How to Purchase a Home on a $100,000 Discount

Passing on this great article that i read today on Yahoo Finance! If you are in the market to buy or sell, contact a professional at the top of the game today like myself and take advantage of this great purchasing opportunity!

To pare down their growing inventory of properties, Fannie Mae and Freddie Mac are scrambling to unload nearly 150,000 foreclosed homes. And that means 2004-esque deals — like requiring as little as 3% down, offering to pay a portion of the closing costs and arranging special financing and warranties for repairs and renovations.

It's another option for home owners who want to trade up — and an easier way into the market for first-time home buyers, says Dean Baker, co-director of the Center for Economic and Policy Research who studies the housing market.

The best bargain might be the home's price. A SmartMoney analysis revealed that buyers could save $100,000 by buying a Fannie or Freddie home instead of similar fair-market properties just a few blocks away.

And while many of Fannie and Freddie's homes are at the lower end of the market and in less-desirable areas, a SmartMoney.com search of Fannie Mae and Freddie Mac listings revealed that buyers could find properties in good neighborhoods — and for $100,000 less than comparable houses nearby. For example, a five-bedroom, three-bath with a backyard, deck and two-car garage in tony Alexandria, Va., was listed for $445,000, $100,000 less than the average listing price in the area, according to Trulia.com. Four blocks away, a similar non-foreclosed colonial is listed for $639,900.

Or how about a three-bedroom, two-bath in Bergen County's leafy River Edge, N.J for $359,900 -- $85,000 less than the average listing in the area. One avenue over, a non-foreclosed similar home is listed for $474,888.

The downside: Angry neighbors. These types of listings are devaluing nearby properties, says David Howell, realtor and executive vice president at McEnearney Associates, which sells homes in the metropolitan Washington D.C. area. That means in some areas where Freddie and Fannie homes are on the market, buyers could find a better deal on a nearby market-rate home that doesn't require repairs, he says.

Buying a Fannie or Freddie home can be more complex than pursuing an open-market real estate listing — or even a commercial bank foreclosed property. There's a smaller selection of appealing properties — there were just six higher-end homes listed on a recent day in Alexandria, for example — and those tend to sell the fastest. And there's little room to negotiate price.
"Our goal is to recover as much as we can to offset our loss and not to be low balling properties just to move them," says a Freddie Mac spokesman. "We absolutely have no motivation to be leading a downward spiral in home prices."

The three best features of Fannie and Freddie foreclosures that make digging for these deals worthwhile:

• Small Down Payment
  For its foreclosed properties, Fannie Mae will accept down payments as low as 3% on 30-year mortgages at the same interest rates banks are currently offering. And Fannie Mae doesn't require private mortgage insurance. Compared to a typical bank mortgage, which requires 10% down, plus PMI for buyers with less than 20%, that's a huge savings — an estimated $51,000 up front and upwards of $2,500 per year PMI on a $300,000 mortgage.

It's a tradeoff, though. For buyers with 20% down, mortgage payments on a 30-year mortgage loan at 5% would be $1,288 a month. With just 3% down, the buyer would need to borrow $291,000 and make a $1,562 monthly payment.

• Help with Renovations
  Fannie and Freddie have fixed big flaws like leaky roofs and damaged electrical work, and they often handle small projects like replacing appliances that are broken or missing, tearing up old carpet, or fixing other damage left by former owners or vandals.

Now, to entice buyers who want to update or upgrade, many of Fannie Mae's properties come with an optional mortgage that includes extra financing up to $30,000 for repairs and improvements. But with a little down payment and the extra amount tacked on, the buyer could end up owing more than the house is worth — especially if home prices continue to drop.

• First Dibs
  Buyers who plan to live in their Freddie Mac-purchased home will get to see properties for at least the first 15 days they're on the market — before the listing opens to would-be landlords. Many bank-owned foreclosure properties are snatched up by cash-stocked investors who can wait out the downturn to sell later at a profit.

And Fannie and Freddie homes can be seen inside and out — unlike some regular foreclosure listings. Consider bringing along a contractor when you view the home to help spot areas that need repairs and provide pricing. (Most contractors will do this for free.)

"It gives families who want to buy a home to live in the opportunity to look and bid without competition from cash-rich investors," says a Freddie Mac spokesman

Looking to purchase a home or want further information about opportunities near you? Contact me direct and you'll be well on your way to taking your first step towards a great new home or investment property!

Facing Foreclosure?....7 Options To Consider

Here is some information that many of you may find useful when trying to determine your options if you find yourself or a friend/family member facing the challenge of losing your home.

According to RealtyTrac.com, 1 out of 84 homeowners received at least 1 foreclosure filing during the first half of 2009, and for the 4th straight month, more than 300,000 foreclosure filings were reported nationwide.

The FDIC reports that the 2 most common reasons for foreclosures are job loss and health crisis. Despite the media seemingly blaming a subprime loan program that affected 3-5% of the population for our foreclosure woes, the reality is that the combination of job loss and dropping home values have created a perfect storm of financial disasters for many normal families. Now with a slower real estate market translating into falling home values, more homeowners who opted for adjustable rate mortgages are finding that their mortgage rate is rising as their home value is lowering. Therefore, unfortunately, the foreclosure crisis in America is likely to continue.

In years past, if you lost your job, couldn’t pay medical bills, or moved out of state, you had a decent chance of selling your home for a profit, or at least breaking even. Now, many people are tens of thousands of dollars upside down on their loan and are unable to downsize to a smaller dwelling without suffering a foreclosure.

According to homebuying.com, a foreclosure will damage a consumer’s credit score, lowering it on average 200-300 points and making it difficult to get another home for 5-7 years. Bad things happen to good people, and the purpose of this article is to provide people with options available to them during the foreclosure process:

• Option 1- Bring loan current. According to the FDIC, most homeowners in foreclosure have no savings and no available credit. And since the number one reason for foreclosure is due to job loss, there may be no way for the homeowner to catch up the loan. However, if you as a homeowner struggling with a foreclosure have the reasonable expectation of income coming in sometime in the near future, it may benefit you to talk to an extended family member or friend about a short term loan.

• Option 2- Loan modifications. According to a Freddie Mac / Roper Poll, most homeowners fail to contact their lender because they are embarrassed, don’t believe the lender can help, and/or believe it would cause them to lose their home more quickly. However, this option may be a viable. Loan modifications occur when the bank agrees to reduce principal, interest, and/or payments. Unless you have experience with the Loss Mitigation Dept. at banks, I would recommend working with a legitimate, experienced loan modification company who can prepare an effective argument for the banks because loan modifications do not have a high success rate. According to the Office of Comptroller Mortgage Metrics report of April 2009, “…In 2008, only 41.85 percent of all modifications reduced monthly principal and interest payments for homeowners. For delinquent borrowers - - a loan modification resulted in an INCREASED or EQUAL payment amount 58.15% of the time!!” As stated earlier, the number one reason for people going into foreclosure is due to job loss. If no income is coming in from a traditional job, then there is little chance that a mortgage company will reduce your loan principle, interest rates, or payment.

• Option 3 – Forbearance. Forbearances are when a mortgage company allows you to delay your payments or spread your missed payments over the next specified number of months until you are caught up. Again, if you have a reasonable expectation of revenue coming into your household within a certain number of months, then this may be a solution for you. However, keep in mind that until your past amounts are brought current, you will have a negative mark against your credit, even during months when you are paying more than your requirement! Also, some programs may allow the banks to immediately foreclose on you if you fall behind on payments again. Read the agreement you receive from the bank diligently and weigh the pros and cons carefully.

• Option 4- Deed in Lieu of Foreclosure. According to Nolo.com, “with a deed in lieu of foreclosure, you give your home to the lender (the “deed”) in exchange for the lender canceling the loan. The lender promises not to initiate foreclosure proceedings, and to terminate any existing foreclosure proceedings.” This option, if accepted by the bank, is a quick and easy way to walk away from the house, doesn’t require a sale, and may look better on a credit report than other options. Also, some banks may accept this option as it is less expensive than the foreclosure process. This process will not work if you have multiple liens on the house. Also, banks are in the business of collecting cash, not property. And the banks are holding onto more property than they would like so this options very seldom works. Plus, in many mortgage agreements, it is stated that if the buyer goes into default, the bank will only take the property back through foreclosure.

• Option 5 – Bankruptcy. This option is widely misunderstood and possibly the worst option for homeowners. Bankruptcy will only pause a foreclosure, not eliminate it. As stated earlier, most mortgage agreements state that if the property goes into default, the bank will take back the property through foreclosure. Then, you will have both a bankruptcy and foreclosure on your credit history for the next 10 years! Plus, you may still be required to work out a repayment plan for the house. Seek legal counseling prior to deciding on a bankruptcy.

• Option 6 – Foreclosure. Do nothing and let the bank take the house back. The foreclosure process will negatively impact your credit by dropping your score 200-300 points and preventing you from purchasing a house again for another 5-7 months. Plus, you may be sued for deficiencies by the bank for the difference between what the house sold for at auction and what you owed. Or you may receive a 1099 from the bank, stating that the difference is income and you can be taxed upon it.

• Option 7- Short Sale. A short sale occurs when a third party negotiates with the mortgage company to accept a discount on what is owned and release their interest in a property in exchange for a cash payment. The seller is not allowed to financially benefit from the transaction. For a short sale scenario, it is better to utilize the services of a Real Estate Investor rather than a Realtor. First, an investor has more experience with these types of creative transactions than a Realtor. Second, the investor will agree to purchase the house, providing the bank with a signed Purchase Agreement. This Purchase Agreement increases the likelihood of a bank accepting a discount. Most Realtors try to negotiate with the bank and then find a buyer after the negotiations. This strategy leads to a very low success rate. Some of the drawbacks of a short sale are similar to a foreclosure, as your credit score will be negatively impacted but you may be able to purchase a house again after 24 months.

Also, you may be sued and taxed as well, although if you have a knowledgeable investor working your short sale, he or she can negotiate with the bank a ‘satisfaction of the loan’ result, meaning that the accepted short sale would satisfy the loan and no remedies would be needed.

Doing nothing or declaring bankruptcy is probably your worst option. Homeowners facing foreclosure today are going through enough misery and stress and deserve options other than these.

Downsizing? Living Large in a Small Space

Today I came across an interesting article that many of my followers may be interested in reading. Hope your having a fantastic week and be sure to forward this and any of my past blogs to friends and family!(Also, don't forget if your buying or selling to contact me today for a free consultation!)

Downsizing? How to Live Large in a Small Space By Jaclyn Banash

RISMEDIA, October 6, 2010--(MCT)--It's a constant battle: Small versus big. Less or more? There are arguments to support both sides.

Having just downsized to the smallest apartment I have ever lived in, I was intrigued by the idea of small being the new big. The challenge of storage and saving space is usually the No. 1 problem for most small-home dwellers. Organization is key, as is making the space work for your lifestyle.

I have been racking my brain for months over how to make my new 656-square-foot apartment work best for me. I have found some great new ideas to integrate with some of my old tricks of the trade.Creative use of furniture is essential in small spaces or even in larger spaces that might need to be multifunctional.

Take, for instance, a guest bedroom that doubles as an office. Instead of crowding the room on a daily basis with a bed that only gets used a few times a year, why not use a sleeper sofa or a chair and a half with a twin sleeper sofa? This will free so much space for day-to-day activities in the office.A daybed is another good-looking piece of furniture that multitasks.

A daybed is a great way to divide a large space, but in a small space, if positioned against the wall, it doubles as a sofa with pillows across the back and an extra sleeping spot when the pillows are removed.

Lots of furniture pieces are known for their great multipurpose and space-saving qualities. The ever-popular pouf, for example, can double as an ottoman, become a small table for books, computers and drinks to rest upon or even turn into extra seating.

Nesting tables also provide options for tiny spaces because they are small and easily moved. Storage ottomans are an obvious choice for doubling as a bench or coffee table that can house toys, blankets and extra bedding.In dining room/eating areas, a custom-built bench/banquette with storage underneath is a great option for tight spaces.

If your budget does not allow for custom, then good-looking storage boxes fit nicely under most pre-made banquettes. If you are not looking for more storage but are just short on space, a breakfast nook can be created with a small table and stools that can tuck underneath when not in use.Simply by pushing a dining table against a wall or window you can save at least three feet. All you have to do is pull the table out for dinner parties. And don't forget, an old or unattractive table can always be put to use and instantly jazzed up with a custom table skirt in a fabulous fabric. Voila, another spot for hidden storage!

One of my recent favorite small-space solutions is installing built-in top-to-bottom mirrors on the inset of closet doors. How brilliant! No longer are you taking up precious wall space in the room with a floor-length mirror.

As for the actual layout and decoration of a small space, conflicting theories abound. Some say not to fill a small room with over-scaled furniture, as it eats up the space and feels cramped. Others say big furniture makes a small room seem grander.I gravitate toward the middle.

In general, I stay away from large, overstuffed furniture and do find that too many small pieces can feel cluttered. But I need enough seating for entertaining and recently purchased a set of Lucite folding chairs (clear furniture is another small-space trick) that can be stowed when not in use.I have never subscribed to pure minimalism, although I admire those who can.

I find it almost impossible to not surround myself with lovely items that I find along my travels, antiquing or shopping. The key is rigorous editing. I have seen many small, successful spaces that have a plethora of mementos or objets d'art.But once you get to a certain point, it becomes necessary to do the practice of one thing in, one thing out.

After all, no matter what size your space is, you need the room to enjoy it.

What is a REIT & Why might you consider one?

What is a REIT and why should I consider one? If you want to get into the real estate market but flipping homes or dealing with tenants and being a landlord is more of a hassle than you'd like then you may want to consider this investment vehicle.

A REIT is a Real Estate Investment Trust. They simply put, do the investing of real estate for you. Managed by experts, they buy properties, manage them, buy mortgages, and hold them for extended periods of time. Like a stock, the price of a REIT goes up and down as the value of their holdings change. You can purchase a REIT through a stockbroker paying normal commissions or if you are an active trader can do so yourself through online sites (ie..Scottrade).

With real estate holdings and values lower today than they have been for many years, now may be the time for some to consider this approach. While I am not suggesting to go out and buy stock in REITs, I'm simply implying that in a buyers market, if you can find an aggressive and financially sound REIT, they like investors may be buying some great properties during this down market which over time could lead to a profit when the market rebounds.

There are many types but your best bet for one to offer steady growth over the long term and dividends would be Equity REITS. They buy apartment buildings, hotels, shopping centers and office buildings. Some specialize in certain parts of the country while others are very diversified. Some invest in developers deals, and others buy and develop and manage properties themselves. In general, those that do their own developing and managing are usually the most profitable.

Over short term most will behave like stocks, rising and falling with the market. Over the long term however they usually trend towards following what the real estate market is doing. So if long term values rise, REITS should as well.

To find out more about a REIT, get the companys annual report. Find out how its doing, what its been investing in and its investing philosophy. What is the stocks history and what type of dividend pay outs do they offer? Are the dividends growing? Most importantly is the dividend being covered by cash from the operations of the business or more investors buying the stock, or selling properties? In general, you should stick with some of the larger more accomplished and actively traded REITS that are listed on the major exchanges. This can be done by doing some research or contacting a trusted financial advisor or broker that may have experience with the stock market.

Hope you find this article helpful and as always, please forward to anyone that may benefit from it as well. I look forward to any comments, questions or thoughts on the above!

Tips for Flipping a House

So you want to get into the game of flipping homes and you don't know where to start or are worried you don't have the knowledge to be successful despite your time watching numerous "flip this house" episodes on television? Don't fear, your real estate expert is here! :) Okay that a bit much I know, but in all seriousness I have a list of tips that can help. I have flipped homes and have experience in this. While its often made out to be glamorous and a sure fire way to make money, its often not broadcast to the public when someone gets in over their head and makes what could have been a successful flip a money losing nightmare! Follow these tips and you'll have a better chance at being successful!

1)Know Your Market - Working backwards, what is the market value for the home your looking at when its finished? A clear idea of ARV (after repair value) is necessary to make an educated offer on a property. Taking a guess that you'll sell it for 25K more than what you put into it is dangerous. YOU don't decide what the home is worth, the market does and knowing this in advance is a must. Once you know the ARV, subtract from this all the costs you have, including price, repair costs, holding costs, buying costs and costs of selling. Now subtract the profit you want, and you have the highest price you should pay. Start with an offer lower than this number and then go for it. If done properly your on your way to a good start!

2) Timeline - Its vital that you have a schedule in mind for start-up and completion of the work. More than a handful of house flipping projects have gone wrong due to falling behind schedule. For example, if you think you can get the electrician/plumber in the first week and they don't make it for a month so you can close up walls, everything else can be thrown off. Meanwhile your spending 2000 per month on holding costs like loan payments, utilities, property taxes and insurance. So be sure prior to finalizing the offer that you know how long it will take to have all necessary work and contractors jobs performed. Also, as a tip be sure to have all contractors sign a completion date expectation form as part of their contract with you prior to starting.

3) Necessities First - On a "house flip" show a couple is running over budget by about 10 thousand dollars on their first fixer upper investment and are also behind schedule! Yikes, not a great start right? They run out of money and put the home on the market AS-IS with a yard that could use a face lift and some unfinished painting on a few walls. Of course buyers are going to see these things first and the home is making a bad first impression. Avoid this mistake by taking care of those things that are most important first, with an emphasis on items that lead to first impressions like curb appeal and paint, flooring etc..Then if you run out of money or time, you've already done some of those key items that will help the home sell. If not done properly, buyers see an unfinished product and a lower offer is expected or it will sit longer, adding to your loss.

4) Know your ROI on Improvements - Your return on investments for all improvements should not be a guessing game. The ROI for each possible improvement should help you determine what you do to the home. You may guess a little at times but the principle is that you do only those things that have a direct correlation to the value of your home increasing. What ROI improvement vary based on each home and area but often include flooring, paint, landscaping and sometimes finishing unfinished space. With a small house, new carpet, paint, landscaping could run less than 7K and add as much as 14K as an example.

5) Know Your Buyers - You should know pretty typically what your end buyer is like. If your in a senior neighborhood, don't expect you'll be selling your home to first time home buyers that are young! Know what type of buyers are likely to want the home (and neighborhood)before you start. Then, after improving it with those buyers in mind, market it appropriately. You or your agent should identify and advertise the benefits that matter to your buyers, whether this includes "close to shopping/stores", "country living" or transportation etc.

6) Price - Ah yes, the very vital question..."what do I price the home at when its finished?" Selling fast means you save holding costs and have cash in hand to do your next project quickly or you may have other projects waiting on that money. Either way, price your home aggressively. If the typical home in that area sells for 150K, price it a few thousand below that. While you may feel like your giving up 3 or 4K of potential profit, you'll probably save atleast that in carrying costs and lost opportunity costs. Purchase the home right and use the other suggestions here and there should be plenty of money left for you!

Hope the above offers you some insight to the game and life of house flipping. As always, please feel free to forward this blog to anyone you know and chime in with your own thoughts and ideas on any of my blogs. Thanks for viewing and have a great day!

10 Tips for Hiring a Home Remodeling Contractor

Looking to have some work done on the home?

With the U.S. economy facing the lowest home sale statistics in fifteen years and home values continuing to slide in many regions, it's not surprising to hear that housing trends point towards a large percentage of American homeowners looking to improve and maximize their existing property investment versus buying a new home. When deciding to undertake a remodeling project however, there are several invaluable tips to keep in mind as you discuss your home make-over with potential contractors.

Through advice and stories shared by both contractors and consumers, StageofLife.com, a blogging resource for homeowners, discovered 10 important tips on how to find a trustworthy home remodeling contractor to help ensure the right person or company is hired for your next home improvement project.

Tip #1: Does Your Contractor Have Proof of Insurance?
Ask the contractor to have his insurance company mail or fax a copy of his current contractor insurance card to you. If the contractor can't do this - stay away. Why? If there is an accident at your home, you are then liable. This also applies to any sub-contractor or employee that the contractor may use - those individuals should have active insurance cards faxed or mailed to you as well.

Tip #2: Did You Check References and See Photos?
Ask for at least three references - with two of them being for the same type of project you are planning - and then call the references. Additionally, ask the contractor to provide photos of previous work, especially for the same type of project. If he produces lawn and garden photos and you're planning a bathroom remodel, you may want to check out another contractor.

Tip #3: Does Your Contractor Take Debit or Credit Cards?
Besides your ability to earn a few points, bonus miles, or cash back on your project, a good sign that a contractor is financially savvy and has a bank behind his business is his ability to take debit and credit cards. This doesn't just apply to big contracting companies. Many small, one-man shops will take cards if they have a good relationship with their business bank or credit union.

Tip #4: Manners and Appearance?
If the contractor drove his vehicle to your home to give you an estimate, take a look at the way he keeps the equipment and vehicle. Are things clean? Neatly arranged? If not - that's a big warning. The way a contractor treats his tools is a direct connection to how he'll treat your home. During the initial meeting, does the contractor present himself in a professional way? Do you feel comfortable around him or his employees? They will be working in your home after all.

Tip #5: Clean Up Policy?
Ask about the clean-up policy. For example, if your home improvement is a multi-day project, will the contractor be cleaning up at the end of every day or will he leave the dust, wood chips, and other mess laying there for day #2? The more mess in your home - the more it gets tracked around. Many homeowners find themselves with mouths gaping wide after the contractor has left for the day and their floors and home are dirty and messy around the project area.

Tip #6: Will the Contractor Put It In Writing?
Is your contractor willing to put both his bid and the scope of work in writing? If not - walk away immediately. You'll be surprised how many homeowners have been duped by contractors who verbally tell you what's included in their scope of work, but will then, in the middle of everything, require extra money to finish the remodel, thus holding you hostage with an uncompleted home project.

Tip #7: Availability?
Can the contractor get the job done in your timeline rather than his timeline? There's nothing more frustrating than if a contractor tells you that a job will be done by a certain date and then it isn't . On the flip side, if you can't find a good contractor that's willing to commit to your timeline, your expectations may be too high and you may need to adjust your timeline.

Tip #8: Does Your Contractor Use "Subs?"
Does your contractor plan on doing everything himself? Or will he "sub out" work to the "trades?" For example, if you are remodeling a bathroom, you may need a plumber, electrician, and carpenter. It's okay if the contractor subs work out to these specific trades - it shows he wants the work done right.

Also, it's fair to say that you can expect your contractor to make money off the trades, or other sub-contractors, by marking up those quotes for the project. That is a standard practice to help the general contractor recover costs in the time it takes to manage the schedule. If you don't want to spend the extra money on your contractor marking up the trade quotes, then you should prepare to project manage the remodel yourself, but know this may limit your options on contractors willing to work with you.

Tip #9: Quoting & Billing Procedure?
Ask the contractor about his quoting procedure. Will it contain general information, or will it be specific? For example - most contractors will charge you for a fuel surcharge, material up-charges, waste removal, labor, etc. Some will show you these exact costs in a line item invoice, but others roll it up into one big bill. How much detail do you want? You should clarify that with your contractor upfront.

Also - what is the payment or billing policy? Is money required upfront? If so, go back to #1 and #2 above to make sure you have the contractor's references checked and have a copy of his contractor's insurance.

Tip #10: Did Your Contractor Get the Permits?
Ask your contractor to take care of the permits. Although permits cost you money, the inspection process is meant to protect you from poor workmanship and to make sure that everything is being built to code.

By following these 10 tips for hiring a home contractor, you'll feel more confident that you've found the right contractor for your remodeling job.

Have a fantastic Labor Day Weekend!!