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Archive for the ‘Foreclosures’ Category

Home “Buyer’s” Beware Part III


It’s A Racket!

If you remember the housing bubble, then you should remember when it burst.  Well get ready for the Housing Bubble Burst Part II

The Property

This is not for the property investor/flipper.  It is intended for the first time home buyer.  The buyer that is intending to make a commitment, an investment and intends to live in their home for the rest of their lives. 

This is an investment for a life time, covering up to 30 years.   You want to take your time, this is a commitment second only to marriage.   You want to look, get the feel of and imagine the potential.    You want a good location, well built and strategically appointed rooms, bathrooms and windows.    Don’t allow you agent to down play the flaws.  here are just a few things to look for.   broken or cracked windows, lose hinges on doors and cabinets,  lumps in carpet, uneven floors (bring a basketball or soccer ball),  counter tops out of level,  check above the corners of windows, if the house has settled to much there will be a crease on either or both sides.  The entry doors will also reveal this defect. 

Check the driveway, if it is cracked, it’s only going to get worse.   check for discoloration in the ceiling, this will sometime reveal a leaky roof.   Use a circuit tester to test the wiring. If it has a three prong outlet it should be grounded.   Insure that the wiring is done correctly on each outlet in every room.   Be vigilant on renovations.  Most garages will have gas furnaces and water heaters.    If a garage has been made into a bedroom or family room, insure that any gas lines has been totally removed.   some renovators will only cap off the gas lines which could result in future problem leaks.  If a home has been switch from gas to electric, insure that the gas has been capped outside at the meter. 

Flipped houses

These houses are bought at auction for as little as $10,000 and sold a few months later for upwards of $200,000 with little more than carpet,  paint, appliances and maybe some carpentry work.    These houses are listed with the highlighted attribute “New Carpet, cabinets, appliances, paint inside and out.”   As with anything, you are going to have the can-do’s  and also the can’t even if they tried.    Be careful with these properties.  They are  more of a cover up than a fix up.     Mildew is sometime covered up with paint only to be revealed in a few months.   squeaking floors are repaired by drilling in screws to quiet the squeak.   Most of the time it will make the floor even.  wear soft bottom shoes to get the feel of the floor.  

foreclosed home

For what ever reason the home owner no longer was able or wanted to continue living or paying for the house.   In many cases they were over extended from the beginning by over paying for the home.    You want to be able to make the payments, maintain and make improvements over time.  If all you can do is make the payments, the property would soon result into blight.   Usually sold as-is.

Short Sale

This home has more owed on it than it is worth.   This type of sale will require a third party approval and sometimes more.  Often times it will also have a second or even a third mortgage.  It will usually take longer to close on a   sale of this nature.  It is not worth the hassle.  Usually sold as-is and not worth the asking price and will have to be approved by all parties involved and it only takes one disapproval to squash the deal.   This hassle is not worth it….Run!!!

The bait Homes

These homes are put on the market solely to stimulate the market and flush out any potential buyers.  These homes are usually under priced and in immaculate well kept condition.   The old saying “If it seems to good to be true” should be well observed.    I don’t think that there is a law anywhere that say “If you put your home on the market, you must sell it”.   Open houses are mostly stages that are put together to gather info on potential buyers.    It’s not to far fetched to imagine a home owner receiving  compensation to stage such an event.   Whether it is really for sale or not, these bait homes are out there, be mindful of them and just walk away.     Because, if you manage to  get an offer in, it will be countered with a stipulation that even a 1st year law student would advise against.

These homes are sometimes advertised as “Bank Approved”.  You should know that if you are getting a conventional loan, your bank will have to approve it. As every bank has their own approval standards.   Your bank  will not give any credibility to the approval of another bank.

flopping

In ‘flopping,’ a home is purchased by insiders at a steep discount, then immediately sold for a big profit.

To Be Continued……….

Home “Buyers” Beware Part II


It’s A Racket!

If you remember the housing bubble, then you should remember when it burst.  Well get ready for the Housing Bubble Burst Part II

Location, Location and don’t forget, did I mention Location  Your agent wants to close the deal.  It really don’t matter to them if it’s near a nuclear plant or a waste dump.   That being said, check out the surroundings of the property.

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Take into consideration that stop lights are a health hazard in that exhaust fumes from cars stopping idling from 15 seconds to 3 minutes and starting up in four different directions.   A round-a-bout is not as bad as a stop sign.   A 4-way-stop intersection is the worst.  By law every vehicle has to slow down, stop, idle then accelerate. This will be going on in all four directions.    So you may want to rethink the highly promoted corner lot and take these into consideration.

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Another health hazard is properties near power sub-stations.   Electrical companies deny cancer clusters ever exist but why take the chance.  They are all about the money and don’t want  law suits.   There are warning signs posted all over.  Why would you want to live near it.

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Yet another controversial location is near a cell tower.  A cell tower is a relay system for cell phones.   You cell phone is a high frequency low power transceiver and it’s signal is picked up by these towers and amplified and retransmitted.    Some towers are set up to retransmit  signals from other cell towers.   Why subject your family to highly amplified high frequencies?  It’s not worth the investment.

Near a freeway,  don’t even think about it.   Not only do you have to contend with the noise, but the exhaust fumes from gas and diesel fueled vehicles that travel up and down the freeway 24 hours a day.  What happens when there are frequent traffic backups?  Idling vehicles, diesel and gas.    If you care about your family, stay away.   You agent will not be concerned about your future health, closing is their game.

The HOA.  Do your really want to pay someone to tell you what you can and can’t do on you own property?  hold up, wait a minute, your city, county and state code enforcement officer does that, so you already have three, do you really need another?

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The highly advertised Bus stop.   If you have asthma or any other respiratory illness you want to stay as far away from living at a bus stop as you can.   A vehicle stopping and starting by your home every 15 min……not a good thing.   If you don’t have a respiratory problem now…you will.   Admittedly, this is an extreme example.  this home is on the corner, a bus stop right at the garage, at a stop light and a cell tower across the street.  That’s before you even look at the inside of the house.

Flood Planes

Check the area’s flood plane map.   The is as elevation in most every area that will always flood.   Compare the flood plane with the elevation  and find out the elevation of the property you are considering.    I don’t have to tell you that the elevation of your property should be substantially higher than the flood plane.

The Greenbelt.   These areas are promoted in areas where no other construction is allowed.   While it may seem nice to live near a green belt, there are restriction and research need to be done to find out what can and can’t be done on your property.    Various restriction apply so thoroughly do your research to assure that the restrictions would not hinder you ambitions now or in the future.

Industrial Areas.   After reading this far, do I really need to explain why this area is not a good idea.   But I will say this, trucks, noise, traffic and I don’t want to get into what is stored, shipped in and out of these areas.

Railroad Tracks.   Really!!!

To Be Continued…….

Home Buyers Beware


It’s A Racket

If you remember the housing bubble, then you should remember when it burst.  Well get ready for Housing Bubble Burst Part II.

Your “Buyer’s” Agent

Fresh out of a Seminar, the job of the agent is to close the deal.  They are brokers.  They are closers,  they don’t make any money until the deal is closed.   So, make no mistake, your buyer’s agent is all about the money.  He/She is all about their commission.   One thing you need to understand is that the more they sell the house for the more money they will make.    Some offers never make it to the seller because of the commission factor.   Each agent has a minimum that they are willing to work for and it’s all in the price of the house.    Very seldom do a buyer actually get to see or haggle with the owner, in fact you may or may not see them at the closing.

This agent is ready and willing to write up and offer and take your “earnest” Money.   Never, and I mean never give anyone any money unless that house is exactly the way you want it.   This is not a handshake deal, they have your money and all you have is a promise.   This agent don’t own this property, yet they will make excuses about the property.  They want to close.    They want you to like the property to give up the money, even though there are problems.   I will get into property conditions in a future publication.

The buyer’s agent will  likely not know anything about the house you want to see.  Check with the listing agent to see if the property is available, your agent may not. There is absolutely no reason for an agent to show you a property that has already been sold.   If this happens, immediately find yourself another agent.    The listing may be sold and just not updated on the Multi-listing Service (MLS).   Unless they are willing to do the foot work for you, you are basically on your own.   You tell  “your” agent how much you have/qualified for, how many rooms, bathrooms, square feet and all the things you want in a home.  Besides,  buying a home is the most important commitment you will make, second only to marriage.   Keep in mind that being a  real estate agent does not require a college degree.  Getting a real estate broker’s license is easy.   All is needed is 90 hours in classes.    A Real Estate agent do not take an oath with their hand on a bible vowing to give you the best deal you can get.  That being said, you will at least one time end up at a house that is nothing like the house you told the agent you wanted.   You are not paying for their services, so why should they go out of their way for you.  That is the attitude you should have.   Besides,  they see you as a person that is under the illusion that you are some day going to actually own a home.

You need to research the real Estate laws in your state.  Then consider agents has already attended that seminar  found some loopholes and end runs around them. There are a few things that you should realize.    You will never own your home free and clear.  There will always be property taxes, where the county levy against you according to the value that they think it’s worth.  This method incorporates two ways of increasing your taxes.   One in which the county just outright increase your tax rate, and other is when they increase the value of your home.   Tax Levies in some counties and cities are put to a vote.  This is sometimes disguised on a ballot as a temporary tax that will expire in a few years.   In a few years it is put back on the ballot as not raising you taxes, in which I might add is the year that the initial levy is to expire and your taxes would go down.   In any case there would be a value assessment done and home values would be raised to accommodate the taxes needed.   Are you getting the feeling that you might need some Vaseline?    Then there is eminent domain, where the city, county, state or Federal government can come in and take your property just because they found a use for it.   More Vaseline anyone? 

A Real estate agent is on the same level as a used car salesmen.   They don’t own the property, they don’t know much about it,  they only know how much it is and where it is.  I can’t stress this enough, they want to sell it to you by any means that they can.    If they have their way you will hit the ground running and in a few years your home (for what ever reason) will be back on the market.   That is their lively hood,  recycling homes.      Ask your potential agent “how many newly built homes have they sold?”     If none then, your agent is Entirely in the home recycling business, and we all know how vicious and cutthroat the recycling industry can be. 

 

Ghost Bidding

Once your (Buyer’s) Agent have summited a written offer to the listing agent, you may be contacted by your “buyer’s” Agent and told that they have gotten a lot of offers for the house and suggest that you raise your offer.  It’s not like you are at auction and can see who you are bidding against.  In fact you may be bidding against yourself.   The agent works on a commission and the more the house sell for the higher the commission.   It’s not in their financial best interest to get you the best price.   Don’t be a glorified lollipop (sucker) and fall into the real estate trap.   You are making an  offer, they will either accept it or a better offer.   They will not tell you how much the other offer is.  You will only know how much the property sold for after the agents close the deal and all is paid.   Never consider it as losing a bid, you made an offer, you did not enter a bid, this is not an auction.   You didn’t lose anything.  You still have your money, and you are not burdened with an over  priced home.  As is the case and the result of so many foreclosures today.    Most people don’t realize that they not only have to pay for the home but has to maintain the home.    Buying an overpriced home don’t leave any wiggle room for maintenance, upgrades and improvements.    Don’t allow your “buyer’s” Agent to get you bogged down with promissory notes.

Definition of “Promissory Note”

A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date. A promissory note typically contains all the terms pertaining to the indebtedness by the issuer or maker to the note’s payee, such as the amount, interest rate, maturity date, date and place of issuance, and issuer’s signature. The 1930 international convention that governs promissory notes and bills of exchange also stipulates that the term “promissory note” should be inserted in the body of the instrument and should contain an unconditional promise to pay.

Submitting an Offer

They love to ask the question “Are approved”?” and “how much are you qualified for?”.    Never tell them how much you are qualified for, tell them how much you are willing to finance.    Just because you qualify for 400,000 do not mean you have to go out looking for a home for 400.000 even though the $ signs and % signs are flashing all through the agents head.  

When the offer is written by a good realtor, a realtor that truly represents you will go in under the asking price so as to have some wiggle room for negotiations.  Most offers, if for the asking price will require the seller to pay all closing.   If your agent can’t accomplish that, then immediately get yourself  another agent.  It will be in your best interest to require that they accept your offer by a certain time of a certain date.   if they do not accept it by the stipulated time and date given, proceed to recover your earnest money immediately.   No further negotiations on your part is required.    If your agent suggest that you resubmit an offer,  if you chose to do so, do so without any earnest money.  

Insure that there is a stipulation that the property will be vacated by the closing date.   At closing, you will be responsible and liable for the property. Allowing the owners to occupy the home after closing without contract could  subject you to liabilities and damages to the property that you would be hard pressed to recover from.  It’s not worth it.     There also should be a stipulation that all trash is to be removed.    Also should be stipulated that any and all personal property that is left behind will be forfeited by the owners and shall immediately become the property of (You) the new owners.

Don’t be surprised after a couple of offers, your agent email or text you that they will no longer represent or work with you.    Don’t be offended,  they realize that you are not a glorified lollipop (sucker).

   A professional would not allow it to get to this point.   A professional would work with you and only show you homes within your criteria and within your means to pay.    They would not expect you to settle for less or over extend your budget.    A professional will find you a home, write up a reasonable offer, insure all the paper work is done to present to your lender close the deal and move on to the next buyer. 

If you listen to some agents closely, you would think they are representing the seller.     These UNPRO’s are urgently trying to close the deal, even at your expense.   Besides, you are  actually the only person in this deal that is spending money.    Any money being spent by the seller is only after they are paid or comes out of the price of the home.    

Remember,  you are the one that will have a mortgage, you are the one that will have the liability and responsibility after closing and the seller and broker is paid.   You are the one that will have to pay taxes, maintenance, upkeep and improvements over the next possible 30 years.    Buying a home is not a speedy process, so don’t allow any agent to rush you into something that’s  going to take you 30 years  to get out of.  Don’t worry about the one that got away, think about it as the one that got out of your way.  

Always be mindful of what your mortgage payments will be.  Keep in touch  with your lender so you will be apprised of the interest rates.   Go over your financing to see what you maximum payments will be.   Just because you qualify for a certain amount don’t mean you need to spend that amount.     Keep in touch  with your lender so you will be apprised of the interest rates.    

 

To Be Continued and Updated……….

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