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.

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.

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.

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 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 -- 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.

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 today! Call 800-831-0681, or email

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

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.

Sunday, July 12, 2009

5 Mistakes for First-Time Buyers to Avoid

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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.


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.


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.



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.


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.


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.


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.


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.


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.


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.


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.


• 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: 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.


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

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, call (888) 989-5277 or go to

Sources: N.J. Attorney General's Office; FBI; Mortgage Asset Research Institute; Interthinx