs for last 30 days.
Names, addresses and phone numbers of Employers for past two (2) years.
Past two (2) month’s statements for all Checking, Savings, IRAs, 401Ks, Money Markets, Profit Sharing and evidence of Stocks and Bonds. Document all recent large deposits.
In income received for commissions, bonuses, partnership(s), corporation(s), or if self-employed, requires two (2) year’s Personal Federal Tax Returns with all Schedules along with a current P&L Statement and Business Balance Sheets and past two (2) years’ Partnership and/or Corporate Returns, if applicable.
Cancelled checks from rent or mortgage for the last 12 months, and name and address of any landlord(s) within the last 12 months.
Names, addresses, account numbers, monthly payments and balances on all open loans and revolving credit accounts.
Copy of Bankruptcy Petition listing all creditors and copy of Bankruptcy Discharge Papers (if applicable). Please provide letter of explanation as to why the Bankruptcy occurred.
Copy of Driver’s License and Social Security Card (VA Loans Only).
Certificate of Eligibility and DD214 Discharge Paper (VA Loans Only).
Application fee (check or money order).
Copy of divorce decree and/or separation agreement.
A "Friend of the Court" letter stating the amount of any alimony/child support payments and notification that the account is current.
1040 tax forms (if you’re self-employed) for the past two years, 1120 Corporate Tax Returns (or Form 1065 for Partnerships) for the previous two years, year-to-date profit-and-loss statement and balance sheet signed by your accountant.
1040 tax forms for the past two years (including schedules) if you own income properties or if your income is based on commission or bonuses.
Fortunately, as you work one-on-one with your chosen home mortgage consultant, he/she should be able to offer valuable lending expertise and advice and answer all your questions while ensuring that your loan application process progresses as smoothly and quickly as possible.
Century 21 JRS Realty is affiliated with Century 21 Mortgage, LLC.
The Loan Application
If you're like most people, you'll probably need to secure a mortgage loan for your new house. Application for a home loan can take as little as one week and up to a month, depending on the type of mortgage.
Your lender or mortgage broker will be able to give you a better idea of the actual time it will take from application to approval. However, in general, conventional loans are processed more quickly than FHA or VA home loans.
Read more about types of mortgage loans.
The following is a step-by-step outline of what to expect during the loan application process:
1. Application
Bring all required documentation. (Also, see the Application Checklist.)
Good Faith Estimate of Closing Costs
Truth-in-Lending statement
2. Processing
Verification of employment
Verification of deposits
Credit report
3. Underwriting
Clear conditions
4. Purchase Homeowner's Insurance
5. Escrow
Determine funds needed for closing
Schedule appointment for closing
Prepare deed and mortgage note
Closing and Title Transfer
Application Checklist
To speed up the application process, bring the applicable following items to your loan application appointment.
Signed copy of Purchase Agreement plus all Addendums.
Tax and Legal description on subject property.
Residence addresses for the past two (2) years.
Past two years' W-2 statements or 1099’s.
Computer generated paycheck stubs for last 30 days.
Names, addresses and phone numbers of Employers for past two (2) years.
Past two (2) month’s statements for all Checking, Savings, IRAs, 401Ks, Money Markets, Profit Sharing and evidence of Stocks and Bonds. Document all recent large deposits.
In income received for commissions, bonuses, partnership(s), corporation(s), or if self-employed, requires two (2) year’s Personal Federal Tax Returns with all Schedules along with a current P&L Statement and Business Balance Sheets and past two (2) years’ Partnership and/or Corporate Returns, if applicable.
Cancelled checks from rent or mortgage for the last 12 months, and name and address of any landlord(s) within the last 12 months.
Names, addresses, account numbers, monthly payments and balances on all open loans and revolving credit accounts.
Copy of Bankruptcy Petition listing all creditors and copy of Bankruptcy Discharge Papers (if applicable). Please provide letter of explanation as to why the Bankruptcy occurred.
Copy of Driver’s License and Social Security Card (VA Loans Only).
Certificate of Eligibility and DD214 Discharge Paper (VA Loans Only).
Application fee (check or money order).
Copy of divorce decree and/or separation agreement.
A "Friend of the Court" letter stating the amount of any alimony/child support payments and notification that the account is current.
1040 tax forms (if you’re self-employed) for the past two years, 1120 Corporate Tax Returns (or Form 1065 for Partnerships) for the previous two years, year-to-date profit-and-loss statement and balance sheet signed by your accountant.
1040 tax forms for the past two years (including schedules) if you own income properties or if your income is based on commission or bonuses.
Fortunately, as you work one-on-one with your chosen home mortgage consultant, he/she should be able to offer valuable lending expertise and advice and answer all your questions while ensuring that your loan application process progresses as smoothly and quickly as possible.
Century 21 JRS Realty is affiliated with Century 21 Mortgage, LLC.
Friday, August 7, 2009
Steps to Buying a Home
Steps to Buying
Buying on Your Terms
Buying a home is all about you. What you need. What you want in the house you'll call home sweet home. So naturally the buying process should be all about you, too.
That's why working with an agent is such a good idea - it puts the focus on what's important to you. Century 21 JRS Realty agents work hard to make your home buying experience just as good as you imagined it; and since they have the most innovative tools in the industry, they're well-equipped to do so.
Here's the Century 21 JRS Realty 10-step plan to buying on your terms:
1. Conduct a Comparative Market Analysis
A Century 21 JRS Realty agent can deliver a Comparative Market Analysis (CMA), which is a breakdown of homes in a particular location that are currently on the market, expired from the market, pending a sale, or already sold. The CMA helps you accurately determine a home's value by comparing homes in the same area that have already sold.
2. Start the Financing Process
Unless you're planning to buy with cash, you'll need to secure a mortgage loan. Your Century 21 JRS Realty agent can help you select a lender and coordinate the timing and paperwork of your loan. Working with our lending affiliate, Century 21 Mortgage may be a good option for you since we can help consolidate the many aspects of the home-buying process.
3. Narrow Your Search
The right agent will work to find your new home, first by opening up your options, then by helping you narrow the field. S/he will come up with a suggested list of homes that match your needs, and can even show you homes online, before arranging for home tours, and providing maps and directions to the homes you wish to visit.
4. Document Assistance
Your Century 21 JRS Realty agent can help you write and present your purchase offer on the home of your choosing. Rely on your agent's expertise in managing the paperwork that's a necessary part of the home-buying process.
5. Evaluate and Negotiate Offers and Counteroffers
While it may be true that anything is negotiable, it may not always be in your best interest. An agent skilled in negotiation is your best ally in a competitive market, helping you get the best purchase price on your new home.
6. Get Objective Advice
Your Century 21 JRS Realty agent is a professional dedicated to guiding you in your new home purchase. While emotion might color your judgment, you can rely on your agent to provide an impartial viewpoint and advise you of options and alternatives throughout the process.
7. Set Up a Home Inspection
Some states require sellers to disclose material facts about their home's condition to potential buyers. A home inspection can help you protect your interests by determining if there are any problems or repairs that need to be taken care of before you complete your new home purchase. Your Century 21 JRS Realty agent can arrange for an inspection appointment, accompany you (or fill in for you) at the inspection, and determine additional needs.
8. Negotiate Disputes and Issues
Even the smoothest, simplest real estate transaction involves two parties with needs and objectives that often differ. Your agent should negotiate, mediate and provide conflict resolution to help you and the seller come to a mutually beneficial outcome.
9. Prepare for Contingencies
Contractual contingencies are terms that must be met before an agreement can be binding. Written contingencies must be removed (in writing and by a specified date) before a contract can be in full effect. Whether it's financing, inspection, or any other item in your agreement, your Century 21 JRS Realty agent can help you understand how to fulfill or remove any contractual conditions.
10. Get to Closing
Taking possession of your new home is always top of mind. But unanticipated difficulties at closing can be downright annoying. Your Century 21 JRS Realty agent will help you resolve issues and finalize the transfer of ownership and house keys, so you can be in the home you always imagined.
Buying on Your Terms
Buying a home is all about you. What you need. What you want in the house you'll call home sweet home. So naturally the buying process should be all about you, too.
That's why working with an agent is such a good idea - it puts the focus on what's important to you. Century 21 JRS Realty agents work hard to make your home buying experience just as good as you imagined it; and since they have the most innovative tools in the industry, they're well-equipped to do so.
Here's the Century 21 JRS Realty 10-step plan to buying on your terms:
1. Conduct a Comparative Market Analysis
A Century 21 JRS Realty agent can deliver a Comparative Market Analysis (CMA), which is a breakdown of homes in a particular location that are currently on the market, expired from the market, pending a sale, or already sold. The CMA helps you accurately determine a home's value by comparing homes in the same area that have already sold.
2. Start the Financing Process
Unless you're planning to buy with cash, you'll need to secure a mortgage loan. Your Century 21 JRS Realty agent can help you select a lender and coordinate the timing and paperwork of your loan. Working with our lending affiliate, Century 21 Mortgage may be a good option for you since we can help consolidate the many aspects of the home-buying process.
3. Narrow Your Search
The right agent will work to find your new home, first by opening up your options, then by helping you narrow the field. S/he will come up with a suggested list of homes that match your needs, and can even show you homes online, before arranging for home tours, and providing maps and directions to the homes you wish to visit.
4. Document Assistance
Your Century 21 JRS Realty agent can help you write and present your purchase offer on the home of your choosing. Rely on your agent's expertise in managing the paperwork that's a necessary part of the home-buying process.
5. Evaluate and Negotiate Offers and Counteroffers
While it may be true that anything is negotiable, it may not always be in your best interest. An agent skilled in negotiation is your best ally in a competitive market, helping you get the best purchase price on your new home.
6. Get Objective Advice
Your Century 21 JRS Realty agent is a professional dedicated to guiding you in your new home purchase. While emotion might color your judgment, you can rely on your agent to provide an impartial viewpoint and advise you of options and alternatives throughout the process.
7. Set Up a Home Inspection
Some states require sellers to disclose material facts about their home's condition to potential buyers. A home inspection can help you protect your interests by determining if there are any problems or repairs that need to be taken care of before you complete your new home purchase. Your Century 21 JRS Realty agent can arrange for an inspection appointment, accompany you (or fill in for you) at the inspection, and determine additional needs.
8. Negotiate Disputes and Issues
Even the smoothest, simplest real estate transaction involves two parties with needs and objectives that often differ. Your agent should negotiate, mediate and provide conflict resolution to help you and the seller come to a mutually beneficial outcome.
9. Prepare for Contingencies
Contractual contingencies are terms that must be met before an agreement can be binding. Written contingencies must be removed (in writing and by a specified date) before a contract can be in full effect. Whether it's financing, inspection, or any other item in your agreement, your Century 21 JRS Realty agent can help you understand how to fulfill or remove any contractual conditions.
10. Get to Closing
Taking possession of your new home is always top of mind. But unanticipated difficulties at closing can be downright annoying. Your Century 21 JRS Realty agent will help you resolve issues and finalize the transfer of ownership and house keys, so you can be in the home you always imagined.
Buyer Frequently Asked Questions
You Want Answers? We Have Them.
Q: I'm thinking about buying a home. Where do I start?
A: The first step for potential homebuyers is a credit check. It's best to keep an eye on your credit reports so you can spot any mistakes and dispute them. You should also avoid running up high credit card bills in the months prior to buying a home.
These two steps will help you in the next phase of your game plan, pre-approval on a mortgage. A full-service real estate broker can help you with this portion of the plan. Pre-approval includes analyzing your income, assets, and present debt to estimate how much house you can afford. This means the lender has committed to loaning you money subject to the house you choose to buy. Being pre-approved for a loan will make you attractive to sellers because the contract won't be tied up with financial issues.
After you know how much you can spend, you're in the homestretch. This is the time for you to become familiar with neighborhoods and the features of a home. Educate yourself by visiting local real estate web sites and viewing the listings. This is also the time for you to decide what you want and need in a home.
A solid game plan needs a good coach. A Century 21 JRS Realty Realtor can help you through all steps of the plan, prepare you for any unforeseen problems and eventually help you to buy the home of your dreams.
Q: What should I consider when I start to look for a home?
A: First, put together a list of features and benefits you want in a home. Think of such things as pricing, location, size, and amenities. If you can't get a home at the price you want with all the features you're looking for, figure out what features are most important to you and rank them in priority so you know what you're willing to give-and-take. For instance, you could choose to have a large kitchen and smaller bedrooms?
You should also consider your future needs. Maybe now is the time to buy a larger home rather than buying a small home and expanding it in the future. Your agent can help you compare the price of homes with the features you are looking for or suggest alternate uses of space.
Q: Should I buy first, or sell first?
A: The answer to this question lies squarely with you. Do you need the equity that's built up in your present home to complete the purchase of a new home? If so, you either need to sell first or consider a bridge loan or house sale contingency. If not, you may choose to buy first and sell later. Before making a final decision, Century 21 JRS Realty strongly suggests that you engage a real estate agent with whom you can enter a trusting relationship. Then discuss this question with him or her, touching on every aspect of what it may mean for your particular situation.
Q: How do I choose between renting or buying?
A: Owning a home offers tax benefits, as well as the freedom to make decisions about where you live. Homeowners, unlike renters, can secure a fixed-rate loan and lock in their monthly payments, so they can make investment plans knowing their expenses won't change substantially. Renters are at the whim of their landlord, who can raise the rent each year without a renter's input. Homeowners, on the other hand, are in control of their property and decide whether they allow pets, decorating, or permanent improvements.
Q: Do your real estate agents cooperate with other companies' agents?
A. Our agents work according to specific laws, regulations, and customs in their respective areas. In every market that Century 21 JRS Realty serves, brokers and agents from different companies work cooperatively, showing and selling each other's listed properties.
Q: Why do I need an agent to help me find a home with all of the technology and advertising available?
A: The Internet and newspaper are good places to start researching the current housing market. You can also find information to help answer many of your financing questions. But once you've looked at what's available, it's a good time to get a professional involved.
If you go it on your own, you might spend hours scanning newspaper ads and home magazines, driving through neighborhoods seeking "for sale" signs, or phoning about individual listings and still miss some of the best available homes. A Century 21 JRS Realty agent will save you time, money, and provide access to a wealth of information resources to help find that special home.
Q: If I'm thinking about buying a newly-constructed house, why do I need an agent?
A: Building a home often requires hours of research and decision-making. You must first decide what area you want to build in and which builder you want to use. After these initial decisions, you still have many choices of floor plans, building materials, and fixtures.
Personalization and freedom of choice are some of the benefits of building a home, but they can also be very stressful. An agent will guide you through the entire home building process and help you along the way should you need it. You'll still get to make the choices on your own, but your agent will be there to help, keeping your best interests in mind. Plus, buyer representation comes at no cost to you.
Q: Is Century 21 JRS Realty a member of the Multiple Listing Service (MLS)?
A. Yes - in every market we serve, Century 21 JRS Realty is a member of the local MLS, as well as being members of the national, state, and local Associations/Boards of Realtors®
Q: What typically goes into an agreement for buyer representation?
A: Like any contract, a buyer representation agreement needs beginning and ending dates. It also has an acknowledgement of your willingness to be represented by the company and its agent, as well as the amount, if any, that you'll pay for real estate-related services. Buyer agreements may also indicate whether you'll work with only one company/agent or several.
Q: What is an Agency Disclosure?
A: An Agency Disclosure is a state-required document, disclosing to you as a principal-in this case, the buyer-in a real estate transaction whom the agent or agents in the transaction represent. A state's Agency Disclosure simply notifies you of that state's agency laws; it does not obligate you to work with any particular agent or broker.
Q: How are buyer's agents compensated?
A: The buyer and real estate agent come to terms on which services the buyer needs and the way the agent will be compensated for providing these services. In most cases, a fee or commission is based on the seller's proceeds of sale and shared between the seller's (listing) and buyer's (selling) agents. In some cases, the buyer makes a direct payment to his or her agent.
Buyers sometimes pay their agent/broker directly for finding and purchasing a home. If a broker charges buyers a direct fee, it should be outlined in an exclusive agency agreement that the buyer signs when engaging the broker.
Payment arrangements vary, depending on market conditions, customary practices, and consumer expectation. Some eager home buyers offer an incentive to give their real estate agent additional motivation (generally a cash bonus when title transfers) to find them the "right" property.
As you interview prospective agents and weigh their respective services, consider which compensation options and terms will get you in the home you want and meet your individual needs.
Q: What do all of those abbreviations in property ads mean?
A: If you find yourself stumbling to understand a property description, you're not alone. We've composed a list of some of the most frequently used abbreviations to help you understand a BA from a BR and more.
BA FDR BR
Bath Formal Dining Room Bedroom
LR MBR=Master Bedroom Dr=Dining Room
Living Room
FP, frplc, fplc FR=Family Room
Fireplace
WBFP LL=Lower Level
Wood Burning Fireplace
Entr grmet kit=Gourmet Kitchen
Entrance
Dck Pvt=Private pwdr rm=Powder Room
Deck
Gar Brk=Brick
Garage
Upr=Upper Floor HDW, HWF, Hdwd=Hardwood Floors
Q: As a buyer, do I have the right to obtain past information about the property I'm interested in purchasing?
A: Yes. Sellers are required to disclose all known property defects. With your agent's help, you can find out what has happened to the property in the past. You should make careful observations, examine the property, and request or otherwise obtain any other important records. Put these requests in writing. If you decide to put an offer on a home, it's important to have a professional inspection completed before closing.
Q: I'm thinking about buying a home. Where do I start?
A: The first step for potential homebuyers is a credit check. It's best to keep an eye on your credit reports so you can spot any mistakes and dispute them. You should also avoid running up high credit card bills in the months prior to buying a home.
These two steps will help you in the next phase of your game plan, pre-approval on a mortgage. A full-service real estate broker can help you with this portion of the plan. Pre-approval includes analyzing your income, assets, and present debt to estimate how much house you can afford. This means the lender has committed to loaning you money subject to the house you choose to buy. Being pre-approved for a loan will make you attractive to sellers because the contract won't be tied up with financial issues.
After you know how much you can spend, you're in the homestretch. This is the time for you to become familiar with neighborhoods and the features of a home. Educate yourself by visiting local real estate web sites and viewing the listings. This is also the time for you to decide what you want and need in a home.
A solid game plan needs a good coach. A Century 21 JRS Realty Realtor can help you through all steps of the plan, prepare you for any unforeseen problems and eventually help you to buy the home of your dreams.
Q: What should I consider when I start to look for a home?
A: First, put together a list of features and benefits you want in a home. Think of such things as pricing, location, size, and amenities. If you can't get a home at the price you want with all the features you're looking for, figure out what features are most important to you and rank them in priority so you know what you're willing to give-and-take. For instance, you could choose to have a large kitchen and smaller bedrooms?
You should also consider your future needs. Maybe now is the time to buy a larger home rather than buying a small home and expanding it in the future. Your agent can help you compare the price of homes with the features you are looking for or suggest alternate uses of space.
Q: Should I buy first, or sell first?
A: The answer to this question lies squarely with you. Do you need the equity that's built up in your present home to complete the purchase of a new home? If so, you either need to sell first or consider a bridge loan or house sale contingency. If not, you may choose to buy first and sell later. Before making a final decision, Century 21 JRS Realty strongly suggests that you engage a real estate agent with whom you can enter a trusting relationship. Then discuss this question with him or her, touching on every aspect of what it may mean for your particular situation.
Q: How do I choose between renting or buying?
A: Owning a home offers tax benefits, as well as the freedom to make decisions about where you live. Homeowners, unlike renters, can secure a fixed-rate loan and lock in their monthly payments, so they can make investment plans knowing their expenses won't change substantially. Renters are at the whim of their landlord, who can raise the rent each year without a renter's input. Homeowners, on the other hand, are in control of their property and decide whether they allow pets, decorating, or permanent improvements.
Q: Do your real estate agents cooperate with other companies' agents?
A. Our agents work according to specific laws, regulations, and customs in their respective areas. In every market that Century 21 JRS Realty serves, brokers and agents from different companies work cooperatively, showing and selling each other's listed properties.
Q: Why do I need an agent to help me find a home with all of the technology and advertising available?
A: The Internet and newspaper are good places to start researching the current housing market. You can also find information to help answer many of your financing questions. But once you've looked at what's available, it's a good time to get a professional involved.
If you go it on your own, you might spend hours scanning newspaper ads and home magazines, driving through neighborhoods seeking "for sale" signs, or phoning about individual listings and still miss some of the best available homes. A Century 21 JRS Realty agent will save you time, money, and provide access to a wealth of information resources to help find that special home.
Q: If I'm thinking about buying a newly-constructed house, why do I need an agent?
A: Building a home often requires hours of research and decision-making. You must first decide what area you want to build in and which builder you want to use. After these initial decisions, you still have many choices of floor plans, building materials, and fixtures.
Personalization and freedom of choice are some of the benefits of building a home, but they can also be very stressful. An agent will guide you through the entire home building process and help you along the way should you need it. You'll still get to make the choices on your own, but your agent will be there to help, keeping your best interests in mind. Plus, buyer representation comes at no cost to you.
Q: Is Century 21 JRS Realty a member of the Multiple Listing Service (MLS)?
A. Yes - in every market we serve, Century 21 JRS Realty is a member of the local MLS, as well as being members of the national, state, and local Associations/Boards of Realtors®
Q: What typically goes into an agreement for buyer representation?
A: Like any contract, a buyer representation agreement needs beginning and ending dates. It also has an acknowledgement of your willingness to be represented by the company and its agent, as well as the amount, if any, that you'll pay for real estate-related services. Buyer agreements may also indicate whether you'll work with only one company/agent or several.
Q: What is an Agency Disclosure?
A: An Agency Disclosure is a state-required document, disclosing to you as a principal-in this case, the buyer-in a real estate transaction whom the agent or agents in the transaction represent. A state's Agency Disclosure simply notifies you of that state's agency laws; it does not obligate you to work with any particular agent or broker.
Q: How are buyer's agents compensated?
A: The buyer and real estate agent come to terms on which services the buyer needs and the way the agent will be compensated for providing these services. In most cases, a fee or commission is based on the seller's proceeds of sale and shared between the seller's (listing) and buyer's (selling) agents. In some cases, the buyer makes a direct payment to his or her agent.
Buyers sometimes pay their agent/broker directly for finding and purchasing a home. If a broker charges buyers a direct fee, it should be outlined in an exclusive agency agreement that the buyer signs when engaging the broker.
Payment arrangements vary, depending on market conditions, customary practices, and consumer expectation. Some eager home buyers offer an incentive to give their real estate agent additional motivation (generally a cash bonus when title transfers) to find them the "right" property.
As you interview prospective agents and weigh their respective services, consider which compensation options and terms will get you in the home you want and meet your individual needs.
Q: What do all of those abbreviations in property ads mean?
A: If you find yourself stumbling to understand a property description, you're not alone. We've composed a list of some of the most frequently used abbreviations to help you understand a BA from a BR and more.
BA FDR BR
Bath Formal Dining Room Bedroom
LR MBR=Master Bedroom Dr=Dining Room
Living Room
FP, frplc, fplc FR=Family Room
Fireplace
WBFP LL=Lower Level
Wood Burning Fireplace
Entr grmet kit=Gourmet Kitchen
Entrance
Dck Pvt=Private pwdr rm=Powder Room
Deck
Gar Brk=Brick
Garage
Upr=Upper Floor HDW, HWF, Hdwd=Hardwood Floors
Q: As a buyer, do I have the right to obtain past information about the property I'm interested in purchasing?
A: Yes. Sellers are required to disclose all known property defects. With your agent's help, you can find out what has happened to the property in the past. You should make careful observations, examine the property, and request or otherwise obtain any other important records. Put these requests in writing. If you decide to put an offer on a home, it's important to have a professional inspection completed before closing.
What to Look for in an Agent
What to Look for in a Buyer's Agent
Once you've made the decision to buy a home, your next step is one of your most important: finding a real estate professional to guide you through the process. A good agent will help you avoid common pitfalls, make wise home investment decisions, and bring order to the entire buying process.
Realtors are licensed professionals who adhere to the National Association of Realtors (NAR) Code of Ethics. Those belonging to the NAR receive continuing education and are up on the latest trends, making them well-prepared to offer you the most advanced real estate advice. Your agent will provide you a variety of tools and assistance to streamline your buying experience.
At Century 21 JRS Realty, we believe that both the buyer and the seller should have professional representation. If an agent represents you, you're privy to more information and receive the benefit of someone promoting your best interests at all times – usually with no out-of-pocket costs to you.
One of the things to look for in a buyer's agent is their reputation and standing in the community. Realtors know (and are known) favorably in their territories. Because they know the neighborhoods inside and out, they can help you decide which home is right for you. For example, you might see two houses in the same neighborhood as being identical, but your agent will be well-versed in their differences – no matter how subtle. In addition, even comparable homes may differ in terms of contract, financing, inspection requirements and closing costs. Let your agent help with all the details.
You should also expect your agent to provide you with quick and easy ways to make the home search process more convenient. Look for a buyer's agent who has access to tools that can help you weed through potential homes at your convenience, online. Being able to view property photos, information and details in advance of in-person showings can help save you a great deal of time in the home search process. Technology-savvy agents should provide this type of service as part of their overall offering to you as a client.
A Century 21 JRS Realty buyer's agent actively approaches the home-buying process with enthusiasm, experience and patience. Look for an agent who will:
Work on your behalf to find your new home.
Research comparable properties to determine a fair price and terms.
Prepare your purchase agreement and accompanying legal paperwork, including disclosure documents.
Negotiate for the price, terms and conditions that are agreeable to you.
Follow up with your mortgage lender, title company, seller's agent and others until the house is legally yours.
Finding the right sales associate involves asking tough questions of yourself and your agent. For example, if you're always on the go and prefer updated listing information via e-mail, ask your prospective real estate agent if s/he is technology-savvy. If you'd prefer a "one-stop shop" where you can get assistance with mortgage, title and relocation needs, consult with an agent at a full-service brokerage company, like Century 21 JRS Realty.
Finally, remember to employ an agent with whom you have a rapport. Knowing you're in capable, trusting hands will let you enjoy the excitement of the home-buying process, not agonize over it.
Find your Century 21 JRS Realty buyer's agent now!
Once you've made the decision to buy a home, your next step is one of your most important: finding a real estate professional to guide you through the process. A good agent will help you avoid common pitfalls, make wise home investment decisions, and bring order to the entire buying process.
Realtors are licensed professionals who adhere to the National Association of Realtors (NAR) Code of Ethics. Those belonging to the NAR receive continuing education and are up on the latest trends, making them well-prepared to offer you the most advanced real estate advice. Your agent will provide you a variety of tools and assistance to streamline your buying experience.
At Century 21 JRS Realty, we believe that both the buyer and the seller should have professional representation. If an agent represents you, you're privy to more information and receive the benefit of someone promoting your best interests at all times – usually with no out-of-pocket costs to you.
One of the things to look for in a buyer's agent is their reputation and standing in the community. Realtors know (and are known) favorably in their territories. Because they know the neighborhoods inside and out, they can help you decide which home is right for you. For example, you might see two houses in the same neighborhood as being identical, but your agent will be well-versed in their differences – no matter how subtle. In addition, even comparable homes may differ in terms of contract, financing, inspection requirements and closing costs. Let your agent help with all the details.
You should also expect your agent to provide you with quick and easy ways to make the home search process more convenient. Look for a buyer's agent who has access to tools that can help you weed through potential homes at your convenience, online. Being able to view property photos, information and details in advance of in-person showings can help save you a great deal of time in the home search process. Technology-savvy agents should provide this type of service as part of their overall offering to you as a client.
A Century 21 JRS Realty buyer's agent actively approaches the home-buying process with enthusiasm, experience and patience. Look for an agent who will:
Work on your behalf to find your new home.
Research comparable properties to determine a fair price and terms.
Prepare your purchase agreement and accompanying legal paperwork, including disclosure documents.
Negotiate for the price, terms and conditions that are agreeable to you.
Follow up with your mortgage lender, title company, seller's agent and others until the house is legally yours.
Finding the right sales associate involves asking tough questions of yourself and your agent. For example, if you're always on the go and prefer updated listing information via e-mail, ask your prospective real estate agent if s/he is technology-savvy. If you'd prefer a "one-stop shop" where you can get assistance with mortgage, title and relocation needs, consult with an agent at a full-service brokerage company, like Century 21 JRS Realty.
Finally, remember to employ an agent with whom you have a rapport. Knowing you're in capable, trusting hands will let you enjoy the excitement of the home-buying process, not agonize over it.
Find your Century 21 JRS Realty buyer's agent now!
Thursday, August 6, 2009
Back on Top
Congrats to Joe Piizzi for earning agent of the month honors again. Joe is back on top for the month of July with 2 listings and 2 sales for the month. Joe is leading the way for CENTURY 21 JRS Realty this year having his best year in Real Estate. Joe is out to prove that the market does not determine the success of a Real Estate Agent. The agents work ethic is what counts. Again we are very proud of Joe and wish him the best in the future.
Friday, July 31, 2009
8 REO Tips for Buying Foreclosures
8 REO Tips for Buying Foreclosures
How to Write Offers to Buy REO Foreclosures
Lots of savvy home buyers want to hit the jackpot and buy that REO foreclosed home, many of which are often under-priced. When banks price REOs under the comparable sales, multiple offers are often the response. This means you could be up against stiff competition for that bank-owned home.
It's not unusual for some REO homes in Sacramento to receive 15 or 20 offers. Sometimes the bank will throw out all but two offers and then ask the selected buyers to resubmit what is called "Highest and Final" offer. Sometimes the bank simply accepts the best offer at inception.
If you're wondering how you can make your offer shine above all the rest and be the winning offer, here are a few tips to help you select the right price and terms:
1) Get the Property History
Ask your buyer's agent to find out the bank's purchase price on the Trustee's Deed or Sheriff's Deed. Generally, it is noted on the document itself, which you can get from the tax rolls or a title company. Compare that price to the price the bank is asking.
Look at the amount of loans that were once secured to the property. Somewhere between the original mortgage balance(s) and the foreclosure sale price is the amount the bank will accept, if the home is under-priced.
2) Determine Comparable Sales
In many cases, the list price has little bearing on the value of the home. The market value carries the most weight. If you are up against competing offers, other buyers will offer more than list price.
Look at the last three months of comparable sales, a mini CMA, for that neighborhood to determine how much this REO is worth. Try to use only those homes that most closely match the REO regarding square footage, number of bedrooms, baths, amenities and condition.
Look at the pending sales. Ask your agent to call the listing agents of those pending sales to try to find out the accepted offer price. Some will share that information and some will not.
Look at the active listings. Those are most likely the listings other buyers will use to formulate a price because they are the only homes those buyers actually tour.
3) Analyze Listing Agent's REO Solds
Most REO agents work for one or two banks. Some listing agents are exclusive listing agents for REOs, and they do not list any other type of property. Since REO agents deal in volume, they typically apply the same pricing principles to all their REO listings.
Ask your buyer's agent to look up the listing agent in MLS.
Run a search using that listing agent's name to find the last three to six months of that agent's listings.
Pull the history of those listings to determine the list-price to sales-price ratio. If most of those listings are selling for, say, 5% over list price, then you may need to offer 6% over list price, and vice versa.
4) Ask About Number of Offers
If there are no offers on the REO home, you can probably offer less than list price and get your offer accepted. However, if there are more than two offers, you will most likely need to offer above the asking price.
If there are 20 offers, bear in mind that some of those offers might be all cash. Banks like all cash offers. If you are obtaining financing, then you may need to increase the price on your offer to be considered.
5) Submit Preapproval Letter
It goes without saying that you do not want a prequal letter. You want a preapproval letter. Get preapproved from your choice of lender in advance.
Moreover, get preapproved by the lender who owns the property. Do not expect to use this lender for your loan, but submit the prepproval letter from this lender, along with the letter from your own lender. Banks don't trust other lender preapprovals but trust their own departments.
6) Don't Ask for Repairs / Inspections
Sometimes banks will pay for repairs, but typically will not agree to do so at the offer stage. If there are problems found during a home inspection, renegotiate after your offer has been accepted.
7) Shorten the Inspection Period
If other buyers ask for 17 days, for example, to conduct inspections, and you ask for 10, you will be deemed the more serious buyer.
8) Offer to Split Fees
Some banks will not pay transfer fees, for example. If the buyer offers to split those fees, the bank will feel more amenable to accepting the offer. Same thing for escrow fees.
Many banks negotiate discount fees for title insurance. If the bank will pay for the owner's policy, the ALTA policy might cost a bit more. But it's still a good idea to let the bank choose title if you want your offer accepted.
Consider the Appraisal Consequences
If you offer over list price, bear in mind that the appraisal will need to substantiate that price. If you find yourself dealing with a low appraisal, you have options, so don't despair. Remember, the bank will most likely run into this problem with the next buyer who obtains financing.
How to Write Offers to Buy REO Foreclosures
Lots of savvy home buyers want to hit the jackpot and buy that REO foreclosed home, many of which are often under-priced. When banks price REOs under the comparable sales, multiple offers are often the response. This means you could be up against stiff competition for that bank-owned home.
It's not unusual for some REO homes in Sacramento to receive 15 or 20 offers. Sometimes the bank will throw out all but two offers and then ask the selected buyers to resubmit what is called "Highest and Final" offer. Sometimes the bank simply accepts the best offer at inception.
If you're wondering how you can make your offer shine above all the rest and be the winning offer, here are a few tips to help you select the right price and terms:
1) Get the Property History
Ask your buyer's agent to find out the bank's purchase price on the Trustee's Deed or Sheriff's Deed. Generally, it is noted on the document itself, which you can get from the tax rolls or a title company. Compare that price to the price the bank is asking.
Look at the amount of loans that were once secured to the property. Somewhere between the original mortgage balance(s) and the foreclosure sale price is the amount the bank will accept, if the home is under-priced.
2) Determine Comparable Sales
In many cases, the list price has little bearing on the value of the home. The market value carries the most weight. If you are up against competing offers, other buyers will offer more than list price.
Look at the last three months of comparable sales, a mini CMA, for that neighborhood to determine how much this REO is worth. Try to use only those homes that most closely match the REO regarding square footage, number of bedrooms, baths, amenities and condition.
Look at the pending sales. Ask your agent to call the listing agents of those pending sales to try to find out the accepted offer price. Some will share that information and some will not.
Look at the active listings. Those are most likely the listings other buyers will use to formulate a price because they are the only homes those buyers actually tour.
3) Analyze Listing Agent's REO Solds
Most REO agents work for one or two banks. Some listing agents are exclusive listing agents for REOs, and they do not list any other type of property. Since REO agents deal in volume, they typically apply the same pricing principles to all their REO listings.
Ask your buyer's agent to look up the listing agent in MLS.
Run a search using that listing agent's name to find the last three to six months of that agent's listings.
Pull the history of those listings to determine the list-price to sales-price ratio. If most of those listings are selling for, say, 5% over list price, then you may need to offer 6% over list price, and vice versa.
4) Ask About Number of Offers
If there are no offers on the REO home, you can probably offer less than list price and get your offer accepted. However, if there are more than two offers, you will most likely need to offer above the asking price.
If there are 20 offers, bear in mind that some of those offers might be all cash. Banks like all cash offers. If you are obtaining financing, then you may need to increase the price on your offer to be considered.
5) Submit Preapproval Letter
It goes without saying that you do not want a prequal letter. You want a preapproval letter. Get preapproved from your choice of lender in advance.
Moreover, get preapproved by the lender who owns the property. Do not expect to use this lender for your loan, but submit the prepproval letter from this lender, along with the letter from your own lender. Banks don't trust other lender preapprovals but trust their own departments.
6) Don't Ask for Repairs / Inspections
Sometimes banks will pay for repairs, but typically will not agree to do so at the offer stage. If there are problems found during a home inspection, renegotiate after your offer has been accepted.
7) Shorten the Inspection Period
If other buyers ask for 17 days, for example, to conduct inspections, and you ask for 10, you will be deemed the more serious buyer.
8) Offer to Split Fees
Some banks will not pay transfer fees, for example. If the buyer offers to split those fees, the bank will feel more amenable to accepting the offer. Same thing for escrow fees.
Many banks negotiate discount fees for title insurance. If the bank will pay for the owner's policy, the ALTA policy might cost a bit more. But it's still a good idea to let the bank choose title if you want your offer accepted.
Consider the Appraisal Consequences
If you offer over list price, bear in mind that the appraisal will need to substantiate that price. If you find yourself dealing with a low appraisal, you have options, so don't despair. Remember, the bank will most likely run into this problem with the next buyer who obtains financing.
Is It Better To Buy a Short Sale or Wait for the Foreclosure to Happen?
Is It Better To Buy a Short Sale or Wait for the Foreclosure to Happen?
Foreclosure Prices (REOs) Can Be Better Than Short Sale Listings
Waiting for an answer on a short sale can be frustrating. A short sale happens when a seller's lender agrees to accept less than its unpaid mortgage balance to facilitate a sale between the seller and buyer, and banks take a long time to decide.
Some short sale buyers wait six months or more for a response. More than half the time, the answer is "No, and don't let the door hit you on the way out."
Short Sale List Prices are Not Real
Buyers gravitate toward short sales for two reasons. The list price is attractive and they believe the seller is desperate. However, neither of those beliefs is necessarily true.
Since not every short sale home is in foreclosure, not every seller is desperate. Moreover, sellers often set the listed price unrealistically, hoping that buyers will flock to that listing like moths to a flame.
Preapproved Short Sales
The way a listing agent finds out how low the bank will go is if an offer has already been accepted and the buyer walks away. Only then is the agent free to market the listing as an accepted short sale because banks rarely disclose a bottom-line price up front.
With a preapproved short sale, the new buyers' wait is dramatically shortened. Typically, about the time the first buyers walk away, the sellers' documents have already been submitted to the lender, and the lender may have been close to issuing the short sale approval letter. The missing documents at this point are the new buyers' offer and loan qualifications.
Short Sale Negotiations
The sellers can agree to any type of purchase offer put before them for signature, but it's not binding unless the sellers' bank approves the offer. It doesn't matter what stipulations are in the offer if the bank won't accept them. Your true negotiation does not lie with the seller; it lies with the bank's negotiator.
Banks rely on desktop appraisals and third-party BPOs (broker price opinions) to determine value. Although banks don't want to follow through on a foreclosure, they also want fair market value. It is up to the listing agent to provide comparable sales and to substantiate the price submitted by the buyer.
Is the Price Lower After a Foreclosure?
Whether a buyer should wait for the property to go through foreclosure and be deeded to the bank depends on whether the home has multiple offers. If more than one buyer has submitted an offer, the highest and most qualified offer will most likely win.
If the buyer is the sole offerer and the bank is responding negatively, or worse, not at all, it might be in the buyer's best interest to wait out the foreclosure. There is also no guarantee that a bank won't reject multiple offers, too, particularly if none is high enough.
Sometimes banks aren't reasonable and end up shooting themselves in the foot. I've had several listings where banks refused to accept short sale offers only to get title to the home through foreclosure, which then ultimately sold for tens of thousands less.
Don't get discouraged if the bank rejects your short sale offer. Be smart. Laugh all the way to your bank.
If no one else submits a higher offer -- and if you didn't, why would anybody else? -- eventually the bank will put the home up for sale as an REO. Watch for it to reappear on the market as a bank-owned home. If the price is reasonable at that point, buy it from the bank. At least buyers of bank-owned homes are relatively assured their transactions will close within 30 days or so, and most likely at a much lower price.
Foreclosure Prices (REOs) Can Be Better Than Short Sale Listings
Waiting for an answer on a short sale can be frustrating. A short sale happens when a seller's lender agrees to accept less than its unpaid mortgage balance to facilitate a sale between the seller and buyer, and banks take a long time to decide.
Some short sale buyers wait six months or more for a response. More than half the time, the answer is "No, and don't let the door hit you on the way out."
Short Sale List Prices are Not Real
Buyers gravitate toward short sales for two reasons. The list price is attractive and they believe the seller is desperate. However, neither of those beliefs is necessarily true.
Since not every short sale home is in foreclosure, not every seller is desperate. Moreover, sellers often set the listed price unrealistically, hoping that buyers will flock to that listing like moths to a flame.
Preapproved Short Sales
The way a listing agent finds out how low the bank will go is if an offer has already been accepted and the buyer walks away. Only then is the agent free to market the listing as an accepted short sale because banks rarely disclose a bottom-line price up front.
With a preapproved short sale, the new buyers' wait is dramatically shortened. Typically, about the time the first buyers walk away, the sellers' documents have already been submitted to the lender, and the lender may have been close to issuing the short sale approval letter. The missing documents at this point are the new buyers' offer and loan qualifications.
Short Sale Negotiations
The sellers can agree to any type of purchase offer put before them for signature, but it's not binding unless the sellers' bank approves the offer. It doesn't matter what stipulations are in the offer if the bank won't accept them. Your true negotiation does not lie with the seller; it lies with the bank's negotiator.
Banks rely on desktop appraisals and third-party BPOs (broker price opinions) to determine value. Although banks don't want to follow through on a foreclosure, they also want fair market value. It is up to the listing agent to provide comparable sales and to substantiate the price submitted by the buyer.
Is the Price Lower After a Foreclosure?
Whether a buyer should wait for the property to go through foreclosure and be deeded to the bank depends on whether the home has multiple offers. If more than one buyer has submitted an offer, the highest and most qualified offer will most likely win.
If the buyer is the sole offerer and the bank is responding negatively, or worse, not at all, it might be in the buyer's best interest to wait out the foreclosure. There is also no guarantee that a bank won't reject multiple offers, too, particularly if none is high enough.
Sometimes banks aren't reasonable and end up shooting themselves in the foot. I've had several listings where banks refused to accept short sale offers only to get title to the home through foreclosure, which then ultimately sold for tens of thousands less.
Don't get discouraged if the bank rejects your short sale offer. Be smart. Laugh all the way to your bank.
If no one else submits a higher offer -- and if you didn't, why would anybody else? -- eventually the bank will put the home up for sale as an REO. Watch for it to reappear on the market as a bank-owned home. If the price is reasonable at that point, buy it from the bank. At least buyers of bank-owned homes are relatively assured their transactions will close within 30 days or so, and most likely at a much lower price.
Buying Distressed Homes
Buying Distressed Homes: Foreclosures, Short Sales, REOs
Which is More Profitable: Foreclosures, Short Sales or REOs?
Foreclosures, short sales and REOs remind me of, "Lions and tigers and bears, oh, my!" The latter are dangerous animals but different from each other -- just as foreclosures and short sales and real-estate-owned (REOs) are distressed sales but different from each other.
However, they are also similar because without knowledge about handling foreclosures, short sales and REOs, you could find yourself in dangerous territory. For example, while most short sales are foreclosures, not all foreclosures are short sales. To further complicate matters, REOs are not short sales either, but some intended short sales can end up as an REO.
What is a Foreclosure Property?
A foreclosure property is a home in foreclosure -- when a notice of default has been filed in the public records. It means the owner has stopped making mortgage payments and the lender has given notice that unless the payments are brought up to date, it will sell the property to the highest bidder.
Lenders can foreclose for other reasons, but the most common reason lenders file a notice of default is when a borrower is at least two payments in arrears.
If the home owner does not bring the loan current, the lender will take the property away from the owner. The final step the lender takes after a certain period has passed is to try to auction the property at a public sale.
Not all homes that fall into foreclosure go to public sale because owners have the right to make up back payments up to a point, the time which varies from state to state.
Real estate investors and home buyers see profit in buying foreclosures because they can often buy the property for the amount owed, picking up the home owner's equity for free.
How California law Affects Foreclosure / Short Sale Investors
States have varying laws governing foreclosures and some follow California law. To completely understand your rights as a foreclosure buyer, contact a local real estate lawyer. However, realize that for a long time in California, a real estate agent could not represent a foreclosure investor if all of the following four statements were true:
The home qualifies as the seller's personal residence.
The property is a single family home or 2 to 4 units.
A Notice of Default has been filed in the public records against the property.
The investor buyer will not occupy the property.
However, if any of those four statements were false, an agent in California would be allowed to represent buyers, especially if the buyer was going to occupy the home. But to represent an investor, CA law requires that a real estate agent post a bond. No such bond is available in the state of California. Therefore, as a pre-foreclosure investor in California, many buyers were forced to act on their own.
A California court ruled in 2007 that the bond requirement was unenforceable. The California Association of Realtors then made available a special package of forms that agents can use to represent investors. Realize, as an investor, you are required to comply with the Home Equity Sales Act. Among other requirements, sellers who are in foreclosure have the right to rescind (cancel) a transaction within five days. Investors must give the seller notice of that right, including a copy of the form that will let sellers cancel.
Failure to comply with the Home Equity Sales Act carries severe penalties, including a provision that gives the seller the right to cancel the sale up to two years after the sale to the investor has closed and get the property back. You read that correctly. Two years.
As an investor, before you decide to buy a home in foreclosure by making up the back payments to the lender, giving the seller a few dollars and recording a deed, call a real estate lawyer.
What is a Short Sale Property?
A short sale occurs when a home owner is in foreclosure but before the property goes to public auction. Under a short sale, a lender must agree to accept less than the amount that is owed on the property.
Unlike a foreclosure, investors typically buy the home for even less because investors are not paying off the existing loan nor making up the back payments. Investors are striking a deal with the existing lender to take less than what the lender has coming to avoid dealing with a foreclosure.
It's a myth that lenders are not going to make a deal with an investor unless the seller has fallen behind on the seller's obligation to make timely mortgage payments. Sellers don't need to be in default for a short sale to occur. For a buyer who wants to occupy the home, buying a short sale makes financial sense.
What are REOs - Real Estate Owned?
Buying an REO is similar to buying a short sale except the property is already owned by the lender.
The property was acquired by the lender through a foreclosure action.
Often lenders will sell repossessed homes for less than the past loan balance.
Bank-owned properties are called REOs, meaning real estate owned by the lender.
Banks end up owning the property when nobody at the public auction bid enough to cover the amount owed against the property. REO homes are often considered the best way to buy a distressed property because the seller is already out of the picture. It's just the investor, the investor's agent, the bank and the bank's agent who are negotiating the transaction. Some REOs can be purchased directly from the lender.
For more information, seek the advice of a real estate lawyer.
Which is More Profitable: Foreclosures, Short Sales or REOs?
Foreclosures, short sales and REOs remind me of, "Lions and tigers and bears, oh, my!" The latter are dangerous animals but different from each other -- just as foreclosures and short sales and real-estate-owned (REOs) are distressed sales but different from each other.
However, they are also similar because without knowledge about handling foreclosures, short sales and REOs, you could find yourself in dangerous territory. For example, while most short sales are foreclosures, not all foreclosures are short sales. To further complicate matters, REOs are not short sales either, but some intended short sales can end up as an REO.
What is a Foreclosure Property?
A foreclosure property is a home in foreclosure -- when a notice of default has been filed in the public records. It means the owner has stopped making mortgage payments and the lender has given notice that unless the payments are brought up to date, it will sell the property to the highest bidder.
Lenders can foreclose for other reasons, but the most common reason lenders file a notice of default is when a borrower is at least two payments in arrears.
If the home owner does not bring the loan current, the lender will take the property away from the owner. The final step the lender takes after a certain period has passed is to try to auction the property at a public sale.
Not all homes that fall into foreclosure go to public sale because owners have the right to make up back payments up to a point, the time which varies from state to state.
Real estate investors and home buyers see profit in buying foreclosures because they can often buy the property for the amount owed, picking up the home owner's equity for free.
How California law Affects Foreclosure / Short Sale Investors
States have varying laws governing foreclosures and some follow California law. To completely understand your rights as a foreclosure buyer, contact a local real estate lawyer. However, realize that for a long time in California, a real estate agent could not represent a foreclosure investor if all of the following four statements were true:
The home qualifies as the seller's personal residence.
The property is a single family home or 2 to 4 units.
A Notice of Default has been filed in the public records against the property.
The investor buyer will not occupy the property.
However, if any of those four statements were false, an agent in California would be allowed to represent buyers, especially if the buyer was going to occupy the home. But to represent an investor, CA law requires that a real estate agent post a bond. No such bond is available in the state of California. Therefore, as a pre-foreclosure investor in California, many buyers were forced to act on their own.
A California court ruled in 2007 that the bond requirement was unenforceable. The California Association of Realtors then made available a special package of forms that agents can use to represent investors. Realize, as an investor, you are required to comply with the Home Equity Sales Act. Among other requirements, sellers who are in foreclosure have the right to rescind (cancel) a transaction within five days. Investors must give the seller notice of that right, including a copy of the form that will let sellers cancel.
Failure to comply with the Home Equity Sales Act carries severe penalties, including a provision that gives the seller the right to cancel the sale up to two years after the sale to the investor has closed and get the property back. You read that correctly. Two years.
As an investor, before you decide to buy a home in foreclosure by making up the back payments to the lender, giving the seller a few dollars and recording a deed, call a real estate lawyer.
What is a Short Sale Property?
A short sale occurs when a home owner is in foreclosure but before the property goes to public auction. Under a short sale, a lender must agree to accept less than the amount that is owed on the property.
Unlike a foreclosure, investors typically buy the home for even less because investors are not paying off the existing loan nor making up the back payments. Investors are striking a deal with the existing lender to take less than what the lender has coming to avoid dealing with a foreclosure.
It's a myth that lenders are not going to make a deal with an investor unless the seller has fallen behind on the seller's obligation to make timely mortgage payments. Sellers don't need to be in default for a short sale to occur. For a buyer who wants to occupy the home, buying a short sale makes financial sense.
What are REOs - Real Estate Owned?
Buying an REO is similar to buying a short sale except the property is already owned by the lender.
The property was acquired by the lender through a foreclosure action.
Often lenders will sell repossessed homes for less than the past loan balance.
Bank-owned properties are called REOs, meaning real estate owned by the lender.
Banks end up owning the property when nobody at the public auction bid enough to cover the amount owed against the property. REO homes are often considered the best way to buy a distressed property because the seller is already out of the picture. It's just the investor, the investor's agent, the bank and the bank's agent who are negotiating the transaction. Some REOs can be purchased directly from the lender.
For more information, seek the advice of a real estate lawyer.
Monday, July 20, 2009
6 Steps to a Higher Credit Score
Contrary to what you might see in some advertisements, there is no magic way to raise your credit score. That doesn't mean you can't improve your score with good old-fashioned attention and effort. All you need to do is see to it that errors are removed, deal with any disputes with your creditors that are resulting in a reduction in your score and -- for most people -- improve your payment history and lower your debt.
Easier said than done, right? Here I give you the six steps to a higher credit score. Your score won't jump overnight, but you should see steady improvement over time if you follow my advice.
1st: Read Your Credit Report
The first step to a higher credit score is to order your credit report, which is the roadmap used to calculate that score. It's like a snapshot in time of your financial and personal life on a particular day. It should factually reflect your outstanding credit, your payment history, the status of your credit accounts, and any information that can be found in public records.
You can request one by visiting www.annualcreditreport.com or calling one of the three main credit reporting agencies: Equifax, Experian, and TransUnion. You are entitled to one free report a year.
2nd: Deal with Credit Report Agency Errors
When you get your report, first, check your personal information (name, addresses, job history), to make sure your file hasn't been merged with someone else. Then check the accounts listed. You may find one listed more than once or one that is not yours included in the report.
If you discover any mistakes, send a written letter to the credit bureau listing what is wrong with the information on the credit report and how you think it should be corrected. The agency has 30 days to respond to your letter and indicate how it will handle your challenges to the report. If the error was simple, that may be all you need to do to take care of it.
3rd: Disputing Creditors' Claims
Your report may include errors that aren't so easy to fix. For example, some consumers walk away when they are in billing disputes with creditors when they are confident they are in the right. But creditors may report a lack of payment to an agency. Such negatives can result in a "no" decision on an application for future credit, even if the negative mark is not a true reflection of your credit history.
To correct those kinds of inaccuracies, you may need to contact the creditor directly. From the time you first hear back from the credit reporting agency when you report an error, you have 60 days to try to get the creditor to correct the information. During that period if you are not satisfied with the response of the creditor, you can then contact the credit reporting agency again and ask for an additional investigation.
4th: When It's Smart to Just Pay the Bill
If you've been battling it out with a creditor and don't want to pay the bill, you could end up severely damaging your credit score. While credit scoring companies must investigate any credit information you challenge, they tend to agree with the vendor in ongoing disputes and will only take the negative mark off your credit report temporarily while investigating a complaint.
If the amount in question is small enough that you can pay it off without financial distress, you may be better off paying the bill and taking the vendor to small claims court for a refund. Why hurt your credit score over a $30 or $50 dispute?
If the amount in question is much larger and you want to continue fighting, be sure you tell a potential creditor to expect the negative report and explain why you won't pay the bill. In some instances it may help, but don't be surprised if you can't get the best interest rates.
5th: Only Use Some of Your Available Credit
The ideal way to use credit is to use only 10% to 20% of your available credit and pay all your bills on time. That seems to get people the best credit scores. You may think you have to pay down all your credit cards to zero to get a good credit score. That's not true. To show you know how to use credit wisely, it doesn't hurt to occasionally pay a card over time. In fact, if you don't buy on credit and pay everything with cash, you'll likely have a lower credit score because you have no credit history for the credit scoring agencies to use.
Another mistake people make when they want to improve their credit score is to cancel credit cards. That can actually hurt your score since it reduces your available credit. Then your debt utilization ratio (the amount of debt you have as a percentage of your available credit) is higher -- which may lower your credit score.
6th: Pay Monthly Bills Ahead
There really aren't many ways to give your credit score a quick boost if you already have low debt and a stellar payment history. But I can suggest one technique you can try if you want to give your score a lift ahead of applying for a major loan, such as a mortgage.
If you pay your cards in full each month, those payments are made after the report has been sent to the credit reporting agency (right after the end of the billing cycle), so your outstanding debt looks higher than it is. If you're trying to improve your credit score, all you have to do pay your total bill at the end of the month -- before actually being billed. Check your balance due online or call your credit card company. If you do this for a few months, you should see a nice improvement in your credit score.
Easier said than done, right? Here I give you the six steps to a higher credit score. Your score won't jump overnight, but you should see steady improvement over time if you follow my advice.
1st: Read Your Credit Report
The first step to a higher credit score is to order your credit report, which is the roadmap used to calculate that score. It's like a snapshot in time of your financial and personal life on a particular day. It should factually reflect your outstanding credit, your payment history, the status of your credit accounts, and any information that can be found in public records.
You can request one by visiting www.annualcreditreport.com or calling one of the three main credit reporting agencies: Equifax, Experian, and TransUnion. You are entitled to one free report a year.
2nd: Deal with Credit Report Agency Errors
When you get your report, first, check your personal information (name, addresses, job history), to make sure your file hasn't been merged with someone else. Then check the accounts listed. You may find one listed more than once or one that is not yours included in the report.
If you discover any mistakes, send a written letter to the credit bureau listing what is wrong with the information on the credit report and how you think it should be corrected. The agency has 30 days to respond to your letter and indicate how it will handle your challenges to the report. If the error was simple, that may be all you need to do to take care of it.
3rd: Disputing Creditors' Claims
Your report may include errors that aren't so easy to fix. For example, some consumers walk away when they are in billing disputes with creditors when they are confident they are in the right. But creditors may report a lack of payment to an agency. Such negatives can result in a "no" decision on an application for future credit, even if the negative mark is not a true reflection of your credit history.
To correct those kinds of inaccuracies, you may need to contact the creditor directly. From the time you first hear back from the credit reporting agency when you report an error, you have 60 days to try to get the creditor to correct the information. During that period if you are not satisfied with the response of the creditor, you can then contact the credit reporting agency again and ask for an additional investigation.
4th: When It's Smart to Just Pay the Bill
If you've been battling it out with a creditor and don't want to pay the bill, you could end up severely damaging your credit score. While credit scoring companies must investigate any credit information you challenge, they tend to agree with the vendor in ongoing disputes and will only take the negative mark off your credit report temporarily while investigating a complaint.
If the amount in question is small enough that you can pay it off without financial distress, you may be better off paying the bill and taking the vendor to small claims court for a refund. Why hurt your credit score over a $30 or $50 dispute?
If the amount in question is much larger and you want to continue fighting, be sure you tell a potential creditor to expect the negative report and explain why you won't pay the bill. In some instances it may help, but don't be surprised if you can't get the best interest rates.
5th: Only Use Some of Your Available Credit
The ideal way to use credit is to use only 10% to 20% of your available credit and pay all your bills on time. That seems to get people the best credit scores. You may think you have to pay down all your credit cards to zero to get a good credit score. That's not true. To show you know how to use credit wisely, it doesn't hurt to occasionally pay a card over time. In fact, if you don't buy on credit and pay everything with cash, you'll likely have a lower credit score because you have no credit history for the credit scoring agencies to use.
Another mistake people make when they want to improve their credit score is to cancel credit cards. That can actually hurt your score since it reduces your available credit. Then your debt utilization ratio (the amount of debt you have as a percentage of your available credit) is higher -- which may lower your credit score.
6th: Pay Monthly Bills Ahead
There really aren't many ways to give your credit score a quick boost if you already have low debt and a stellar payment history. But I can suggest one technique you can try if you want to give your score a lift ahead of applying for a major loan, such as a mortgage.
If you pay your cards in full each month, those payments are made after the report has been sent to the credit reporting agency (right after the end of the billing cycle), so your outstanding debt looks higher than it is. If you're trying to improve your credit score, all you have to do pay your total bill at the end of the month -- before actually being billed. Check your balance due online or call your credit card company. If you do this for a few months, you should see a nice improvement in your credit score.
8 Ways to Raise Your Credit Score
In an age of slashed credit limits, tighter credit-card restrictions, and anxious lenders, having strong credit is more important than ever. The average credit score is 692, according to credit-scoring agency Experian, but in today's market, those even slightly below average could be in trouble. "With the economy so down, 620 is the minimum for getting a loan, but people really need credit score around 700, preferably 720, to get something with decent rates," says Linda Call, vice president of Berkeley Mortgage in Richmond, Virginia. "It's very scary right now for anyone with a low credit score." Here are eight ways to give your credit score an extra boost.
1. Keep the Balances Balanced
In a tough economic climate, keeping your credit balance under the limit -- but close to the limit -- could hurt your score, says Scott Scredon of the Consumer Credit Counseling Service of Greater Atlanta. "If you carry a balance on your credit card, you need to make sure the difference between your credit limit and your balance is 50 percent or less," he says. "So if your limit is $1,000, you need to keep your balance at $500 or less. Not using all of your credit is a signal to card companies that you're managing your credit properly."
And keeping an even lower balance -- 30 percent or less -- will boost your score even more, Scredon says. Should your balance go over the 50 percent mark on one card, Scredon recommends focusing any available financial resources on cutting the balance down, even if it means sacrificing a few daily luxuries until the credit's in check.
2. Eliminate the Mistakes
One of the fastest ways to lift your score is to make sure it's actually yours. An estimated 8.3 million Americans are victims of identity theft each year, according to a 2005 study by the Federal Trade Commission. Of those victims, 1.8 million have had new credit cards, loans, or financial accounts opened in their name without their knowledge.
An easy way to prevent paying off debts you didn't incur is to keep tabs on your credit score.
3. Diversify Your Credit
"People don't realize that 10 percent of your credit score is determined by what types of credit you use," says Gail Cunningham, marketing director of the National Foundation for Credit Counseling. "That's determined not only by how you manage revolving debt like Visa, MasterCard, and store credit cards, but also how you handle fixed payments, like your car payments or your mortgage payments, over time."
Instead of putting longterm purchases on cards, Cunningham recommends taking out short-term one- to two-year loans, to build a diversified credit portfolio. In addition to receiving lower interest rates and more flexible payment terms, consumers who use loans over cards also build positive credit and gain better credit terms in the future.
4. In With the Old, Out With the New
Another 15 percent of your credit score is determined by how long you've been managing credit. If you can manage your cards wisely, paying on time and keeping balances lower than your limits, you can improve your credit score by getting plastic early. It's up to you to figure out when the time is right.
"It's to your advantage to get a credit card as early as possible and start building credit early," says Call, "but you have to do that when you're ready. People who start building credit in their early 20s will have a significant advantage when it comes time to apply for a home mortgage." Though college students are statistically poor at managing plastic -- the average college student graduates with nearly $2,200 in credit card debt, according to Nellie Mae -- learning the basics of credit at a young age can benefit in the long run.
5. Add Some Positives
Consumers in dire credit straits may be able to boost their scores simply by showing credit scoring services what they're doing right. "If the consumer has positive histories in things like rent and utilities, adding those histories can greatly help the credit score," says Mark Guimond, executive director of the American Association of Debt Management Organizations.
"There are companies designed to get positive information on your credit score and that can have a significant impact," he says. Organizations like PRBC in Annapolis, Maryland, can help consumers add day care, insurance, rent, and cable credit histories to their score, and set up online bill pay services to make sure those debts keep getting paid on time.
6. Flex Your Negotiation Muscle
If you see trouble on the horizon, nip it in the bud. "Making a late payment could affect your interest rate -- not just on the card you're paying late on, but on all your credit cards," says Scredon. "If you know you're going to have trouble making payments, get in touch with your lender and have a discussion about it. We are hearing more and more from our counselors that lenders are willing to look at whether you can put together a different payment plan." Since even one late payment could lower your credit score, preventing disaster before it happens can protect your credit for years to come.
7. Prioritize the Debt
Those who are already in the plastic trap can begin digging out by creating a debt attack plan. Start by making a list of all of your credit debts. Then pick out which is harming you the most.
"If you have a card where you owe more than 30 percent of your credit limit, pay that one down first, to keep your credit score intact," recommends Cunningham. "After that, I tell people to pay off their largest debts first, unless it's just too daunting. If so, tackle your smallest bill first while making minimum payments on everything else, and once you've paid it and have that sense of accomplishment, move on to the next one."
By focusing your financial resources on eliminating one problem debt at a time, Cunningham says consumers can keep long term out-of-control debt from hurting their credit score.
8. Research the Bargains
Credit inquiries prevent consumers from comparing loan rates and terms. While inquiries on your credit report can lower your score -- as much as five points, according to Lendingtree.com -- consumers have a 30-day window before choosing their loan, when all mortgage and auto-loan inquiries only count once.
An easy way to avoid racking up inquiries on your account, says Guimond, is to comparison-shop before filling out an application. "Don't just apply to ten different lenders -- talk to lenders, talk to customer-service people, get as much information as possible," he says. "It pays to do the research."
1. Keep the Balances Balanced
In a tough economic climate, keeping your credit balance under the limit -- but close to the limit -- could hurt your score, says Scott Scredon of the Consumer Credit Counseling Service of Greater Atlanta. "If you carry a balance on your credit card, you need to make sure the difference between your credit limit and your balance is 50 percent or less," he says. "So if your limit is $1,000, you need to keep your balance at $500 or less. Not using all of your credit is a signal to card companies that you're managing your credit properly."
And keeping an even lower balance -- 30 percent or less -- will boost your score even more, Scredon says. Should your balance go over the 50 percent mark on one card, Scredon recommends focusing any available financial resources on cutting the balance down, even if it means sacrificing a few daily luxuries until the credit's in check.
2. Eliminate the Mistakes
One of the fastest ways to lift your score is to make sure it's actually yours. An estimated 8.3 million Americans are victims of identity theft each year, according to a 2005 study by the Federal Trade Commission. Of those victims, 1.8 million have had new credit cards, loans, or financial accounts opened in their name without their knowledge.
An easy way to prevent paying off debts you didn't incur is to keep tabs on your credit score.
3. Diversify Your Credit
"People don't realize that 10 percent of your credit score is determined by what types of credit you use," says Gail Cunningham, marketing director of the National Foundation for Credit Counseling. "That's determined not only by how you manage revolving debt like Visa, MasterCard, and store credit cards, but also how you handle fixed payments, like your car payments or your mortgage payments, over time."
Instead of putting longterm purchases on cards, Cunningham recommends taking out short-term one- to two-year loans, to build a diversified credit portfolio. In addition to receiving lower interest rates and more flexible payment terms, consumers who use loans over cards also build positive credit and gain better credit terms in the future.
4. In With the Old, Out With the New
Another 15 percent of your credit score is determined by how long you've been managing credit. If you can manage your cards wisely, paying on time and keeping balances lower than your limits, you can improve your credit score by getting plastic early. It's up to you to figure out when the time is right.
"It's to your advantage to get a credit card as early as possible and start building credit early," says Call, "but you have to do that when you're ready. People who start building credit in their early 20s will have a significant advantage when it comes time to apply for a home mortgage." Though college students are statistically poor at managing plastic -- the average college student graduates with nearly $2,200 in credit card debt, according to Nellie Mae -- learning the basics of credit at a young age can benefit in the long run.
5. Add Some Positives
Consumers in dire credit straits may be able to boost their scores simply by showing credit scoring services what they're doing right. "If the consumer has positive histories in things like rent and utilities, adding those histories can greatly help the credit score," says Mark Guimond, executive director of the American Association of Debt Management Organizations.
"There are companies designed to get positive information on your credit score and that can have a significant impact," he says. Organizations like PRBC in Annapolis, Maryland, can help consumers add day care, insurance, rent, and cable credit histories to their score, and set up online bill pay services to make sure those debts keep getting paid on time.
6. Flex Your Negotiation Muscle
If you see trouble on the horizon, nip it in the bud. "Making a late payment could affect your interest rate -- not just on the card you're paying late on, but on all your credit cards," says Scredon. "If you know you're going to have trouble making payments, get in touch with your lender and have a discussion about it. We are hearing more and more from our counselors that lenders are willing to look at whether you can put together a different payment plan." Since even one late payment could lower your credit score, preventing disaster before it happens can protect your credit for years to come.
7. Prioritize the Debt
Those who are already in the plastic trap can begin digging out by creating a debt attack plan. Start by making a list of all of your credit debts. Then pick out which is harming you the most.
"If you have a card where you owe more than 30 percent of your credit limit, pay that one down first, to keep your credit score intact," recommends Cunningham. "After that, I tell people to pay off their largest debts first, unless it's just too daunting. If so, tackle your smallest bill first while making minimum payments on everything else, and once you've paid it and have that sense of accomplishment, move on to the next one."
By focusing your financial resources on eliminating one problem debt at a time, Cunningham says consumers can keep long term out-of-control debt from hurting their credit score.
8. Research the Bargains
Credit inquiries prevent consumers from comparing loan rates and terms. While inquiries on your credit report can lower your score -- as much as five points, according to Lendingtree.com -- consumers have a 30-day window before choosing their loan, when all mortgage and auto-loan inquiries only count once.
An easy way to avoid racking up inquiries on your account, says Guimond, is to comparison-shop before filling out an application. "Don't just apply to ten different lenders -- talk to lenders, talk to customer-service people, get as much information as possible," he says. "It pays to do the research."
Wednesday, July 15, 2009
Short Sales and Foreclosures
Not all homes that go into default go all the way through foreclosure. Many sell before the notice of default is finalized. Home buyers and investors are attracted to short sales and foreclosures because they want to buy a home for less than market value. Sometimes sellers in default and buyers who want a short sale or foreclosure can see eye-to-eye and enter into a profitable transaction for both parties.
But it's not for the faint of heart. Distressed home sales are often complicated and sellers have rights when in foreclosure. Both sellers and buyers should seek legal advice before entering into such a contract.
Sellers in Foreclosure
It's all too common for sellers in foreclosure to want to ignore the problem and hope it will go away. Some stick their heads in the sand. But help is available. Sellers in foreclosure have options.
How to Stop Foreclosure can help sellers keep a home through reinstatement, forbearance, mortgage modifications or repayment plans.
Short Sales for Sellers clarifies how to transfer title to a buyer before the redemption period ends by persuading the lender to accept less than the unpaid mortgage balance. Not all lenders will accept a short sale, however. This covers what lenders want from sellers. Negotiation is key.
Foreclosure and Short Sale Taxes discusses how the I.R.S. will treat a foreclosure or short sale for tax purposes. It's called debt forgiveness, and until tax rules change, sellers could owe the government taxes even though sellers lost money on the sale.
Buying Foreclosures & Short Sale Homes
Not all foreclosures and short sales are profitable. To pull a home out of foreclosure, buyers need to make up back payments to the lender, pay all imposed fees and either pay off the loan or make arrangements to sell the property. Few lenders will let a buyer assume an existing obligation.
Buying Distressed Homes involves three ways to purchase: from the seller in foreclosure, negotiating a short sale or buying from the lender after a public auction. Read this carefully as investors in California cannot be represented by a real estate agent.
Buying Short Sales details why the process is complicated and can take much longer to close than an ordinary transaction. Not all short sales are profitable, and this article explains why.
Buying Foreclosures before the home goes to a public auction involves negotiating directly with the seller. Buyers also have the option of bidding on a foreclosure at the public auction, but read the procedures first.
Drawbacks to Foreclosures talks about the repercussions and inherent problems that are often present when buying a foreclosure. Buyers who bid at public auctions will benefit from getting as much information as possible beforehand.
Defaults Hit Home Values. Nearby homes will feel the effect, which could pull the market value of a newly purchased short sale or foreclosure even lower. This article goes into detail about how appraisers determine the value in neighborhoods with distressed home sales.
Fixing Up Foreclosures & Short Sale Homes
One way to make money in real estate is to "buy low and sell high." Couple that principle with fixing up the home or improving it, and the amount of profit can be even greater. Besides, many distressed homes fall into disarray and require repairs.
Repairs Before Resale can boost bottom-line profit. But not all repairs or improvements return 100% of an investment. Read why.
Top Do It Yourself Mistakes. This article covers 10 common errors home owners make when trying to flip a house. Don't think about buying a foreclosure until you read this.
Fix-Up and Sell is a five-part series with links at the end of each article to the next. It's a first-hand description involving simple to complex remodeling projects that were completed on five flipper homes.
But it's not for the faint of heart. Distressed home sales are often complicated and sellers have rights when in foreclosure. Both sellers and buyers should seek legal advice before entering into such a contract.
Sellers in Foreclosure
It's all too common for sellers in foreclosure to want to ignore the problem and hope it will go away. Some stick their heads in the sand. But help is available. Sellers in foreclosure have options.
How to Stop Foreclosure can help sellers keep a home through reinstatement, forbearance, mortgage modifications or repayment plans.
Short Sales for Sellers clarifies how to transfer title to a buyer before the redemption period ends by persuading the lender to accept less than the unpaid mortgage balance. Not all lenders will accept a short sale, however. This covers what lenders want from sellers. Negotiation is key.
Foreclosure and Short Sale Taxes discusses how the I.R.S. will treat a foreclosure or short sale for tax purposes. It's called debt forgiveness, and until tax rules change, sellers could owe the government taxes even though sellers lost money on the sale.
Buying Foreclosures & Short Sale Homes
Not all foreclosures and short sales are profitable. To pull a home out of foreclosure, buyers need to make up back payments to the lender, pay all imposed fees and either pay off the loan or make arrangements to sell the property. Few lenders will let a buyer assume an existing obligation.
Buying Distressed Homes involves three ways to purchase: from the seller in foreclosure, negotiating a short sale or buying from the lender after a public auction. Read this carefully as investors in California cannot be represented by a real estate agent.
Buying Short Sales details why the process is complicated and can take much longer to close than an ordinary transaction. Not all short sales are profitable, and this article explains why.
Buying Foreclosures before the home goes to a public auction involves negotiating directly with the seller. Buyers also have the option of bidding on a foreclosure at the public auction, but read the procedures first.
Drawbacks to Foreclosures talks about the repercussions and inherent problems that are often present when buying a foreclosure. Buyers who bid at public auctions will benefit from getting as much information as possible beforehand.
Defaults Hit Home Values. Nearby homes will feel the effect, which could pull the market value of a newly purchased short sale or foreclosure even lower. This article goes into detail about how appraisers determine the value in neighborhoods with distressed home sales.
Fixing Up Foreclosures & Short Sale Homes
One way to make money in real estate is to "buy low and sell high." Couple that principle with fixing up the home or improving it, and the amount of profit can be even greater. Besides, many distressed homes fall into disarray and require repairs.
Repairs Before Resale can boost bottom-line profit. But not all repairs or improvements return 100% of an investment. Read why.
Top Do It Yourself Mistakes. This article covers 10 common errors home owners make when trying to flip a house. Don't think about buying a foreclosure until you read this.
Fix-Up and Sell is a five-part series with links at the end of each article to the next. It's a first-hand description involving simple to complex remodeling projects that were completed on five flipper homes.
Tuesday, July 14, 2009
Why do I need a Realtor?
What are the advantages of using a REALTOR today?
Having a good real estate transaction or experience really depends on your agent
Finding the right agent is the basis for a great real estate transaction. And success comes from the consumer's perspective, no one else's. Make sure that you feel comfortable and can communicate easily with your agent, and that they have the knowledge you need to help make a good decision. Carefully choosing a Realtor will definitely give you an advantage in the home buying or selling process!
QUICK TIP #1: Look for the agent who has the LOCAL ADVANTAGE
When you are choosing a Realtor to help you buy or sell real estate, look for one who is an expert in the community where you are selling or interested in buying. Here are a few ways to determine how "local" your agent is:
- A community resident (preferred)
- Has community memberships in clubs, boards, chambers, associations, PTA, etc.
- Ask to see their "PR" or press related announcements about their local activities
- Ask how long they have been in the area and where their office is located
- Do you see their "FOR SALE" sign in the area?
QUICK TIP #2: Look for the agent who has the TECHNICAL ADVANTAGE
One of the key assets you want in a Realtor is one who has knowledge of their industry and of the local market. You want them to understand the technical side of the real estate transaction so they can help you navigate through the process, eliminating errors and getting you to the closing table successfully and on time.
- Look for experience. How many years in the business?
- What is their background?
- Check to see what real estate "designations" they have. There are many education hours required for an agent to receive one single designation such as CRS (Certified Residential Specialist) or REALTOR® (Graduate of the Realtor Institute). This indicates specialized training in a certain area.
- When you identify the agent's areas of expertise, make sure this compliments your particular needs.
QUICK TIP #3: Look for the agent who has the MARKETING ADVANTAGE
One of the greatest advantages in working with a real estate professional is the marketing opportunities they bring to the table. For the buyer, they are more knowledgeable on homes from marketing through their vast referral network. And for the seller, a Realtor's "marketing toolbox" and referral network has the potential to expose your property to thousands more interested buyer prospects.
- Check out their website, is it up to date with community and property information?
- Are they Internet savvy? Connected?
- Do they participate in social networking, and do they have pages on Facebook and other sites they are using to market their listings and provide pertinent real estate information to the online community?
- Ask for an example of their marketing plan for your property or a listing of their referral networks where they can match your real estate needs up to sellers.
- When and how will they deploy their marketing plan? How will it benefit your objectives?
These tips get you thinking about what qualifications you want in a real estate professional. The bottom line is that you want to find an agent who possesses most, if not all, of these qualities while having a comfortable working relationship with you. You are choosing someone you will be spending many hours with and hopefully will build a solid, long-term relationship over time. Selecting the right real estate agent will make a world of difference in the outcome of your real estate transaction.
To find a real estate professional who can help you get started on your next real estate transaction, visit http://www.C21JRS.com today! Call 800-831-0681, or email c21jrs72@aol.com
Having a good real estate transaction or experience really depends on your agent
Finding the right agent is the basis for a great real estate transaction. And success comes from the consumer's perspective, no one else's. Make sure that you feel comfortable and can communicate easily with your agent, and that they have the knowledge you need to help make a good decision. Carefully choosing a Realtor will definitely give you an advantage in the home buying or selling process!
QUICK TIP #1: Look for the agent who has the LOCAL ADVANTAGE
When you are choosing a Realtor to help you buy or sell real estate, look for one who is an expert in the community where you are selling or interested in buying. Here are a few ways to determine how "local" your agent is:
- A community resident (preferred)
- Has community memberships in clubs, boards, chambers, associations, PTA, etc.
- Ask to see their "PR" or press related announcements about their local activities
- Ask how long they have been in the area and where their office is located
- Do you see their "FOR SALE" sign in the area?
QUICK TIP #2: Look for the agent who has the TECHNICAL ADVANTAGE
One of the key assets you want in a Realtor is one who has knowledge of their industry and of the local market. You want them to understand the technical side of the real estate transaction so they can help you navigate through the process, eliminating errors and getting you to the closing table successfully and on time.
- Look for experience. How many years in the business?
- What is their background?
- Check to see what real estate "designations" they have. There are many education hours required for an agent to receive one single designation such as CRS (Certified Residential Specialist) or REALTOR® (Graduate of the Realtor Institute). This indicates specialized training in a certain area.
- When you identify the agent's areas of expertise, make sure this compliments your particular needs.
QUICK TIP #3: Look for the agent who has the MARKETING ADVANTAGE
One of the greatest advantages in working with a real estate professional is the marketing opportunities they bring to the table. For the buyer, they are more knowledgeable on homes from marketing through their vast referral network. And for the seller, a Realtor's "marketing toolbox" and referral network has the potential to expose your property to thousands more interested buyer prospects.
- Check out their website, is it up to date with community and property information?
- Are they Internet savvy? Connected?
- Do they participate in social networking, and do they have pages on Facebook and other sites they are using to market their listings and provide pertinent real estate information to the online community?
- Ask for an example of their marketing plan for your property or a listing of their referral networks where they can match your real estate needs up to sellers.
- When and how will they deploy their marketing plan? How will it benefit your objectives?
These tips get you thinking about what qualifications you want in a real estate professional. The bottom line is that you want to find an agent who possesses most, if not all, of these qualities while having a comfortable working relationship with you. You are choosing someone you will be spending many hours with and hopefully will build a solid, long-term relationship over time. Selecting the right real estate agent will make a world of difference in the outcome of your real estate transaction.
To find a real estate professional who can help you get started on your next real estate transaction, visit http://www.C21JRS.com today! Call 800-831-0681, or email c21jrs72@aol.com
Congrats to Warren, NJ #6 in US
6. Warren, NJ
WINNERTop 100 rank: 6
Population: 16,100
Unemployment: 6.9%
Compare Warren to Top 10 Best Places
Children, commuters, cul-de-sacs--sure, Warren has those. But it isn't the typical big-city suburb. Here, fields aren't used just to kick soccer balls but also to raise cows and crops, thanks to 72 working farms. You'll see few sidewalks and streetlights; residents say they'd spoil the semi-rural atmosphere.
Many residents work in New York City, but there are plenty of jobs closer to home. Insurer Chubb has its headquarters in town. Embattled Citigroup has a large office in Warren, and a spokesperson says no layoffs are planned there.
Residents rave about the local schools and the family-friendly township recreation offerings, including a fishing derby for kids each May, a carnival in June, and a classic-car show in September. And when the charms of Warren wear thin, either the beach (the Jersey shore), the slopes (the Poconos), or high culture (Manhattan) is just an hour away. Become a Facebook fan of Warren
WINNERTop 100 rank: 6
Population: 16,100
Unemployment: 6.9%
Compare Warren to Top 10 Best Places
Children, commuters, cul-de-sacs--sure, Warren has those. But it isn't the typical big-city suburb. Here, fields aren't used just to kick soccer balls but also to raise cows and crops, thanks to 72 working farms. You'll see few sidewalks and streetlights; residents say they'd spoil the semi-rural atmosphere.
Many residents work in New York City, but there are plenty of jobs closer to home. Insurer Chubb has its headquarters in town. Embattled Citigroup has a large office in Warren, and a spokesperson says no layoffs are planned there.
Residents rave about the local schools and the family-friendly township recreation offerings, including a fishing derby for kids each May, a carnival in June, and a classic-car show in September. And when the charms of Warren wear thin, either the beach (the Jersey shore), the slopes (the Poconos), or high culture (Manhattan) is just an hour away. Become a Facebook fan of Warren
Monday, July 13, 2009
7 Way to find the best Realtor for me
Finding a good real estate agent / broker is essential to enjoying a painless real estate transaction. The saying is "20% of the agents do 80% of the business," and it is true. The question is how can you find a good real estate agent? The best agent for you doesn't necessarily work at the largest brokerage, close the most transactions or make the most money. The best agent for you is an experienced professional who will listen to you, conduct herself in an ethical manner and knows your market.
1. REALTORS® and Real Estate Agents
All Realtors® are licensed to sell real estate as an agent or a broker but not all real estate agents are Realtors®. Only Realtors® can display the Realtor® logo. Realtors® belong to the National Association of Realtors and pledge to follow the Code of Ethics, a comprehensive list containing 17 articles and underlying standards of practice, which establish levels of conduct that are higher than ordinary business practices or those required by law. Less than half of all licensees are Realtors®.
2. Referrals
Most real estate agents stay in business because satisfied clients refer them to friends, family, neighbors and coworkers. Ask the people around you who they have used and ask them to describe their experiences with this real estate agent. Successful agents make customer satisfaction their number one priority and put their customers' needs before their own. Try to find an agent who goes above and beyond her responsibilities. She'll be the agent whose praises your friends sing loudest.
3. Search Online for Agent Listings
There are plenty of Web sites that will refer agents to you but that is no assurance of quality. The agents they refer are those who have paid the Web site owners a fee to be listed in their directory. A better bet is to Google the top real estate companies in your area, go to those Web sites and look up profiles of individual agents at offices near you. Agents who are experienced will tell you but newer agents might have more time to spend with you. Look for customer testimonials.
4. Attend Open Houses
By going to open houses, you can meet real estate agents in a non-threatening working environment and interact with them. Collect business cards and make notes on them. If you're thinking about selling your home, pay attention to how the agent is showing the home. Is she polite and informative; appear knowledgeable? Does she hand out professional-looking promotional material about the home? Is she trying to sell features of the home? Or is she sitting in a corner reading a book, ignoring you?
5. Track Neighborhood Signs
Pay attention to the listing signs in your neighborhood. Make note of the day they go up and when the sold sign appears. The agent who sells listings the fastest might be better for you than the agent with the largest number of "for sale" signs. Results speak volumes.
6. Using Print Advertising
Real estate agents run real estate ads for two purposes. The first is to sell specific real estate. The second is to promote the real estate agent. Look in your local Sunday newspaper for ads in your targeted neighborhood. Then look up the Web sites of the agents who are advertising. These agents could be specialists in your neighborhood. Call and ask them about their experience.
7. Recommendations from Professionals
Ask other real estate agents for referrals. Agents are happy to refer buyers and sellers to associates, especially if the service you need is not a specialty of the agent who is referring you. Some agents specialize in residential resales while others work exclusively with new home builders. Other agents sell only commercial or investment property. Mortgage brokers are also a resource for agent referrals as many brokers have first-hand knowledge of exceptional agents. Pros tend to refer pros.
1. REALTORS® and Real Estate Agents
All Realtors® are licensed to sell real estate as an agent or a broker but not all real estate agents are Realtors®. Only Realtors® can display the Realtor® logo. Realtors® belong to the National Association of Realtors and pledge to follow the Code of Ethics, a comprehensive list containing 17 articles and underlying standards of practice, which establish levels of conduct that are higher than ordinary business practices or those required by law. Less than half of all licensees are Realtors®.
2. Referrals
Most real estate agents stay in business because satisfied clients refer them to friends, family, neighbors and coworkers. Ask the people around you who they have used and ask them to describe their experiences with this real estate agent. Successful agents make customer satisfaction their number one priority and put their customers' needs before their own. Try to find an agent who goes above and beyond her responsibilities. She'll be the agent whose praises your friends sing loudest.
3. Search Online for Agent Listings
There are plenty of Web sites that will refer agents to you but that is no assurance of quality. The agents they refer are those who have paid the Web site owners a fee to be listed in their directory. A better bet is to Google the top real estate companies in your area, go to those Web sites and look up profiles of individual agents at offices near you. Agents who are experienced will tell you but newer agents might have more time to spend with you. Look for customer testimonials.
4. Attend Open Houses
By going to open houses, you can meet real estate agents in a non-threatening working environment and interact with them. Collect business cards and make notes on them. If you're thinking about selling your home, pay attention to how the agent is showing the home. Is she polite and informative; appear knowledgeable? Does she hand out professional-looking promotional material about the home? Is she trying to sell features of the home? Or is she sitting in a corner reading a book, ignoring you?
5. Track Neighborhood Signs
Pay attention to the listing signs in your neighborhood. Make note of the day they go up and when the sold sign appears. The agent who sells listings the fastest might be better for you than the agent with the largest number of "for sale" signs. Results speak volumes.
6. Using Print Advertising
Real estate agents run real estate ads for two purposes. The first is to sell specific real estate. The second is to promote the real estate agent. Look in your local Sunday newspaper for ads in your targeted neighborhood. Then look up the Web sites of the agents who are advertising. These agents could be specialists in your neighborhood. Call and ask them about their experience.
7. Recommendations from Professionals
Ask other real estate agents for referrals. Agents are happy to refer buyers and sellers to associates, especially if the service you need is not a specialty of the agent who is referring you. Some agents specialize in residential resales while others work exclusively with new home builders. Other agents sell only commercial or investment property. Mortgage brokers are also a resource for agent referrals as many brokers have first-hand knowledge of exceptional agents. Pros tend to refer pros.
Sunday, July 12, 2009
5 Mistakes for First-Time Buyers to Avoid
Re-blogged by 0 agents
5 Mistakes for First Time Buyers to Avoid (edit/delete)
5 first-time buyer mistakes to avoid
Experienced homeowners share their secrets so you won't make a rookie mistake
If you're a first-time home buyer in this market, how could you go wrong? Nationally, sales prices of existing single-family homes are down nearly 24 percent since their July 2006 peak. Interest rates, recently 4.9 percent for a 30-year fixed-rate mortgage, are hovering near historic lows.
And if that isn't incentive enough, Uncle Sam is offering first-time buyers an $8,000 tax credit to further sweeten the deal.
But as any homeowner will tell you, the decision to buy a home is only half the battle. The real challenge is in the details of what, where and how much. Here are five first-time home buyer mistakes you don't want to make.
First Time Buyer Guide 2009
This is an exciting year for first time buyers, with a once in a lifetime opportunity to get the home of your dream.
1. Don't think that "long term" is a couple of years.
Buying a home, especially now, requires long-term planning, not just with finances, but with your career and your personal life. "The old rule was to plan on owning the house for three to four years," says Ben Hoefer, an agent with John L. Scott in Seattle. "I'm recommending that people think in terms of five to seven years."
If you don't know where you'll be a year from now, let alone seven years from now, you might want to rethink your plans to buy. A house isn't a bargain if you can't recoup your investment. The more time you can spend in the home -- comfortably -- the better the deal.
For many first-time home buyers, that means finding a house that suits their needs and their budget now but also offers room to grow -- or the option to rent. Location is another sticking point. "A lot of people will go for the better house farther out and realize, after it's too late, it's not the location they want," says Hoefer. Would the commute be manageable if you change jobs? What about school quality? These factors influence not only your sanity but also home values.
2. Don't settle for something with more wrongs than rights.
Before you get lured into an open house, spend some time figuring out how much home you can afford and browse online listings to familiarize yourself with the market. "Most first-time buyers are going to be hard pressed to get everything they want, even now," says David Krieger, general manager of Coldwell Banker Preferred in Philadelphia. But if you prioritize your needs and wants and give yourself time to look around, you have a better shot.
That tactic worked well for Litsy Witkowski, who bought her first home last summer. "I didn't necessarily want to find a place very quickly," says Witkowski, 27, who spent more than six months looking around New Haven, Conn. During that time she saw dozens of houses and condominiums and "quickly learned what neighborhoods and styles I liked and didn't like," she says. Her home, a three-bedroom colonial with two and a half bathrooms, a finished attic and basement, and a four-season porch, was listed for $299,000; Witkowski managed to negotiate the price down to $285,000. "Taking my time was definitely the right call," says Witkowski, who shares her home with three housemates. "I think there is something to be said for walking into a place and knowing that you either love it or you don't."
3. Don't make finding an agent an afterthought.
With so much information at your fingertips, it might seem old fashioned to enlist the help of a real estate agent. But, a good buyer's agent brings a lot more to the table than listings; he can walk you through everything from the loan preapproval to the home inspection and, most importantly, is obligated to put your interests first.
In hindsight, this is one thing first-time home buyer Kelcey Nichols, 34, would have done differently when she started house hunting in Santa Fe, N.M., a couple of years ago. Although she's very happy with her three-bedroom adobe-style home, she wasn't always on the same page as her agent. "We had different negotiation styles," she says. If she were buying again she would interview several agents before starting the search. "I think working with someone who really knows what you want could save you a lot of time and money," she says.
Yet, most buyers don't spend enough time looking for an agent who will represent their interests in the transaction, says Krieger. Instead, they find the home and call the listing agent, not realizing that that agent represents the seller. It's better to find your own advocate from day one. What's it going to cost you? Technically, nothing. Sellers' and buyers' agents split commissions paid by the seller. Although you could go it alone and ask the seller's agent to cut her commission and pass that savings on to you, as a first-time buyer it's likely you would do better working with a pro and looking for savings elsewhere.
4. Don't assume that every home is in foreclosure.
No doubt there are deals to be had. But just because national headlines show double-digit drops in home prices and a record level of foreclosures doesn't mean that's the case for every home in every market. Nationally, fewer than 1 percent of all housing units on the market are in foreclosure, according to first-quarter data from RealtyTrac. While you don't want to rule out foreclosed property, you don't want to limit your search to the bargain bin.
Krieger notes that the average Philadelphia seller is receiving about 97 percent of asking price. This figure will vary from month to month and even from neighborhood to neighborhood, so do your homework before putting in an offer. Now that home prices have fallen so much, many of the best deals are starting to fetch multiple offers.
5. Don't forget about all the other costs of owning a home.
After searching Salt Lake City for six months, Julia Lyon, 35, knew she'd found a winner when she walked through the front door of a circa-1901 Victorian in the Liberty Park neighborhood. The house needed a little work. But at $260,500 the price seemed fair, especially by 2006 standards.
Still, the home has gobbled up more time and money than she'd ever anticipated. "As my brother recently told me, I didn't buy a house -- I bought a project," says Lyon, who's spent about $15,000 on everything from gutting the first-floor bathroom to fencing in the backyard. "I don't want to keep ignoring problems that should have been dealt with 10 years ago," says Lyon, who got married in 2008. "But I worry that we're putting more money into some of the fixes than we may get back."
Most first-time home buyers find themselves in a similar situation: They focus so much on the sticker price that they fail to account for the other costs that come with owning a home. Some of these costs aren't optional -- closing costs, maintenance and utilities. Others -- new furniture and gardening tools, to name a few -- can add thousands of dollars to the price tag if you're not careful.
At the same time Lyon is conscious of "over improving" her home, she has no regrets about buying it. "I love my house as much today as I did the first time I saw it," she says. Unfortunately, many buyers from the boom can't say the same. "Some of the saddest homeowner stories I've heard are from people who bought too quickly -- without really understanding what was out there."
5 Mistakes for First Time Buyers to Avoid (edit/delete)
5 first-time buyer mistakes to avoid
Experienced homeowners share their secrets so you won't make a rookie mistake
If you're a first-time home buyer in this market, how could you go wrong? Nationally, sales prices of existing single-family homes are down nearly 24 percent since their July 2006 peak. Interest rates, recently 4.9 percent for a 30-year fixed-rate mortgage, are hovering near historic lows.
And if that isn't incentive enough, Uncle Sam is offering first-time buyers an $8,000 tax credit to further sweeten the deal.
But as any homeowner will tell you, the decision to buy a home is only half the battle. The real challenge is in the details of what, where and how much. Here are five first-time home buyer mistakes you don't want to make.
First Time Buyer Guide 2009
This is an exciting year for first time buyers, with a once in a lifetime opportunity to get the home of your dream.
1. Don't think that "long term" is a couple of years.
Buying a home, especially now, requires long-term planning, not just with finances, but with your career and your personal life. "The old rule was to plan on owning the house for three to four years," says Ben Hoefer, an agent with John L. Scott in Seattle. "I'm recommending that people think in terms of five to seven years."
If you don't know where you'll be a year from now, let alone seven years from now, you might want to rethink your plans to buy. A house isn't a bargain if you can't recoup your investment. The more time you can spend in the home -- comfortably -- the better the deal.
For many first-time home buyers, that means finding a house that suits their needs and their budget now but also offers room to grow -- or the option to rent. Location is another sticking point. "A lot of people will go for the better house farther out and realize, after it's too late, it's not the location they want," says Hoefer. Would the commute be manageable if you change jobs? What about school quality? These factors influence not only your sanity but also home values.
2. Don't settle for something with more wrongs than rights.
Before you get lured into an open house, spend some time figuring out how much home you can afford and browse online listings to familiarize yourself with the market. "Most first-time buyers are going to be hard pressed to get everything they want, even now," says David Krieger, general manager of Coldwell Banker Preferred in Philadelphia. But if you prioritize your needs and wants and give yourself time to look around, you have a better shot.
That tactic worked well for Litsy Witkowski, who bought her first home last summer. "I didn't necessarily want to find a place very quickly," says Witkowski, 27, who spent more than six months looking around New Haven, Conn. During that time she saw dozens of houses and condominiums and "quickly learned what neighborhoods and styles I liked and didn't like," she says. Her home, a three-bedroom colonial with two and a half bathrooms, a finished attic and basement, and a four-season porch, was listed for $299,000; Witkowski managed to negotiate the price down to $285,000. "Taking my time was definitely the right call," says Witkowski, who shares her home with three housemates. "I think there is something to be said for walking into a place and knowing that you either love it or you don't."
3. Don't make finding an agent an afterthought.
With so much information at your fingertips, it might seem old fashioned to enlist the help of a real estate agent. But, a good buyer's agent brings a lot more to the table than listings; he can walk you through everything from the loan preapproval to the home inspection and, most importantly, is obligated to put your interests first.
In hindsight, this is one thing first-time home buyer Kelcey Nichols, 34, would have done differently when she started house hunting in Santa Fe, N.M., a couple of years ago. Although she's very happy with her three-bedroom adobe-style home, she wasn't always on the same page as her agent. "We had different negotiation styles," she says. If she were buying again she would interview several agents before starting the search. "I think working with someone who really knows what you want could save you a lot of time and money," she says.
Yet, most buyers don't spend enough time looking for an agent who will represent their interests in the transaction, says Krieger. Instead, they find the home and call the listing agent, not realizing that that agent represents the seller. It's better to find your own advocate from day one. What's it going to cost you? Technically, nothing. Sellers' and buyers' agents split commissions paid by the seller. Although you could go it alone and ask the seller's agent to cut her commission and pass that savings on to you, as a first-time buyer it's likely you would do better working with a pro and looking for savings elsewhere.
4. Don't assume that every home is in foreclosure.
No doubt there are deals to be had. But just because national headlines show double-digit drops in home prices and a record level of foreclosures doesn't mean that's the case for every home in every market. Nationally, fewer than 1 percent of all housing units on the market are in foreclosure, according to first-quarter data from RealtyTrac. While you don't want to rule out foreclosed property, you don't want to limit your search to the bargain bin.
Krieger notes that the average Philadelphia seller is receiving about 97 percent of asking price. This figure will vary from month to month and even from neighborhood to neighborhood, so do your homework before putting in an offer. Now that home prices have fallen so much, many of the best deals are starting to fetch multiple offers.
5. Don't forget about all the other costs of owning a home.
After searching Salt Lake City for six months, Julia Lyon, 35, knew she'd found a winner when she walked through the front door of a circa-1901 Victorian in the Liberty Park neighborhood. The house needed a little work. But at $260,500 the price seemed fair, especially by 2006 standards.
Still, the home has gobbled up more time and money than she'd ever anticipated. "As my brother recently told me, I didn't buy a house -- I bought a project," says Lyon, who's spent about $15,000 on everything from gutting the first-floor bathroom to fencing in the backyard. "I don't want to keep ignoring problems that should have been dealt with 10 years ago," says Lyon, who got married in 2008. "But I worry that we're putting more money into some of the fixes than we may get back."
Most first-time home buyers find themselves in a similar situation: They focus so much on the sticker price that they fail to account for the other costs that come with owning a home. Some of these costs aren't optional -- closing costs, maintenance and utilities. Others -- new furniture and gardening tools, to name a few -- can add thousands of dollars to the price tag if you're not careful.
At the same time Lyon is conscious of "over improving" her home, she has no regrets about buying it. "I love my house as much today as I did the first time I saw it," she says. Unfortunately, many buyers from the boom can't say the same. "Some of the saddest homeowner stories I've heard are from people who bought too quickly -- without really understanding what was out there."
Monday, July 6, 2009
Avoid Mortgage Fraud
Avoid Mortgage Fraud (edit/delete)
Mortgage fraud has many guises
by Lisa Fleisher/The Star-Ledger Sunday July 05, 2009, 10:15 AM
As the economy changes, so do the ways people try to make a quick -- and sometimes criminal -- buck.
In response, state and federal agencies are ramping up efforts to track down and prosecute people who committed fraud that hurt major financial institutions and everyday homeowners.
There's no single crime known as "mortgage fraud." Instead, people are charged with crimes such as mail fraud or identity theft. The height of the fraud activity might have taken place two or three years ago, but the prosecution is just ramping up.
The FBI created a national mortgage team in December and more than doubled the agents devoted to this type of crime.
Here's a primer to the types of mortgage fraud that are out there, how to get help and what it all means to you.
GLOSSARY
mortgage: Loan used to buy a home.
mortgage-backed security: Financial instrument that allows investors to buy shares in a fund that combines many mortgages into one pool.
straw buyer: Person named on mortgage documents but who is not really the intended homebuyer; often used when the actual buyer does not have good enough credit or high enough income.
equity: Money built up in the house by paying into the mortgage. For example, a person who made $100,000 in mortgage payments on a $300,000 loan has $100,000 in equity in the house.
shell company: Company set up for a single purpose. In our context, fraud.
WHY I SHOULD CARE
Mortgage fraud deflates property values across the board, destabilizes banks and
can ultimately put greater stress on our social safety nets by leaving victims destitute. Fraud often results in foreclosure, which pushes down neighboring home prices, can chip away at the town's tax base and strains municipal resources.
TYPES OF MORTGAGE FRAUD
INCOME AND EMPLOYMENT FRAUD
Method: Perhaps the most prevalent, either homeowners lie about their income or loan brokers coerce or flat-out falsify documents to get a loan approved.
Result: Homeowners end up with loans they can't afford.
REVERSE MORTGAGE FRAUD
Method: Elderly people who might have lost retirement funds sometimes turn to a reverse mortgage, which allows them to take a new mortgage out on a house they've already paid off. While this is sometimes a helpful tool, industry watchers and government officials warn about people charging sky-high fees.
Result: Elderly people are either cheated by high fees or, in worst-case scenarios, lose their house because they signed documents they did not understand.
PHANTOM HELP
Method: A type of foreclosure rescue scam in which a fraudster collects an upfront fee from homeowners trying to save their homes from foreclosure -- and then disappears.
Result: Criminals do nothing and pocket the fee.
MORTGAGE-RELATED IDENTITY THEFT
Method: Perpetrators use stolen identities to buy properties outright or take out mortgages.
Result: Victims find out they are on the hook for mortgages and loans.
SHORT SALE FRAUD
Method: A buyer colludes with real estate agents or others to give faulty appraisals to banks and convinces them a property is worth less than it is.
Result: Banks are defrauded and surrounding property values can drop.
BAIT AND BUMP
Method: Lenders or brokers dangle attractive loans in front of desperate homeowners. But when it comes time to close, buyers are told it's too late to switch.
Result: New homeowners are left with mortgages they can't pay or end up signing away their homes.
EQUITY STRIPPING OR SKIMMING
Method: There are several definitions for this, one of which is synonymous with lease buy-back (see below). Another iteration is when a fraudster convinces people to invest in or buy properties, using their credit to get loans for inflated property values, but walks away.
Result: Investor or group of investors is left with properties, which often have been neglected and have gone into foreclosure.
LEASE BUY-BACK
Method: Homeowners facing foreclosure sign over the deed to a company or individual who promises to sell it back after a year, during which the homeowners can get their finances in order. In the meantime, they are told they will be allowed to rent the house.
Result: The scammer evicts the original homeowner-turned-renter and keeps or sells the property.
HOW DO I AVOID BECOMING A VICTIM?
• Be skeptical of people who make unsolicited contact.
• Don't hesitate to ask as many questions as you need until you understand what you are signing.
• Don't sign blank forms.
• Check to make sure your name is correct on documents and matches your identification.
&bull Check mortgage agent, real estate agent and lawyer's certifications through state agencies.
• Review the value of the home by comparing it with others nearby, and go over the sales history of the home to see whether the value has been inflated through multiple sales.
• Remember, if it's too good to be true, it probably is.
Q&A
Q: Are frauds like these new?
A: No, many of these methods have been around for decades.
Q: Why are we just hearing about them now?
A: A few reasons are often cited: The falling economy strips away the financial cover some of these perpetrators may have had, leaving more people with mounting losses; companies are reporting fraud more frequently; state and federal agencies are stepping up enforcement.
Q: Are the victims always innocent?
A: No, sometimes -- but not always or often -- victims can be partial participants. They get a cash payment and do not ask questions or agree to falsify information. The key, however, is that the licensed professional who ought to know better is helping them along.
Q: Does a prosecution prevent a company from doing business?
A: Not necessarily. Unless there is an injunction, the companies might be able to solicit customers and operate websites until proven guilty or until their licenses are stripped away.
Q: What is being done?
A: A half-dozen federal agencies are investigating these frauds -- including the FBI, the Secret Service, the Department of Housing and Urban Development and the IRS. So are states' attorneys general. The number of FBI special agents assigned to mortgage fraud increased to 250 in February, from 120 in 2007, and Congress is considering adding $35 million to the FBI's budget for this type of fraud detection.
New Jersey Attorney General Anne Milgram said her office is using civil cases to go after suspected criminals, because civil cases can be brought more quickly, but might follow up with criminal charges. Also, she said she told the Division of Consumer Affairs to look into TV and radio commercials making debt relief or foreclosure relief claims.
Q: Why aren't banks doing more?
A: Some say the banks do not want to investigate their own loans for fear it will taint them or open them up to lawsuits because their loans have been packaged into mortgage-backed securities made with certain promises against fraud.
Q: Why aren't more of these cases being prosecuted?
A: Criminals can be difficult to pin down, since many businesses have gone bankrupt or perpetrators have skipped the state.
WHERE SHOULD I GO FOR HELP?
Contact the New Jersey Division of Consumer Affairs at (800) 242-5846 for in-state callers and (973) 504-6200 from out of state; or visit njconsumeraffairs.gov.
If you are facing foreclosure, visit a U.S. Department of Housing and Urban Development-approved counselor. For a list, visit the real estate blog at nj.com, call (888) 989-5277 or go to NJForeclosureMediation.org.
Sources: N.J. Attorney General's Office; FBI; Mortgage Asset Research Institute; Interthinx
Mortgage fraud has many guises
by Lisa Fleisher/The Star-Ledger Sunday July 05, 2009, 10:15 AM
As the economy changes, so do the ways people try to make a quick -- and sometimes criminal -- buck.
In response, state and federal agencies are ramping up efforts to track down and prosecute people who committed fraud that hurt major financial institutions and everyday homeowners.
There's no single crime known as "mortgage fraud." Instead, people are charged with crimes such as mail fraud or identity theft. The height of the fraud activity might have taken place two or three years ago, but the prosecution is just ramping up.
The FBI created a national mortgage team in December and more than doubled the agents devoted to this type of crime.
Here's a primer to the types of mortgage fraud that are out there, how to get help and what it all means to you.
GLOSSARY
mortgage: Loan used to buy a home.
mortgage-backed security: Financial instrument that allows investors to buy shares in a fund that combines many mortgages into one pool.
straw buyer: Person named on mortgage documents but who is not really the intended homebuyer; often used when the actual buyer does not have good enough credit or high enough income.
equity: Money built up in the house by paying into the mortgage. For example, a person who made $100,000 in mortgage payments on a $300,000 loan has $100,000 in equity in the house.
shell company: Company set up for a single purpose. In our context, fraud.
WHY I SHOULD CARE
Mortgage fraud deflates property values across the board, destabilizes banks and
can ultimately put greater stress on our social safety nets by leaving victims destitute. Fraud often results in foreclosure, which pushes down neighboring home prices, can chip away at the town's tax base and strains municipal resources.
TYPES OF MORTGAGE FRAUD
INCOME AND EMPLOYMENT FRAUD
Method: Perhaps the most prevalent, either homeowners lie about their income or loan brokers coerce or flat-out falsify documents to get a loan approved.
Result: Homeowners end up with loans they can't afford.
REVERSE MORTGAGE FRAUD
Method: Elderly people who might have lost retirement funds sometimes turn to a reverse mortgage, which allows them to take a new mortgage out on a house they've already paid off. While this is sometimes a helpful tool, industry watchers and government officials warn about people charging sky-high fees.
Result: Elderly people are either cheated by high fees or, in worst-case scenarios, lose their house because they signed documents they did not understand.
PHANTOM HELP
Method: A type of foreclosure rescue scam in which a fraudster collects an upfront fee from homeowners trying to save their homes from foreclosure -- and then disappears.
Result: Criminals do nothing and pocket the fee.
MORTGAGE-RELATED IDENTITY THEFT
Method: Perpetrators use stolen identities to buy properties outright or take out mortgages.
Result: Victims find out they are on the hook for mortgages and loans.
SHORT SALE FRAUD
Method: A buyer colludes with real estate agents or others to give faulty appraisals to banks and convinces them a property is worth less than it is.
Result: Banks are defrauded and surrounding property values can drop.
BAIT AND BUMP
Method: Lenders or brokers dangle attractive loans in front of desperate homeowners. But when it comes time to close, buyers are told it's too late to switch.
Result: New homeowners are left with mortgages they can't pay or end up signing away their homes.
EQUITY STRIPPING OR SKIMMING
Method: There are several definitions for this, one of which is synonymous with lease buy-back (see below). Another iteration is when a fraudster convinces people to invest in or buy properties, using their credit to get loans for inflated property values, but walks away.
Result: Investor or group of investors is left with properties, which often have been neglected and have gone into foreclosure.
LEASE BUY-BACK
Method: Homeowners facing foreclosure sign over the deed to a company or individual who promises to sell it back after a year, during which the homeowners can get their finances in order. In the meantime, they are told they will be allowed to rent the house.
Result: The scammer evicts the original homeowner-turned-renter and keeps or sells the property.
HOW DO I AVOID BECOMING A VICTIM?
• Be skeptical of people who make unsolicited contact.
• Don't hesitate to ask as many questions as you need until you understand what you are signing.
• Don't sign blank forms.
• Check to make sure your name is correct on documents and matches your identification.
&bull Check mortgage agent, real estate agent and lawyer's certifications through state agencies.
• Review the value of the home by comparing it with others nearby, and go over the sales history of the home to see whether the value has been inflated through multiple sales.
• Remember, if it's too good to be true, it probably is.
Q&A
Q: Are frauds like these new?
A: No, many of these methods have been around for decades.
Q: Why are we just hearing about them now?
A: A few reasons are often cited: The falling economy strips away the financial cover some of these perpetrators may have had, leaving more people with mounting losses; companies are reporting fraud more frequently; state and federal agencies are stepping up enforcement.
Q: Are the victims always innocent?
A: No, sometimes -- but not always or often -- victims can be partial participants. They get a cash payment and do not ask questions or agree to falsify information. The key, however, is that the licensed professional who ought to know better is helping them along.
Q: Does a prosecution prevent a company from doing business?
A: Not necessarily. Unless there is an injunction, the companies might be able to solicit customers and operate websites until proven guilty or until their licenses are stripped away.
Q: What is being done?
A: A half-dozen federal agencies are investigating these frauds -- including the FBI, the Secret Service, the Department of Housing and Urban Development and the IRS. So are states' attorneys general. The number of FBI special agents assigned to mortgage fraud increased to 250 in February, from 120 in 2007, and Congress is considering adding $35 million to the FBI's budget for this type of fraud detection.
New Jersey Attorney General Anne Milgram said her office is using civil cases to go after suspected criminals, because civil cases can be brought more quickly, but might follow up with criminal charges. Also, she said she told the Division of Consumer Affairs to look into TV and radio commercials making debt relief or foreclosure relief claims.
Q: Why aren't banks doing more?
A: Some say the banks do not want to investigate their own loans for fear it will taint them or open them up to lawsuits because their loans have been packaged into mortgage-backed securities made with certain promises against fraud.
Q: Why aren't more of these cases being prosecuted?
A: Criminals can be difficult to pin down, since many businesses have gone bankrupt or perpetrators have skipped the state.
WHERE SHOULD I GO FOR HELP?
Contact the New Jersey Division of Consumer Affairs at (800) 242-5846 for in-state callers and (973) 504-6200 from out of state; or visit njconsumeraffairs.gov.
If you are facing foreclosure, visit a U.S. Department of Housing and Urban Development-approved counselor. For a list, visit the real estate blog at nj.com, call (888) 989-5277 or go to NJForeclosureMediation.org.
Sources: N.J. Attorney General's Office; FBI; Mortgage Asset Research Institute; Interthinx
Thursday, June 18, 2009
Home Buyer Tax Credit
The new-and-improved version of the First-Time Homebuyer Credit offers rookie home buyers (or those who simply haven't owned a home in the past three years) a chance to get a federal income tax credit of up to $8,000. Thanks to this year’s Stimulus Act, you don't have to repay the credit like you did with last year’s version.
Even better, the IRS says unmarried individuals can team up on a home purchase and then share the credit. If you're thinking of going this route, here's what you need to know to get the best tax-saving results:
How Much You'll Get
The updated First-Time Homebuyer Credit can be applied to purchases of homes that occur between Jan. 1, 2009, and Nov. 30, 2009. The maximum credit equals the lesser of 10% of the purchase price of a principal residence or $8,000. Or, in the case of married individuals who file separately, $4,000. (These amounts are up from the $7,500 and $3,750 limits for purchases that occurred between April 9 and Dec. 31 of last year.)
There are some catches, however. The credit is phased out (reduced or completely eliminated) if your modified adjusted gross income (MAGI) is too high. (For this purpose, MAGI means the adjusted gross income figure reported on the last line on page 1 of your Form 1040 increased by certain income from outside the U.S. that is exempt from taxation.)
For married joint filers, the credit is phased out when the MAGI is between $150,000 and $170,000. For unmarried individuals and married individuals who file separately, the credit is phased out between MAGI of $75,000 and $95,000.
You can use the credit to offset your entire federal income tax bill, including any alternative minimum tax (AMT). Since the credit is refundable, you can collect any amount left over after your tax bill has been reduced to zero in cold, hard cash.
Eligibility
The credit is only available to buyers who have not owned a principal residence in the U.S. during the three-year period that ends on the purchase date for the home. That home must serve as the new principal residence.
If you’re married, both you and your spouse must pass the three-year test (whether or not you file jointly). If you’re unmarried, and you team up with another person to buy a home that serves as the new principal residence for you both and you both pass the three-year test, then you can share the credit. If only one of you passes the three-year test, only that person can claim the credit.
Unmarried Buyers Can Share the Credit
Say two (or more) unmarried individuals buy a home together that serves as their new principal residence. Assuming each person passes the three-year test and they jointly own the property as tenants in common or as joint tenants, they can pretty much share the credit any way they choose, according to IRS Notice 2009-12. However, the total credit is still limited to the lesser of 10% of the purchase price or $8,000. And the credit allocated to each person is still subject to the phase-out rule, based on MAGI. Although the IRS doesn’t actually say so, it appears you can’t claim a credit that exceeds your share of the purchase price (including your share of any mortgage debt). Here’s an example to illustrate the possibilities.
Example: Say you and your significant other jointly buy a home for $150,000 in June of this year and you both pass the three-year test. You pay 60% of the cost, and your partner pays 40%. The available credit for this purchase is $8,000 (lesser of 10% of the purchase price or the $8,000 credit ceiling). You and the other person could agree to share the credit 60/40 to reflect your shares of the purchase price. But if the other person's MAGI is too high to claim the credit and yours is not, then it makes good tax-saving sense to have the entire $8,000 allocated to you. On the flip side, if your MAGI is too high, the entire $8,000 could be allocated to the other person. Or you could split the credit 50/50, or 75/25, or 25/75, or whatever allocation suits the two of you best. Anything you decide is OK with IRS.
Word of Caution: Credit Must Be Repaid in Some Circumstances
Under last year’s version of the First-Time Home Buyer Credit, those who bought homes between April 9, 2008, and Dec. 31, 2008, were generally required to repay the credit over 15 years. The Stimulus Act eliminated the repayment rule -- in most cases. However, the repayment rule can still hit you if you sell the home you buy in 2009 within three years of the purchase date or stop using the home as your principal residence during that time. If either of those events occurs, you generally must repay your entire credit when you file your Form 1040 for the year during which the triggering event occurs (no 15-year repayment deal for you).
Even better, the IRS says unmarried individuals can team up on a home purchase and then share the credit. If you're thinking of going this route, here's what you need to know to get the best tax-saving results:
How Much You'll Get
The updated First-Time Homebuyer Credit can be applied to purchases of homes that occur between Jan. 1, 2009, and Nov. 30, 2009. The maximum credit equals the lesser of 10% of the purchase price of a principal residence or $8,000. Or, in the case of married individuals who file separately, $4,000. (These amounts are up from the $7,500 and $3,750 limits for purchases that occurred between April 9 and Dec. 31 of last year.)
There are some catches, however. The credit is phased out (reduced or completely eliminated) if your modified adjusted gross income (MAGI) is too high. (For this purpose, MAGI means the adjusted gross income figure reported on the last line on page 1 of your Form 1040 increased by certain income from outside the U.S. that is exempt from taxation.)
For married joint filers, the credit is phased out when the MAGI is between $150,000 and $170,000. For unmarried individuals and married individuals who file separately, the credit is phased out between MAGI of $75,000 and $95,000.
You can use the credit to offset your entire federal income tax bill, including any alternative minimum tax (AMT). Since the credit is refundable, you can collect any amount left over after your tax bill has been reduced to zero in cold, hard cash.
Eligibility
The credit is only available to buyers who have not owned a principal residence in the U.S. during the three-year period that ends on the purchase date for the home. That home must serve as the new principal residence.
If you’re married, both you and your spouse must pass the three-year test (whether or not you file jointly). If you’re unmarried, and you team up with another person to buy a home that serves as the new principal residence for you both and you both pass the three-year test, then you can share the credit. If only one of you passes the three-year test, only that person can claim the credit.
Unmarried Buyers Can Share the Credit
Say two (or more) unmarried individuals buy a home together that serves as their new principal residence. Assuming each person passes the three-year test and they jointly own the property as tenants in common or as joint tenants, they can pretty much share the credit any way they choose, according to IRS Notice 2009-12. However, the total credit is still limited to the lesser of 10% of the purchase price or $8,000. And the credit allocated to each person is still subject to the phase-out rule, based on MAGI. Although the IRS doesn’t actually say so, it appears you can’t claim a credit that exceeds your share of the purchase price (including your share of any mortgage debt). Here’s an example to illustrate the possibilities.
Example: Say you and your significant other jointly buy a home for $150,000 in June of this year and you both pass the three-year test. You pay 60% of the cost, and your partner pays 40%. The available credit for this purchase is $8,000 (lesser of 10% of the purchase price or the $8,000 credit ceiling). You and the other person could agree to share the credit 60/40 to reflect your shares of the purchase price. But if the other person's MAGI is too high to claim the credit and yours is not, then it makes good tax-saving sense to have the entire $8,000 allocated to you. On the flip side, if your MAGI is too high, the entire $8,000 could be allocated to the other person. Or you could split the credit 50/50, or 75/25, or 25/75, or whatever allocation suits the two of you best. Anything you decide is OK with IRS.
Word of Caution: Credit Must Be Repaid in Some Circumstances
Under last year’s version of the First-Time Home Buyer Credit, those who bought homes between April 9, 2008, and Dec. 31, 2008, were generally required to repay the credit over 15 years. The Stimulus Act eliminated the repayment rule -- in most cases. However, the repayment rule can still hit you if you sell the home you buy in 2009 within three years of the purchase date or stop using the home as your principal residence during that time. If either of those events occurs, you generally must repay your entire credit when you file your Form 1040 for the year during which the triggering event occurs (no 15-year repayment deal for you).
Wednesday, June 17, 2009
Deciphering Mortgage Types
Deciphering Mortgage Loan Types
Home loans got your head spinning? You're not alone. We all need a clear explanation of mortgage types before we take the plunge into the home buying market. Get help understanding types of mortgages here before you go shopping for your own home loan. We've compiled a solid list of resources to consider when understanding mortgage types.
There are four basic types of mortgage loans: fixed rate loans, adjustable rate loans, convertible mortgage loans and balloon mortgage loans. Learn more here. Walletpop: Types of Mortgage Loans
You may have heard of FHA or VA Loans. The Federal Housing Administration (FHA) is part of the U.S. Dept. of Housing and Urban Development (HUD). An FHA loan usually requires a lower down payment and must not exceed the statutory limit. Similarly, VA loans, backed by the Department of Veteran Affairs can offer lower down payments and terms if you qualify for one.
Conventional loans may fall under the category of conforming or non-conforming. Conforming loans are backed by Fannie Mae and Freddie Mac, who set terms as to how much the loan may be for, what kind of credit requirements are involved and amount of down payment. Jumbo loans, above the maximum amount established by Fannie and Freddie can have higher interest rates.
Need more help with explanation of mortgage types? We have a simple explanation and list of some of the more popular loans. See which loan is right for you.
What is Negative Amortization?
Negative amortization happens when a loan payment schedule has increasing amounts each year because the scheduled monthly payments do not fully cover the amount of interest due. The unpaid interest builds up and is then added to the principal of the loan, resulting in you owing more on the loan balance each year instead of chipping away at the principal balance.
Graduated payment loans allow you to buy a home with a larger loan and a smaller payment up front. However, the payments go up at pre-determined times throughout the loan, and keep accelerating into larger payments toward the end of the loan life to catch up for the earlier lower payments. During this time, especially the early years, they are building up negative amortization, thus you are owing more each year on your loan balance than you started with.
Option ARM loans have become popular during the boom, as they allow you to buy a home with a large loan, yet pick which payment you want to send in monthly. In good times, you may choose the lowest payment, which would accrue negative amortization. In good times, you may want to bump it up to an interest only or even a fully amortized payment. These loans may be beneficial to someone starting out in a career that needs a lower loan payment option, but as you progress in life you can pay the higher amount, thus combating or making up for the early negative amortization.
Fixed Rate or Adjustable?
With a fixed rate loan your payment generally stays the same through the life of the loan. You can get a lower interest rate for shorter term loans, for example if you chose a 15 yr. vs. a 30 yr. You'll get a lower payment with a longer term however you'll pay a lot more interest, and therefore more on the total loan throughout the loan life.
Payments on adjustable rate mortgages (ARMs) change through the life of the loan. Adjustments are made to the interest rate of the loan based upon the defined index the loan uses, such as a Treasury Bill (T-Bill) or Cost of Savings Index (COSI) or many more. Arm Indexes Explained
If you really want some heavy reading on ARM loans, check out the Federal Reserve Board's Consumer Handbook on Adjustable Rate Loans.
Fixed or Adjustable? See which loan is right for you from Bankrate.
Glossary of adjustable rate mortgage terms:
Federal Reserve ARM Glossary
Thursday, June 11, 2009
2 in a Row
2 In a Row?
That's right, 2 months in a row Eddie Kefalas has earned the CENTURY 21 JRS Realty Agent of the Month Award. With the stacked roster of top agents CENTURY 21 JRS Realty employs this is a tremendous accomplishment. CENTURY 21 JRS Realty has some of the hardest working, well trained agents in the Union & Middlesex County area. For Eddie to be the Agent of the Month for April and May of 2009 is a great accomplishment. CENTURY 21 JRS Realty is very happy for Eddie and would like to wish him even more success moving forward. This market will not stop CENTURY 21 JRS Realty from reaching their goals, and it will not stop Eddie either.
Thursday, May 21, 2009
Congrats to our Hot Rods & Harley Day Winnners
Saturday May 16th, 2009 turned out to be a beautiful day after all. CENTURY 21 JRS Realty spent the day out side at the annual street fair in down town Rahway New Jersey, Hot Rods & Harley Day. This year CENTURY 21 JRS Realty gave away 5 bicycles, temporary tattoos, bouncy balls, and many other free items to the public. CENTURY 21 JRS Realty was the only Real Estate company to attend this years street fair, and they made the most of it. Pictured above are some of our winners and hard working agents attempting to help the crowds of people.
Wednesday, May 13, 2009
Selling in Spring
Spring is the optimum time to sell a home. Regardless of whether it's a buyer's market or a seller's market, inventory almost always rises in the spring. Why? Because the largest number of buyers are actively searching for a new home during the months of April, May and June.
Tip: If your home has been languishing on the market since the holidays, take it off the market. Give it a chance to "cool down" for a few weeks before putting it back on the market. Nobody is going to look at your home in the spring if the DOM show it's been on the market for several months. Buyers gravitate toward fresh, new listings!
Here are 15 things you can do to improve the odds that your home will stand out among the sea of new listings flooding the spring-time real estate market:
1) Wash windows inside and out / polish all mirrors
Sparkle is free, and sparkle sells homes. A potential buyer may not realize why your home seems so inviting but will feel drawn to it if the windows are spotless and your mirrors reflect sunlight. Cleaning is the first step to preparing your home for sale.
2) Rake the yard / trim back bushes
Clean out dead leaves and debris in your lawn. Don't let overgrown vegetation block the windows or path to the entrance. Cutting bushes and tree limbs will let the sun inside and showcase the exterior of your home.
3) Mow diagonally and edge lawn along driveway / sidewalks
Artfully manicured lawns are edged and tell buyers you pay attention to small details. Diagonally mowed lawns make your yard appear larger.
4) Transplant tulips and daffodils or buy flowers in containers
Yellow flowers stimulate buying urges. After a long winter, everybody is anxious to see the first signs of spring. Yellow tulips and daffodils induce feelings of happiness and contentment. Arrange containers in groups of three or five near the entrance.
5) Clean drapes, curtains & blinds and open every window
Send your window coverings to the dry cleaners or wash, dry and press. Toss blinds into a soapy bathtub for a quick wash. Get rid of all accumulated dust and spider webs. Crisp linens and a spring-time breeze through the windows invites the season inside.
6) Set out fresh-smelling flowers such as just-clipped lilacs branches or peonies
Why not flatter your neighbors and ask if you can borrow flowers from their yards? Natural scents are more appealing than artificial and trigger fewer allergies among those susceptible. Peony vases are designed to hold peonies upright, but wash the flowers first to avoid carrying ants inside. Clever home staging brings color and fragrance indoors.
7) Polish floors to a high gloss
Your hardwood floors should be refinished, if necessary. Make your ceramic and linoleum floors twinkle and shine. Bleach dull grout. Thoroughly clean all area rugs.
8) Utilize towels, throws, pillows in light colors – yellows, pinks, pale blues, lavenders
Even if it means replacing items, towels, linens, throws and sofa pillows are inexpensive accents you can buy. In soft spring colors, they will light up a room. Layer towels on bathroom towel racks and place rolled wash cloths on the counters in a fashionable pyramid.
9) Offer an outside mat for cleaning shoes & put umbrella stand at entrance
No matter where you live, spring weather is often unpredictable. In some states, it can be 72 degrees one day and snowing the next. If it's raining, give buyers a place to stash umbrellas and wipe their feet before entering your home. Some sellers lay down plastic runners across floors for protection, but that tends to ruin the effect of a glittering polish job.
10) Buy brightly colored helium balloons
Stationery and party-supply stores sell helium balloons for about a dollar each. So, there's no reason not to pick up a couple dozen balloons to tie to your open house signs. Balloons build excitement and will get your home noticed by home shoppers.
11) Set out four-color flyers & financing options
Don't skimp on your marketing materials. You want home buyers to select your flyer among the dozens they pick up. Color sells better than black and white. Show home buyers how easily they can afford to buy your home by giving them two or three financing options. The first thing on buyer's minds when considering a home purchase is the monthly mortgage payment. Don't make them guess.
12) Use a color photo for display advertising
Spend a little more on newspaper and online advertising by including a color photograph in your ad. Remember: a picture is worth a 1,000 words. Look through your photo galleries for a seasonal photograph that flaunts your home to its best advantage.
13) Mail four-color postcards with UV coating
Call a local title company to obtain a free direct-mail list of your surrounding neighbors. Print four-color oversized postcards and include a UV coating to give the marketing oomph. Use first-class postage.
14) Fill sink with ice to chill bottled water for guests
Put a couple dozen bottles of water in a sink of ice for buyers. You can also tape labels to the bottles, printed from your computer, with your phone number, a photograph and address of your home.
15) Set out treats, individually wrapped in cellophane & tied w/ribbon
Touring homes makes buyers hungry. Give them a snack. It will give buyers an opportunity to linger in your kitchen and marvel at its elegant appointments, which might otherwise be overlooked.
Tip: If your home has been languishing on the market since the holidays, take it off the market. Give it a chance to "cool down" for a few weeks before putting it back on the market. Nobody is going to look at your home in the spring if the DOM show it's been on the market for several months. Buyers gravitate toward fresh, new listings!
Here are 15 things you can do to improve the odds that your home will stand out among the sea of new listings flooding the spring-time real estate market:
1) Wash windows inside and out / polish all mirrors
Sparkle is free, and sparkle sells homes. A potential buyer may not realize why your home seems so inviting but will feel drawn to it if the windows are spotless and your mirrors reflect sunlight. Cleaning is the first step to preparing your home for sale.
2) Rake the yard / trim back bushes
Clean out dead leaves and debris in your lawn. Don't let overgrown vegetation block the windows or path to the entrance. Cutting bushes and tree limbs will let the sun inside and showcase the exterior of your home.
3) Mow diagonally and edge lawn along driveway / sidewalks
Artfully manicured lawns are edged and tell buyers you pay attention to small details. Diagonally mowed lawns make your yard appear larger.
4) Transplant tulips and daffodils or buy flowers in containers
Yellow flowers stimulate buying urges. After a long winter, everybody is anxious to see the first signs of spring. Yellow tulips and daffodils induce feelings of happiness and contentment. Arrange containers in groups of three or five near the entrance.
5) Clean drapes, curtains & blinds and open every window
Send your window coverings to the dry cleaners or wash, dry and press. Toss blinds into a soapy bathtub for a quick wash. Get rid of all accumulated dust and spider webs. Crisp linens and a spring-time breeze through the windows invites the season inside.
6) Set out fresh-smelling flowers such as just-clipped lilacs branches or peonies
Why not flatter your neighbors and ask if you can borrow flowers from their yards? Natural scents are more appealing than artificial and trigger fewer allergies among those susceptible. Peony vases are designed to hold peonies upright, but wash the flowers first to avoid carrying ants inside. Clever home staging brings color and fragrance indoors.
7) Polish floors to a high gloss
Your hardwood floors should be refinished, if necessary. Make your ceramic and linoleum floors twinkle and shine. Bleach dull grout. Thoroughly clean all area rugs.
8) Utilize towels, throws, pillows in light colors – yellows, pinks, pale blues, lavenders
Even if it means replacing items, towels, linens, throws and sofa pillows are inexpensive accents you can buy. In soft spring colors, they will light up a room. Layer towels on bathroom towel racks and place rolled wash cloths on the counters in a fashionable pyramid.
9) Offer an outside mat for cleaning shoes & put umbrella stand at entrance
No matter where you live, spring weather is often unpredictable. In some states, it can be 72 degrees one day and snowing the next. If it's raining, give buyers a place to stash umbrellas and wipe their feet before entering your home. Some sellers lay down plastic runners across floors for protection, but that tends to ruin the effect of a glittering polish job.
10) Buy brightly colored helium balloons
Stationery and party-supply stores sell helium balloons for about a dollar each. So, there's no reason not to pick up a couple dozen balloons to tie to your open house signs. Balloons build excitement and will get your home noticed by home shoppers.
11) Set out four-color flyers & financing options
Don't skimp on your marketing materials. You want home buyers to select your flyer among the dozens they pick up. Color sells better than black and white. Show home buyers how easily they can afford to buy your home by giving them two or three financing options. The first thing on buyer's minds when considering a home purchase is the monthly mortgage payment. Don't make them guess.
12) Use a color photo for display advertising
Spend a little more on newspaper and online advertising by including a color photograph in your ad. Remember: a picture is worth a 1,000 words. Look through your photo galleries for a seasonal photograph that flaunts your home to its best advantage.
13) Mail four-color postcards with UV coating
Call a local title company to obtain a free direct-mail list of your surrounding neighbors. Print four-color oversized postcards and include a UV coating to give the marketing oomph. Use first-class postage.
14) Fill sink with ice to chill bottled water for guests
Put a couple dozen bottles of water in a sink of ice for buyers. You can also tape labels to the bottles, printed from your computer, with your phone number, a photograph and address of your home.
15) Set out treats, individually wrapped in cellophane & tied w/ribbon
Touring homes makes buyers hungry. Give them a snack. It will give buyers an opportunity to linger in your kitchen and marvel at its elegant appointments, which might otherwise be overlooked.
Tuesday, May 12, 2009
Prepping and staging a house. Every seller wants her home to sell fast and bring top dollar. Does that sound good to you? Well, it's not luck that makes that happen. It's careful planning and knowing how to professionally spruce up your home that will send home buyers scurrying for their checkbooks. Here is how to prep a house and turn it into an irresistible and marketable home.
1) Disassociate Yourself With Your Home.
Say to yourself, "This is not my home; it is a house -- a product to be sold much like a box of cereal on the grocery store shelf.
Make the mental decision to "let go" of your emotions and focus on the fact that soon this house will no longer be yours.
Picture yourself handing over the keys and envelopes containing appliance warranties to the new owners!
Say goodbye to every room.
Don't look backwards -- look toward the future.
2)De-Personalize.
Pack up those personal photographs and family heirlooms. Buyers can't see past personal artifacts, and you don't want them to be distracted. You want buyers to imagine their own photos on the walls, and they can't do that if yours are there! You don't want to make any buyer ask, "I wonder what kind of people live in this home?" You want buyers to say, "I can see myself living here."
3)De-Clutter!
People collect an amazing quantity of junk. Consider this: if you haven't used it in over a year, you probably don't need it.
If you don't need it, why not donate it or throw it away?
Remove all books from bookcases.
Pack up those knickknacks.
Clean off everything on kitchen counters.
Put essential items used daily in a small box that can be stored in a closet when not in use.
Think of this process as a head-start on the packing you will eventually need to do anyway.
4)Rearrange Bedroom Closets and Kitchen Cabinets.
Buyers love to snoop and will open closet and cabinet doors. Think of the message it sends if items fall out! Now imagine what a buyer believes about you if she sees everything organized. It says you probably take good care of the rest of the house as well. This means:
Alphabetize spice jars.
Neatly stack dishes.
Turn coffee cup handles facing the same way.
Hang shirts together, buttoned and facing the same direction.
Line up shoes.
5)Rent a Storage Unit.
Almost every home shows better with less furniture. Remove pieces of furniture that block or hamper paths and walkways and put them in storage. Since your bookcases are now empty, store them. Remove extra leaves from your dining room table to make the room appear larger. Leave just enough furniture in each room to showcase the room's purpose and plenty of room to move around. You don't want buyers scratching their heads and saying, "What is this room used for?"
6)Remove/Replace Favorite Items.
If you want to take window coverings, built-in appliances or fixtures with you, remove them now. If the chandelier in the dining room once belonged to your great grandmother, take it down. If a buyer never sees it, she won't want it. Once you tell a buyer she can't have an item, she will covet it, and it could blow your deal. Pack those items and replace them, if necessary.
7)Make Minor Repairs.
Replace cracked floor or counter tiles.
Patch holes in walls.
Fix leaky faucets.
Fix doors that don't close properly and kitchen drawers that jam.
Consider painting your walls neutral colors, especially if you have grown accustomed to purple or pink walls.
(Don't give buyers any reason to remember your home as "the house with the orange bathroom.")
Replace burned-out light bulbs.
If you've considered replacing a worn bedspread, do so now!
8)Make the House Sparkle!
Wash windows inside and out.
Rent a pressure washer and spray down sidewalks and exterior.
Clean out cobwebs.
Re-caulk tubs, showers and sinks.
Polish chrome faucets and mirrors.
Clean out the refrigerator.
Vacuum daily.
Wax floors.
Dust furniture, ceiling fan blades and light fixtures.
Bleach dingy grout.
Replace worn rugs.
Hang up fresh towels.
Bathroom towels look great fastened with ribbon and bows.
Clean and air out any musty smelling areas. Odors are a no-no.
9)Scrutinize.
Go outside and open your front door. Stand there. Do you want to go inside? Does the house welcome you?
Linger in the doorway of every single room and imagine how your house will look to a buyer.
Examine carefully how furniture is arranged and move pieces around until it makes sense.
Make sure window coverings hang level.
Tune in to the room's statement and its emotional pull. Does it have impact and pizzazz?
Does it look like nobody lives in this house? You're almost finished.
10)Check Curb Appeal.
If a buyer won't get out of her agent's car because she doesn't like the exterior of your home, you'll never get her inside.
Keep the sidewalks cleared.
Mow the lawn.
Paint faded window trim.
Plant yellow flowers or group flower pots together. Yellow evokes a buying emotion. Marigolds are inexpensive.
Trim your bushes.
Make sure visitors can clearly read your house number.
1) Disassociate Yourself With Your Home.
Say to yourself, "This is not my home; it is a house -- a product to be sold much like a box of cereal on the grocery store shelf.
Make the mental decision to "let go" of your emotions and focus on the fact that soon this house will no longer be yours.
Picture yourself handing over the keys and envelopes containing appliance warranties to the new owners!
Say goodbye to every room.
Don't look backwards -- look toward the future.
2)De-Personalize.
Pack up those personal photographs and family heirlooms. Buyers can't see past personal artifacts, and you don't want them to be distracted. You want buyers to imagine their own photos on the walls, and they can't do that if yours are there! You don't want to make any buyer ask, "I wonder what kind of people live in this home?" You want buyers to say, "I can see myself living here."
3)De-Clutter!
People collect an amazing quantity of junk. Consider this: if you haven't used it in over a year, you probably don't need it.
If you don't need it, why not donate it or throw it away?
Remove all books from bookcases.
Pack up those knickknacks.
Clean off everything on kitchen counters.
Put essential items used daily in a small box that can be stored in a closet when not in use.
Think of this process as a head-start on the packing you will eventually need to do anyway.
4)Rearrange Bedroom Closets and Kitchen Cabinets.
Buyers love to snoop and will open closet and cabinet doors. Think of the message it sends if items fall out! Now imagine what a buyer believes about you if she sees everything organized. It says you probably take good care of the rest of the house as well. This means:
Alphabetize spice jars.
Neatly stack dishes.
Turn coffee cup handles facing the same way.
Hang shirts together, buttoned and facing the same direction.
Line up shoes.
5)Rent a Storage Unit.
Almost every home shows better with less furniture. Remove pieces of furniture that block or hamper paths and walkways and put them in storage. Since your bookcases are now empty, store them. Remove extra leaves from your dining room table to make the room appear larger. Leave just enough furniture in each room to showcase the room's purpose and plenty of room to move around. You don't want buyers scratching their heads and saying, "What is this room used for?"
6)Remove/Replace Favorite Items.
If you want to take window coverings, built-in appliances or fixtures with you, remove them now. If the chandelier in the dining room once belonged to your great grandmother, take it down. If a buyer never sees it, she won't want it. Once you tell a buyer she can't have an item, she will covet it, and it could blow your deal. Pack those items and replace them, if necessary.
7)Make Minor Repairs.
Replace cracked floor or counter tiles.
Patch holes in walls.
Fix leaky faucets.
Fix doors that don't close properly and kitchen drawers that jam.
Consider painting your walls neutral colors, especially if you have grown accustomed to purple or pink walls.
(Don't give buyers any reason to remember your home as "the house with the orange bathroom.")
Replace burned-out light bulbs.
If you've considered replacing a worn bedspread, do so now!
8)Make the House Sparkle!
Wash windows inside and out.
Rent a pressure washer and spray down sidewalks and exterior.
Clean out cobwebs.
Re-caulk tubs, showers and sinks.
Polish chrome faucets and mirrors.
Clean out the refrigerator.
Vacuum daily.
Wax floors.
Dust furniture, ceiling fan blades and light fixtures.
Bleach dingy grout.
Replace worn rugs.
Hang up fresh towels.
Bathroom towels look great fastened with ribbon and bows.
Clean and air out any musty smelling areas. Odors are a no-no.
9)Scrutinize.
Go outside and open your front door. Stand there. Do you want to go inside? Does the house welcome you?
Linger in the doorway of every single room and imagine how your house will look to a buyer.
Examine carefully how furniture is arranged and move pieces around until it makes sense.
Make sure window coverings hang level.
Tune in to the room's statement and its emotional pull. Does it have impact and pizzazz?
Does it look like nobody lives in this house? You're almost finished.
10)Check Curb Appeal.
If a buyer won't get out of her agent's car because she doesn't like the exterior of your home, you'll never get her inside.
Keep the sidewalks cleared.
Mow the lawn.
Paint faded window trim.
Plant yellow flowers or group flower pots together. Yellow evokes a buying emotion. Marigolds are inexpensive.
Trim your bushes.
Make sure visitors can clearly read your house number.
Thursday, April 30, 2009
Agent of the Month-Eddie Kefalas
Congratulations to Eddie Kefalas on being the Agent of the Month for April 2009
Eddie Kefalas brought his Real Estate career back to the office that gave him his start 12 years ago, CENTURY 21 JRS Realty. We are very happy that was the course of action Eddies career path drove him in. Now after being with the company for about a year, Eddie has won the Agent of the month trophy for the first time. In April 2009 Eddie listed 3 homes in the area, and his career is rolling at this point. The transition from his other office was a tough one at first, but after the first few months he started right were he left off. Month after month Eddie registered multiple listings, and finally now Eddie has been recognized as Agent of the Month. CENTURY 21 JRS Realty is very pleased to have Eddie as a family member once again.
Saturday, April 18, 2009
Sellers Deserve the BEST Service
Help From Your Listing Agent
From A-Z, there are literally dozens of things that need to be considered, handled and resolved in the course of selling your home. Certainly that's why you've engaged a professional real estate agent as your partner.
From placing your home on the market to signing the final closing papers, here's how your listing agent can help:
Price and Prepare Your Home for sale
Market to Other Agents
Market to Potential Buyers
Negotiate, Handle Paperwork and Close the Deal
Prepare Your Home
A good agent will help you prepare your home for sale. From offering advice on how to spiff-up your living space to helping you decide on your asking price, here are a few things you can expect from a Century 21 JRS Realty agent. Contact us for more information.
Comparative Market Analysis (CMA). Your Century 21 JRS Realty listing agent can generate a report that compares your home to the other homes currently being sold in your area. It may also show other homes that have sold recently, or expired from the market before selling. This data will help you and your agent decide together on the most realistic asking (or list) price for your home.
Interior and exterior improvements. Your home should "smile a welcome" to prospective buyers. The exterior's curb appeal will get them in the door; the interior will seal the deal. Your agent will tour your home with you, offering objective advice about which improvements that should or could be made. Learn how to prepare your home for sale.
Market to Other Agents
A good agent also knows the value of spreading the word about your home to other agents. A Century 21 JRS Realty agent will widen your audience of potential buyers using these techniques.
Multiple Listing Service (MLS). The MLS lets real estate agents show and sell each other's listed properties as "cooperating brokers." It's an electronic database promoting large and small brokers' listings. The more agents who know your home is for sale, the faster it's likely to sell.
Brokers' Open. Your agent will host this tour (usually held on a weekday morning) and invite local agents to see your home; agents who will preview it for their buyers.
Hot List. Century 21 JRS Realty sales associates are able to quickly broadcast new listings within the real estate community, via computerized "hot sheets" that announce your home's arrival on the market. The faster agents and brokers know your home is for sale, the sooner their buyers will take a look.
Lockbox. Your agent will provide an electronic key or numeric combination to open a door-hanger, which holds your house key. Agents will be able to show prospective buyers your home, even when you're not there. If you're away from home a lot, or if you're house is off the beaten path, this is a great convenience.
Market to Potential Buyers
For every home, there's a buyer. Let your Century 21 JRS Realty agent connect you to "the one" with these tactics.
Yard Sign. Yard signs are an awareness-generating tool, notifying neighbors and drive-by buyers that your home is for sale.
Web Listing. The Internet is a popular choice for home "shoppers." Nationally, more than 80 percent of people in the market for a new home use it. It's especially valuable for people relocating to your area. Your Century 21 JRS Realty agent will provide you with real-time listings, online open houses and plenty of photos that showcase your home to Web surfers. Plus Century 21 JRS Realty guarantees that every one of our listed properties will be promoted on multiple Web sites.
Community Newspaper Ads. This most basic marketing tool is still important in many areas. Your agent will advertise your home in the real estate pages of your local newspaper (and tell you how often), with a brief description, asking price and contact information.
Home Book or Magazine. Free of charge and available just about everywhere that potential buyers shop, home books are another popular marketing tool among sellers (not to mention a very useful catalog when you're buying you're next home).
Showings. Your Century 21 JRS Realty sales associate will set up showings to accommodate the schedules of qualified buyers and their agents – without inconveniencing you and your family.
Open Houses. Your potential buyer may still be around the corner, but open houses can bring them to your door. Ask your Century 21 JRS Realty agent if s/he will hold them and if you should be away from the house when they occur. Consider a weekday open house – they're not just for Sundays anymore! And don't forget to ask your agent to market your open house online!
Direct Mail. Promotional postcards and other written materials about your home can be sent to targeted market areas and the potential home buyers who live there.
Home Warranty. Century 21 JRS Realty offers a home warranty program: a one-year plan that assures prospective buyers that your home's systems (electrical, heating/air conditioning, plumbing, appliances, etc.) will be functional during that time. Such a warranty will protect you and reassure your buyer that your home is of solid value and in good condition.
Close the Deal
It may seem ceremonial, but closing the deal is often the hardest part of a real estate transaction. Your Century 21 JRS Realty agent will start working for you even before the final sale.
Qualification/Pre-Screening. Prospective buyers visiting your home should be financially able to purchase it. Your listing agent can work with the buyer's agent to assure that the people who see your home can afford what you're asking. You may wish to require pre-qualification (or more complete pre-approval) by a qualified lender.
Inspections. City code, general home, and pest and radon inspections. Your Century 21 JRS Realty listing agent can represent you (and your interests) during these appointments so you don't lose time from work or school.
Evaluating and Negotiating the Offer. It takes a certain finesse to navigate the ins and outs of a buyer's offer. Is the offer acceptable? What closing date works for you? Are you willing to repair the roof in exchange for your full asking price? Helping in shaping your decisions is why you'll want a trusted, objective professional like a Century 21 JRS Realty sales associate as your partner.
Contract Acceptance. Buying a home is one of the biggest decisions of your life. Rely on the guidance and objectivity of a trusted professional. Your Century 21 JRS Realty listing agent can make sure that details are remembered and your interests protected.
Legal and Other Documents. A real estate transaction can involve listing and purchase agreements, multiple disclosure statements, addenda, amendments and contingencies. Do you work with real estate-related legal documents every day? Your Century 21 JRS Realty listing agent does. Rely on his/her familiarity with the language, timelines and requirements that lie within these legal documents.
Dispute Resolution. Even the smoothest, simplest real estate transaction involves two parties, with needs and objectives that may differ. The right real estate agent can provide skilled negotiation and mediation and conflict resolution. Let your agent deal with the sticking points that can sometimes offend a seller.
Facilitate Closing. The old adage, "the devil is in the details," is no less true at closing. Once you've accepted an offer on your home, your Century 21 JRS Realty agent will work quietly and efficiently to keep things moving smoothly and according to plan. Broker, lender or title examiner. Everyone needs paperwork, signatures, verifications and certifications. From opening escrow to title transfer, it's another area where the right agent can make the difference.
Transfers. The number one irritant of home buyers is running into unanticipated difficulties in gaining possession of their new (your former) home. Your Century 21 JRS Realty listing agent will make help the transition go smoothly by handling everything from finalizing the transfer of utilities to handing over the house keys and ownership to the new owners.
Pre-sale Repairs and Upgrades. Got a leaky roof that requires a certification? Or perhaps you've agreed to remove an unsightly tree stump. Your Century 21 JRS Realty agent can create a tickler system that will remind you to fulfill your obligation in a timely fashion to prevent breach of contract.
Title Services. Creditors' claims, undisclosed heirs and mistakes in public records. These are issues that could stall your closing. Century 21 JRS Realty offers title service as part of our "one-stop shopping" service.
Contingency Resolution. Contractual contingencies are terms that must be met before an agreement is binding. The written contingency, therefore, must also be removed in writing, by a specified date, before the contract can be fully in effect. Whether it's financing, inspection or any other item your agreement is subject to, your Century 21 JRS Realty listing agent can assist you in understanding and fulfilling these contractual conditions.
From A-Z, there are literally dozens of things that need to be considered, handled and resolved in the course of selling your home. Certainly that's why you've engaged a professional real estate agent as your partner.
From placing your home on the market to signing the final closing papers, here's how your listing agent can help:
Price and Prepare Your Home for sale
Market to Other Agents
Market to Potential Buyers
Negotiate, Handle Paperwork and Close the Deal
Prepare Your Home
A good agent will help you prepare your home for sale. From offering advice on how to spiff-up your living space to helping you decide on your asking price, here are a few things you can expect from a Century 21 JRS Realty agent. Contact us for more information.
Comparative Market Analysis (CMA). Your Century 21 JRS Realty listing agent can generate a report that compares your home to the other homes currently being sold in your area. It may also show other homes that have sold recently, or expired from the market before selling. This data will help you and your agent decide together on the most realistic asking (or list) price for your home.
Interior and exterior improvements. Your home should "smile a welcome" to prospective buyers. The exterior's curb appeal will get them in the door; the interior will seal the deal. Your agent will tour your home with you, offering objective advice about which improvements that should or could be made. Learn how to prepare your home for sale.
Market to Other Agents
A good agent also knows the value of spreading the word about your home to other agents. A Century 21 JRS Realty agent will widen your audience of potential buyers using these techniques.
Multiple Listing Service (MLS). The MLS lets real estate agents show and sell each other's listed properties as "cooperating brokers." It's an electronic database promoting large and small brokers' listings. The more agents who know your home is for sale, the faster it's likely to sell.
Brokers' Open. Your agent will host this tour (usually held on a weekday morning) and invite local agents to see your home; agents who will preview it for their buyers.
Hot List. Century 21 JRS Realty sales associates are able to quickly broadcast new listings within the real estate community, via computerized "hot sheets" that announce your home's arrival on the market. The faster agents and brokers know your home is for sale, the sooner their buyers will take a look.
Lockbox. Your agent will provide an electronic key or numeric combination to open a door-hanger, which holds your house key. Agents will be able to show prospective buyers your home, even when you're not there. If you're away from home a lot, or if you're house is off the beaten path, this is a great convenience.
Market to Potential Buyers
For every home, there's a buyer. Let your Century 21 JRS Realty agent connect you to "the one" with these tactics.
Yard Sign. Yard signs are an awareness-generating tool, notifying neighbors and drive-by buyers that your home is for sale.
Web Listing. The Internet is a popular choice for home "shoppers." Nationally, more than 80 percent of people in the market for a new home use it. It's especially valuable for people relocating to your area. Your Century 21 JRS Realty agent will provide you with real-time listings, online open houses and plenty of photos that showcase your home to Web surfers. Plus Century 21 JRS Realty guarantees that every one of our listed properties will be promoted on multiple Web sites.
Community Newspaper Ads. This most basic marketing tool is still important in many areas. Your agent will advertise your home in the real estate pages of your local newspaper (and tell you how often), with a brief description, asking price and contact information.
Home Book or Magazine. Free of charge and available just about everywhere that potential buyers shop, home books are another popular marketing tool among sellers (not to mention a very useful catalog when you're buying you're next home).
Showings. Your Century 21 JRS Realty sales associate will set up showings to accommodate the schedules of qualified buyers and their agents – without inconveniencing you and your family.
Open Houses. Your potential buyer may still be around the corner, but open houses can bring them to your door. Ask your Century 21 JRS Realty agent if s/he will hold them and if you should be away from the house when they occur. Consider a weekday open house – they're not just for Sundays anymore! And don't forget to ask your agent to market your open house online!
Direct Mail. Promotional postcards and other written materials about your home can be sent to targeted market areas and the potential home buyers who live there.
Home Warranty. Century 21 JRS Realty offers a home warranty program: a one-year plan that assures prospective buyers that your home's systems (electrical, heating/air conditioning, plumbing, appliances, etc.) will be functional during that time. Such a warranty will protect you and reassure your buyer that your home is of solid value and in good condition.
Close the Deal
It may seem ceremonial, but closing the deal is often the hardest part of a real estate transaction. Your Century 21 JRS Realty agent will start working for you even before the final sale.
Qualification/Pre-Screening. Prospective buyers visiting your home should be financially able to purchase it. Your listing agent can work with the buyer's agent to assure that the people who see your home can afford what you're asking. You may wish to require pre-qualification (or more complete pre-approval) by a qualified lender.
Inspections. City code, general home, and pest and radon inspections. Your Century 21 JRS Realty listing agent can represent you (and your interests) during these appointments so you don't lose time from work or school.
Evaluating and Negotiating the Offer. It takes a certain finesse to navigate the ins and outs of a buyer's offer. Is the offer acceptable? What closing date works for you? Are you willing to repair the roof in exchange for your full asking price? Helping in shaping your decisions is why you'll want a trusted, objective professional like a Century 21 JRS Realty sales associate as your partner.
Contract Acceptance. Buying a home is one of the biggest decisions of your life. Rely on the guidance and objectivity of a trusted professional. Your Century 21 JRS Realty listing agent can make sure that details are remembered and your interests protected.
Legal and Other Documents. A real estate transaction can involve listing and purchase agreements, multiple disclosure statements, addenda, amendments and contingencies. Do you work with real estate-related legal documents every day? Your Century 21 JRS Realty listing agent does. Rely on his/her familiarity with the language, timelines and requirements that lie within these legal documents.
Dispute Resolution. Even the smoothest, simplest real estate transaction involves two parties, with needs and objectives that may differ. The right real estate agent can provide skilled negotiation and mediation and conflict resolution. Let your agent deal with the sticking points that can sometimes offend a seller.
Facilitate Closing. The old adage, "the devil is in the details," is no less true at closing. Once you've accepted an offer on your home, your Century 21 JRS Realty agent will work quietly and efficiently to keep things moving smoothly and according to plan. Broker, lender or title examiner. Everyone needs paperwork, signatures, verifications and certifications. From opening escrow to title transfer, it's another area where the right agent can make the difference.
Transfers. The number one irritant of home buyers is running into unanticipated difficulties in gaining possession of their new (your former) home. Your Century 21 JRS Realty listing agent will make help the transition go smoothly by handling everything from finalizing the transfer of utilities to handing over the house keys and ownership to the new owners.
Pre-sale Repairs and Upgrades. Got a leaky roof that requires a certification? Or perhaps you've agreed to remove an unsightly tree stump. Your Century 21 JRS Realty agent can create a tickler system that will remind you to fulfill your obligation in a timely fashion to prevent breach of contract.
Title Services. Creditors' claims, undisclosed heirs and mistakes in public records. These are issues that could stall your closing. Century 21 JRS Realty offers title service as part of our "one-stop shopping" service.
Contingency Resolution. Contractual contingencies are terms that must be met before an agreement is binding. The written contingency, therefore, must also be removed in writing, by a specified date, before the contract can be fully in effect. Whether it's financing, inspection or any other item your agreement is subject to, your Century 21 JRS Realty listing agent can assist you in understanding and fulfilling these contractual conditions.
Tuesday, April 7, 2009
Web Tools To Make Life Easier
10 Free Web Tools to Make Life Easier
These range of Web tools can be good resources for you in your real estate business.
1. Mint.comThis secure financial management tool pulls data from your checking accounts, savings accounts, credit cards, mortgages, and other loans to help you track expenses.
2. Zenbe.com Have multiple e-mail addresses? View all your mail in one inbox, and check in with Facebook and Twitter from the same screen.
3. GetDropBox.com Back up your important documents and e-mail messages. This tool syncs with your computer to save documents and allows you to access them via the Web from any computer.
4. Everyscape.comThis alternative to Google Earth lets you view three-dimensional images of streets and cities at eye level.
5. Inhabitat.com For home owners who want to go green, this eco-friendly design blog provides tips and inspiration.
6. Yelp.com If buyers are new to the area, send them here. Neighbors review local restaurants, spas, doctors, plumbers, and more.
7. Billshrink.comDiscover hidden fees in your credit card accounts and cell phone bills, and get recommedantions for lower-cost alternatives.
8. GasBuddy.com Do some comparison shopping before you fill up. Get a listing of what the gas stations in your area are charging per gallon.
9. FotoFlexer.comTouch up your photographs, create effects, and adjust lighting to create high-quality images worthy for marketing materials.
10. DesignSpongeOnline.com Do-it-yourselfers on a budget will love the easy home decorating projects and gift ideas.
These range of Web tools can be good resources for you in your real estate business.
1. Mint.comThis secure financial management tool pulls data from your checking accounts, savings accounts, credit cards, mortgages, and other loans to help you track expenses.
2. Zenbe.com Have multiple e-mail addresses? View all your mail in one inbox, and check in with Facebook and Twitter from the same screen.
3. GetDropBox.com Back up your important documents and e-mail messages. This tool syncs with your computer to save documents and allows you to access them via the Web from any computer.
4. Everyscape.comThis alternative to Google Earth lets you view three-dimensional images of streets and cities at eye level.
5. Inhabitat.com For home owners who want to go green, this eco-friendly design blog provides tips and inspiration.
6. Yelp.com If buyers are new to the area, send them here. Neighbors review local restaurants, spas, doctors, plumbers, and more.
7. Billshrink.comDiscover hidden fees in your credit card accounts and cell phone bills, and get recommedantions for lower-cost alternatives.
8. GasBuddy.com Do some comparison shopping before you fill up. Get a listing of what the gas stations in your area are charging per gallon.
9. FotoFlexer.comTouch up your photographs, create effects, and adjust lighting to create high-quality images worthy for marketing materials.
10. DesignSpongeOnline.com Do-it-yourselfers on a budget will love the easy home decorating projects and gift ideas.
Saturday, April 4, 2009
Rahway Street Fair
Hot Rods & Harley Day here again
Wow, the years go by so fast. I can't believe that another year has come and gone, and we are getting ready for another Hot Rods & Harley Day festival in down town Rahway. Every year at this even CENTURY 21 JRS Realty gives away thousands of dollars worth of promotional items to the public. We do this not to get business from it, but to be one of the few Real Estate companies that gives back to the public. Most people don't even appreciate what we do, let alone use our company because we gave away a Todo pad. We know these events will not bring us business. No, we do them because it is our way of saying thank you to the community with balloons and televisions. Every year we give away some large and small things for the adults and the children in the area. This year we will give away 5 bicycles to 5 different lucky winners. CENTURY 21 JRS Realty will give away 1 bike an hour starting at 1PM and ending at 5pm. We will also have face painting from 2:30pm to 5pm, as well as agents with Todo pads for all the adults. We hope to make this years event as successful as years past.
Wow, the years go by so fast. I can't believe that another year has come and gone, and we are getting ready for another Hot Rods & Harley Day festival in down town Rahway. Every year at this even CENTURY 21 JRS Realty gives away thousands of dollars worth of promotional items to the public. We do this not to get business from it, but to be one of the few Real Estate companies that gives back to the public. Most people don't even appreciate what we do, let alone use our company because we gave away a Todo pad. We know these events will not bring us business. No, we do them because it is our way of saying thank you to the community with balloons and televisions. Every year we give away some large and small things for the adults and the children in the area. This year we will give away 5 bicycles to 5 different lucky winners. CENTURY 21 JRS Realty will give away 1 bike an hour starting at 1PM and ending at 5pm. We will also have face painting from 2:30pm to 5pm, as well as agents with Todo pads for all the adults. We hope to make this years event as successful as years past.
Thursday, April 2, 2009
Agent of the Month
Congratulations to Joe Piizzi-AGENT OF THE MONTH
I am happy to report that Joe Piizzi is the agent of the month of March 2009. Joe is by far the hardest working Realtor I have known in my 13+ years in the business. In a time of crisis like we are in right now, a hard working agent can breath life into an office by himself, that is what Joe is doing. Joe has put the office on his back and carrying them to the finish line. Joe makes hundreds of calls everyday to past and present clients, strangers, and anyone that will listen. Joe knows that is the name of the game. Nothing worth having ever comes easy, and this Real Estate market is no different. Joe is a model of the perfect Realtor and we feel fortunate to have him as a member of our company. Congrats to Joe on his accomplishment.
Friday, March 27, 2009
Watch Your Words
The words that you think and speak have a direct connection to your sales skills and subsequent sales results. This revelation has been revealed through many sources, consider using these words as a sales professional in your ongoing efforts to expand your business network and increase sales.
#1: Potential Qualified Customers - Replace the word prospects with this phrase. When you use the word prospects, you have turn those individuals into objects instead of realizing their worth as individuals. Read the book Leadership and Self Deception to learn more.
#2: Qualifying - Is not the desired result of marketing is to qualify your potential buyers? So, exchange the word prospecting for qualifying. Again, this helps you as the sales professional to see the person across the table or the room as an individual as not as a hunk of rock with some veins of gold.
#3: Agree - This word has 100 times more emotional marketing value than the word Yes. The only person who wants to truly hear the word Yes, is you as the sales professional. Agree implies a contract has been established between you and your potential qualified customers.
#4: Earn - Take the word close out of your vocabulary. To close means to shut off. Way in heaven's sake would your salespeople want to shut off their potential qualified customers.
#5: Statement of Work - Unless you are involved in an open bid process such as one issued by governmental, educational or not for profits, consider using this phrase instead of proposal. The word proposal is what all those other salespeople use and places you in the Sea of Sameness. However, Statement of Work implies that you will be doing business with this qualified potential customer. Also, this sets a psychological tone in your mind and possibly one in the mind of your potential buyer.
#6: Educating - The traditional sales based approach simply is not as effective in the 21st information heavy society where benefits can be easily found with the click of the mouse. By employing education based marketing (EBA), your actions demonstrate the value that your solutions bring to the table.
#7: Ask - Even though this word is a verb, to be able to ask is a powerful word that does increase sales. Ask for referrals from existing loyal customers to centers of influence. Ask to speak at local civic to not for profit organizations. Ask how you can help a new contact even if the person is not a qualified potential customer.
#1: Potential Qualified Customers - Replace the word prospects with this phrase. When you use the word prospects, you have turn those individuals into objects instead of realizing their worth as individuals. Read the book Leadership and Self Deception to learn more.
#2: Qualifying - Is not the desired result of marketing is to qualify your potential buyers? So, exchange the word prospecting for qualifying. Again, this helps you as the sales professional to see the person across the table or the room as an individual as not as a hunk of rock with some veins of gold.
#3: Agree - This word has 100 times more emotional marketing value than the word Yes. The only person who wants to truly hear the word Yes, is you as the sales professional. Agree implies a contract has been established between you and your potential qualified customers.
#4: Earn - Take the word close out of your vocabulary. To close means to shut off. Way in heaven's sake would your salespeople want to shut off their potential qualified customers.
#5: Statement of Work - Unless you are involved in an open bid process such as one issued by governmental, educational or not for profits, consider using this phrase instead of proposal. The word proposal is what all those other salespeople use and places you in the Sea of Sameness. However, Statement of Work implies that you will be doing business with this qualified potential customer. Also, this sets a psychological tone in your mind and possibly one in the mind of your potential buyer.
#6: Educating - The traditional sales based approach simply is not as effective in the 21st information heavy society where benefits can be easily found with the click of the mouse. By employing education based marketing (EBA), your actions demonstrate the value that your solutions bring to the table.
#7: Ask - Even though this word is a verb, to be able to ask is a powerful word that does increase sales. Ask for referrals from existing loyal customers to centers of influence. Ask to speak at local civic to not for profit organizations. Ask how you can help a new contact even if the person is not a qualified potential customer.
Monday, March 23, 2009
Goal Setting Results
Getting Results from Goal Setting
You've established your goals for the year. Now how do you make them happen? Start with a plan of action and follow it through - all the way to celebrating your success!
Start with the end in mind.
Develop a clear picture of what you want to accomplish. State the end results in one sentence that even a child can imagine, understand and remember. Consider the power of President Kennedy’s goal "to send a man to the moon and bring him safely back home within this decade." Thousands of people did very detailed work and spent billions of dollars based on this simply stated goal.
Develop a written plan.
Get it on paper (or in the computer). Make the plan as specific as possible, in terms of what will be done and by when. A timeline will help you keep on track as far as providing a written outline of your accomplishments to date and what remains to be done.
Enlist support of others.
Let them know what you are doing, and how they and others will benefit from the results you want to produce. Invite them to lend their support however they can.
Set up milestones and reporting systems.
Break the job down into segments, and set target dates for completing each segment. Develop a reporting system on paper or via a good software program. Communicate often with all those who have a need to know to avoid unwanted surprises.
Have a support system.
Set up the supports you need in your work and in your personal life. Have one or more advisers that you meet with regularly to report progress, and get advice and encouragement. Your personal coach can be one of these key people.
Monitor progress and make adjustments.
Realize that even the best plans need to be adjusted in the heat of the battle. Make adjustments quickly and respond to new opportunities or short cuts along the way that help you reach your destination faster. If you find it difficult to get around or through certain roadblocks, get help and advice promptly.
Form mutually beneficial alliances with others.
Find out what other people or groups are natural allies and team up with them so you can help each other reach your objectives more easily and effectively.
Work your plan regularly and continuously.
Maintain a high focused activity level yourself, and get help when you need it. Don’t try to do everything yourself. Delegate as much as you can, and follow up with those to whom you delegate work.
Keep your allies on your side and your enemies at bay.
Inform your allies about progress you are making and problems you are having. Thank them for their help. Protect yourself from important enemies by setting up and maintaining boundaries between yourself and your enemies. Recognize that enemies can be within you as well as about you. When you find that you are doing things that impede your own progress, replace that activity or habit with a better one. Ask your advisers what you personally can do better. Then put the corrections in place.
Celebrate progress along the way and at the completion of your work.
Share the glory. Recognize and thank the people who have helped you produce results.
You've established your goals for the year. Now how do you make them happen? Start with a plan of action and follow it through - all the way to celebrating your success!
Start with the end in mind.
Develop a clear picture of what you want to accomplish. State the end results in one sentence that even a child can imagine, understand and remember. Consider the power of President Kennedy’s goal "to send a man to the moon and bring him safely back home within this decade." Thousands of people did very detailed work and spent billions of dollars based on this simply stated goal.
Develop a written plan.
Get it on paper (or in the computer). Make the plan as specific as possible, in terms of what will be done and by when. A timeline will help you keep on track as far as providing a written outline of your accomplishments to date and what remains to be done.
Enlist support of others.
Let them know what you are doing, and how they and others will benefit from the results you want to produce. Invite them to lend their support however they can.
Set up milestones and reporting systems.
Break the job down into segments, and set target dates for completing each segment. Develop a reporting system on paper or via a good software program. Communicate often with all those who have a need to know to avoid unwanted surprises.
Have a support system.
Set up the supports you need in your work and in your personal life. Have one or more advisers that you meet with regularly to report progress, and get advice and encouragement. Your personal coach can be one of these key people.
Monitor progress and make adjustments.
Realize that even the best plans need to be adjusted in the heat of the battle. Make adjustments quickly and respond to new opportunities or short cuts along the way that help you reach your destination faster. If you find it difficult to get around or through certain roadblocks, get help and advice promptly.
Form mutually beneficial alliances with others.
Find out what other people or groups are natural allies and team up with them so you can help each other reach your objectives more easily and effectively.
Work your plan regularly and continuously.
Maintain a high focused activity level yourself, and get help when you need it. Don’t try to do everything yourself. Delegate as much as you can, and follow up with those to whom you delegate work.
Keep your allies on your side and your enemies at bay.
Inform your allies about progress you are making and problems you are having. Thank them for their help. Protect yourself from important enemies by setting up and maintaining boundaries between yourself and your enemies. Recognize that enemies can be within you as well as about you. When you find that you are doing things that impede your own progress, replace that activity or habit with a better one. Ask your advisers what you personally can do better. Then put the corrections in place.
Celebrate progress along the way and at the completion of your work.
Share the glory. Recognize and thank the people who have helped you produce results.
What makes Goal Setting Successful
Seven Principles to Successful Real Estate Goal Setting
Your ability to plan, set goals, and create action plans to accomplish your goals is the mark of someone who is truly successful. This skill to set goals is a life-long endeavor. It is a habit that must be cultivated daily for a lifetime. This single activity will have the greatest impact on your life over any other achievement skill.
To be disciplined in setting goals is to sit down with paper and pen and make a list of things you want to acquire, attract or accomplish in the next several years. Earl Nightingale said, "The problem with people is not achieving the goals we set, it is actually the process of setting them in the first place." We are all goal seeking organisms. Your subconscious mind will work on the goal you give it until it is accomplished. You must only set this vast powerful computer in motion by setting the goal.
To achieve a well rounded, joyous life we need to be working toward our goals. When it comes to goals the journey is almost better than the destination. Success was defined by Nightingale as the progressive realization of a worthy goal. You become successful once you set the goal and work towards it. Success is not found only at the attainment level, but also in the striving toward attainment.
You need goals in all areas of your life. It is not good enough to set your sights on your business or commission earnings, transaction sides. You need goals in family, spiritual, physical, financial, and mental areas of your life. This is the only way to achieve balance.
Organize your goals in all areas based on priority. Put the most important ones on the top.
Our overall goal for our life should be to be a continuous goal setter. We need to become so focused and clear on what we desire that every hour and every day we are doing the things that are moving us in our direction of choice and toward our goals.
Studies have shown that you will save ten minutes in execution for every minute that you invest in planning or goal setting. What an incredible return on your investment of time. How often would you invest in an investment that you put in a dollar and got ten dollars back?
Seven Keys of Goal Setting
Your goals must be specific, detailed, and clear. You must invest the time to put them in written form. There is a direct link between your writing the goal, seeing it being written, and burning it into your subconscious mind. The goals you desire must be specific, not vague. To set a goal to be rich or be happy will not draw you to it. Well-written goals are like magnets they will you to your desired result. Your goal must be concrete and tangible. Highly defined goals are attained fuzzy goals are forgotten.
The goals you set you must be measurable. How can one truly measure happiness? You have to be able to analyze and evaluate your progress and your results in a tangible way. Many people have a goal of being rich. You need to know specifically how much money rich is. Your need to know the specific time period you want to achieve it by. Now that's a goal.
The best goals have deadlines. They have a time by which you need to accomplish them by. They also have interim steps along the way that can be monitored. These sub-deadlines or schedules are critical to success. There are no unrealistic goals; there are merely unrealistic time frames.
Goals need to challenge you to capacity or beyond. They will stretch you and mold you into a new person. Jim Rohn wisely said, "It's not the money that makes the millionaire successful; it's what he had to become (as a person) to earn a million dollars." If you took the money away from that millionaire that millionaire, would make it back twice as fast as before, because he learned the skill to make it in the first place.
Your goals need to possess congruency with your values and beliefs. You goals also have to be harmonious with each other. Let me give you an example, I want to lose 40 pounds, but I also want to eat Dreyer's Rocky Road ice cream every night before I go to bed. One of these goals will need to give way to the other. They are not congruent with each other. There is no way I can achieve both at the same time. You can not achieve goals that are actually contradictory.
Your goals must have balance. Just as a wheel needs balance to rotate properly; we need balance to get anywhere in life. Make sure you are balanced between your personal life, family, financial, spiritual, physical, mental, and business goals.
The largest most difficult goal in life is to define your purpose goal. We all have one goal that is at the core of our being. Our life moves to greatness when we decide upon a definite purpose or focus for our life.
I can speak from personal experience. When I determined my "core purpose" was to make meaningful impact in people's lives for all the people I come in contact with, my perspective changed dramatically. My enjoyment of my day to day "work life" increased.
Your ability to plan, set goals, and create action plans to accomplish your goals is the mark of someone who is truly successful. This skill to set goals is a life-long endeavor. It is a habit that must be cultivated daily for a lifetime. This single activity will have the greatest impact on your life over any other achievement skill.
To be disciplined in setting goals is to sit down with paper and pen and make a list of things you want to acquire, attract or accomplish in the next several years. Earl Nightingale said, "The problem with people is not achieving the goals we set, it is actually the process of setting them in the first place." We are all goal seeking organisms. Your subconscious mind will work on the goal you give it until it is accomplished. You must only set this vast powerful computer in motion by setting the goal.
To achieve a well rounded, joyous life we need to be working toward our goals. When it comes to goals the journey is almost better than the destination. Success was defined by Nightingale as the progressive realization of a worthy goal. You become successful once you set the goal and work towards it. Success is not found only at the attainment level, but also in the striving toward attainment.
You need goals in all areas of your life. It is not good enough to set your sights on your business or commission earnings, transaction sides. You need goals in family, spiritual, physical, financial, and mental areas of your life. This is the only way to achieve balance.
Organize your goals in all areas based on priority. Put the most important ones on the top.
Our overall goal for our life should be to be a continuous goal setter. We need to become so focused and clear on what we desire that every hour and every day we are doing the things that are moving us in our direction of choice and toward our goals.
Studies have shown that you will save ten minutes in execution for every minute that you invest in planning or goal setting. What an incredible return on your investment of time. How often would you invest in an investment that you put in a dollar and got ten dollars back?
Seven Keys of Goal Setting
Your goals must be specific, detailed, and clear. You must invest the time to put them in written form. There is a direct link between your writing the goal, seeing it being written, and burning it into your subconscious mind. The goals you desire must be specific, not vague. To set a goal to be rich or be happy will not draw you to it. Well-written goals are like magnets they will you to your desired result. Your goal must be concrete and tangible. Highly defined goals are attained fuzzy goals are forgotten.
The goals you set you must be measurable. How can one truly measure happiness? You have to be able to analyze and evaluate your progress and your results in a tangible way. Many people have a goal of being rich. You need to know specifically how much money rich is. Your need to know the specific time period you want to achieve it by. Now that's a goal.
The best goals have deadlines. They have a time by which you need to accomplish them by. They also have interim steps along the way that can be monitored. These sub-deadlines or schedules are critical to success. There are no unrealistic goals; there are merely unrealistic time frames.
Goals need to challenge you to capacity or beyond. They will stretch you and mold you into a new person. Jim Rohn wisely said, "It's not the money that makes the millionaire successful; it's what he had to become (as a person) to earn a million dollars." If you took the money away from that millionaire that millionaire, would make it back twice as fast as before, because he learned the skill to make it in the first place.
Your goals need to possess congruency with your values and beliefs. You goals also have to be harmonious with each other. Let me give you an example, I want to lose 40 pounds, but I also want to eat Dreyer's Rocky Road ice cream every night before I go to bed. One of these goals will need to give way to the other. They are not congruent with each other. There is no way I can achieve both at the same time. You can not achieve goals that are actually contradictory.
Your goals must have balance. Just as a wheel needs balance to rotate properly; we need balance to get anywhere in life. Make sure you are balanced between your personal life, family, financial, spiritual, physical, mental, and business goals.
The largest most difficult goal in life is to define your purpose goal. We all have one goal that is at the core of our being. Our life moves to greatness when we decide upon a definite purpose or focus for our life.
I can speak from personal experience. When I determined my "core purpose" was to make meaningful impact in people's lives for all the people I come in contact with, my perspective changed dramatically. My enjoyment of my day to day "work life" increased.
Saturday, March 21, 2009
Capital Gains Tax
Capital Gains and You
Congratulations! You now have a "sold" sign in your front yard. The sale of your home is complete and, hopefully, you netted a profit. If you did, be aware that you may be subject to capital gains tax. That simply means that you sold your home (a capital asset) and made a profit (gain), which could be subject to taxes.
The Taxpayer Relief Act of 1997 changed the tax laws concerning capital gains on primary residences. In years past, when you sold your home you could delay paying tax on your profit if you purchased another home within two years of selling. (There were also restrictions on the price of the home you had to buy.)
Today, you don't have to purchase another home to receive capital gains tax relief and you only pay taxes on any gains over $250,000 ($500,000, if filing jointly).
Here's how the IRS recommends figuring the gain (or loss) on the sale of your primary home:
1. Subtract your expenses from the selling price to obtain the realized amount.
Expenses typically include:
o Commissions,
o Advertising fees,
o Legal fees, and
o Loan charges, such as points.
2. Subtract the adjusted basis you made to the basis of your home from the realized amount to get the gain (or loss). (The basis is the amount you paid if you bought it or built it.)
According to the Internal Revenue Service (IRS), you do not have to report the sale of your home on your tax return unless:
You have a gain and you do not qualify to exclude all of it, or
You have a gain and choose not to exclude it.
Otherwise, you must report the gain on Form 1040, Schedule D.
As with any tax information, your personal situation (including such things as divorce) can have major tax implications. And since IRS tax rules change often, you'll want to be sure to consult with a qualified tax specialist.
Disclaimer: These are general guidelines and provided for information only. Other IRS rules may apply. Consult with your accountant, CPA or tax attorney for professional advice.
For more information on this topic or any other Real Estate matters feel free to e-mail JR at c21jrs72@aol.com
Congratulations! You now have a "sold" sign in your front yard. The sale of your home is complete and, hopefully, you netted a profit. If you did, be aware that you may be subject to capital gains tax. That simply means that you sold your home (a capital asset) and made a profit (gain), which could be subject to taxes.
The Taxpayer Relief Act of 1997 changed the tax laws concerning capital gains on primary residences. In years past, when you sold your home you could delay paying tax on your profit if you purchased another home within two years of selling. (There were also restrictions on the price of the home you had to buy.)
Today, you don't have to purchase another home to receive capital gains tax relief and you only pay taxes on any gains over $250,000 ($500,000, if filing jointly).
Here's how the IRS recommends figuring the gain (or loss) on the sale of your primary home:
1. Subtract your expenses from the selling price to obtain the realized amount.
Expenses typically include:
o Commissions,
o Advertising fees,
o Legal fees, and
o Loan charges, such as points.
2. Subtract the adjusted basis you made to the basis of your home from the realized amount to get the gain (or loss). (The basis is the amount you paid if you bought it or built it.)
According to the Internal Revenue Service (IRS), you do not have to report the sale of your home on your tax return unless:
You have a gain and you do not qualify to exclude all of it, or
You have a gain and choose not to exclude it.
Otherwise, you must report the gain on Form 1040, Schedule D.
As with any tax information, your personal situation (including such things as divorce) can have major tax implications. And since IRS tax rules change often, you'll want to be sure to consult with a qualified tax specialist.
Disclaimer: These are general guidelines and provided for information only. Other IRS rules may apply. Consult with your accountant, CPA or tax attorney for professional advice.
For more information on this topic or any other Real Estate matters feel free to e-mail JR at c21jrs72@aol.com
Monday, March 16, 2009
For Buyers
Loan Process
Loan Application
If you're like most people, you'll probably need to secure a mortgage loan for your new house. Application for a home loan can take as little as one week and up to a month, depending on the type of mortgage.
Your lender or mortgage broker will be able to give you a better idea of the actual time it will take from application to approval. However, in general, conventional loans are processed more quickly than FHA or VA home loans.
Read more about types of mortgage loans.
The following is a step-by-step outline of what to expect during the loan application process:
1. Application
Bring all required documentation. (Also, see the Application Checklist.)
Good Faith Estimate of Closing Costs
Truth-in-Lending statement
2. Processing
Verification of employment
Verification of deposits
Credit report
3. Underwriting
Clear conditions
4. Purchase Homeowner's Insurance
5. Escrow
Determine funds needed for closing
Schedule appointment for closing
Prepare deed and mortgage note
Closing and Title Transfer
Application Checklist
To speed up the application process, bring the applicable following items to your loan application appointment.
Signed copy of Purchase Agreement plus all Addendums.
Tax and Legal description on subject property.
Residence addresses for the past two (2) years.
Past two years' W-2 statements or 1099’s.
Computer generated paycheck stubs for last 30 days.
Names, addresses and phone numbers of Employers for past two (2) years.
Past two (2) month’s statements for all Checking, Savings, IRAs, 401Ks, Money Markets, Profit Sharing and evidence of Stocks and Bonds. Document all recent large deposits.
In income received for commissions, bonuses, partnership(s), corporation(s), or if self-employed, requires two (2) year’s Personal Federal Tax Returns with all Schedules along with a current P&L Statement and Business Balance Sheets and past two (2) years’ Partnership and/or Corporate Returns, if applicable.
Cancelled checks from rent or mortgage for the last 12 months, and name and address of any landlord(s) within the last 12 months.
Names, addresses, account numbers, monthly payments and balances on all open loans and revolving credit accounts.
Copy of Bankruptcy Petition listing all creditors and copy of Bankruptcy Discharge Papers (if applicable). Please provide letter of explanation as to why the Bankruptcy occurred.
Copy of Driver’s License and Social Security Card (VA Loans Only).
Certificate of Eligibility and DD214 Discharge Paper (VA Loans Only).
Application fee (check or money order).
Copy of divorce decree and/or separation agreement.
A "Friend of the Court" letter stating the amount of any alimony/child support payments and notification that the account is current.
1040 tax forms (if you’re self-employed) for the past two years, 1120 Corporate Tax Returns (or Form 1065 for Partnerships) for the previous two years, year-to-date profit-and-loss statement and balance sheet signed by your accountant.
1040 tax forms for the past two years (including schedules) if you own income properties or if your income is based on commission or bonuses.
Fortunately, as you work one-on-one with your chosen home mortgage consultant, he/she should be able to offer valuable lending expertise and advice and answer all your questions while ensuring that your loan application process progresses as smoothly and quickly as possible.
Century 21 JRS Realty is affiliated with Century 21 Mortgage, LLC
Loan Application
If you're like most people, you'll probably need to secure a mortgage loan for your new house. Application for a home loan can take as little as one week and up to a month, depending on the type of mortgage.
Your lender or mortgage broker will be able to give you a better idea of the actual time it will take from application to approval. However, in general, conventional loans are processed more quickly than FHA or VA home loans.
Read more about types of mortgage loans.
The following is a step-by-step outline of what to expect during the loan application process:
1. Application
Bring all required documentation. (Also, see the Application Checklist.)
Good Faith Estimate of Closing Costs
Truth-in-Lending statement
2. Processing
Verification of employment
Verification of deposits
Credit report
3. Underwriting
Clear conditions
4. Purchase Homeowner's Insurance
5. Escrow
Determine funds needed for closing
Schedule appointment for closing
Prepare deed and mortgage note
Closing and Title Transfer
Application Checklist
To speed up the application process, bring the applicable following items to your loan application appointment.
Signed copy of Purchase Agreement plus all Addendums.
Tax and Legal description on subject property.
Residence addresses for the past two (2) years.
Past two years' W-2 statements or 1099’s.
Computer generated paycheck stubs for last 30 days.
Names, addresses and phone numbers of Employers for past two (2) years.
Past two (2) month’s statements for all Checking, Savings, IRAs, 401Ks, Money Markets, Profit Sharing and evidence of Stocks and Bonds. Document all recent large deposits.
In income received for commissions, bonuses, partnership(s), corporation(s), or if self-employed, requires two (2) year’s Personal Federal Tax Returns with all Schedules along with a current P&L Statement and Business Balance Sheets and past two (2) years’ Partnership and/or Corporate Returns, if applicable.
Cancelled checks from rent or mortgage for the last 12 months, and name and address of any landlord(s) within the last 12 months.
Names, addresses, account numbers, monthly payments and balances on all open loans and revolving credit accounts.
Copy of Bankruptcy Petition listing all creditors and copy of Bankruptcy Discharge Papers (if applicable). Please provide letter of explanation as to why the Bankruptcy occurred.
Copy of Driver’s License and Social Security Card (VA Loans Only).
Certificate of Eligibility and DD214 Discharge Paper (VA Loans Only).
Application fee (check or money order).
Copy of divorce decree and/or separation agreement.
A "Friend of the Court" letter stating the amount of any alimony/child support payments and notification that the account is current.
1040 tax forms (if you’re self-employed) for the past two years, 1120 Corporate Tax Returns (or Form 1065 for Partnerships) for the previous two years, year-to-date profit-and-loss statement and balance sheet signed by your accountant.
1040 tax forms for the past two years (including schedules) if you own income properties or if your income is based on commission or bonuses.
Fortunately, as you work one-on-one with your chosen home mortgage consultant, he/she should be able to offer valuable lending expertise and advice and answer all your questions while ensuring that your loan application process progresses as smoothly and quickly as possible.
Century 21 JRS Realty is affiliated with Century 21 Mortgage, LLC
Sunday, March 15, 2009
Buy or Sell First?
Buy or Sell First
Which Comes First: Selling or Buying?
Like the proverbial chicken and the egg, the question of "which comes first?" – in this case, the sale of your existing home or the purchase of your new home – can leave you scratching your head.
The answer to that age-old question depends on you and your individual situation. Evaluate each of your alternatives, taking into consideration the effect each scenario will have on your (1) finances, (2) negotiating position and (3) moving-day timeline.
Buying before selling
If you choose to buy a new home before you sell your current home, you may have to pay on two mortgages until your former home sells. A bridge loan can ease the strain of double mortgage payments; however, you generally must have sufficient equity in your current home to qualify.
Of course, you could make the purchase of your next home dependent upon the sale of your current home, and your Century 21 JRS Realty agent can write this contingency into your purchase agreement.
A strong housing market may mean that the seller will not be as likely to accept such an offer. The advantage of buying a home before you sell your current one is that you have more time to look for your new home – without the added pressure of moving.
Selling before buying
You may be in a stronger bargaining position for your new home if you put off serious home shopping until after you've accepted an offer on your current house. If you wait, you'll have a better idea of how much equity you can put into your next house and, more importantly, you won't have to make the purchase of that home contingent upon the sale of your old one.
Of course, there's the added pressure of needing to find a new home quickly. You may not be able to negotiate a lower purchase price if the seller knows you have time constraints.
In the end, only you can decide. Be sure to talk with your Century 21 JRS Realty agent. S/he's trained and experienced in helping you explore and narrow your options, as well as understand the "why and wherefore" of most home-related dilemmas, including buy first/sell first.
Which Comes First: Selling or Buying?
Like the proverbial chicken and the egg, the question of "which comes first?" – in this case, the sale of your existing home or the purchase of your new home – can leave you scratching your head.
The answer to that age-old question depends on you and your individual situation. Evaluate each of your alternatives, taking into consideration the effect each scenario will have on your (1) finances, (2) negotiating position and (3) moving-day timeline.
Buying before selling
If you choose to buy a new home before you sell your current home, you may have to pay on two mortgages until your former home sells. A bridge loan can ease the strain of double mortgage payments; however, you generally must have sufficient equity in your current home to qualify.
Of course, you could make the purchase of your next home dependent upon the sale of your current home, and your Century 21 JRS Realty agent can write this contingency into your purchase agreement.
A strong housing market may mean that the seller will not be as likely to accept such an offer. The advantage of buying a home before you sell your current one is that you have more time to look for your new home – without the added pressure of moving.
Selling before buying
You may be in a stronger bargaining position for your new home if you put off serious home shopping until after you've accepted an offer on your current house. If you wait, you'll have a better idea of how much equity you can put into your next house and, more importantly, you won't have to make the purchase of that home contingent upon the sale of your old one.
Of course, there's the added pressure of needing to find a new home quickly. You may not be able to negotiate a lower purchase price if the seller knows you have time constraints.
In the end, only you can decide. Be sure to talk with your Century 21 JRS Realty agent. S/he's trained and experienced in helping you explore and narrow your options, as well as understand the "why and wherefore" of most home-related dilemmas, including buy first/sell first.
Saturday, March 14, 2009
Neyland's Football Maxims
GENERAL NEYLAND’S
MAXIMS OF FOOTBALL
1. The team that makes the fewest mistakes will win.
2. Play for and make the breaks and when one comes your
way - SCORE.
3. If at first the game - or the breaks - go against you, don’t
let up...put on more steam.
4. Protect our kickers, our QB, our lead and our ball game.
5. Ball, oskie, cover, block, cut and slice, pursue and gang
tackle... for this is the WINNING EDGE.
6. Press the kicking game. Here is where the breaks are
made.
7. Carry the fight to our opponent and keep it there for 60
minutes.
MAXIMS OF FOOTBALL
1. The team that makes the fewest mistakes will win.
2. Play for and make the breaks and when one comes your
way - SCORE.
3. If at first the game - or the breaks - go against you, don’t
let up...put on more steam.
4. Protect our kickers, our QB, our lead and our ball game.
5. Ball, oskie, cover, block, cut and slice, pursue and gang
tackle... for this is the WINNING EDGE.
6. Press the kicking game. Here is where the breaks are
made.
7. Carry the fight to our opponent and keep it there for 60
minutes.
Learn & Earn from Lost Listings
Learn & Earn from Lost Listings
If you do this you can make much more money over the long haul then you think. For 13 years in the business I have not found anyone that does this consistently or correctly.
OK here we go. In a given year you will not sign up every listing that you do a cma for, but there is still a huge potential for 2 things to happen. First, you can learn from your appointment, better yourself, and sign up the next listing appointment you attend because of what you learned. Second, you can make an impression on the sellers so that if they do not sell through the Realtor they chose you will certainly sign it up when it expires. If you do enough prospecting, like 80% of every day as you are supposed to, you will go on many listings appointments in your career. If you are a top agent you will sign up 80% to 90% of them, that's if you are a top agent. Statistically most agents are not TOP agents. So this means in a given year there are a number of listings you do not sign up, and some of them will not sell with the Realtor you lost out to. This number gets very large when added up over an entire career. How can you make sure to sign them up after they do not sell the first time around?
Here is all you have to do. You need to learn, and improve from every appointment...but how? The first way is by calling the seller and asking what made the difference, is there anything you could have done differently, what do you need to improve on, wish them luck with the sale, and extend an invitation to them to call you if they have any questions along the way. This needs to be done in a very polite, humble way, because you are trying to better yourself in your career and learn from every experience and you need their help to do that. Next, you follow up your call with a hand written thank you note and two business cards inside. You will write inside what you said over the phone, you wish them the best, and let them know they can call you at anytime for anything. Simple right, here's why it works.
First of all, not many agents will make this type of follow-up phone call for the purpose of learning and improving. If an agent did make a follow-up phone call it would be a bitter call that probably would not be handled in the right way and might go south because of emotion. Second, if you are polite and humble enough you will make an impression on the seller that is positive, and who do you think they are going to think of if they are not happy or they expire? Finally, if you can show their home or get a listing in their area during the time their home is on the market, you have the opportunity for another contact with a just listed post card and a showing appointment. Then, when your listing sells before their home sells you will have yet another contact with a just sold card. If you follow these steps you can sign up many homes on the rebound and continue to service your area and become the local leader in your market. For more information on this system please feel free to e-mail me at c21jrs72@aol.comor visit my company website and read one of the many guides we have posted for sellers and buyers, just visit www.c21jrs.com.
If you do this you can make much more money over the long haul then you think. For 13 years in the business I have not found anyone that does this consistently or correctly.
OK here we go. In a given year you will not sign up every listing that you do a cma for, but there is still a huge potential for 2 things to happen. First, you can learn from your appointment, better yourself, and sign up the next listing appointment you attend because of what you learned. Second, you can make an impression on the sellers so that if they do not sell through the Realtor they chose you will certainly sign it up when it expires. If you do enough prospecting, like 80% of every day as you are supposed to, you will go on many listings appointments in your career. If you are a top agent you will sign up 80% to 90% of them, that's if you are a top agent. Statistically most agents are not TOP agents. So this means in a given year there are a number of listings you do not sign up, and some of them will not sell with the Realtor you lost out to. This number gets very large when added up over an entire career. How can you make sure to sign them up after they do not sell the first time around?
Here is all you have to do. You need to learn, and improve from every appointment...but how? The first way is by calling the seller and asking what made the difference, is there anything you could have done differently, what do you need to improve on, wish them luck with the sale, and extend an invitation to them to call you if they have any questions along the way. This needs to be done in a very polite, humble way, because you are trying to better yourself in your career and learn from every experience and you need their help to do that. Next, you follow up your call with a hand written thank you note and two business cards inside. You will write inside what you said over the phone, you wish them the best, and let them know they can call you at anytime for anything. Simple right, here's why it works.
First of all, not many agents will make this type of follow-up phone call for the purpose of learning and improving. If an agent did make a follow-up phone call it would be a bitter call that probably would not be handled in the right way and might go south because of emotion. Second, if you are polite and humble enough you will make an impression on the seller that is positive, and who do you think they are going to think of if they are not happy or they expire? Finally, if you can show their home or get a listing in their area during the time their home is on the market, you have the opportunity for another contact with a just listed post card and a showing appointment. Then, when your listing sells before their home sells you will have yet another contact with a just sold card. If you follow these steps you can sign up many homes on the rebound and continue to service your area and become the local leader in your market. For more information on this system please feel free to e-mail me at c21jrs72@aol.comor visit my company website and read one of the many guides we have posted for sellers and buyers, just visit www.c21jrs.com.
Wednesday, March 11, 2009
Will This Help Our Industry?
Mortgage Bailout to Aid 1 in 9 U.S. Homeowners
By MICHAEL M. PHILLIPS and RUTH SIMON
WASHINGTON -- The Obama administration announced details of a housing-rescue plan it said would help as many as one in nine homeowners, from low-income Americans struggling to avoid foreclosure to well-off borrowers who owe more than their homes are worth.
The announcement came two weeks after President Barack Obama said he would spend $75 billion on the housing component of an emergency economic plan that includes a financial-system bailout and a $787 billion spending-and-tax-cut package.
View Interactive
Some Win, Some Lose
See how new measures will affect some homeowners across the country.
Homeowners Size Up Housing-Aid Plan
Q&A: Guide for Homeowners
Summary: Treasury guidelines, fact sheet
Question of the Day
Vote: How would you gauge Obama's homeowner-rescue plan? Fair Not fair
Join the discussion.
The package represents an effort to tackle the political challenges inherent in any housing rescue. While the administration wants a sweeping program that would prevent millions of foreclosures, it doesn't want to be seen as rewarding the greedy or reckless.
"It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets, just as we work to stabilize our financial system, create jobs and help businesses thrive," Treasury Secretary Timothy Geithner said in a written statement.
The administration, which was criticized for its rollout of its financial-sector rescue last month, got a generally warmer reception for the details of the foreclosure program. The Dow Jones Industrial Average rose 149.82 points, or 2.2%, snapping a dismal losing streak in recent days.
It remains uncertain how successful the administration will be in overcoming one of the biggest problems to forestall private efforts to fix troubled mortgages: the objections of investors who own mortgage-backed securities.
The administration estimates the new plan will cover as many as nine million mortgage holders. It has two main components.
First, the government will offer financial incentives and subsidies to persuade mortgage-servicing companies to ease up on borrowers who are in financial straits so severe that they risk losing their homes. Borrowers will have to sign affidavits attesting to their financial hardships. In return, they will see their interest rates drop to as low as 2%, their payment periods lengthened, and other modifications aimed at bringing their monthly payments to 31% of their income -- commonly considered a reasonable ratio. This program will be limited to first-lien mortgages with outstanding principal balances that don't exceed $729,750, in the case of single-family homes.
Welsh for The Wall Street Journal
POTENTIAL WINNERS: Nelia Price, with her son Ralph, in front of their home in Modesto, Calif., could be eligible for a loan modification.
Loan-servicing companies will receive up to $3,500 from the government to participate, with the government also matching a portion of the lenders' costs, dollar-for-dollar. Homeowners will get as much as $5,000 apiece in federal money to reduce their outstanding balances, as a way to encourage them to stay current on the modified mortgages.
Administration officials made a point of noting that the loan-modification program will not aid people who bought homes merely as investments; the program is designed for those who live in their homes.
In coming weeks, the administration plans to announce how it will help servicers persuade creditors holding second loans on the same properties to extinguish those debts. Roughly half of delinquent subprime borrowers also have second mortgages, according to Credit Suisse Group. Thus far, that has proved an impediment to modifying mortgages.
The second main component of the plan calls for Fannie Mae and Freddie Mac, the government-backed mortgage giants, to refinance loans for millions of borrowers who may owe more than their homes are worth, even if they are wealthy enough to afford their current payments. There is no income ceiling for beneficiaries. But they must have mortgages held or guaranteed by Fannie Mae or Freddie Mac, and they cannot owe more than 105% of the current value of their home.
That raises the possibility that homeowners considered well-off by national standards may qualify for public aid.
A Treasury spokeswoman said that there are benefits to helping some well-off homeowners. "The recent decline in home values has left many responsible borrowers, through no fault of their own, in a position where they can't take advantage of today's low rates through a refinancing," she said. "It is in the best interest of American homeowners to be able to refinance to lower-rate mortgages. And this, in turn, is good for home prices, for consumer spending during a downturn, and for liquidity in our mortgage markets."
At the end of last year, an estimated 13.6 million U.S. borrowers owed more on their homes than their properties were worth, according to Moody's Economy.com, up from 11.8 million at the end of the third quarter.
The release of the government's new guidelines will likely accelerate efforts already under way at the nation's largest banks all have unveiled loan-modification efforts over the past few months. They instituted foreclosure moratoriums after the government announced that it, too, was preparing to tackle the issue. They will likely soon resume foreclosing on properties that they have determined aren't eligible for loan modifications.
Many banks, which had worried about possible hits to earnings when the plan first was announced, welcomed it on Wednesday. "The plan appropriately balances the interest of homeowners, mortgage servicers and investors," said Jamie Dimon, chief executive of J.P. Morgan Chase.
Some investors who own mortgage securities, however, remained skeptical.
Under the loan-modification plan, a hypothetical borrower earning $4,000 a month, with a $225,000, 6.5% loan with 28 years remaining, could see the rate fall to 2.73%, and the monthly payment drop to $1,240, from $1,737, according to Thomas Lawler, an independent housing economist. The government would cover about $155 of the $495 payment reduction. Principal payments and federal subsidies would reduce the outstanding balance to $193,000 after five years. Without the federal program, the principal would have fallen to $208,000, assuming the borrower kept current.
Mortgage Bankers Association President John Courson said that the Obama program, by setting an industry standard, will help servicers, who are hired by investors to collect mortgage payments each month, defend themselves against complaints that they aren't acting in investors' interests by modifying loans. But Mr. Courson added that servicers might be reluctant to act without congressional protection from lawsuits.
Getty Images
Treasury Secretary Timothy Geithner testified Wednesday in front of the Senate Finance Committee.
The administration is "not going to see eye-to-eye" with some investors, said a senior Treasury official. "Our role is not to use taxpayer resources to bail them out."
Citigroup will apply the new program to all loans held by investors, "unless there's a contractual obligation that specifically prohibits us from doing that," said Sanjiv Das, chief executive of the bank's CitiMortgage unit.
Bank of America "will work with our investors to allow these programs to be extended for borrowers whose loans they own," said spokesman Dan Frahm.
Calls from borrowers interested in loan modifications "really spiked" on Wednesday, said Barbara Desoer, Bank of America mortgage president.
Administration officials acknowledged that it could take time for troubled borrowers to move through the system. "People need to be patient and understand that servicers are likely to get lots of telephone calls and lots of inquiries," a senior White House official said.—Robin Sidel and James R. Hagerty contributed to this article.
By MICHAEL M. PHILLIPS and RUTH SIMON
WASHINGTON -- The Obama administration announced details of a housing-rescue plan it said would help as many as one in nine homeowners, from low-income Americans struggling to avoid foreclosure to well-off borrowers who owe more than their homes are worth.
The announcement came two weeks after President Barack Obama said he would spend $75 billion on the housing component of an emergency economic plan that includes a financial-system bailout and a $787 billion spending-and-tax-cut package.
View Interactive
Some Win, Some Lose
See how new measures will affect some homeowners across the country.
Homeowners Size Up Housing-Aid Plan
Q&A: Guide for Homeowners
Summary: Treasury guidelines, fact sheet
Question of the Day
Vote: How would you gauge Obama's homeowner-rescue plan? Fair Not fair
Join the discussion.
The package represents an effort to tackle the political challenges inherent in any housing rescue. While the administration wants a sweeping program that would prevent millions of foreclosures, it doesn't want to be seen as rewarding the greedy or reckless.
"It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets, just as we work to stabilize our financial system, create jobs and help businesses thrive," Treasury Secretary Timothy Geithner said in a written statement.
The administration, which was criticized for its rollout of its financial-sector rescue last month, got a generally warmer reception for the details of the foreclosure program. The Dow Jones Industrial Average rose 149.82 points, or 2.2%, snapping a dismal losing streak in recent days.
It remains uncertain how successful the administration will be in overcoming one of the biggest problems to forestall private efforts to fix troubled mortgages: the objections of investors who own mortgage-backed securities.
The administration estimates the new plan will cover as many as nine million mortgage holders. It has two main components.
First, the government will offer financial incentives and subsidies to persuade mortgage-servicing companies to ease up on borrowers who are in financial straits so severe that they risk losing their homes. Borrowers will have to sign affidavits attesting to their financial hardships. In return, they will see their interest rates drop to as low as 2%, their payment periods lengthened, and other modifications aimed at bringing their monthly payments to 31% of their income -- commonly considered a reasonable ratio. This program will be limited to first-lien mortgages with outstanding principal balances that don't exceed $729,750, in the case of single-family homes.
Welsh for The Wall Street Journal
POTENTIAL WINNERS: Nelia Price, with her son Ralph, in front of their home in Modesto, Calif., could be eligible for a loan modification.
Loan-servicing companies will receive up to $3,500 from the government to participate, with the government also matching a portion of the lenders' costs, dollar-for-dollar. Homeowners will get as much as $5,000 apiece in federal money to reduce their outstanding balances, as a way to encourage them to stay current on the modified mortgages.
Administration officials made a point of noting that the loan-modification program will not aid people who bought homes merely as investments; the program is designed for those who live in their homes.
In coming weeks, the administration plans to announce how it will help servicers persuade creditors holding second loans on the same properties to extinguish those debts. Roughly half of delinquent subprime borrowers also have second mortgages, according to Credit Suisse Group. Thus far, that has proved an impediment to modifying mortgages.
The second main component of the plan calls for Fannie Mae and Freddie Mac, the government-backed mortgage giants, to refinance loans for millions of borrowers who may owe more than their homes are worth, even if they are wealthy enough to afford their current payments. There is no income ceiling for beneficiaries. But they must have mortgages held or guaranteed by Fannie Mae or Freddie Mac, and they cannot owe more than 105% of the current value of their home.
That raises the possibility that homeowners considered well-off by national standards may qualify for public aid.
A Treasury spokeswoman said that there are benefits to helping some well-off homeowners. "The recent decline in home values has left many responsible borrowers, through no fault of their own, in a position where they can't take advantage of today's low rates through a refinancing," she said. "It is in the best interest of American homeowners to be able to refinance to lower-rate mortgages. And this, in turn, is good for home prices, for consumer spending during a downturn, and for liquidity in our mortgage markets."
At the end of last year, an estimated 13.6 million U.S. borrowers owed more on their homes than their properties were worth, according to Moody's Economy.com, up from 11.8 million at the end of the third quarter.
The release of the government's new guidelines will likely accelerate efforts already under way at the nation's largest banks all have unveiled loan-modification efforts over the past few months. They instituted foreclosure moratoriums after the government announced that it, too, was preparing to tackle the issue. They will likely soon resume foreclosing on properties that they have determined aren't eligible for loan modifications.
Many banks, which had worried about possible hits to earnings when the plan first was announced, welcomed it on Wednesday. "The plan appropriately balances the interest of homeowners, mortgage servicers and investors," said Jamie Dimon, chief executive of J.P. Morgan Chase.
Some investors who own mortgage securities, however, remained skeptical.
Under the loan-modification plan, a hypothetical borrower earning $4,000 a month, with a $225,000, 6.5% loan with 28 years remaining, could see the rate fall to 2.73%, and the monthly payment drop to $1,240, from $1,737, according to Thomas Lawler, an independent housing economist. The government would cover about $155 of the $495 payment reduction. Principal payments and federal subsidies would reduce the outstanding balance to $193,000 after five years. Without the federal program, the principal would have fallen to $208,000, assuming the borrower kept current.
Mortgage Bankers Association President John Courson said that the Obama program, by setting an industry standard, will help servicers, who are hired by investors to collect mortgage payments each month, defend themselves against complaints that they aren't acting in investors' interests by modifying loans. But Mr. Courson added that servicers might be reluctant to act without congressional protection from lawsuits.
Getty Images
Treasury Secretary Timothy Geithner testified Wednesday in front of the Senate Finance Committee.
The administration is "not going to see eye-to-eye" with some investors, said a senior Treasury official. "Our role is not to use taxpayer resources to bail them out."
Citigroup will apply the new program to all loans held by investors, "unless there's a contractual obligation that specifically prohibits us from doing that," said Sanjiv Das, chief executive of the bank's CitiMortgage unit.
Bank of America "will work with our investors to allow these programs to be extended for borrowers whose loans they own," said spokesman Dan Frahm.
Calls from borrowers interested in loan modifications "really spiked" on Wednesday, said Barbara Desoer, Bank of America mortgage president.
Administration officials acknowledged that it could take time for troubled borrowers to move through the system. "People need to be patient and understand that servicers are likely to get lots of telephone calls and lots of inquiries," a senior White House official said.—Robin Sidel and James R. Hagerty contributed to this article.
Who is responsible for your SUCCESS?
Who Is Responsible for your Success?
This isn’t a trick question.
Certainly you know the answer—the person who has been responsible for the life you live right now: YOU.
Everything about you is a result of your doing or not doing... Your income. Debt. Relationships. Health. Fitness level. Attitudes and behaviors.
I think everyone knows this in their hearts, but often times people convince themselves into thinking that external factors are the source of their failure, disappointment, and unhappiness.
External factors do not determine how you live. YOU are in complete control of the quality of your life.
When I hear people complain about the state of their life (be it their problems with personal finances, weight, their jobs, or general dissatisfaction) I like to help them see things differently.
If they feel “stuck” and unable to move forward for whatever reason, I ask them to scrutinize both what is working well and what isn’t working well in their life and see how they’ve arrived at where they currently are.
For example, if a woman tells me she’s unhappy with her weight—she travels frequently, and has no to time to exercise or seek healthy foods—I point out that her weight is not a result of her travels and schedule. It’s an outcome of what she chooses to eat and how she chooses to move, regardless of her daily agenda. Why not make a conscious effort to pre-plan healthy meals and snacks, even if it’s on the go, and sneak in 10 minutes here and 10 minutes there to be physically active (hey, I know some frequent flyers who make it a habit of running through airports!).
If you’re frustrated with any area in your life, then it’s time to take a little inventory. Certainly there are wonderful things happening, whether it’s your job, your romantic relationship, your children, your friends, or your income level. Your accomplishments are just as important as your missteps.
First, congratulate yourself on your successes; and then take a look at what isn’t working out so well. What are you doing or not doing to create those experiences?
Watch out! If you find yourself beginning to complain about everything but the choices you’ve made, then you need to take a step back. See if you can stop blaming outside factors for your unhappiness.
When you realize that you—and only you—create your experiences, you’ll realize that you can un-create them and forge new experiences whenever you want.
How empowering is that!
You must take responsibility for your happiness and your unhappiness, your successes and your failures, your good times and your bad times.
All too often we choose to claim the successes and blame the failures on others or other circumstances. When you stop blaming, however, you can take that energy and redirect it to focus on shaping a better situation for yourself. Blaming only ties up your energy. Imagine roping all the energy into a positive effort.
Some ideas to make this happen:
Believe, Believe, Believe! Have unwavering faith in yourself, for good and bad. Make the decision to accept the fact that you create all your experiences. You will experience successes thanks to you, and you will experience pain, struggle, and strife thanks to you. Sounds a little strange, but accepting this level of responsibility is uniquely empowering. It means you can do, change, and be anything. Stumbling blocks become just that—little hills to hop over.
Take no less than 100% responsibility. Successful people take full responsibility for the thoughts they think, the images they visualize, and the actions they take. They don't waste their time and energy blaming and complaining. They evaluate their experiences and decide if they need to change them or not. They face the uncomfortable and take risks in order to create the life they want to live.
Stop complaining. Look at what you are complaining about. I’m fat. I’m tired. I can’t get out of debt. I won’t ever get a better job. I can’t stand the relationship I have with my sister. I’ll never find a soul mate in life. Really examine your complaints. More than likely you can do something about them. They are not about other people, other things, or other events. They are about YOU.
Make an immediate change. Are you unhappy about something that is happening right now? Make requests that will make it more desirable to you, or take the steps to change it yourself. Making a change might be uncomfortable for you. It might mean you have to put in more time, money, and effort. It might mean that someone gets upset about it, or makes you feel bad about your decision. It might be difficult to change or leave a situation, but staying put is your choice so why continue to complain?
You can either do something about it or not. It is your choice and you have responsibility for your choices.
Pay attention. Looking to others for help and guidance is helpful, but don’t forget to stay tuned in to yourself—your behavior, attitude, and life experiences. Identify what’s working and what isn’t. If you need to, write it all down. Then…
Face the truth and take action for the long term . You have to be willing to change your behavior if you want a different outcome. You have to be willing to take the risks necessary to get what you want. If you’ve already taken an initial step in the right direction, now’s the time to plan additional steps to keep moving you forward, faster.
Isn’t it a great relief to know that you can make your life what you want it to be? Isn’t it wonderful that your successes do not depend on someone else?
So if you need just one thing to do different today than you did yesterday, make it this: Commit to taking 100% responsibility for every aspect of your life. Decide to make changes, one step at a time. Once you start the process you’ll discover it's much easier to get what you want by taking control of your thoughts, your visualizations, and your actions!
-Jack Canfield
This isn’t a trick question.
Certainly you know the answer—the person who has been responsible for the life you live right now: YOU.
Everything about you is a result of your doing or not doing... Your income. Debt. Relationships. Health. Fitness level. Attitudes and behaviors.
I think everyone knows this in their hearts, but often times people convince themselves into thinking that external factors are the source of their failure, disappointment, and unhappiness.
External factors do not determine how you live. YOU are in complete control of the quality of your life.
When I hear people complain about the state of their life (be it their problems with personal finances, weight, their jobs, or general dissatisfaction) I like to help them see things differently.
If they feel “stuck” and unable to move forward for whatever reason, I ask them to scrutinize both what is working well and what isn’t working well in their life and see how they’ve arrived at where they currently are.
For example, if a woman tells me she’s unhappy with her weight—she travels frequently, and has no to time to exercise or seek healthy foods—I point out that her weight is not a result of her travels and schedule. It’s an outcome of what she chooses to eat and how she chooses to move, regardless of her daily agenda. Why not make a conscious effort to pre-plan healthy meals and snacks, even if it’s on the go, and sneak in 10 minutes here and 10 minutes there to be physically active (hey, I know some frequent flyers who make it a habit of running through airports!).
If you’re frustrated with any area in your life, then it’s time to take a little inventory. Certainly there are wonderful things happening, whether it’s your job, your romantic relationship, your children, your friends, or your income level. Your accomplishments are just as important as your missteps.
First, congratulate yourself on your successes; and then take a look at what isn’t working out so well. What are you doing or not doing to create those experiences?
Watch out! If you find yourself beginning to complain about everything but the choices you’ve made, then you need to take a step back. See if you can stop blaming outside factors for your unhappiness.
When you realize that you—and only you—create your experiences, you’ll realize that you can un-create them and forge new experiences whenever you want.
How empowering is that!
You must take responsibility for your happiness and your unhappiness, your successes and your failures, your good times and your bad times.
All too often we choose to claim the successes and blame the failures on others or other circumstances. When you stop blaming, however, you can take that energy and redirect it to focus on shaping a better situation for yourself. Blaming only ties up your energy. Imagine roping all the energy into a positive effort.
Some ideas to make this happen:
Believe, Believe, Believe! Have unwavering faith in yourself, for good and bad. Make the decision to accept the fact that you create all your experiences. You will experience successes thanks to you, and you will experience pain, struggle, and strife thanks to you. Sounds a little strange, but accepting this level of responsibility is uniquely empowering. It means you can do, change, and be anything. Stumbling blocks become just that—little hills to hop over.
Take no less than 100% responsibility. Successful people take full responsibility for the thoughts they think, the images they visualize, and the actions they take. They don't waste their time and energy blaming and complaining. They evaluate their experiences and decide if they need to change them or not. They face the uncomfortable and take risks in order to create the life they want to live.
Stop complaining. Look at what you are complaining about. I’m fat. I’m tired. I can’t get out of debt. I won’t ever get a better job. I can’t stand the relationship I have with my sister. I’ll never find a soul mate in life. Really examine your complaints. More than likely you can do something about them. They are not about other people, other things, or other events. They are about YOU.
Make an immediate change. Are you unhappy about something that is happening right now? Make requests that will make it more desirable to you, or take the steps to change it yourself. Making a change might be uncomfortable for you. It might mean you have to put in more time, money, and effort. It might mean that someone gets upset about it, or makes you feel bad about your decision. It might be difficult to change or leave a situation, but staying put is your choice so why continue to complain?
You can either do something about it or not. It is your choice and you have responsibility for your choices.
Pay attention. Looking to others for help and guidance is helpful, but don’t forget to stay tuned in to yourself—your behavior, attitude, and life experiences. Identify what’s working and what isn’t. If you need to, write it all down. Then…
Face the truth and take action for the long term . You have to be willing to change your behavior if you want a different outcome. You have to be willing to take the risks necessary to get what you want. If you’ve already taken an initial step in the right direction, now’s the time to plan additional steps to keep moving you forward, faster.
Isn’t it a great relief to know that you can make your life what you want it to be? Isn’t it wonderful that your successes do not depend on someone else?
So if you need just one thing to do different today than you did yesterday, make it this: Commit to taking 100% responsibility for every aspect of your life. Decide to make changes, one step at a time. Once you start the process you’ll discover it's much easier to get what you want by taking control of your thoughts, your visualizations, and your actions!
-Jack Canfield
Monday, March 9, 2009
What should my Budget for a Home be?
Figuring Your Housing Budget
Have you ever shopped for clothes, furniture or gifts without a budget and later found that you'd overspent? It's easy to do especially when looking at so many great houses with your agent. Obviously, staying on budget is very important when house hunting.
That's why you'd probably like to have a ballpark idea of how much house you can afford - before you start looking and even before meeting with your mortgage broker or lender.
To get a rough estimate of how much you'll qualify for, do what the lenders do – plug your budget numbers into a basic mortgage calculation formula.
Lender FormulasLenders typically use one of two formula guidelines; although most will require that you meet both sets of guidelines. Even if you don't meet the guidelines, talk with your chosen home mortgage consultant. S/he can provide additional details specific to your situation, and since there are other formulas that exist, you may qualify under another standard. For example, VA loans are calculated on a single ratio that's based upon mortgage payment and all debts. If you have very little debt, this formula may allow you to qualify more easily for a more expensive home.
Of the two usual formulas, the first compares income-to-housing costs (without including long-term debts), while the second includes all debts.
28 Percent Formula
Total monthly housing costs (P.I.T.I.) = 28 percent (or less) of gross monthly income.
36 Percent Formula
P.I.T.I. + all monthly debts = 36 percent (or less) of gross monthly Income.
So, if you're a family with a monthly gross income (before taxes) of $3,500, you would multiply $3,500 by 28 and 36 percent. The result shows that you might qualify for a home mortgage with monthly payments between $980 and $1,260 a month.
Note that these percentages may be slightly less if you have long-term debts (more than eight months) or alimony/child support payments. The number and ages of your children as well as household budget items may also have an impact.
Now that you have a better idea of what your approximate housing budget may be, learn more about:
Types of Loans
Mortgage Strategies
The Loan Application
Have you ever shopped for clothes, furniture or gifts without a budget and later found that you'd overspent? It's easy to do especially when looking at so many great houses with your agent. Obviously, staying on budget is very important when house hunting.
That's why you'd probably like to have a ballpark idea of how much house you can afford - before you start looking and even before meeting with your mortgage broker or lender.
To get a rough estimate of how much you'll qualify for, do what the lenders do – plug your budget numbers into a basic mortgage calculation formula.
Lender FormulasLenders typically use one of two formula guidelines; although most will require that you meet both sets of guidelines. Even if you don't meet the guidelines, talk with your chosen home mortgage consultant. S/he can provide additional details specific to your situation, and since there are other formulas that exist, you may qualify under another standard. For example, VA loans are calculated on a single ratio that's based upon mortgage payment and all debts. If you have very little debt, this formula may allow you to qualify more easily for a more expensive home.
Of the two usual formulas, the first compares income-to-housing costs (without including long-term debts), while the second includes all debts.
28 Percent Formula
Total monthly housing costs (P.I.T.I.) = 28 percent (or less) of gross monthly income.
36 Percent Formula
P.I.T.I. + all monthly debts = 36 percent (or less) of gross monthly Income.
So, if you're a family with a monthly gross income (before taxes) of $3,500, you would multiply $3,500 by 28 and 36 percent. The result shows that you might qualify for a home mortgage with monthly payments between $980 and $1,260 a month.
Note that these percentages may be slightly less if you have long-term debts (more than eight months) or alimony/child support payments. The number and ages of your children as well as household budget items may also have an impact.
Now that you have a better idea of what your approximate housing budget may be, learn more about:
Types of Loans
Mortgage Strategies
The Loan Application
Doom & Gloom.....Fact or Fiction?
We Must Get Ratings!!!!!!
That is the way I see our media outlets, we must get ratings at all costs. I would have to be a moron to say the economy is not down. We all have seen the latest unemployment rate over 8%, we know that in the last year over 4 million jobs have been lost....and we know ONE more VERY important thing.......THINGS WILL GET BETTER!!!!!! Whether you voted for our president or not, as an American, you must have blind faith and trust the people in charge of our country. We have to have faith that they have the country's best interests in mind with every decision they make. The media wants to shock us with sensationalism and big bold headlines that make us watch their channel just to be more depressed by the DOOM and GLOOM they spew. We don't need the media to tell us the economy has gone in the crapper, just talk to your friends that have lost their jobs. We just went through one of the most prosperous periods of gluttony and excess our country has ever seen. Should we not pay the price now? Yes, we are now paying the price for the excess of living off your homes equity, evil mortgage companies that cared only about "loan the money", and sell it to someone else.I am writing this post because in my company I just had 4 agents go up against multiple offers on homes in Union and Middlesex County New Jersey. So how bad is Real Estate? Yes, now banks are not just going to throw bad money out the window if you have a pulse.Yes, the prices of homes have fallen. Yes, you have to be worth the risk in order to be loaned money. When my parents were growing up, they knew only one way to buy a home..save 20% for a down payment and qualify for a conventional loan. You were made to care about your home because you WORKED to earn the RIGHT to purchase a piece of the AMERICAN DREAM. You appreciated your home because you earned it. The generation after the baby boomers only knows excess and should be called the "I must have it NOW!" generation...and I am a part of that generation. But I also have the courage to take responsibility for my actions and stand up for what I believe in. How is a generation of kids supposed to survive in this America, when all they see every day are sports stars, and actors, and rappers making more then teachers and our own President. A half a billion dollars to play baseball, are you kidding me? What does that say to our young people about what is important in this world? I know only Real Estate sales. It has been in my family for 40 years and it is the only thing I know. Accept for this...if you are given something for nothing it will mean NOTHING to you.Place the Blame for this economic crash in the right place. Who was president when the no money down loan came to be? Who was president when 3% down and 5% down loans came to be? Not George W Bush, that's for sure.All I am saying is as a country we got our selves into this mess and we WILL get ourselves out of it...TOGETHER. For all the Realtors out there struggling, just keep on making the contacts daily, meeting people daily, and working a little bit harder everyday. Remember, the contacts you make in these lean years will turn into $$$$ when things turn around. Don't listen to the news, tell people about the positives. Rates are low, there are more homes to choose from, you are able to buy a home cheaper then your neighbor did just a few years ago. Those 3 things sound like potential for a good market. The daily activities of a successful Realtor have not changed, make contacts everyday. That task does not change with the rise and fall of the economy. The only thing that changes is the value of homes and the time it may take for your listing to turn into money in your bank account. Listings will always and forever be the name of this game, and the amount of contacts you make everyday will determine the amount of listings you sign up.
For more information from JR Sangiuliano of CENTURY 21 JRS Realty feel free to E-mail him at c21jrs72@aol.com or visit his Company Blog at http://www.century21jrsrealty.blogspot.com/
That is the way I see our media outlets, we must get ratings at all costs. I would have to be a moron to say the economy is not down. We all have seen the latest unemployment rate over 8%, we know that in the last year over 4 million jobs have been lost....and we know ONE more VERY important thing.......THINGS WILL GET BETTER!!!!!! Whether you voted for our president or not, as an American, you must have blind faith and trust the people in charge of our country. We have to have faith that they have the country's best interests in mind with every decision they make. The media wants to shock us with sensationalism and big bold headlines that make us watch their channel just to be more depressed by the DOOM and GLOOM they spew. We don't need the media to tell us the economy has gone in the crapper, just talk to your friends that have lost their jobs. We just went through one of the most prosperous periods of gluttony and excess our country has ever seen. Should we not pay the price now? Yes, we are now paying the price for the excess of living off your homes equity, evil mortgage companies that cared only about "loan the money", and sell it to someone else.I am writing this post because in my company I just had 4 agents go up against multiple offers on homes in Union and Middlesex County New Jersey. So how bad is Real Estate? Yes, now banks are not just going to throw bad money out the window if you have a pulse.Yes, the prices of homes have fallen. Yes, you have to be worth the risk in order to be loaned money. When my parents were growing up, they knew only one way to buy a home..save 20% for a down payment and qualify for a conventional loan. You were made to care about your home because you WORKED to earn the RIGHT to purchase a piece of the AMERICAN DREAM. You appreciated your home because you earned it. The generation after the baby boomers only knows excess and should be called the "I must have it NOW!" generation...and I am a part of that generation. But I also have the courage to take responsibility for my actions and stand up for what I believe in. How is a generation of kids supposed to survive in this America, when all they see every day are sports stars, and actors, and rappers making more then teachers and our own President. A half a billion dollars to play baseball, are you kidding me? What does that say to our young people about what is important in this world? I know only Real Estate sales. It has been in my family for 40 years and it is the only thing I know. Accept for this...if you are given something for nothing it will mean NOTHING to you.Place the Blame for this economic crash in the right place. Who was president when the no money down loan came to be? Who was president when 3% down and 5% down loans came to be? Not George W Bush, that's for sure.All I am saying is as a country we got our selves into this mess and we WILL get ourselves out of it...TOGETHER. For all the Realtors out there struggling, just keep on making the contacts daily, meeting people daily, and working a little bit harder everyday. Remember, the contacts you make in these lean years will turn into $$$$ when things turn around. Don't listen to the news, tell people about the positives. Rates are low, there are more homes to choose from, you are able to buy a home cheaper then your neighbor did just a few years ago. Those 3 things sound like potential for a good market. The daily activities of a successful Realtor have not changed, make contacts everyday. That task does not change with the rise and fall of the economy. The only thing that changes is the value of homes and the time it may take for your listing to turn into money in your bank account. Listings will always and forever be the name of this game, and the amount of contacts you make everyday will determine the amount of listings you sign up.
For more information from JR Sangiuliano of CENTURY 21 JRS Realty feel free to E-mail him at c21jrs72@aol.com or visit his Company Blog at http://www.century21jrsrealty.blogspot.com/
Sunday, March 8, 2009
How to get a Mortgage
The Loan Application
If you're like most people, you'll probably need to secure a mortgage loan for your new house. Application for a home loan can take as little as one week and up to a month, depending on the type of mortgage.
Your lender or mortgage broker will be able to give you a better idea of the actual time it will take from application to approval. However, in general, conventional loans are processed more quickly than FHA or VA home loans.
Read more about types of mortgage loans.
The following is a step-by-step outline of what to expect during the loan application process:
1. ApplicationBring all required documentation. (Also, see the Application Checklist.)Good Faith Estimate of Closing Costs Truth-in-Lending statement
2. ProcessingVerification of employmentVerification of depositsCredit report
3. Underwriting Clear conditions
4. Purchase Homeowner's Insurance
5. EscrowDetermine funds needed for closing Schedule appointment for closing Prepare deed and mortgage note Closing and Title Transfer
Application Checklist
To speed up the application process, bring the applicable following items to your loan application appointment.
Signed copy of Purchase Agreement plus all Addendums.
Tax and Legal description on subject property.
Residence addresses for the past two (2) years.
Past two years' W-2 statements or 1099’s.
Computer generated paycheck stubs for last 30 days.
Names, addresses and phone numbers of Employers for past two (2) years.
Past two (2) month’s statements for all Checking, Savings, IRAs, 401Ks, Money Markets, Profit Sharing and evidence of Stocks and Bonds. Document all recent large deposits.
In income received for commissions, bonuses, partnership(s), corporation(s), or if self-employed, requires two (2) year’s Personal Federal Tax Returns with all Schedules along with a current P&L Statement and Business Balance Sheets and past two (2) years’ Partnership and/or Corporate Returns, if applicable.
Cancelled checks from rent or mortgage for the last 12 months, and name and address of any landlord(s) within the last 12 months.
Names, addresses, account numbers, monthly payments and balances on all open loans and revolving credit accounts.
Copy of Bankruptcy Petition listing all creditors and copy of Bankruptcy Discharge Papers (if applicable). Please provide letter of explanation as to why the Bankruptcy occurred.
Copy of Driver’s License and Social Security Card (VA Loans Only).
Certificate of Eligibility and DD214 Discharge Paper (VA Loans Only).
Application fee (check or money order).
Copy of divorce decree and/or separation agreement.
A "Friend of the Court" letter stating the amount of any alimony/child support payments and notification that the account is current.
1040 tax forms (if you’re self-employed) for the past two years, 1120 Corporate Tax Returns (or Form 1065 for Partnerships) for the previous two years, year-to-date profit-and-loss statement and balance sheet signed by your accountant.
1040 tax forms for the past two years (including schedules) if you own income properties or if your income is based on commission or bonuses.
Fortunately, as you work one-on-one with your chosen home mortgage consultant, he/she should be able to offer valuable lending expertise and advice and answer all your questions while ensuring that your loan application process progresses as smoothly and quickly as possible.
Century 21 JRS Realty is affiliated with Century 21 Mortgage, LLC.
If you're like most people, you'll probably need to secure a mortgage loan for your new house. Application for a home loan can take as little as one week and up to a month, depending on the type of mortgage.
Your lender or mortgage broker will be able to give you a better idea of the actual time it will take from application to approval. However, in general, conventional loans are processed more quickly than FHA or VA home loans.
Read more about types of mortgage loans.
The following is a step-by-step outline of what to expect during the loan application process:
1. ApplicationBring all required documentation. (Also, see the Application Checklist.)Good Faith Estimate of Closing Costs Truth-in-Lending statement
2. ProcessingVerification of employmentVerification of depositsCredit report
3. Underwriting Clear conditions
4. Purchase Homeowner's Insurance
5. EscrowDetermine funds needed for closing Schedule appointment for closing Prepare deed and mortgage note Closing and Title Transfer
Application Checklist
To speed up the application process, bring the applicable following items to your loan application appointment.
Signed copy of Purchase Agreement plus all Addendums.
Tax and Legal description on subject property.
Residence addresses for the past two (2) years.
Past two years' W-2 statements or 1099’s.
Computer generated paycheck stubs for last 30 days.
Names, addresses and phone numbers of Employers for past two (2) years.
Past two (2) month’s statements for all Checking, Savings, IRAs, 401Ks, Money Markets, Profit Sharing and evidence of Stocks and Bonds. Document all recent large deposits.
In income received for commissions, bonuses, partnership(s), corporation(s), or if self-employed, requires two (2) year’s Personal Federal Tax Returns with all Schedules along with a current P&L Statement and Business Balance Sheets and past two (2) years’ Partnership and/or Corporate Returns, if applicable.
Cancelled checks from rent or mortgage for the last 12 months, and name and address of any landlord(s) within the last 12 months.
Names, addresses, account numbers, monthly payments and balances on all open loans and revolving credit accounts.
Copy of Bankruptcy Petition listing all creditors and copy of Bankruptcy Discharge Papers (if applicable). Please provide letter of explanation as to why the Bankruptcy occurred.
Copy of Driver’s License and Social Security Card (VA Loans Only).
Certificate of Eligibility and DD214 Discharge Paper (VA Loans Only).
Application fee (check or money order).
Copy of divorce decree and/or separation agreement.
A "Friend of the Court" letter stating the amount of any alimony/child support payments and notification that the account is current.
1040 tax forms (if you’re self-employed) for the past two years, 1120 Corporate Tax Returns (or Form 1065 for Partnerships) for the previous two years, year-to-date profit-and-loss statement and balance sheet signed by your accountant.
1040 tax forms for the past two years (including schedules) if you own income properties or if your income is based on commission or bonuses.
Fortunately, as you work one-on-one with your chosen home mortgage consultant, he/she should be able to offer valuable lending expertise and advice and answer all your questions while ensuring that your loan application process progresses as smoothly and quickly as possible.
Century 21 JRS Realty is affiliated with Century 21 Mortgage, LLC.
What service do I Deserve?
What to Expect from a Full-service Agent
What can you expect from your agent? Plenty! (Or at least you should.)No doubt about it. Buying or selling a home is right at the top of the list of major (and exciting) life changes. It's also one of the most important financial transactions of your life. From making initial buying or selling decisions to closing (and everything in between), you should definitely know how an agent will turn your dream into a reality.That's where full-service agents come in. You don't want to trust one of the most important decisions of your lifetime to an agent who's more focused on cutting corners than on making sure needs are being met – and exceeded.Here's a list of what you should expect from a full-service agent. This is just a general list – you should review it and determine what other important needs you have. Make sure that your prospective agent is willing to provide you with the full suite of services you deserve.
Buyers
We work to make the home buying process easier for you by providing the ultimate convenience with these services:
* Assistance with loan pre-approval
* Needs assessment
* Fast home-buying assistance
* Online tools to make the process easier and more convenient
* Expert negotiation
* Mortgage
* Title
* Warranty
* Relocation services Connect with a buyer's agent for more information.
Sellers
We've perfected the home-selling process, too, by providing full-fledged service including:
* Pricing your home to sell
* Innovative marketing
* Home preparation advice
* Showing your home
* Expert negotiation
* Real communication – on your terms
* Finding your next home fast With the best Web site in the real estate industry, and the best marketing tools in the business, our agents reach a wider audience of potential buyers, making it easier for them to find your home once it's been listed. And, when the time comes, we can help you find your next home, too.
Connect with a listing agent from CENTURY 21 JRS Realty for more information at www.C21JRS.com.
What can you expect from your agent? Plenty! (Or at least you should.)No doubt about it. Buying or selling a home is right at the top of the list of major (and exciting) life changes. It's also one of the most important financial transactions of your life. From making initial buying or selling decisions to closing (and everything in between), you should definitely know how an agent will turn your dream into a reality.That's where full-service agents come in. You don't want to trust one of the most important decisions of your lifetime to an agent who's more focused on cutting corners than on making sure needs are being met – and exceeded.Here's a list of what you should expect from a full-service agent. This is just a general list – you should review it and determine what other important needs you have. Make sure that your prospective agent is willing to provide you with the full suite of services you deserve.
Buyers
We work to make the home buying process easier for you by providing the ultimate convenience with these services:
* Assistance with loan pre-approval
* Needs assessment
* Fast home-buying assistance
* Online tools to make the process easier and more convenient
* Expert negotiation
* Mortgage
* Title
* Warranty
* Relocation services Connect with a buyer's agent for more information.
Sellers
We've perfected the home-selling process, too, by providing full-fledged service including:
* Pricing your home to sell
* Innovative marketing
* Home preparation advice
* Showing your home
* Expert negotiation
* Real communication – on your terms
* Finding your next home fast With the best Web site in the real estate industry, and the best marketing tools in the business, our agents reach a wider audience of potential buyers, making it easier for them to find your home once it's been listed. And, when the time comes, we can help you find your next home, too.
Connect with a listing agent from CENTURY 21 JRS Realty for more information at www.C21JRS.com.
How to Choose your Listing Agent
Listing Agent Interview Questions
Choose Your Selling Agent with Care
If you're interviewing a listing agent at your home, pay attention to how s/he reacts to talk about your home during the discussion. Choose someone you feel comfortable with. Someone who genuinely believes in your home as much (or more!) than you do. Someone who sees its potential and will work hard to represent it. And, someone who has an innovative marketing plan that will make sure that all potential buyers are exposed to your home.All Century 21 JRS Realty agents are highly trained professionals with the skills, abilities and resources to sell your home. So, when you're choosing a Century 21 JRS Realty agent, all you need to do is find the one that fits your personality and preferences.Formulate a list of questions, and then set out to find your agent. Here are some questions to get you started:Q. If I list my house with an agent, can the same agent represent me in the purchase of my next home?A. Most likely, yes. Ask the agent to explain the agency concept and how it works in your state. The agent who lists your home can usually become your buying agent, too. Just be sure to ask what limitations, if any, your agent's representation will have.Q. If you're my agent, what happens when you're not available?A. Find out how each agent handles the time they're unavailable. Do they use an assistant? Do they have a partner? Whom should you call and when? Can you reach the agent by cell, pager or e-mail? Find out what the contingencies are for all what-if scenarios. Make sure to partner with an agent who will ensure that your needs can be met – all of the time.Q. When did you last sell your own residence? What did you like and dislike about that experience?A. Experience is a great teacher. Selling a home is an emotional experience, and empathy is one of the most powerful emotions. Does your agent understand first-hand what it's like to sell a home? Can s/he provide some lessons learned to help in your experience?Q. What advice would you give me to prepare my home for sale?A. Some agents will suggest that you neutralize your décor, while others may feel they know just the right buyer for your intense (or subdued, as the case may be) color scheme. Should you tear out old carpeting? What about major repairs? Be sure to choose an agent who can analyze your home's strengths and weaknesses – and who can help you know how to accentuate its best features when preparing to sell.Q. What would you tell a buyer who's considering my home?A. Real estate agents should be skilled in discerning the positive features and benefits of any home. Is your home especially appealing because of its floor plan? Because of it's location in a great neighborhood? Or because of a unique kitchen or master suite? Be sure you're comfortable with how s/he plans to represent your home – and that s/he can accurately describe and promote your home's best attributes.Q. What's your personal philosophy of what really sells a home? Is it direct mail marketing, Internet exposure, promotion to other real estate agents or something else?A. Your Century 21 JRS Realty listing agent will build a marketing plan based on his/her answer to this question, and your specific property. Make sure you understand and agree with the agent's perspective.Q. How will you or your company protect me from the general public in the areas of safety, convenience and eliminating unnecessary showings?A. Make sure your agent is willing to operate in a way that makes you feel comfortable and safe – and in a way that makes the selling process as convenient as possible. Discuss whether you would like potential buyers to be screened prior to scheduling showings, and whether you'd like your address to be kept private in marketing efforts. Have this discussion in advance to make sure your agent's philosophies are in line with your preferences.Q. What sold the last three properties you listed?A. Because the answer to this question can differ by market and by home, what's more important than the actual answer is that your agent is able to explain in simple, direct terms which factors contributed to his or her recent sales. If the agent hasn't already addressed it, ask him/her what strengths they see in your home that will help it sell.Q. What advice would you give to a buyer who's considering my home?A. You won't likely be present when your agent talks to potential buyers, so make sure you feel comfortable with how s/he talks about your home – whether the emphasis is on getting the best offer or selling the house quickly.Q. What distinguishes your real estate company from the competitor(s)?A. Is a company large because it reinvests in innovation? Does the agent's real estate firm promise to provide sellers with the best online exposure to sellers? Each organization should have a business philosophy that your agent can easily articulate to you.Q. What distinguishes your personal service from other real estate agents?A. Listen to how the agent describes his/her communication skills and willingness to be there for you – when you need them, in the way you need them. Think about how often you want to communicate, as well as when and how you'd like to receive updates on the sales process. Choose an agent who gives you a confident response to communicating on your terms.After each interview, ask yourself: * Do you feel like the agent is trustworthy and honest? * Does s/he seem realistic when talking about your home or your anticipated home purchase? * Do you communicate well with the agent and vice versa? * Do you feel that the agent sees things from the same point of view? * Would you describe him/her as committed, motivated and experienced? For more information visit our website at www.C21JRS.com
Choose Your Selling Agent with Care
If you're interviewing a listing agent at your home, pay attention to how s/he reacts to talk about your home during the discussion. Choose someone you feel comfortable with. Someone who genuinely believes in your home as much (or more!) than you do. Someone who sees its potential and will work hard to represent it. And, someone who has an innovative marketing plan that will make sure that all potential buyers are exposed to your home.All Century 21 JRS Realty agents are highly trained professionals with the skills, abilities and resources to sell your home. So, when you're choosing a Century 21 JRS Realty agent, all you need to do is find the one that fits your personality and preferences.Formulate a list of questions, and then set out to find your agent. Here are some questions to get you started:Q. If I list my house with an agent, can the same agent represent me in the purchase of my next home?A. Most likely, yes. Ask the agent to explain the agency concept and how it works in your state. The agent who lists your home can usually become your buying agent, too. Just be sure to ask what limitations, if any, your agent's representation will have.Q. If you're my agent, what happens when you're not available?A. Find out how each agent handles the time they're unavailable. Do they use an assistant? Do they have a partner? Whom should you call and when? Can you reach the agent by cell, pager or e-mail? Find out what the contingencies are for all what-if scenarios. Make sure to partner with an agent who will ensure that your needs can be met – all of the time.Q. When did you last sell your own residence? What did you like and dislike about that experience?A. Experience is a great teacher. Selling a home is an emotional experience, and empathy is one of the most powerful emotions. Does your agent understand first-hand what it's like to sell a home? Can s/he provide some lessons learned to help in your experience?Q. What advice would you give me to prepare my home for sale?A. Some agents will suggest that you neutralize your décor, while others may feel they know just the right buyer for your intense (or subdued, as the case may be) color scheme. Should you tear out old carpeting? What about major repairs? Be sure to choose an agent who can analyze your home's strengths and weaknesses – and who can help you know how to accentuate its best features when preparing to sell.Q. What would you tell a buyer who's considering my home?A. Real estate agents should be skilled in discerning the positive features and benefits of any home. Is your home especially appealing because of its floor plan? Because of it's location in a great neighborhood? Or because of a unique kitchen or master suite? Be sure you're comfortable with how s/he plans to represent your home – and that s/he can accurately describe and promote your home's best attributes.Q. What's your personal philosophy of what really sells a home? Is it direct mail marketing, Internet exposure, promotion to other real estate agents or something else?A. Your Century 21 JRS Realty listing agent will build a marketing plan based on his/her answer to this question, and your specific property. Make sure you understand and agree with the agent's perspective.Q. How will you or your company protect me from the general public in the areas of safety, convenience and eliminating unnecessary showings?A. Make sure your agent is willing to operate in a way that makes you feel comfortable and safe – and in a way that makes the selling process as convenient as possible. Discuss whether you would like potential buyers to be screened prior to scheduling showings, and whether you'd like your address to be kept private in marketing efforts. Have this discussion in advance to make sure your agent's philosophies are in line with your preferences.Q. What sold the last three properties you listed?A. Because the answer to this question can differ by market and by home, what's more important than the actual answer is that your agent is able to explain in simple, direct terms which factors contributed to his or her recent sales. If the agent hasn't already addressed it, ask him/her what strengths they see in your home that will help it sell.Q. What advice would you give to a buyer who's considering my home?A. You won't likely be present when your agent talks to potential buyers, so make sure you feel comfortable with how s/he talks about your home – whether the emphasis is on getting the best offer or selling the house quickly.Q. What distinguishes your real estate company from the competitor(s)?A. Is a company large because it reinvests in innovation? Does the agent's real estate firm promise to provide sellers with the best online exposure to sellers? Each organization should have a business philosophy that your agent can easily articulate to you.Q. What distinguishes your personal service from other real estate agents?A. Listen to how the agent describes his/her communication skills and willingness to be there for you – when you need them, in the way you need them. Think about how often you want to communicate, as well as when and how you'd like to receive updates on the sales process. Choose an agent who gives you a confident response to communicating on your terms.After each interview, ask yourself: * Do you feel like the agent is trustworthy and honest? * Does s/he seem realistic when talking about your home or your anticipated home purchase? * Do you communicate well with the agent and vice versa? * Do you feel that the agent sees things from the same point of view? * Would you describe him/her as committed, motivated and experienced? For more information visit our website at www.C21JRS.com
Thursday, March 5, 2009
10 Steps for Marketing Success
10 STEPS FOR MARKETING SUCCESS
Reading all these stories of success may have you dreaming of your own future. Yet you may not be sure how to jump start your own production. Then may I give you my proven marketing methods discovered over my twenty eight years in the mortgage industry. These steps have taken me and my staff to top producer and top income earners in every management and sales position I’ve held.
You may notice, it doesn’t say the ’10 Easiest Steps for Marketing Success’. The mortgage industry is a fabulous industry, but like most things in life ‘it doesn’t come easy’. Yet with effort and focus the mortgage industry is one of the most rewarding careers. Just remember to save money in the busy years, to get you through the slow years.
Use these well worn steps as your road map to marketing success.
1. Define your client or target market?
There are many mortgage business sources, which require a loan originator to focus their efforts to improve their marketing response. That’s not to say you’re so focused you miss an opportunity. Marketing efforts often cost money, and having your marketing focused will improve your chances of attracting prospects. You should also focus on a source you have a passion for. When you have a true interest it will show in your presentation.
A loan originator should have one main marketing focus, or target market, with two or three side sources. The target market is your main focus for marketing material and advertising. This source will need to be developed into your main source of generating production.
The side sources are generally relationship based and generally are a good source for stable reliable business. These sources feed you referral business. The benefit for this source is your professional handling of their client or referral. No one wants to make a recommendation that will cause them to hear the person complain or worse yet lose that person’s business themselves.
2. Review the 32 opportunities?
When you are first entering this industry your sphere of influence starts with friends, family, and anyone you know enough to call and ask for business. These are also the best to make mistakes with while you learn the system and pitfalls of the mortgage business. People who already know you will be more patient with mistakes, and you can learn how to handle the issues without someone yelling at you (hopefully). You will need to be sensitive to the confidentiality of the information you will learn and gain their trust.
The other markets are your choice. Real estate agents are not suggested when first starting out as this group will be the least forgiving, as real estate agents have a tendency to not forget the botched closing that cost them their commission.
The list is not all inclusive, so don’t be afraid to look outside this list.
‘3’ FOOT RULE – Be sure to give everyone that comes within three foot of you your card. Give it to everyone you tip, or meet. Have your card in an easy to access clean place so you can get to them quickly. Do not pass out damaged or dirty cards as that would reflect poorly on your professionalism.
BANKS/CREDIT UNIONS – Many Banks and Credit Unions are limited in their home loan programs which allow for referrals. Reciprocate by referring people that need car loans or other types of loans you do not offer. A reciprocal agreement for services is great networking.
BUILDER ACCOUNTS – It may be hard to get the account of the big builders, but smaller custom builder accounts may be open to a professional mortgage person. Builders are special in that they will have specific demands, and the builder becomes your client over the borrower. Weekly status reports and constant availability and reliability are a must. This type of client is very demanding in that they expect perfection with little room for mistakes, and are very critical of the amount of income they will allow you to make on a loan. The benefit is the business is reliable and consistent, until the subdivision is sold out. It takes six to twelve months for the property to close, but when you are in the builder’s flow of business the closings are reliable which allows you to charge fewer fees. The builder is also doing your marketing as they are the ones recommending you for the loan on the new property.
CLUBS or ORGANIZATIONS – Join. People like to work with people they know even if indirectly through club affiliation. If they have a newsletter, get your business information in the newsletter some how or write an article. Sponsorship can also help you get your name out to the members. Don’t forget the ‘3’ foot rule. Chamber of Commerce may be effective if you can get on the committee to welcome newcomers to the area.
COLD CALLS – Practice makes perfect with cold calling. The more calls you make the more confident you will become. In your presentation, have a script that identifies the benefit points for your target market, and remember you are trying to qualify the prospect to determine if they will be worth bringing in for an appointment. The mind set is you have to hear ‘no’s’ to get the ‘yes’. When cold calling a real estate agent, have your benefit for real estate agent presentation ready and your response to ‘I have a lender I use already’. Make this response sincere with the true benefit to your potential new client.
COLLEGE STUDENTS - College students may be a good market as they may get an FHA loan when parents can qualify for their new home purchase. Parents can benefit by purchasing a home for their college student, instead of paying for dorm fees. After the student graduates they can sell the home. Possibly the equity growth can cover the cost of the student loans. Check FHA or other loan program guidelines for loans with this feature.
COMMUNITY COLLEGES – Try teaming up with an adult education instructor in Real Estate, Finance, etc… that would welcome a mortgage professional to do a short presentation on something applicable to their class or current market – great free advertising.
CONTRACTORS – Home repair specialist often need financing for the improvements or repairs they are proposing to the homeowner. When house prices are raising this is a good market as homeowners decide to improve their current home instead of moving up. Give the contractor flyers or brochure they can pass to their homeowners. The flyers will need to identify the benefits of 1st or 2ND mortgages for home improvements. Major improvements of ‘fair condition’ properties may need an FHA 203k rehabilitation loan or FNMA Renovation type programs.
CONVENTION or SEMINAR ATTENDEES – You can get lists of attendees to real estate home tours, home shows, garden shows, etc… You may need to pay and attend the seminar yourself to get access to the list. Do a mailer to solicit their business, as well as at the convention.
COURTHOUSE RECORDS, FEDERAL & STATE TAX LIENS – Go to the county Recorder’s Office, Federal Courthouse, or County tax collector and get the name of everyone with Federal, State, or County tax liens. County property taxes are best as generally this ensures they own property. Mail an offer to refinance their home to pay off the liens.
CUSTOM CONSTRUCTION/ARCHITECT – Team up with a builder to develop seminars that educate the consumer on ‘How to build their Dream Home’. Custom construction and architects have unique problems with the size of the loan amount. Limited lenders will do big jumbo loan amounts, so ensure you have a lending source.
DEAD LOAN FILE – Going through the cancelled loans “dead loan” files in your office can generate business. Guidelines and programs change, and new products become available. Get permission from your manager before attempting.
FACTORY or PLANT POSTER BOARD – Go to a large factory or assembly plant, and ask the human resource department if you can put a “Still Renting?” or “Need to Consolidate Your Bills?” poster on their bulletin board. Explain to them how you can help their employees. Your ‘angle’ with HR is that a homeowner makes a better employee and may be a more stable worker. Also an employee who is not worrying about paying their bills does a better job at work, and has no wage garnishments. Offer discount loan fees for employees. Placement near the time clock or in the break room works great. An insert in their pay envelope works well too. Make sure the action for the employee is clear and easy to follow, such as an easy phone number to remember or tear off sheets with the number to call.
FARM LEADS – Farm leads are a list of potential borrower that you telemarketer to or do mass mail marketing campaigns. If telemarketing, have a scripted approach. Most title companies will give you a qualified list free in exchange for you using their office services when doing a refinance loan. Farm leads will target an area specified by the parameters you set. Common parameters are loans closed two years ago (gets you the non-prime 2/28 programs, and possible equity built up in the home for cash out); home prices between $150,000 and $250,000 (or what ever range you prefer such as within FHA loan limits); and zip code parameters. Work with your title company rep for all the details available and try to get a list that will reach your chosen target market. Farm lists for renters may also be available. Always remember to ‘scrub’ the list, remove “Do Not Call’ registered numbers.
Reading all these stories of success may have you dreaming of your own future. Yet you may not be sure how to jump start your own production. Then may I give you my proven marketing methods discovered over my twenty eight years in the mortgage industry. These steps have taken me and my staff to top producer and top income earners in every management and sales position I’ve held.
You may notice, it doesn’t say the ’10 Easiest Steps for Marketing Success’. The mortgage industry is a fabulous industry, but like most things in life ‘it doesn’t come easy’. Yet with effort and focus the mortgage industry is one of the most rewarding careers. Just remember to save money in the busy years, to get you through the slow years.
Use these well worn steps as your road map to marketing success.
1. Define your client or target market?
There are many mortgage business sources, which require a loan originator to focus their efforts to improve their marketing response. That’s not to say you’re so focused you miss an opportunity. Marketing efforts often cost money, and having your marketing focused will improve your chances of attracting prospects. You should also focus on a source you have a passion for. When you have a true interest it will show in your presentation.
A loan originator should have one main marketing focus, or target market, with two or three side sources. The target market is your main focus for marketing material and advertising. This source will need to be developed into your main source of generating production.
The side sources are generally relationship based and generally are a good source for stable reliable business. These sources feed you referral business. The benefit for this source is your professional handling of their client or referral. No one wants to make a recommendation that will cause them to hear the person complain or worse yet lose that person’s business themselves.
2. Review the 32 opportunities?
When you are first entering this industry your sphere of influence starts with friends, family, and anyone you know enough to call and ask for business. These are also the best to make mistakes with while you learn the system and pitfalls of the mortgage business. People who already know you will be more patient with mistakes, and you can learn how to handle the issues without someone yelling at you (hopefully). You will need to be sensitive to the confidentiality of the information you will learn and gain their trust.
The other markets are your choice. Real estate agents are not suggested when first starting out as this group will be the least forgiving, as real estate agents have a tendency to not forget the botched closing that cost them their commission.
The list is not all inclusive, so don’t be afraid to look outside this list.
‘3’ FOOT RULE – Be sure to give everyone that comes within three foot of you your card. Give it to everyone you tip, or meet. Have your card in an easy to access clean place so you can get to them quickly. Do not pass out damaged or dirty cards as that would reflect poorly on your professionalism.
BANKS/CREDIT UNIONS – Many Banks and Credit Unions are limited in their home loan programs which allow for referrals. Reciprocate by referring people that need car loans or other types of loans you do not offer. A reciprocal agreement for services is great networking.
BUILDER ACCOUNTS – It may be hard to get the account of the big builders, but smaller custom builder accounts may be open to a professional mortgage person. Builders are special in that they will have specific demands, and the builder becomes your client over the borrower. Weekly status reports and constant availability and reliability are a must. This type of client is very demanding in that they expect perfection with little room for mistakes, and are very critical of the amount of income they will allow you to make on a loan. The benefit is the business is reliable and consistent, until the subdivision is sold out. It takes six to twelve months for the property to close, but when you are in the builder’s flow of business the closings are reliable which allows you to charge fewer fees. The builder is also doing your marketing as they are the ones recommending you for the loan on the new property.
CLUBS or ORGANIZATIONS – Join. People like to work with people they know even if indirectly through club affiliation. If they have a newsletter, get your business information in the newsletter some how or write an article. Sponsorship can also help you get your name out to the members. Don’t forget the ‘3’ foot rule. Chamber of Commerce may be effective if you can get on the committee to welcome newcomers to the area.
COLD CALLS – Practice makes perfect with cold calling. The more calls you make the more confident you will become. In your presentation, have a script that identifies the benefit points for your target market, and remember you are trying to qualify the prospect to determine if they will be worth bringing in for an appointment. The mind set is you have to hear ‘no’s’ to get the ‘yes’. When cold calling a real estate agent, have your benefit for real estate agent presentation ready and your response to ‘I have a lender I use already’. Make this response sincere with the true benefit to your potential new client.
COLLEGE STUDENTS - College students may be a good market as they may get an FHA loan when parents can qualify for their new home purchase. Parents can benefit by purchasing a home for their college student, instead of paying for dorm fees. After the student graduates they can sell the home. Possibly the equity growth can cover the cost of the student loans. Check FHA or other loan program guidelines for loans with this feature.
COMMUNITY COLLEGES – Try teaming up with an adult education instructor in Real Estate, Finance, etc… that would welcome a mortgage professional to do a short presentation on something applicable to their class or current market – great free advertising.
CONTRACTORS – Home repair specialist often need financing for the improvements or repairs they are proposing to the homeowner. When house prices are raising this is a good market as homeowners decide to improve their current home instead of moving up. Give the contractor flyers or brochure they can pass to their homeowners. The flyers will need to identify the benefits of 1st or 2ND mortgages for home improvements. Major improvements of ‘fair condition’ properties may need an FHA 203k rehabilitation loan or FNMA Renovation type programs.
CONVENTION or SEMINAR ATTENDEES – You can get lists of attendees to real estate home tours, home shows, garden shows, etc… You may need to pay and attend the seminar yourself to get access to the list. Do a mailer to solicit their business, as well as at the convention.
COURTHOUSE RECORDS, FEDERAL & STATE TAX LIENS – Go to the county Recorder’s Office, Federal Courthouse, or County tax collector and get the name of everyone with Federal, State, or County tax liens. County property taxes are best as generally this ensures they own property. Mail an offer to refinance their home to pay off the liens.
CUSTOM CONSTRUCTION/ARCHITECT – Team up with a builder to develop seminars that educate the consumer on ‘How to build their Dream Home’. Custom construction and architects have unique problems with the size of the loan amount. Limited lenders will do big jumbo loan amounts, so ensure you have a lending source.
DEAD LOAN FILE – Going through the cancelled loans “dead loan” files in your office can generate business. Guidelines and programs change, and new products become available. Get permission from your manager before attempting.
FACTORY or PLANT POSTER BOARD – Go to a large factory or assembly plant, and ask the human resource department if you can put a “Still Renting?” or “Need to Consolidate Your Bills?” poster on their bulletin board. Explain to them how you can help their employees. Your ‘angle’ with HR is that a homeowner makes a better employee and may be a more stable worker. Also an employee who is not worrying about paying their bills does a better job at work, and has no wage garnishments. Offer discount loan fees for employees. Placement near the time clock or in the break room works great. An insert in their pay envelope works well too. Make sure the action for the employee is clear and easy to follow, such as an easy phone number to remember or tear off sheets with the number to call.
FARM LEADS – Farm leads are a list of potential borrower that you telemarketer to or do mass mail marketing campaigns. If telemarketing, have a scripted approach. Most title companies will give you a qualified list free in exchange for you using their office services when doing a refinance loan. Farm leads will target an area specified by the parameters you set. Common parameters are loans closed two years ago (gets you the non-prime 2/28 programs, and possible equity built up in the home for cash out); home prices between $150,000 and $250,000 (or what ever range you prefer such as within FHA loan limits); and zip code parameters. Work with your title company rep for all the details available and try to get a list that will reach your chosen target market. Farm lists for renters may also be available. Always remember to ‘scrub’ the list, remove “Do Not Call’ registered numbers.
FLOOR DUTY – The Company you work for may do advertising. Floor duty is when the prospect calls are coming in to the company from their advertising. Floor duty allows you to handle the incoming sales calls. Luck of the draw on this one, but morning is usually the best as people will generally take care of important issues like buying a home first thing in the morning.
FOR SALE BY OWNERS – Teach them how to sell their own home. Sell how you can qualify the borrower, and get them their financing. Open house kits (explained later in this section) can also be used for this market.
HOME BUYER SEMINARS – develop a seminar to educate first-time home buyers on how the mortgage lending process works, and what to expect. Mortgage Trainers of North America has a Home Buyer Seminar already complete for your use. For more information and the cost, check the website http://www.mtgtna.com/. After the seminar, invite the attendees for a quick prequalification.
JUST CLOSED REAL ESTATE – Get a farm list or county recorders records of recently closed loans from a specific area or price range. Solicit these leads for 100% and 125% LTV second mortgage programs for home improvement. Many new buyers have improvement projects or yards to complete.
KIOSK – These stands in the Malls can be affective ways to meet people. Placement would depend on your target market and where they are likely to shop. If you have a wireless laptop computer, you could do quick pre-quals on the spot.
MARKET TRENDS – Catch the Wave – Look for trends in the market or new hot product offerings. Title companies may offer a newsletter service that can keep you informed of market trends along with information on local house sales prices statistics. Watch the trends of hot products with wholesale lender flyers or go to the lender’s web sites. Set your target market based on who will benefit from the new hot product offering. Here are some examples of trends.
When house prices soar, start a campaign to remodel their current home to make it what they want. Many homeowners will not be able to move as the price of a better house will be outside their budget. Therefore they will choose to do a ‘cash out’ refinance or Home Equity Line of Credit (HELOC) to cover the costs of remodeling or room addition projects. Teaming up with a contractor (make sure they are licensed) can help reach these borrowers.
When the economy slows, farm your past clients for leads. Market for debt consolidation loans is very helpful for people with heavy debt burdens. January is always a good month for debt consolidation loans as people want to payoff last years and holiday debts. January through April is good for new home buyers with income tax refund money.
June is a big wedding month, so hook up with a bridal shop to offer free home buyer qualification. Set up a Kiosk in a mall during the spring outside a bridal shop, or set up a table inside a bridal shop. Many wedding couples get thousands for their new start. They in turn may want to purchase a home. Many will even close on the house before the wedding, so this marketing campaign for wedding planners can be offered all year long.
Sometimes the easiest approach to marketing can be to jump on the wave of business and ride it. Look to see what the hot new markets are, and focus your efforts on that business. Option Arm programs were the last market trend. What is the trend today? It’s important to pay attention to trends. When the market moves, if you’re not watching the industry indicators, reading the industry magazines, newsletters, etc… you could miss an opportunity.
MEDICAL PROFESSIONALS, FIREMEN, POLICE OFFICERS, OR TEACHERS – There are special programs available for professionals in your community. FNMA and FHLMC both have high LTV programs. Get details of the loan programs on their websites. You can find links at www.mtgtna.com/links. These programs allow for less down payment or down payment assistance programs. When approaching this market, advertise in areas these professionals would read or circulate. Professionals are use to making referrals to their friends and collages, so be sure to ask for referrals.
MILITARY PERSONNEL – Present the benefits you can do for military people. Promote “free pre-qualifications” or “zero down financing” to compete with VA loans. When National Guardsmen are called to active duty, they will generally get eligibility for VA home loans. This is unique to war times, and a good niche to sale when VA loans are available to you.
OPEN HOUSE – Real estate agents may want for safety reasons to have someone sit with them during an open house. Beyond safety reasons, having the ability to qualify any potential buyers there on the spot is a plus. Here is an opportunity to meet a potential new client who is in the market to purchase a property. You could pull their credit and interview them on the spot. If they do not purchase the property, maybe they will purchase another property.
Open house kits can be prepared in advance. The kit gives the person two or three scenarios on payments, down payment requirements, qualifying income needs, house amenities or special features list. Open house kits can also include information on nearby amenities such as schools, popular stores, local highlights of interest, chamber information, and other information useful to a potential purchaser for the home.
You could drop-in to an Open House, and talk to the real estate agent. Open houses don’t have a ‘gate keeper’ like the real estate office. Treat as you would a cold call. If agent is not busy, it’s a good time to pitch your services.
PROFESSIONAL CONTACTS – Bankruptcy attorney, financial consultants, divorce attorney, CPA or Bookkeeper, and other professionals that work with clients that need the equity of their home or understand the value of home ownership. These professionals need a qualified mortgage professional to refer their clients. A financial planner may want a homeowner to refinance and use the equity for investments with higher rate of return. An accountant may advise a client they need to purchase a home for the tax write off. Bankruptcy attorney may advise a different path from bankruptcy. Such as a debt consolidation when a client has excessive home equity, or paying off the chapter 13 bankruptcy early with a home equity refinance.
PUBLIC INFORMATION SOURCES – There are public announcements for marriage licenses, job promotions, bankruptcy filings, divorce filings, or other filings that would give you a reason for approach.
REAL ESTATE AGENTS – The goal of having a steady stream of real estate agent business is the dream of most loan originators. The relationship between the real estate agent and loan originator is difficult to keep consistent. Often the relationship is only as good as the last loan transaction. Real estate agents have many loan originators contending for their business, all offering better products, better service, and who knows what. Keep in mind that it is illegal according to RESPA to pay a real estate agent for a lead.
So if you cannot buy the real estate agent’s loyalty how do you keep the relationship? Excellent customer service is the best way. Don’t miss a close of escrow date, EVER! Keep the real estate agent informed with weekly status reports. Communication is Key! Keep in mind the Privacy Laws governs your actions as to the amount of information you may share with the real estate agents involved in the transaction.
Listing Agents – When you have a purchase transaction, keep the listing agent well informed as this is an opportunity for a new source. By keeping them in the information loop, you may just earn their business. Introduce yourself when you get the purchase contract. Let them know when the appraisal is being ordered and ask how they want to give access to the property. Call and inform them when the appraisal is received and the appraised value, and when closing docs are ordered and at title. After you call the listing agent to let them know the transaction has funded, let them know you’d like to work with them. Give them your quick scripted presentation for new business, and ask for an appointment to discuss how you can help them close loans. Maybe show them the ‘Open House Kits’ you use for listing agents, and your willingness to sit at open houses.
Real estate agents can give referrals to other real estate agents and purchasers, but only if they trust you to get the loan closed. Best way to get past the ‘Gate Keeper’. Ask the agents for referrals to other agents in their office. Meet the real estate agent at their office so they can introduce you around to the other agents personally.
REAL ESTATE INVESTOR – Develop a seminar educating consumers on how to use the equity in their current properties to buy more properties. Some companies may even go further by lining up renters with a leasing agent for their investment property clients.
RECENT COLLEGE GRADUATES – Get lists of all college graduates from your local colleges and vocational-tech schools. These people often have just gotten new jobs, received graduation money, and may be looking to purchase a home or condo.
REFERRALS – This is the key to success. This is the best source of business for any business. A warm lead to call, and repeat customers keep the commissions stable more than any other source of business. Just doing a good job may not generate a referral. Marketing follow up systems work well to stimulate referrals. If you feel you deserve the business, ASK FOR IT! Give the borrower many opportunities to give you referrals, ask often, and give them more than one card so they can pass them out. You don’t want to be pushy, but asking politely is expected. Some top producers operate on a “By Referral Only” basis. Once the flow of referrals start you may never have to worry about where your business is coming from, even in hard times.
RENTERS – This market can have different approaches, such as rent vs. purchase argument. Solicit the rental market and educate them on the cost of not purchasing a home. A large percentage of the current renters, do not believe they will qualify. They may not know how much money it takes, or whether they have good credit or not. They are afraid to purchase, as their parents were renters, and they truly feel homeownership is for someone else. How can you tap this market and let them know they may qualify? Target the renters with new home buying seminars, or mail campaign to apartment complexes telling them “Renting is Hazardous to Your Wealth”.
REVERSE MORTGAGE MARKET – Solicit retirees that have equity or free and clear properties. Reverse mortgages is a niche as not everyone will want this type of loan. But for those elderly homeowners, it can be a great relief of extra money for medical expenses. This may also be the next wave of business, as the ‘Baby Boomer’ generation turns 62 this year.
WEB SEARCH ENGINES – Once you have a website, you can purchase services from search engines to drive business to your site. Prices vary for this service and are called website optimization. There are ways to make your web site rank high in the search engines without paying for a service. You will need to do your homework to learn how to use key words in your home page that will give your site priority consideration with search engines.
3. IDENTIFY YOUR TARGET MARKET
Your first step is to identify who you want to have as a client or target market. What are your strong points or personal desires? If you like working with first time homebuyers and overcoming their challenges, then this can be your target market. Pick a target market that you understand their true needs and desires, or research to find out what they need. Maybe you remember your first experience in buying a home, and feel you could do better with communication to the buyer on the expectations of the process. Put your mind set in the new first-time homebuyers mind, and determine what issues and fears they may have. Make a list of first-time homebuyer concerns and possible issues. Then work on the loan features and benefits to assist with these issues.
Setting production goals are a great start in making a marketing plan. Preparing goals for your market approach saves time and frustration. If you don’t have goals sheets for planning your marketing approach, you may access free Sales Goal Sheet Templates at http://www.mtgtna.com/. Goals allow you to focus your efforts and budget.
4. REACHING YOUR MARKET
Your budget may determine your approach? Build into every client transaction a percentage of income for the marketing budget. Marketing does not have to be expensive or time consuming. Referrals are the cheapest as they generally just take an effort to ask for the referral, and then follow up with the lead. It is also courteous to send a thank you for the lead received. Due to privacy rights, you cannot disclose any details of the referrals business. Follow the laws required in your state and federal advertising regulations, and focus your presentation on your target market. Do not attempt the ‘shot gun’ approach that attempt to hit every prospective borrower. Your message will be lost in the maze of information. Also your advertising should not deter protected groups from accessing your services. Keep in mind that generally your first approach to any market is to get them to ‘call you’. So that is your focus.
BROCHURES – These can be nice for hand outs, and make the company look more professional with a brochure that outlines their services. Professional services and templates on the internet can help with development. When approaching professionals and human resource departments, a brochure works well to let them know the benefits of using you, your service, and your company. Benefits outlined in the brochure will need to be for your target market, and again not the shot gun approach of everything you have ever done.
E-MAIL MARKETING CAMPAIGN – Although there are costs and work involved in setting up an e-mail marketing campaign, there are clear benefits. You can purchase a data base if you do not have one, but the norm is to be invited to use someone’s email. The point is that once you get started, you will find e-mailing to be cost-effective.
FLYERS – Do not make a flyer that will attract all possible prospects. Do not let the flyer become too busy or misleading. The flyers should have a message that will meet the marketing goal, generally to generate action by the targeted market. The flyer will need to hit on the estimated motivation of the target market. What specific services will the potential borrower want from you, the mortgage professional?
GIFTS – There are gift baskets, wine with customized company name labels, plants, seed packets, fruit baskets, new home welcome baskets, and many other ways to spend your marketing dollars. There are also regulations on gifts from people in the mortgage business, so keep gifts under $50. If you give a present to one client, you should give a present to all. Excessive or expected gifts may be considered an illegal inducement or referral fee.
MAILING CAMPAIGN – There are costs involved in this approach, and the return is estimated at 2-3% being a good response. There are marketing services for a fee that will handle the mailing for you. These services make mailing campaigns easy as long as your database is up-to-date and accurate. Data bases can be purchased, but may not be current or may be over-used by other loan originators. Farm lists from title companies can also be used for your data base. What type of mailer will you use?
POSTCARDS – An effective mailer as most people will read the postcard before they throw. Postcards also cost less to mail. You have a very brief area to get your target market to take action, so make sure the message is simple and action requesting is clear. Call me!
GREETING CARDS – Holiday cards, birthday cards, and thank you's are all great to keep in touch with past clients. It also gives you another chance to ask for referrals, keep your data base current, and just basically keep your name in the fore front of their mind.
INVITATION – Invite past and potential clients to special events, “Homebuyer Seminar”, open house at your office, or holiday party. Have a door prize (less than $50 in value). Your client will get one chance in the drawing for every person they bring. How about a welcome to the neighborhood party you throw for your new client and their neighbors.
NEWSLETTERS – Newsletters can maintain communication between you and your clients. Marketing service companies can develop a newsletter for you, or you can write them yourself. Keep in mind that most newsletters are informational and do not normally ask for the business like marketing material.
NEWSPAPER/MAGAZINE PRINT-ADS – These can be expensive, but if your target market reads the paper or magazine the cost may be off set by the amount of applications it generates. Ask for a Media Kit to determine circulation and demographics of their readers. Ads should not be too busy. Keep it simple as you are just trying to get the phone to ring. Sometimes doing the ad in black with white writing can help it stand out from the other newspaper print ads.
PROMOTIONAL ITEMS – Pens, calendars, pads, rulers, game schedule charts, magnets, key chains, go more for useful rather than unique although both are great. Recipe cards are unique and often kept. T-shirts, polo shirts, hats, and bags are nice, but can be expensive and are considered inducements which are illegal. Why are you giving them the promotional item? The answer may help you decide what to use, if anything.
RADIO ADVERTISEMENT – Radio advertising on your local station is not too expensive, especially sponsoring the weather or traffic reports. You’ll need to run the ad at least six months. What radio station will your target market listen too? What time?
FREE ADVERTISING – there are many sources of free advertising. The following is a small list.
Word of mouth, referrals is the best.
Newspaper article written about you, or a press release.
Speeches and programs for civic groups.
Teach a course on home financing at the community college.
Business card on bulletin boards at stores and community centers.
Write newspaper article or column
Speak at Real Estate meetings.
Speak at high school career day programs
Three foot rule, anyone within three feet gets your card and presentation.
What more can you think of?
5. COMPLIANCE WITH ADVERTISING
Make sure all your marketing materials meet state and federal requirements. Federal laws require advertisements to be clear and not misleading. Per the Truth In Lending Act (TILA), any rate quotes or implied payment amounts will require an annual percentage rate (APR) disclosure. When advertising, the posted APR cannot be any less conspicuous that the rate quoted.
Types of discrimination identified by the courts are:
· Overt evidence of discrimination, “When a lender blatantly discriminates on a prohibitive bases.”
· Disparate Treatment, “When a lender treats an applicant differently based on one of the prohibited factors.” This is the most concern in pricing. For example, you find your Hispanic clients harder to work with due to credit or employment issues, so you price their loans higher than your 800 credit score white clients. This is not a rate issue. This is a fees being charged to the borrower issue – pricing. It may not be directly intentional, but will your excuse hold up in court?
· Disparate Impact, “When a lender applies a practice uniformly to all applicants, but the practice has a discriminatory effect on a prohibited basis and is not justified by business necessity,” which hurts all parties involved with the lending transaction. For example, a company has all their advertising in Spanish with Spanish Magazines. This may be disparate impact to other protected groups such as some blacks that may not speak or read Spanish.
Home Ownership and Equity Protection Act of 1994
The Federal Reserve Board published its Truth-in-Lending Final Rule with Advertising standards that require additional information about rates, monthly payment, and other loan features. The final rule bans seven deceptive or misleading advertising practices and strengthens the clear and conspicious standards for advertising disclosures. The following is brief review of the prohibited factors:
1. Advertisements that state ‘fixed’ rates or payments for loans but rates can vary with only a limited fixed rate period.
2. Advertisements that compare an actual or hypothetical rate or payment obligation unless the advertisement states the rates or payments that apply over the full term of the loan.
3. Advertisements that characterize the products offered as ‘government loan programs’ even though the advertised products are not government-supported or sponsored loans.
4. Advertisements that display the name of the consumer’s current mortgage lender, unless prominently discloses that advertisement is from a mortgage lender not affiliated with the consumer’s current lender.
5. Advertisements that make claims of debt elimination if the product advertised would merely replace one debt obligation with another.
6. Advertisements that create a false impression that the mortgage broker or lender is a ‘counselor’ for the consumer.
7. Foreign-language advertisements, such as a low introductory ‘teaser’ rate, while the required disclosures are provided only in English.
These final rules will be phased in and took affect 10-1-09.
Fair lending laws require advertisements going to the public to disclose the equal opportunity housing symbol ( Equal Housing Lender.) Fair lending laws require you to not discriminate against any protected groups and comply with Fair Lending Laws. Be mindful of the image your advertising is taking. Most state laws require advertising disclose the complete name and address of the mortgage company and not just the loan originator. If the advertising is for ‘real estate professional’s only’ this statement must be on the advertisement or flyer. Supervisors should review all advertising to the public.
6. CHOOSING YOUR APPROACH
Next Step is to determine what form of advertising you will use to reach your market. What approach will give you the best possibility of reaching this target market? The first approach may not work initially. Repetitive advertising is ideal as people will normally need to see something three or more times before they act. Maybe do a repeating ad in the paper, or radio. Send a mailer more than once. The ad or mailer can vary each time, but keep the heading or company logo or slogan so they can recognize the advertisement. Plan out your marketing for the year or at least six months, then track your responses and fine tune your campaign as you go.
7. DEVELOP AFFECTIVE MATERIALS
Next step you will need to develop marketing to get the phone to ring. What ever approach you choose, you will need to make sure you identify how you will overcome the issues identified for your target market. Not so much loan program as much as solutions (benefits) adapted to those clients. Now communicate in the material that you are available, and what are your solutions.
Be creative but keep the focus on the target market. What will get them to pick up the phone and call you? Create effective direct response advertisements by including these key marketing tips.
Grabber – The ad needs to grab the readers’ attention. Ask yourself, “What is it I do that really benefits the borrower?”
Interest – Having the reader answer “Yes” to questions works well and makes it easy for them to say yes to your call to action or services.
Conviction – You must create a belief that you can help them achieve their goal. Testimonials and success stories work well.
Call-to-action – Somewhere in your ad you need to instruct the prospect what action to do next. Call, email, complete response card, or so on. Creating a fear of loss with limited time offer will also motivate action.
Easy – It should be easy to reach you. Use toll free phone number, website address, and email.
You have to believe in what you’re selling. You are selling yourself, your company, and your services. You need to believe you will give the best service for the borrower, and not just close the loan for commission. When the focus is on the borrower, the money in your pocket will follow.
Selling yourself should be easy. Wouldn’t you do business with you? If your answer is no, we offer an ethics and law course. If the answer is no because you’re new, then focus your sales efforts on selling your company. It’s OK to be new and learning the business. Just make sure you have a mentor to review the information you are telling the borrower.
SIX BUYING MOTIVATORS
What motivates a person to purchase? Their desire for gain, fear of loss, comfort and convenience, security and protection, pride of ownership, and satisfaction of emotion. The loan originator must peak the interest and inspire the prospect to proceed with the loan and make a decision to proceed with the loan triggering one of these motives in the prospect. What will motivate your target market?
TYPES OF ADS
There are two main types of advertising and a method to combine both ads.
Brand or Image marketing promotes name recognition, and gives you the opportunity to sell your reputation or your company’s mission. This type of ads goal is to build awareness and interest.
Call-to-action or product marketing promotes the reader to do something or act on the offer. The ads goal is to present an offer and prompt a person to act.
Whole or Total approach ad incorporates both goals. Uniformity of advertising will allow brand or name recognition. Ads may use the same layout, font, logo, and/or slogan, picture, or other repetitive feature to the ad which will allow the reader quick recognition of who is the advertiser. Beyond the repetitive advertising features the ad is designed to meet your advertising strategy goal.
An advertising strategy should include the answers to the following questions:
Who is your target market?
What do I want the target market to know about me, my services, and/or my company?
Present one clear idea. Clear single focused communication will be understood the best.
Convey benefits not features. When you think of feature, ask yourself – “which means” what?
Why am I better than the hundreds of other loan originators?
COMPLIANCE WITH LAWS
Stay in compliance with advertising and lending laws. I would suggest a law class if you do not know an advertisement implying a rate or payment requires an APR, or that Fair Lending Laws require no discrimination and the display of the ECOA house symbol. There are also laws that prohibit you from not taking an application for a borrower that wants to make application for a home loan. Always ensure all advertising meets the federal and state law requirements to avoid fines and un-professional approach to the market.
8. THE BUYING CYCLE
The phone rings. You’re in the buying cycle. Now is the time to sell. What are you selling? First you are selling yourself, then your services (money), and your company. Don’t over sell with this initial contact. Remember this is for building interest to come in for an appointment. If needed, have your script ready so you don’t stumble and sound incompetent on the phone. Give a short pitch, and then ask if you can ask them a few questions. Screen the calls to determine viable prospects, and set appointments to meet the prospects that are serious about purchasing or refinancing. Make the decision if they should be brought in for an appointment, set up in future follow-up for a call back, or cut loose.
STEPS IN THE BUYING CYCLE
1ST step-Awareness – Get the phone to ring. You’re not trying to close the sale, just get a call. Do not make your marketing so busy that the message to call you is lost in the information. The message to call will need to touch the motivation of the target market.
2nd Step–Peak Interest–Screen the call and get the appointment, build rapport.
3rd Step – Inspire action to use you for their loan. At the loan application, convey value.
4th Step-Decision to close the loan
Then the cycle starts back to awareness. You expect referrals, and for them to use you again in the future. Your clients will react to your advertising in steps. People do not work with you because you make them understand every step; they work with your because they feel understood and trust you. No one wants to be sold; they want to make an informed decision to buy.
9. MARKET TRACKING
All marketing material should be tracked. If you receive no calls from a flyer you’ll know to not use it again, or you may want to reuse one that was successful. There are many ways to track. Some use an extension, code word or name for prospects to ask for such as Fred, even though there is no one in the office named Fred. The code word will let you know which marketing material generated the lead. You can also just ask how they heard about you and note on feedback worksheets. Feedback worksheets work well, and make analyzing results easier. Having a 1-2% return on a mass mailing is average. After analyzing the results of a marketing campaign, evaluate and make adjustments for future marketing campaigns.
10. DEVELOP A PROSPECT INTO A CLIENT AND REFERRAL SOURCE
The last step in marketing is the appointment, make sure you listen. Listen to what their concerns and fears are and then focus your presentation based on their personal needs. You need to create desire to use you for their home purchase or refinance. If you convey value and instill trust, they may not shop you. Testimonials and other success stories may help if they relate to issues the borrower is also facing.
A problem with many sales people is they talk themselves out of the sale. They are too busy talking, and they forget to listen. Experts have proven the best communicator is a LISTENER! How do you show them you are listening? Meet or address their needs or concerns they have told you they have. Good luck with your 2008 marketing campaign.
FOR SALE BY OWNERS – Teach them how to sell their own home. Sell how you can qualify the borrower, and get them their financing. Open house kits (explained later in this section) can also be used for this market.
HOME BUYER SEMINARS – develop a seminar to educate first-time home buyers on how the mortgage lending process works, and what to expect. Mortgage Trainers of North America has a Home Buyer Seminar already complete for your use. For more information and the cost, check the website http://www.mtgtna.com/. After the seminar, invite the attendees for a quick prequalification.
JUST CLOSED REAL ESTATE – Get a farm list or county recorders records of recently closed loans from a specific area or price range. Solicit these leads for 100% and 125% LTV second mortgage programs for home improvement. Many new buyers have improvement projects or yards to complete.
KIOSK – These stands in the Malls can be affective ways to meet people. Placement would depend on your target market and where they are likely to shop. If you have a wireless laptop computer, you could do quick pre-quals on the spot.
MARKET TRENDS – Catch the Wave – Look for trends in the market or new hot product offerings. Title companies may offer a newsletter service that can keep you informed of market trends along with information on local house sales prices statistics. Watch the trends of hot products with wholesale lender flyers or go to the lender’s web sites. Set your target market based on who will benefit from the new hot product offering. Here are some examples of trends.
When house prices soar, start a campaign to remodel their current home to make it what they want. Many homeowners will not be able to move as the price of a better house will be outside their budget. Therefore they will choose to do a ‘cash out’ refinance or Home Equity Line of Credit (HELOC) to cover the costs of remodeling or room addition projects. Teaming up with a contractor (make sure they are licensed) can help reach these borrowers.
When the economy slows, farm your past clients for leads. Market for debt consolidation loans is very helpful for people with heavy debt burdens. January is always a good month for debt consolidation loans as people want to payoff last years and holiday debts. January through April is good for new home buyers with income tax refund money.
June is a big wedding month, so hook up with a bridal shop to offer free home buyer qualification. Set up a Kiosk in a mall during the spring outside a bridal shop, or set up a table inside a bridal shop. Many wedding couples get thousands for their new start. They in turn may want to purchase a home. Many will even close on the house before the wedding, so this marketing campaign for wedding planners can be offered all year long.
Sometimes the easiest approach to marketing can be to jump on the wave of business and ride it. Look to see what the hot new markets are, and focus your efforts on that business. Option Arm programs were the last market trend. What is the trend today? It’s important to pay attention to trends. When the market moves, if you’re not watching the industry indicators, reading the industry magazines, newsletters, etc… you could miss an opportunity.
MEDICAL PROFESSIONALS, FIREMEN, POLICE OFFICERS, OR TEACHERS – There are special programs available for professionals in your community. FNMA and FHLMC both have high LTV programs. Get details of the loan programs on their websites. You can find links at www.mtgtna.com/links. These programs allow for less down payment or down payment assistance programs. When approaching this market, advertise in areas these professionals would read or circulate. Professionals are use to making referrals to their friends and collages, so be sure to ask for referrals.
MILITARY PERSONNEL – Present the benefits you can do for military people. Promote “free pre-qualifications” or “zero down financing” to compete with VA loans. When National Guardsmen are called to active duty, they will generally get eligibility for VA home loans. This is unique to war times, and a good niche to sale when VA loans are available to you.
OPEN HOUSE – Real estate agents may want for safety reasons to have someone sit with them during an open house. Beyond safety reasons, having the ability to qualify any potential buyers there on the spot is a plus. Here is an opportunity to meet a potential new client who is in the market to purchase a property. You could pull their credit and interview them on the spot. If they do not purchase the property, maybe they will purchase another property.
Open house kits can be prepared in advance. The kit gives the person two or three scenarios on payments, down payment requirements, qualifying income needs, house amenities or special features list. Open house kits can also include information on nearby amenities such as schools, popular stores, local highlights of interest, chamber information, and other information useful to a potential purchaser for the home.
You could drop-in to an Open House, and talk to the real estate agent. Open houses don’t have a ‘gate keeper’ like the real estate office. Treat as you would a cold call. If agent is not busy, it’s a good time to pitch your services.
PROFESSIONAL CONTACTS – Bankruptcy attorney, financial consultants, divorce attorney, CPA or Bookkeeper, and other professionals that work with clients that need the equity of their home or understand the value of home ownership. These professionals need a qualified mortgage professional to refer their clients. A financial planner may want a homeowner to refinance and use the equity for investments with higher rate of return. An accountant may advise a client they need to purchase a home for the tax write off. Bankruptcy attorney may advise a different path from bankruptcy. Such as a debt consolidation when a client has excessive home equity, or paying off the chapter 13 bankruptcy early with a home equity refinance.
PUBLIC INFORMATION SOURCES – There are public announcements for marriage licenses, job promotions, bankruptcy filings, divorce filings, or other filings that would give you a reason for approach.
REAL ESTATE AGENTS – The goal of having a steady stream of real estate agent business is the dream of most loan originators. The relationship between the real estate agent and loan originator is difficult to keep consistent. Often the relationship is only as good as the last loan transaction. Real estate agents have many loan originators contending for their business, all offering better products, better service, and who knows what. Keep in mind that it is illegal according to RESPA to pay a real estate agent for a lead.
So if you cannot buy the real estate agent’s loyalty how do you keep the relationship? Excellent customer service is the best way. Don’t miss a close of escrow date, EVER! Keep the real estate agent informed with weekly status reports. Communication is Key! Keep in mind the Privacy Laws governs your actions as to the amount of information you may share with the real estate agents involved in the transaction.
Listing Agents – When you have a purchase transaction, keep the listing agent well informed as this is an opportunity for a new source. By keeping them in the information loop, you may just earn their business. Introduce yourself when you get the purchase contract. Let them know when the appraisal is being ordered and ask how they want to give access to the property. Call and inform them when the appraisal is received and the appraised value, and when closing docs are ordered and at title. After you call the listing agent to let them know the transaction has funded, let them know you’d like to work with them. Give them your quick scripted presentation for new business, and ask for an appointment to discuss how you can help them close loans. Maybe show them the ‘Open House Kits’ you use for listing agents, and your willingness to sit at open houses.
Real estate agents can give referrals to other real estate agents and purchasers, but only if they trust you to get the loan closed. Best way to get past the ‘Gate Keeper’. Ask the agents for referrals to other agents in their office. Meet the real estate agent at their office so they can introduce you around to the other agents personally.
REAL ESTATE INVESTOR – Develop a seminar educating consumers on how to use the equity in their current properties to buy more properties. Some companies may even go further by lining up renters with a leasing agent for their investment property clients.
RECENT COLLEGE GRADUATES – Get lists of all college graduates from your local colleges and vocational-tech schools. These people often have just gotten new jobs, received graduation money, and may be looking to purchase a home or condo.
REFERRALS – This is the key to success. This is the best source of business for any business. A warm lead to call, and repeat customers keep the commissions stable more than any other source of business. Just doing a good job may not generate a referral. Marketing follow up systems work well to stimulate referrals. If you feel you deserve the business, ASK FOR IT! Give the borrower many opportunities to give you referrals, ask often, and give them more than one card so they can pass them out. You don’t want to be pushy, but asking politely is expected. Some top producers operate on a “By Referral Only” basis. Once the flow of referrals start you may never have to worry about where your business is coming from, even in hard times.
RENTERS – This market can have different approaches, such as rent vs. purchase argument. Solicit the rental market and educate them on the cost of not purchasing a home. A large percentage of the current renters, do not believe they will qualify. They may not know how much money it takes, or whether they have good credit or not. They are afraid to purchase, as their parents were renters, and they truly feel homeownership is for someone else. How can you tap this market and let them know they may qualify? Target the renters with new home buying seminars, or mail campaign to apartment complexes telling them “Renting is Hazardous to Your Wealth”.
REVERSE MORTGAGE MARKET – Solicit retirees that have equity or free and clear properties. Reverse mortgages is a niche as not everyone will want this type of loan. But for those elderly homeowners, it can be a great relief of extra money for medical expenses. This may also be the next wave of business, as the ‘Baby Boomer’ generation turns 62 this year.
WEB SEARCH ENGINES – Once you have a website, you can purchase services from search engines to drive business to your site. Prices vary for this service and are called website optimization. There are ways to make your web site rank high in the search engines without paying for a service. You will need to do your homework to learn how to use key words in your home page that will give your site priority consideration with search engines.
3. IDENTIFY YOUR TARGET MARKET
Your first step is to identify who you want to have as a client or target market. What are your strong points or personal desires? If you like working with first time homebuyers and overcoming their challenges, then this can be your target market. Pick a target market that you understand their true needs and desires, or research to find out what they need. Maybe you remember your first experience in buying a home, and feel you could do better with communication to the buyer on the expectations of the process. Put your mind set in the new first-time homebuyers mind, and determine what issues and fears they may have. Make a list of first-time homebuyer concerns and possible issues. Then work on the loan features and benefits to assist with these issues.
Setting production goals are a great start in making a marketing plan. Preparing goals for your market approach saves time and frustration. If you don’t have goals sheets for planning your marketing approach, you may access free Sales Goal Sheet Templates at http://www.mtgtna.com/. Goals allow you to focus your efforts and budget.
4. REACHING YOUR MARKET
Your budget may determine your approach? Build into every client transaction a percentage of income for the marketing budget. Marketing does not have to be expensive or time consuming. Referrals are the cheapest as they generally just take an effort to ask for the referral, and then follow up with the lead. It is also courteous to send a thank you for the lead received. Due to privacy rights, you cannot disclose any details of the referrals business. Follow the laws required in your state and federal advertising regulations, and focus your presentation on your target market. Do not attempt the ‘shot gun’ approach that attempt to hit every prospective borrower. Your message will be lost in the maze of information. Also your advertising should not deter protected groups from accessing your services. Keep in mind that generally your first approach to any market is to get them to ‘call you’. So that is your focus.
BROCHURES – These can be nice for hand outs, and make the company look more professional with a brochure that outlines their services. Professional services and templates on the internet can help with development. When approaching professionals and human resource departments, a brochure works well to let them know the benefits of using you, your service, and your company. Benefits outlined in the brochure will need to be for your target market, and again not the shot gun approach of everything you have ever done.
E-MAIL MARKETING CAMPAIGN – Although there are costs and work involved in setting up an e-mail marketing campaign, there are clear benefits. You can purchase a data base if you do not have one, but the norm is to be invited to use someone’s email. The point is that once you get started, you will find e-mailing to be cost-effective.
FLYERS – Do not make a flyer that will attract all possible prospects. Do not let the flyer become too busy or misleading. The flyers should have a message that will meet the marketing goal, generally to generate action by the targeted market. The flyer will need to hit on the estimated motivation of the target market. What specific services will the potential borrower want from you, the mortgage professional?
GIFTS – There are gift baskets, wine with customized company name labels, plants, seed packets, fruit baskets, new home welcome baskets, and many other ways to spend your marketing dollars. There are also regulations on gifts from people in the mortgage business, so keep gifts under $50. If you give a present to one client, you should give a present to all. Excessive or expected gifts may be considered an illegal inducement or referral fee.
MAILING CAMPAIGN – There are costs involved in this approach, and the return is estimated at 2-3% being a good response. There are marketing services for a fee that will handle the mailing for you. These services make mailing campaigns easy as long as your database is up-to-date and accurate. Data bases can be purchased, but may not be current or may be over-used by other loan originators. Farm lists from title companies can also be used for your data base. What type of mailer will you use?
POSTCARDS – An effective mailer as most people will read the postcard before they throw. Postcards also cost less to mail. You have a very brief area to get your target market to take action, so make sure the message is simple and action requesting is clear. Call me!
GREETING CARDS – Holiday cards, birthday cards, and thank you's are all great to keep in touch with past clients. It also gives you another chance to ask for referrals, keep your data base current, and just basically keep your name in the fore front of their mind.
INVITATION – Invite past and potential clients to special events, “Homebuyer Seminar”, open house at your office, or holiday party. Have a door prize (less than $50 in value). Your client will get one chance in the drawing for every person they bring. How about a welcome to the neighborhood party you throw for your new client and their neighbors.
NEWSLETTERS – Newsletters can maintain communication between you and your clients. Marketing service companies can develop a newsletter for you, or you can write them yourself. Keep in mind that most newsletters are informational and do not normally ask for the business like marketing material.
NEWSPAPER/MAGAZINE PRINT-ADS – These can be expensive, but if your target market reads the paper or magazine the cost may be off set by the amount of applications it generates. Ask for a Media Kit to determine circulation and demographics of their readers. Ads should not be too busy. Keep it simple as you are just trying to get the phone to ring. Sometimes doing the ad in black with white writing can help it stand out from the other newspaper print ads.
PROMOTIONAL ITEMS – Pens, calendars, pads, rulers, game schedule charts, magnets, key chains, go more for useful rather than unique although both are great. Recipe cards are unique and often kept. T-shirts, polo shirts, hats, and bags are nice, but can be expensive and are considered inducements which are illegal. Why are you giving them the promotional item? The answer may help you decide what to use, if anything.
RADIO ADVERTISEMENT – Radio advertising on your local station is not too expensive, especially sponsoring the weather or traffic reports. You’ll need to run the ad at least six months. What radio station will your target market listen too? What time?
FREE ADVERTISING – there are many sources of free advertising. The following is a small list.
Word of mouth, referrals is the best.
Newspaper article written about you, or a press release.
Speeches and programs for civic groups.
Teach a course on home financing at the community college.
Business card on bulletin boards at stores and community centers.
Write newspaper article or column
Speak at Real Estate meetings.
Speak at high school career day programs
Three foot rule, anyone within three feet gets your card and presentation.
What more can you think of?
5. COMPLIANCE WITH ADVERTISING
Make sure all your marketing materials meet state and federal requirements. Federal laws require advertisements to be clear and not misleading. Per the Truth In Lending Act (TILA), any rate quotes or implied payment amounts will require an annual percentage rate (APR) disclosure. When advertising, the posted APR cannot be any less conspicuous that the rate quoted.
Types of discrimination identified by the courts are:
· Overt evidence of discrimination, “When a lender blatantly discriminates on a prohibitive bases.”
· Disparate Treatment, “When a lender treats an applicant differently based on one of the prohibited factors.” This is the most concern in pricing. For example, you find your Hispanic clients harder to work with due to credit or employment issues, so you price their loans higher than your 800 credit score white clients. This is not a rate issue. This is a fees being charged to the borrower issue – pricing. It may not be directly intentional, but will your excuse hold up in court?
· Disparate Impact, “When a lender applies a practice uniformly to all applicants, but the practice has a discriminatory effect on a prohibited basis and is not justified by business necessity,” which hurts all parties involved with the lending transaction. For example, a company has all their advertising in Spanish with Spanish Magazines. This may be disparate impact to other protected groups such as some blacks that may not speak or read Spanish.
Home Ownership and Equity Protection Act of 1994
The Federal Reserve Board published its Truth-in-Lending Final Rule with Advertising standards that require additional information about rates, monthly payment, and other loan features. The final rule bans seven deceptive or misleading advertising practices and strengthens the clear and conspicious standards for advertising disclosures. The following is brief review of the prohibited factors:
1. Advertisements that state ‘fixed’ rates or payments for loans but rates can vary with only a limited fixed rate period.
2. Advertisements that compare an actual or hypothetical rate or payment obligation unless the advertisement states the rates or payments that apply over the full term of the loan.
3. Advertisements that characterize the products offered as ‘government loan programs’ even though the advertised products are not government-supported or sponsored loans.
4. Advertisements that display the name of the consumer’s current mortgage lender, unless prominently discloses that advertisement is from a mortgage lender not affiliated with the consumer’s current lender.
5. Advertisements that make claims of debt elimination if the product advertised would merely replace one debt obligation with another.
6. Advertisements that create a false impression that the mortgage broker or lender is a ‘counselor’ for the consumer.
7. Foreign-language advertisements, such as a low introductory ‘teaser’ rate, while the required disclosures are provided only in English.
These final rules will be phased in and took affect 10-1-09.
Fair lending laws require advertisements going to the public to disclose the equal opportunity housing symbol ( Equal Housing Lender.) Fair lending laws require you to not discriminate against any protected groups and comply with Fair Lending Laws. Be mindful of the image your advertising is taking. Most state laws require advertising disclose the complete name and address of the mortgage company and not just the loan originator. If the advertising is for ‘real estate professional’s only’ this statement must be on the advertisement or flyer. Supervisors should review all advertising to the public.
6. CHOOSING YOUR APPROACH
Next Step is to determine what form of advertising you will use to reach your market. What approach will give you the best possibility of reaching this target market? The first approach may not work initially. Repetitive advertising is ideal as people will normally need to see something three or more times before they act. Maybe do a repeating ad in the paper, or radio. Send a mailer more than once. The ad or mailer can vary each time, but keep the heading or company logo or slogan so they can recognize the advertisement. Plan out your marketing for the year or at least six months, then track your responses and fine tune your campaign as you go.
7. DEVELOP AFFECTIVE MATERIALS
Next step you will need to develop marketing to get the phone to ring. What ever approach you choose, you will need to make sure you identify how you will overcome the issues identified for your target market. Not so much loan program as much as solutions (benefits) adapted to those clients. Now communicate in the material that you are available, and what are your solutions.
Be creative but keep the focus on the target market. What will get them to pick up the phone and call you? Create effective direct response advertisements by including these key marketing tips.
Grabber – The ad needs to grab the readers’ attention. Ask yourself, “What is it I do that really benefits the borrower?”
Interest – Having the reader answer “Yes” to questions works well and makes it easy for them to say yes to your call to action or services.
Conviction – You must create a belief that you can help them achieve their goal. Testimonials and success stories work well.
Call-to-action – Somewhere in your ad you need to instruct the prospect what action to do next. Call, email, complete response card, or so on. Creating a fear of loss with limited time offer will also motivate action.
Easy – It should be easy to reach you. Use toll free phone number, website address, and email.
You have to believe in what you’re selling. You are selling yourself, your company, and your services. You need to believe you will give the best service for the borrower, and not just close the loan for commission. When the focus is on the borrower, the money in your pocket will follow.
Selling yourself should be easy. Wouldn’t you do business with you? If your answer is no, we offer an ethics and law course. If the answer is no because you’re new, then focus your sales efforts on selling your company. It’s OK to be new and learning the business. Just make sure you have a mentor to review the information you are telling the borrower.
SIX BUYING MOTIVATORS
What motivates a person to purchase? Their desire for gain, fear of loss, comfort and convenience, security and protection, pride of ownership, and satisfaction of emotion. The loan originator must peak the interest and inspire the prospect to proceed with the loan and make a decision to proceed with the loan triggering one of these motives in the prospect. What will motivate your target market?
TYPES OF ADS
There are two main types of advertising and a method to combine both ads.
Brand or Image marketing promotes name recognition, and gives you the opportunity to sell your reputation or your company’s mission. This type of ads goal is to build awareness and interest.
Call-to-action or product marketing promotes the reader to do something or act on the offer. The ads goal is to present an offer and prompt a person to act.
Whole or Total approach ad incorporates both goals. Uniformity of advertising will allow brand or name recognition. Ads may use the same layout, font, logo, and/or slogan, picture, or other repetitive feature to the ad which will allow the reader quick recognition of who is the advertiser. Beyond the repetitive advertising features the ad is designed to meet your advertising strategy goal.
An advertising strategy should include the answers to the following questions:
Who is your target market?
What do I want the target market to know about me, my services, and/or my company?
Present one clear idea. Clear single focused communication will be understood the best.
Convey benefits not features. When you think of feature, ask yourself – “which means” what?
Why am I better than the hundreds of other loan originators?
COMPLIANCE WITH LAWS
Stay in compliance with advertising and lending laws. I would suggest a law class if you do not know an advertisement implying a rate or payment requires an APR, or that Fair Lending Laws require no discrimination and the display of the ECOA house symbol. There are also laws that prohibit you from not taking an application for a borrower that wants to make application for a home loan. Always ensure all advertising meets the federal and state law requirements to avoid fines and un-professional approach to the market.
8. THE BUYING CYCLE
The phone rings. You’re in the buying cycle. Now is the time to sell. What are you selling? First you are selling yourself, then your services (money), and your company. Don’t over sell with this initial contact. Remember this is for building interest to come in for an appointment. If needed, have your script ready so you don’t stumble and sound incompetent on the phone. Give a short pitch, and then ask if you can ask them a few questions. Screen the calls to determine viable prospects, and set appointments to meet the prospects that are serious about purchasing or refinancing. Make the decision if they should be brought in for an appointment, set up in future follow-up for a call back, or cut loose.
STEPS IN THE BUYING CYCLE
1ST step-Awareness – Get the phone to ring. You’re not trying to close the sale, just get a call. Do not make your marketing so busy that the message to call you is lost in the information. The message to call will need to touch the motivation of the target market.
2nd Step–Peak Interest–Screen the call and get the appointment, build rapport.
3rd Step – Inspire action to use you for their loan. At the loan application, convey value.
4th Step-Decision to close the loan
Then the cycle starts back to awareness. You expect referrals, and for them to use you again in the future. Your clients will react to your advertising in steps. People do not work with you because you make them understand every step; they work with your because they feel understood and trust you. No one wants to be sold; they want to make an informed decision to buy.
9. MARKET TRACKING
All marketing material should be tracked. If you receive no calls from a flyer you’ll know to not use it again, or you may want to reuse one that was successful. There are many ways to track. Some use an extension, code word or name for prospects to ask for such as Fred, even though there is no one in the office named Fred. The code word will let you know which marketing material generated the lead. You can also just ask how they heard about you and note on feedback worksheets. Feedback worksheets work well, and make analyzing results easier. Having a 1-2% return on a mass mailing is average. After analyzing the results of a marketing campaign, evaluate and make adjustments for future marketing campaigns.
10. DEVELOP A PROSPECT INTO A CLIENT AND REFERRAL SOURCE
The last step in marketing is the appointment, make sure you listen. Listen to what their concerns and fears are and then focus your presentation based on their personal needs. You need to create desire to use you for their home purchase or refinance. If you convey value and instill trust, they may not shop you. Testimonials and other success stories may help if they relate to issues the borrower is also facing.
A problem with many sales people is they talk themselves out of the sale. They are too busy talking, and they forget to listen. Experts have proven the best communicator is a LISTENER! How do you show them you are listening? Meet or address their needs or concerns they have told you they have. Good luck with your 2008 marketing campaign.
Linda Williams is the VP of Marketing and Trainer for Mortgage Trainers of North America where ‘Knowledge is power, power to drive your business and your success’. She has been a Mortgage Professional for 30 years and a Trainer for 15 years. For more information on Linda or training opportunities, visit http://www.mtgtna.com/ or email linda@mtgtna.com.
Tuesday, March 3, 2009
Does the MArket Change what an agent must do to Succeed?
by JR Sangiuliano
YES, GET OFF YOUR ASS and work. Everyday in a good market, bad market, up market, down market, it does not matter you have to work 40 to 60 ours a week. If you want to make an above average income you must put in above average hours at you trade. Realtors think just being in the office they are working or better yet fooling their broker into thinking they are working. A realtor must spend his or her time meeting new people and calling on friends and family and family of friend and friends of family EVERYDAY. Add to that calls to past and present clients, some prospecting of businesses, calling strangers, attacking For Sale By Owners & Expired listings, and working with buyers for only 10% of your day and you have the make up of a successful real estate agent. But here is a news flash...IF THAT DOES NOT WORK DO SOMETHING ELSE TO MAKE IT WORK, hand out flyer's, blanket the parking lot of you local shop rite, DO SOMETHING. The most successful agents do as much of this prospecting face to face as possible because that is the most affecting method. This does not change with the changes in the market. The only thing that changes with the market is how hard you have to work, the time it takes for money to hit your pocket, and the prices of the homes you sell. But as for the daily activities of the full time agent in this career your duties and responsibilities to your fellow team members and your company do not change. Every agent that spend 80% of each working day prospecting, self promoting, and generating leads will not feel any drop off in production. The problem is that most agents fall pray to the crap they hear on the news and that affects their CONSISTENCY everyday. That is the key: to be consistent with your activities. Well that is my lesson and thoughts of the day
YES, GET OFF YOUR ASS and work. Everyday in a good market, bad market, up market, down market, it does not matter you have to work 40 to 60 ours a week. If you want to make an above average income you must put in above average hours at you trade. Realtors think just being in the office they are working or better yet fooling their broker into thinking they are working. A realtor must spend his or her time meeting new people and calling on friends and family and family of friend and friends of family EVERYDAY. Add to that calls to past and present clients, some prospecting of businesses, calling strangers, attacking For Sale By Owners & Expired listings, and working with buyers for only 10% of your day and you have the make up of a successful real estate agent. But here is a news flash...IF THAT DOES NOT WORK DO SOMETHING ELSE TO MAKE IT WORK, hand out flyer's, blanket the parking lot of you local shop rite, DO SOMETHING. The most successful agents do as much of this prospecting face to face as possible because that is the most affecting method. This does not change with the changes in the market. The only thing that changes with the market is how hard you have to work, the time it takes for money to hit your pocket, and the prices of the homes you sell. But as for the daily activities of the full time agent in this career your duties and responsibilities to your fellow team members and your company do not change. Every agent that spend 80% of each working day prospecting, self promoting, and generating leads will not feel any drop off in production. The problem is that most agents fall pray to the crap they hear on the news and that affects their CONSISTENCY everyday. That is the key: to be consistent with your activities. Well that is my lesson and thoughts of the day
Who is responsible for your success?
This isn’t a trick question.
Certainly you know the answer—the person who has been responsible for the life you live right now: YOU.
Everything about you is a result of your doing or not doing... Your income. Debt. Relationships. Health. Fitness level. Attitudes and behaviors.
I think everyone knows this in their hearts, but often times people convince themselves into thinking that external factors are the source of their failure, disappointment, and unhappiness.
External factors do not determine how you live. YOU are in complete control of the quality of your life.
When I hear people complain about the state of their life (be it their problems with personal finances, weight, their jobs, or general dissatisfaction) I like to help them see things differently.
If they feel “stuck” and unable to move forward for whatever reason, I ask them to scrutinize both what is working well and what isn’t working well in their life and see how they’ve arrived at where they currently are. For example, if a woman tells me she’s unhappy with her weight—she travels frequently, and has no to time to exercise or seek healthy foods—I point out that her weight is not a result of her travels and schedule. It’s an outcome of what she chooses to eat and how she chooses to move, regardless of her daily agenda. Why not make a conscious effort to pre-plan healthy meals and snacks, even if it’s on the go, and sneak in 10 minutes here and 10 minutes there to be physically active (hey, I know some frequent flyers who make it a habit of running through airports!).
If you’re frustrated with any area in your life, then it’s time to take a little inventory. Certainly there are wonderful things happening, whether it’s your job, your romantic relationship, your children, your friends, or your income level. Your accomplishments are just as important as your missteps.
First, congratulate yourself on your successes; and then take a look at what isn’t working out so well. What are you doing or not doing to create those experiences?
Watch out! If you find yourself beginning to complain about everything but the choices you’ve made, then you need to take a step back. See if you can stop blaming outside factors for your unhappiness.
When you realize that you—and only you—create your experiences, you’ll realize that you can un-create them and forge new experiences whenever you want.
How empowering is that!
You must take responsibility for your happiness and your unhappiness, your successes and your failures, your good times and your bad times.
All too often we choose to claim the successes and blame the failures on others or other circumstances. When you stop blaming, however, you can take that energy and redirect it to focus on shaping a better situation for yourself. Blaming only ties up your energy. Imagine roping all the energy into a positive effort.
Some ideas to make this happen:
Believe, Believe, Believe! Have unwavering faith in yourself, for good and bad. Make the decision to accept the fact that you create all your experiences. You will experience successes thanks to you, and you will experience pain, struggle, and strife thanks to you. Sounds a little strange, but accepting this level of responsibility is uniquely empowering. It means you can do, change, and be anything. Stumbling blocks become just that—little hills to hop over.
Take no less than 100% responsibility. Successful people take full responsibility for the thoughts they think, the images they visualize, and the actions they take. They don't waste their time and energy blaming and complaining. They evaluate their experiences and decide if they need to change them or not. They face the uncomfortable and take risks in order to create the life they want to live.
Stop complaining. Look at what you are complaining about. I’m fat. I’m tired. I can’t get out of debt. I won’t ever get a better job. I can’t stand the relationship I have with my sister. I’ll never find a soulmate in life. Really examine your complaints. More than likely you can do something about them. They are not about other people, other things, or other events. They are about YOU. Make an immediate change. Are you unhappy about something that is happening right now? Make requests that will make it more desirable to you, or take the steps to change it yourself. Making a change might be uncomfortable for you. It might mean you have to put in more time, money, and effort. It might mean that someone gets upset about it, or makes you feel bad about your decision. It might be difficult to change or leave a situation, but staying put is your choice so why continue to complain?
You can either do something about it or not. It is your choice and you have responsibility for your choices.
Pay attention. Looking to others for help and guidance is helpful, but don’t forget to stay tuned in to yourself—your behavior, attitude, and life experiences. Identify what’s working and what isn’t. If you need to, write it all down. Then…
Face the truth and take action for the long term . You have to be willing to change your behavior if you want a different outcome. You have to be willing to take the risks necessary to get what you want. If you’ve already taken an initial step in the right direction, now’s the time to plan additional steps to keep moving you forward, faster.
Isn’t it a great relief to know that you can make your life what you want it to be? Isn’t it wonderful that your successes do not depend on someone else?
So if you need just one thing to do different today than you did yesterday, make it this: Commit to taking 100% responsibility for every aspect of your life. Decide to make changes, one step at a time. Once you start the process you’ll discover it's much easier to get what you want by taking control of your thoughts, your visualizations, and your actions!
Certainly you know the answer—the person who has been responsible for the life you live right now: YOU.
Everything about you is a result of your doing or not doing... Your income. Debt. Relationships. Health. Fitness level. Attitudes and behaviors.
I think everyone knows this in their hearts, but often times people convince themselves into thinking that external factors are the source of their failure, disappointment, and unhappiness.
External factors do not determine how you live. YOU are in complete control of the quality of your life.
When I hear people complain about the state of their life (be it their problems with personal finances, weight, their jobs, or general dissatisfaction) I like to help them see things differently.
If they feel “stuck” and unable to move forward for whatever reason, I ask them to scrutinize both what is working well and what isn’t working well in their life and see how they’ve arrived at where they currently are. For example, if a woman tells me she’s unhappy with her weight—she travels frequently, and has no to time to exercise or seek healthy foods—I point out that her weight is not a result of her travels and schedule. It’s an outcome of what she chooses to eat and how she chooses to move, regardless of her daily agenda. Why not make a conscious effort to pre-plan healthy meals and snacks, even if it’s on the go, and sneak in 10 minutes here and 10 minutes there to be physically active (hey, I know some frequent flyers who make it a habit of running through airports!).
If you’re frustrated with any area in your life, then it’s time to take a little inventory. Certainly there are wonderful things happening, whether it’s your job, your romantic relationship, your children, your friends, or your income level. Your accomplishments are just as important as your missteps.
First, congratulate yourself on your successes; and then take a look at what isn’t working out so well. What are you doing or not doing to create those experiences?
Watch out! If you find yourself beginning to complain about everything but the choices you’ve made, then you need to take a step back. See if you can stop blaming outside factors for your unhappiness.
When you realize that you—and only you—create your experiences, you’ll realize that you can un-create them and forge new experiences whenever you want.
How empowering is that!
You must take responsibility for your happiness and your unhappiness, your successes and your failures, your good times and your bad times.
All too often we choose to claim the successes and blame the failures on others or other circumstances. When you stop blaming, however, you can take that energy and redirect it to focus on shaping a better situation for yourself. Blaming only ties up your energy. Imagine roping all the energy into a positive effort.
Some ideas to make this happen:
Believe, Believe, Believe! Have unwavering faith in yourself, for good and bad. Make the decision to accept the fact that you create all your experiences. You will experience successes thanks to you, and you will experience pain, struggle, and strife thanks to you. Sounds a little strange, but accepting this level of responsibility is uniquely empowering. It means you can do, change, and be anything. Stumbling blocks become just that—little hills to hop over.
Take no less than 100% responsibility. Successful people take full responsibility for the thoughts they think, the images they visualize, and the actions they take. They don't waste their time and energy blaming and complaining. They evaluate their experiences and decide if they need to change them or not. They face the uncomfortable and take risks in order to create the life they want to live.
Stop complaining. Look at what you are complaining about. I’m fat. I’m tired. I can’t get out of debt. I won’t ever get a better job. I can’t stand the relationship I have with my sister. I’ll never find a soulmate in life. Really examine your complaints. More than likely you can do something about them. They are not about other people, other things, or other events. They are about YOU. Make an immediate change. Are you unhappy about something that is happening right now? Make requests that will make it more desirable to you, or take the steps to change it yourself. Making a change might be uncomfortable for you. It might mean you have to put in more time, money, and effort. It might mean that someone gets upset about it, or makes you feel bad about your decision. It might be difficult to change or leave a situation, but staying put is your choice so why continue to complain?
You can either do something about it or not. It is your choice and you have responsibility for your choices.
Pay attention. Looking to others for help and guidance is helpful, but don’t forget to stay tuned in to yourself—your behavior, attitude, and life experiences. Identify what’s working and what isn’t. If you need to, write it all down. Then…
Face the truth and take action for the long term . You have to be willing to change your behavior if you want a different outcome. You have to be willing to take the risks necessary to get what you want. If you’ve already taken an initial step in the right direction, now’s the time to plan additional steps to keep moving you forward, faster.
Isn’t it a great relief to know that you can make your life what you want it to be? Isn’t it wonderful that your successes do not depend on someone else?
So if you need just one thing to do different today than you did yesterday, make it this: Commit to taking 100% responsibility for every aspect of your life. Decide to make changes, one step at a time. Once you start the process you’ll discover it's much easier to get what you want by taking control of your thoughts, your visualizations, and your actions!
Saturday, February 14, 2009
Marketing Tips for Realtors
Marketing Success in Any Market
1. Define your client or target market?
There are many mortgage business sources, which require a loan originator to focus their efforts to improve their marketing response. That’s not to say you’re so focused you miss an opportunity. Marketing efforts often cost money, and having your marketing focused will improve your chances of attracting prospects. You should also focus on a source you have a passion for. When you have a true interest, it will show in your presentation.
A loan originator should have one main marketing focus, or target market, with two or three side sources. The target market is your main focus for marketing material and advertising. This source will need to be developed into your main source of generating production.
The side sources are generally relationship based and generally are a good source for stable reliable business. These sources feed you referral business. The benefit for this source is your professional handling of their client or referral. No one wants to make a recommendation that will cause them to hear the person complain or worse yet lose that person’s business themselves.
2. Review the 32 opportunities?
When you are first entering this industry, your sphere of influence starts with friends, family, and anyone you know enough to call and ask for business. These are also the best to make mistakes with while you learn the system and pitfalls of the mortgage business. People who already know you will be more patient with mistakes, and you can learn how to handle the issues without someone yelling at you (hopefully). You will need to be sensitive to the confidentiality of the information you will learn and gain their trust.
The other markets are your choice. Real estate agents are not suggested when first starting out, as this group will be the least forgiving, as real estate agents have a tendency to not forget the botched closing that cost them their commission.
The list is not all-inclusive, so don’t be afraid to look outside this list.
‘3′ FOOT RULE - Be sure to give everyone that comes within three foot of you your card. Give it to everyone you tip, or meet. Have your card in an easy to access clean place so you can get to them quickly. Do not pass out damaged or dirty cards as that would reflect poorly on your professionalism.
BANKS/CREDIT UNIONS - Many Banks and Credit Unions are limited in their home loan programs, which allow for referrals. Reciprocate by referring people that need car loans or other types of loans you do not offer. A reciprocal agreement for services is great networking.
BUILDER ACCOUNTS - It may be hard to get the account of the big builders, but smaller custom builder accounts may be open to a professional mortgage person. Builders are special in that they will have specific demands, and the builder becomes your client over the borrower. Weekly status reports and constant availability and reliability are a must. This type of client is very demanding in that they expect perfection with little room for mistakes, and are very critical of the amount of income they will allow you to make on a loan. The benefit is the business is reliable and consistent, until the subdivision is sold out. It takes six to twelve months for the property to close, but when you are in the builder’s flow of business, the closings are reliable which allows you to charge fewer fees. The builder is also doing your marketing, as they are the ones recommending you for the loan on the new property.
CLUBS or ORGANIZATIONS - Join. People like to work with people they know even if indirectly through club affiliation. If they have a newsletter, get your business information in the newsletter some how or write an article. Sponsorship can also help you get your name out to the members. Don’t forget the ‘3′ foot rule. Chamber of Commerce may be effective if you can get on the committee to welcome newcomers to the area.
COLD CALLS - Practice makes perfect with cold calling. The more calls you make the more confident you will become. In your presentation, have a script that identifies the benefit points for your target market, and remember you are trying to qualify the prospect to determine if they will be worth bringing in for an appointment. The mind set is you have to hear ‘no’s’ to get the ‘yes’.
When cold calling a real estate agent, have your benefit for real estate agent presentation ready and your response to ‘I have a lender I use already’. Make this response sincere with the true benefit to your potential new client.
COLLEGE STUDENTS - College students may be a good market as they may get an FHA loan when parents can qualify for their new home purchase. Parents can benefit by purchasing a home for their college student, instead of paying for dorm fees. After the student graduates, they can sell the home. Possibly the equity growth can cover the cost of the student loans. Check FHA or other loan program guidelines for loans with this feature.
COMMUNITY COLLEGES - Try teaming up with an adult education instructor in Real Estate, Finance, etc… that would welcome a mortgage professional to do a short presentation on something applicable to their class or current market - great free advertising.
CONTRACTORS - Home repair specialist often need financing for the improvements or repairs they are proposing to the homeowner. When house prices are raising this is a good market as homeowners decide to improve their current home instead of moving up. Give the contractor flyers or brochure they can pass to their homeowners. The flyers will need to identify the
benefits of 1st or 2nd mortgages for home improvements. Major improvements of ‘fair condition’ properties may need an FHA 203k rehabilitation loan or FNMA Renovation type programs.
CONVENTION or SEMINAR ATTENDEES - You can get lists of attendees to real estate home tours, home shows, garden shows, etc… You may need to pay and attend the seminar yourself to get access to the list. Do a mailer to solicit their business, as well as at the convention.
COURTHOUSE RECORDS, FEDERAL & STATE TAX LIENS - Go to the county Recorder’s Office, Federal Courthouse, or County tax collector and get the name of everyone with Federal, State, or County tax liens. County property taxes are best as generally this ensures they own property. Mail an offer to refinance their home to pay off the liens.
CUSTOM CONSTRUCTION/ARCHITECT - Team up with a builder to develop seminars that educate the consumer on ‘How to build their Dream Home’. Custom construction and architects have unique problems with the size of the loan amount. Limited lenders will do big jumbo loan amounts, so ensure you have a lending source.
DEAD LOAN FILE - Going through the cancelled loans “dead loan” files in your office can generate business. Guidelines and programs change, and new products become available. Get permission from your manager before attempting.
FACTORY or PLANT POSTER BOARD - Go to a large factory or assembly plant, and ask the human resource department if you can put a “Still Renting?” or “Need to Consolidate Your Bills?” poster on their bulletin board. Explain to them how you can help their employees. Your ‘angle’ with HR is that a homeowner makes a better employee and may be a more stable worker. Also, an employee who is not worrying about paying their bills does a better job at work, and has no wage garnishments. Offer discount loan fees for employees. Placement near the time clock or in the break room works great. An insert in their pay envelope works well too. Make sure the action for the employee is clear and easy to follow, such as an easy phone number to remember or tear off sheets with the number to call.
FARM LEADS - Farm leads are a list of potential borrower that you telemarketer to or do mass mail marketing campaigns. If telemarketing, have a scripted approach. Most title companies will give you a qualified list free in exchange for you using their office services when doing a refinance loan. Farm leads will target an area specified by the parameters you set. common parameters are loans closed two years ago (gets you the non-prime 2/28 programs, and possible equity built up in the home for cash out); home prices between $150,000 and $250,000 (or whatever range you prefer such as within FHA loan limits); and zip code parameters. Work with your title company rep for all the details available and try to get a list that will reach your chosen target market. Farm lists for renters may also be available. Always remember to ‘scrub’ the list, remove “Do Not Call’ registered numbers.
FLOOR DUTY - The Company you work for may do advertising. Floor duty is when the prospect calls are coming in to the company from their advertising. Floor duty allows you to handle the incoming sales calls. Luck of the draw on this one, but morning is usually the best as people will generally take care of important issues like buying a home first thing in the morning.
FOR SALE BY OWNERS - Teach them how to sell their own home. Sell how you can qualify the borrower, and get them their financing. Open house kits (explained later in this section) can also be used for this market.
HOME BUYER SEMINARS - develop a seminar to educate first-time home buyers on how the mortgage lending process works, and what to expect. Mortgage Trainers of North America has a Home Buyer Seminar already complete for your use. For more information and the cost, check the website http://www.mtgtna.com/. After the seminar, invite the attendees for a quick prequalification.
JUST CLOSED REAL ESTATE - Get a farm list or county recorders records of recently closed loans from a specific area or price range. Solicit these leads for 100% and 125% LTV second mortgage programs for home improvement. Many new buyers have improvement projects or yards to complete.
KIOSK - These stands in the Malls can be effective ways to meet people. Placement would depend on your target market and where they are likely to shop. If you have a wireless laptop computer, you could do quick pre-quals on the spot.
MARKET TRENDS - Catch the Wave - Look for trends in the market or new hot product offerings. Title companies may offer a newsletter service that can keep you informed of market trends along with information on local house sales prices statistics. Watch the trends of hot products with wholesale lender flyers or go to the lender’s web sites. Set your target market based on who will benefit from the new hot product offering. Here are some examples of trends.
When house prices soar, start a campaign to remodel their current home to make it what they want. Many homeowners will not be able to move, as the price of a better house will be outside their budget. Therefore they will choose to do a ‘cash out’ refinance or Home Equity Line of Credit (HELOC) to cover the costs of remodeling or room addition projects. Teaming up with a contractor (make sure they are licensed) can help reach these borrowers.
When the economy slows, farm your past clients for leads. Market for debt consolidation loans is very helpful for people with heavy debt burdens. January is always a good month for debt consolidation loans as people want to payoff last years and holiday debts. January through April is good for new home buyers with income tax refund money.
June is a big wedding month, so hook up with a bridal shop to offer free home buyer qualification. Set up a Kiosk in a mall during the spring outside a bridal shop, or set up a table inside a bridal shop. Many wedding couples get thousands for their new start. They in turn may want to purchase a home. Many will even close on the house before the wedding, so this marketing campaign for wedding planners can be offered all year long.
Sometimes the easiest approach to marketing can be to jump on the wave of business and ride it. Look to see what the hot new markets are, and focus your efforts on that business. Option Arm programs were the last market trend. What is the trend today? It’s important to pay attention to trends. When the market moves, if you’re not watching the industry indicators, reading the industry magazines, newsletters, etc… you could miss an opportunity.
MEDICAL PROFESSIONALS, FIREMEN, POLICE OFFICERS, OR TEACHERS - There are special programs available for professionals in your community. FNMA and FHLMC both have high LTV programs. Get details of the loan programs on their websites. You can find links at www.mtgtna.com/links. These programs allow for less down payment or down payment assistance programs. When approaching this market, advertise in areas these professionals would read or circulate. Professionals are use to making referrals to their friends and collages, so be sure to ask for referrals.
MILITARY PERSONNEL - Present the benefits you can do for military people. Promote “free pre-qualifications” or “zero down financing” to compete with VA loans. When National Guardsmen are called to active duty, they will generally get eligibility for VA home loans. This is unique to war times, and a good niche to sale when VA loans are available to you.
OPEN HOUSE - Real estate agents may want for safety reasons, to have someone sit with them during an open house. Beyond safety reasons, having the ability to qualify any potential buyers there on the spot is a plus. Here is an opportunity to meet a potential new client who is in the market to purchase a property. You could pull their credit and interview them on the spot. If they do not purchase the property, maybe they will purchase another property.
Open house kits can be prepared in advance. The kit gives the person two or three scenarios on payments, down payment requirements, qualifying income needs, house amenities or special features list. Open house kits can also include information on nearby amenities such as schools, popular stores, local highlights of interest, chamber information, and other information useful to a potential purchaser for the home.
You could drop-in to an Open House, and talk to the real estate agent. Open houses don’t have a ‘gate keeper’ like the real estate office. Treat as you would a cold call. If agent is not busy, it’s a good time to pitch your services.
PROFESSIONAL CONTACTS - Bankruptcy attorney, financial consultants, divorce attorney, CPA or Bookkeeper, and other professionals that work with clients that need the equity of their home or understand the value of home ownership. These professionals need a qualified mortgage professional to refer their clients. A financial planner may want a homeowner to refinance and use the equity for investments with higher rate of return. An accountant may advise a client they need to purchase a home for the tax write off. Bankruptcy attorney may advise a different path from bankruptcy. Such as a debt consolidation when a client has excessive home equity, or paying off the chapter 13 bankruptcies early with a home equity refinance.
PUBLIC INFORMATION SOURCES - There are public announcements for marriage licenses, job promotions, bankruptcy filings, divorce filings, or other filings that would give you a reason for approach.
REAL ESTATE AGENTS - The goal of having a steady stream of real estate agent business is the dream of most loan originators. The relationship between the real estate agent and loan originator is difficult to keep consistent. Often the relationship is only as good as the last loan transaction. Real estate agents have many loan originators contending for their business, all offering better products, better service, and who knows what. Keep in mind that it is illegal according to RESPA to pay a real estate agent for a lead.
So if you cannot buy the real estate agent’s loyalty how do you keep the relationship? Excellent customer service is the best way. Don’t miss a close of escrow date, EVER! Keep the real estate agent informed with weekly status reports. Communication is Key! Keep in mind the Privacy Laws governs your actions as to the amount of information you may share with the real estate agents involved in the transaction.
Listing Agents - When you have a purchase transaction, keep the listing agent well informed, as this is an opportunity for a new source. By keeping them in the information loop, you may just earn their business. Introduce yourself when you get the purchase contract. Let them know when the appraisal is being ordered and ask how they want to give access to the property. Call and inform them when the appraisal is received and the appraised value, and when closing docs are ordered and at title. After you call the listing agent to let them know the transaction has funded, let them know you’d like to work with them. Give them your quick scripted presentation for new business, and ask for an appointment to discuss how you can help them close loans. Maybe show them the ‘Open House Kits’ you use for listing agents, and your willingness to sit at open houses.
Real estate agents can give referrals to other real estate agents and purchasers, but only if they trust you to get the loan closed. Best way to get past the ‘Gate Keeper’. Ask the agents for referrals to other agents in their office. Meet the real estate agent at their office so they can introduce you around to the other agents personally.
REAL ESTATE INVESTOR - Develop a seminar educating consumers on how to use the equity in their current properties to buy more properties. Some companies may even go further by lining up renters with a leasing agent for their investment property clients.
RECENT COLLEGE GRADUATES - Get lists of all college graduates from your local colleges and vocational-tech schools. These people often have just gotten new jobs, received graduation money, and may be looking to purchase a home or condo.
REFERRALS - This is the key to success. This is the best source of business for any business. A warm lead to call, and repeat customers keep the commissions stable more than any other source of business. Just doing a good job may not generate a referral. Marketing follow up systems work well to stimulate referrals. If you feel you deserve the business, ASK FOR IT! Give the borrower many opportunities to give you referrals, ask often, and give them more than one card so they can pass them out. You don’t want to be pushy, but asking politely is expected. Some top producers operate on a “By Referral Only” basis. Once the flow of referrals start you may never have to worry about where your business is coming from, even in hard times.
RENTERS - This market can have different approaches, such as rent vs. purchase argument. Solicit the rental market and educate them on the cost of not purchasing a home. A large percentage of the current renters, do not believe they will qualify. They may not know how much money it takes, or whether they have good credit or not. They are afraid to purchase, as their parents were renters, and they truly feel home ownership is for someone else. How can you tap this market and let them know they may qualify? Target the renters with new home buying seminars, or mail campaign to apartment complexes telling them “Renting is Hazardous to Your Wealth”.
REVE
1. Define your client or target market?
There are many mortgage business sources, which require a loan originator to focus their efforts to improve their marketing response. That’s not to say you’re so focused you miss an opportunity. Marketing efforts often cost money, and having your marketing focused will improve your chances of attracting prospects. You should also focus on a source you have a passion for. When you have a true interest, it will show in your presentation.
A loan originator should have one main marketing focus, or target market, with two or three side sources. The target market is your main focus for marketing material and advertising. This source will need to be developed into your main source of generating production.
The side sources are generally relationship based and generally are a good source for stable reliable business. These sources feed you referral business. The benefit for this source is your professional handling of their client or referral. No one wants to make a recommendation that will cause them to hear the person complain or worse yet lose that person’s business themselves.
2. Review the 32 opportunities?
When you are first entering this industry, your sphere of influence starts with friends, family, and anyone you know enough to call and ask for business. These are also the best to make mistakes with while you learn the system and pitfalls of the mortgage business. People who already know you will be more patient with mistakes, and you can learn how to handle the issues without someone yelling at you (hopefully). You will need to be sensitive to the confidentiality of the information you will learn and gain their trust.
The other markets are your choice. Real estate agents are not suggested when first starting out, as this group will be the least forgiving, as real estate agents have a tendency to not forget the botched closing that cost them their commission.
The list is not all-inclusive, so don’t be afraid to look outside this list.
‘3′ FOOT RULE - Be sure to give everyone that comes within three foot of you your card. Give it to everyone you tip, or meet. Have your card in an easy to access clean place so you can get to them quickly. Do not pass out damaged or dirty cards as that would reflect poorly on your professionalism.
BANKS/CREDIT UNIONS - Many Banks and Credit Unions are limited in their home loan programs, which allow for referrals. Reciprocate by referring people that need car loans or other types of loans you do not offer. A reciprocal agreement for services is great networking.
BUILDER ACCOUNTS - It may be hard to get the account of the big builders, but smaller custom builder accounts may be open to a professional mortgage person. Builders are special in that they will have specific demands, and the builder becomes your client over the borrower. Weekly status reports and constant availability and reliability are a must. This type of client is very demanding in that they expect perfection with little room for mistakes, and are very critical of the amount of income they will allow you to make on a loan. The benefit is the business is reliable and consistent, until the subdivision is sold out. It takes six to twelve months for the property to close, but when you are in the builder’s flow of business, the closings are reliable which allows you to charge fewer fees. The builder is also doing your marketing, as they are the ones recommending you for the loan on the new property.
CLUBS or ORGANIZATIONS - Join. People like to work with people they know even if indirectly through club affiliation. If they have a newsletter, get your business information in the newsletter some how or write an article. Sponsorship can also help you get your name out to the members. Don’t forget the ‘3′ foot rule. Chamber of Commerce may be effective if you can get on the committee to welcome newcomers to the area.
COLD CALLS - Practice makes perfect with cold calling. The more calls you make the more confident you will become. In your presentation, have a script that identifies the benefit points for your target market, and remember you are trying to qualify the prospect to determine if they will be worth bringing in for an appointment. The mind set is you have to hear ‘no’s’ to get the ‘yes’.
When cold calling a real estate agent, have your benefit for real estate agent presentation ready and your response to ‘I have a lender I use already’. Make this response sincere with the true benefit to your potential new client.
COLLEGE STUDENTS - College students may be a good market as they may get an FHA loan when parents can qualify for their new home purchase. Parents can benefit by purchasing a home for their college student, instead of paying for dorm fees. After the student graduates, they can sell the home. Possibly the equity growth can cover the cost of the student loans. Check FHA or other loan program guidelines for loans with this feature.
COMMUNITY COLLEGES - Try teaming up with an adult education instructor in Real Estate, Finance, etc… that would welcome a mortgage professional to do a short presentation on something applicable to their class or current market - great free advertising.
CONTRACTORS - Home repair specialist often need financing for the improvements or repairs they are proposing to the homeowner. When house prices are raising this is a good market as homeowners decide to improve their current home instead of moving up. Give the contractor flyers or brochure they can pass to their homeowners. The flyers will need to identify the
benefits of 1st or 2nd mortgages for home improvements. Major improvements of ‘fair condition’ properties may need an FHA 203k rehabilitation loan or FNMA Renovation type programs.
CONVENTION or SEMINAR ATTENDEES - You can get lists of attendees to real estate home tours, home shows, garden shows, etc… You may need to pay and attend the seminar yourself to get access to the list. Do a mailer to solicit their business, as well as at the convention.
COURTHOUSE RECORDS, FEDERAL & STATE TAX LIENS - Go to the county Recorder’s Office, Federal Courthouse, or County tax collector and get the name of everyone with Federal, State, or County tax liens. County property taxes are best as generally this ensures they own property. Mail an offer to refinance their home to pay off the liens.
CUSTOM CONSTRUCTION/ARCHITECT - Team up with a builder to develop seminars that educate the consumer on ‘How to build their Dream Home’. Custom construction and architects have unique problems with the size of the loan amount. Limited lenders will do big jumbo loan amounts, so ensure you have a lending source.
DEAD LOAN FILE - Going through the cancelled loans “dead loan” files in your office can generate business. Guidelines and programs change, and new products become available. Get permission from your manager before attempting.
FACTORY or PLANT POSTER BOARD - Go to a large factory or assembly plant, and ask the human resource department if you can put a “Still Renting?” or “Need to Consolidate Your Bills?” poster on their bulletin board. Explain to them how you can help their employees. Your ‘angle’ with HR is that a homeowner makes a better employee and may be a more stable worker. Also, an employee who is not worrying about paying their bills does a better job at work, and has no wage garnishments. Offer discount loan fees for employees. Placement near the time clock or in the break room works great. An insert in their pay envelope works well too. Make sure the action for the employee is clear and easy to follow, such as an easy phone number to remember or tear off sheets with the number to call.
FARM LEADS - Farm leads are a list of potential borrower that you telemarketer to or do mass mail marketing campaigns. If telemarketing, have a scripted approach. Most title companies will give you a qualified list free in exchange for you using their office services when doing a refinance loan. Farm leads will target an area specified by the parameters you set. common parameters are loans closed two years ago (gets you the non-prime 2/28 programs, and possible equity built up in the home for cash out); home prices between $150,000 and $250,000 (or whatever range you prefer such as within FHA loan limits); and zip code parameters. Work with your title company rep for all the details available and try to get a list that will reach your chosen target market. Farm lists for renters may also be available. Always remember to ‘scrub’ the list, remove “Do Not Call’ registered numbers.
FLOOR DUTY - The Company you work for may do advertising. Floor duty is when the prospect calls are coming in to the company from their advertising. Floor duty allows you to handle the incoming sales calls. Luck of the draw on this one, but morning is usually the best as people will generally take care of important issues like buying a home first thing in the morning.
FOR SALE BY OWNERS - Teach them how to sell their own home. Sell how you can qualify the borrower, and get them their financing. Open house kits (explained later in this section) can also be used for this market.
HOME BUYER SEMINARS - develop a seminar to educate first-time home buyers on how the mortgage lending process works, and what to expect. Mortgage Trainers of North America has a Home Buyer Seminar already complete for your use. For more information and the cost, check the website http://www.mtgtna.com/. After the seminar, invite the attendees for a quick prequalification.
JUST CLOSED REAL ESTATE - Get a farm list or county recorders records of recently closed loans from a specific area or price range. Solicit these leads for 100% and 125% LTV second mortgage programs for home improvement. Many new buyers have improvement projects or yards to complete.
KIOSK - These stands in the Malls can be effective ways to meet people. Placement would depend on your target market and where they are likely to shop. If you have a wireless laptop computer, you could do quick pre-quals on the spot.
MARKET TRENDS - Catch the Wave - Look for trends in the market or new hot product offerings. Title companies may offer a newsletter service that can keep you informed of market trends along with information on local house sales prices statistics. Watch the trends of hot products with wholesale lender flyers or go to the lender’s web sites. Set your target market based on who will benefit from the new hot product offering. Here are some examples of trends.
When house prices soar, start a campaign to remodel their current home to make it what they want. Many homeowners will not be able to move, as the price of a better house will be outside their budget. Therefore they will choose to do a ‘cash out’ refinance or Home Equity Line of Credit (HELOC) to cover the costs of remodeling or room addition projects. Teaming up with a contractor (make sure they are licensed) can help reach these borrowers.
When the economy slows, farm your past clients for leads. Market for debt consolidation loans is very helpful for people with heavy debt burdens. January is always a good month for debt consolidation loans as people want to payoff last years and holiday debts. January through April is good for new home buyers with income tax refund money.
June is a big wedding month, so hook up with a bridal shop to offer free home buyer qualification. Set up a Kiosk in a mall during the spring outside a bridal shop, or set up a table inside a bridal shop. Many wedding couples get thousands for their new start. They in turn may want to purchase a home. Many will even close on the house before the wedding, so this marketing campaign for wedding planners can be offered all year long.
Sometimes the easiest approach to marketing can be to jump on the wave of business and ride it. Look to see what the hot new markets are, and focus your efforts on that business. Option Arm programs were the last market trend. What is the trend today? It’s important to pay attention to trends. When the market moves, if you’re not watching the industry indicators, reading the industry magazines, newsletters, etc… you could miss an opportunity.
MEDICAL PROFESSIONALS, FIREMEN, POLICE OFFICERS, OR TEACHERS - There are special programs available for professionals in your community. FNMA and FHLMC both have high LTV programs. Get details of the loan programs on their websites. You can find links at www.mtgtna.com/links. These programs allow for less down payment or down payment assistance programs. When approaching this market, advertise in areas these professionals would read or circulate. Professionals are use to making referrals to their friends and collages, so be sure to ask for referrals.
MILITARY PERSONNEL - Present the benefits you can do for military people. Promote “free pre-qualifications” or “zero down financing” to compete with VA loans. When National Guardsmen are called to active duty, they will generally get eligibility for VA home loans. This is unique to war times, and a good niche to sale when VA loans are available to you.
OPEN HOUSE - Real estate agents may want for safety reasons, to have someone sit with them during an open house. Beyond safety reasons, having the ability to qualify any potential buyers there on the spot is a plus. Here is an opportunity to meet a potential new client who is in the market to purchase a property. You could pull their credit and interview them on the spot. If they do not purchase the property, maybe they will purchase another property.
Open house kits can be prepared in advance. The kit gives the person two or three scenarios on payments, down payment requirements, qualifying income needs, house amenities or special features list. Open house kits can also include information on nearby amenities such as schools, popular stores, local highlights of interest, chamber information, and other information useful to a potential purchaser for the home.
You could drop-in to an Open House, and talk to the real estate agent. Open houses don’t have a ‘gate keeper’ like the real estate office. Treat as you would a cold call. If agent is not busy, it’s a good time to pitch your services.
PROFESSIONAL CONTACTS - Bankruptcy attorney, financial consultants, divorce attorney, CPA or Bookkeeper, and other professionals that work with clients that need the equity of their home or understand the value of home ownership. These professionals need a qualified mortgage professional to refer their clients. A financial planner may want a homeowner to refinance and use the equity for investments with higher rate of return. An accountant may advise a client they need to purchase a home for the tax write off. Bankruptcy attorney may advise a different path from bankruptcy. Such as a debt consolidation when a client has excessive home equity, or paying off the chapter 13 bankruptcies early with a home equity refinance.
PUBLIC INFORMATION SOURCES - There are public announcements for marriage licenses, job promotions, bankruptcy filings, divorce filings, or other filings that would give you a reason for approach.
REAL ESTATE AGENTS - The goal of having a steady stream of real estate agent business is the dream of most loan originators. The relationship between the real estate agent and loan originator is difficult to keep consistent. Often the relationship is only as good as the last loan transaction. Real estate agents have many loan originators contending for their business, all offering better products, better service, and who knows what. Keep in mind that it is illegal according to RESPA to pay a real estate agent for a lead.
So if you cannot buy the real estate agent’s loyalty how do you keep the relationship? Excellent customer service is the best way. Don’t miss a close of escrow date, EVER! Keep the real estate agent informed with weekly status reports. Communication is Key! Keep in mind the Privacy Laws governs your actions as to the amount of information you may share with the real estate agents involved in the transaction.
Listing Agents - When you have a purchase transaction, keep the listing agent well informed, as this is an opportunity for a new source. By keeping them in the information loop, you may just earn their business. Introduce yourself when you get the purchase contract. Let them know when the appraisal is being ordered and ask how they want to give access to the property. Call and inform them when the appraisal is received and the appraised value, and when closing docs are ordered and at title. After you call the listing agent to let them know the transaction has funded, let them know you’d like to work with them. Give them your quick scripted presentation for new business, and ask for an appointment to discuss how you can help them close loans. Maybe show them the ‘Open House Kits’ you use for listing agents, and your willingness to sit at open houses.
Real estate agents can give referrals to other real estate agents and purchasers, but only if they trust you to get the loan closed. Best way to get past the ‘Gate Keeper’. Ask the agents for referrals to other agents in their office. Meet the real estate agent at their office so they can introduce you around to the other agents personally.
REAL ESTATE INVESTOR - Develop a seminar educating consumers on how to use the equity in their current properties to buy more properties. Some companies may even go further by lining up renters with a leasing agent for their investment property clients.
RECENT COLLEGE GRADUATES - Get lists of all college graduates from your local colleges and vocational-tech schools. These people often have just gotten new jobs, received graduation money, and may be looking to purchase a home or condo.
REFERRALS - This is the key to success. This is the best source of business for any business. A warm lead to call, and repeat customers keep the commissions stable more than any other source of business. Just doing a good job may not generate a referral. Marketing follow up systems work well to stimulate referrals. If you feel you deserve the business, ASK FOR IT! Give the borrower many opportunities to give you referrals, ask often, and give them more than one card so they can pass them out. You don’t want to be pushy, but asking politely is expected. Some top producers operate on a “By Referral Only” basis. Once the flow of referrals start you may never have to worry about where your business is coming from, even in hard times.
RENTERS - This market can have different approaches, such as rent vs. purchase argument. Solicit the rental market and educate them on the cost of not purchasing a home. A large percentage of the current renters, do not believe they will qualify. They may not know how much money it takes, or whether they have good credit or not. They are afraid to purchase, as their parents were renters, and they truly feel home ownership is for someone else. How can you tap this market and let them know they may qualify? Target the renters with new home buying seminars, or mail campaign to apartment complexes telling them “Renting is Hazardous to Your Wealth”.
REVE