Dean Graziosi | Dean Graziosi Real Estate | Dean Graziosi Investment

Knowing what the real estate market has done in the past is an important piece of knowledge that buyers and sellers should be aware of. Being aware of how the market has behaved in certain neighborhoods and locations where you are looking at properties can be an indicator of what to expect once the home has been purchased. Past market trends can and do have an effect on the current value of a property and how the value of the property can change in the future. Market trends have been in a constant state of change lately and knowing what the past trends were will better prepare you for the future.

Looking at how the area you’re interested in has changed in past three or four months will show what to expect in the future. Banks and lenders typically use this same information when determining comparable prices of homes recently sold in the area. This is an important tool to use while you are looking at properties. Once you find a property that you are interested in, you should also look at what the past property trends have been. This will prepare you for what to expect when the market becomes more stable. These numbers will show if the neighborhood you’re looking at has a high turnover rate, meaning that people purchase homes but do not tend to stay.

You will also want to look at the rate of foreclosures in the neighborhood, this can affect the purchase price of your home and can also affect the selling price should you decide to sell later. Experts suggest that when you look at past trends you go as far back as three years. This will tell you how many homes were sold and what the average sale price was. It also allows you to notice any trends either up or down in property values. Doing some research into past trends may seem like a lot of extra work, but it can help you make a better informed decision when purchasing a home.

Every neighborhood will have property sales throughout the years, some are for the typical reasons of families relocating to a larger home, downsizing or a change in their living situations. But researching the trends will show you if there is an abnormally large amount of activity in the area. Market trends are changing all the time, and doing some research now can help you in the long run. Finding a neighborhood you like is critical to being happy in the home you buy; but doing the proper research before purchasing that home will ensure that you are getting the most for your money and you will not be likely to lose more down the line.

Properties that have been vacant for a long time can be a great bargain for anyone looking to invest in real estate. However, there are a few things you should watch for in properties that have stood vacant for some time. The longer a property is vacant, the more chances that these problems will arise. This is due to the fact that since no one is living there, and most of these properties are rarely checked on. Certain problems may arise and become worse due to lack of attention. To protect yourself, watch for these three things in properties that have been vacant for a year or more.

1.      Have the roof checked for any need of repair. When you walk through the house, look carefully at the ceilings for signs of leaks. It is very common for a house that is standing vacant to develop problems with the roof that go unnoticed. When roofing problems are left to their own devices, they become much worse very quickly. It is important to have this inspected before you buy the home.

If you believe that the roof needs to be repaired, do not be afraid to ask that such repairs be taken into consideration as part of the negotiations on the property. Make certain that the repair cost is deducted from the sale price, or that the repairs will be made before the sale is completed.

2.      Have the foundation checked out by an experienced appraiser. The foundation of a house can be the reason that it has stood vacant for so long. You want to make sure that the house is on a firm foundation, otherwise it could have serious problems later on down the road. Even if the foundation is not causing problems right now, it could cause issues in the future if it is going bad. This is one of the biggest reasons older homes don’t sell, and it should be taken into careful consideration before you buy.

If the house has a bad foundation, this is likely the reason it has stood vacant. You should not buy such a house. It can cost thousands of dollars to repair a foundation. It is typically not worth the investment.

3.      Electrical systems should also be checked thoroughly. It is common for houses that have been vacant for some time to have an invasion of rodents or other pests. These intruders generally go unchecked for some time, because the house is left empty with no one entering it for months at a time. They can chew on wiring, and cause other problems with the house. Just make sure that you check for any signs of any rodents or animals being in the property, and have the wiring checked thoroughly to ensure that no damage has been done.

Many real estate experts agree that in today’s market overpricing your home can be a very big mistake.  It is better to list your home at fair market value, than overprice it in order to leave room to negotiate or just to test the market.  When the market was in better condition these tactics may have worked, but in todays flooded market, buyers have more options available and do not need to waste time viewing listings that they know are overpriced.  By listing your home over fair market value you may cause your home to sit for months without even getting an offer, the longer buyers see your house sitting on listing sites, the more they may begin to wonder if something is wrong with the property.

Other problems that may occur from overpricing your home include no prospective buyers wishing to view your home.  Offering an overpriced home to buyers who have become familiar with the appropriate values of homes in your area will know that your home is priced too high and will steer clear.  By overpricing your home, you may also inadvertently be helping others to sell.  Buyer who see your asking price and the price of others in the neighborhood that are similar to yours, will more than likely make an offer on the lower priced home rather than yours.  So, in effect, you are actually helping your neighbors sell their home instead of getting your own home to sell.

If you are lucky enough to get the attention of a buyer and they actually agree to pay what you’re asking the deal may fall apart when there is an appraisal done on the property.  More than likely, your home is not going to appraise for the higher price you have it listed under.  Lenders will not approve a loan for more than what the home is actually worth.  The longer your home sits on the market, the harder prospective buyers will try to negotiate.  This will give buyers the control of the negotiating process and may cost you by having you make more concessions in order to close the deal.  What seemed like a good idea in the beginning may ultimately end up costing you any extra profit that you may have seen if your home sold quicker.

By pricing your home too high you are also cutting out prospective buyers who could actually afford the true market value of your home.  Listing your home too high may take it out of the price range of many buyers who are looking in a specific price range.  This will not only limit the amount of buyers who look at your home, but buyers who are familiar with listings in the range of your asking price are familiar with what to expect for the amount they will leave unimpressed with your home and search for one that is better suited to the price range you are asking.

In our current economic situation, many people are finding it difficult to come up with the large down payments that many lenders are requiring.  This trend is leading many prospective home buyers to look into the option of renting to own.  This option is becoming more popular among first time home buyers, who are having a difficult time receiving preapproval from lending agencies or can’t come up with a down payment.

In order for a rent to own option to be successful, a buyer must first find a seller who is open to this type of arrangement.  Many sellers are warming to this option; it offers them a profitable alternative to letting their house sit empty for months waiting for a buyer or renter to come along.  Once you have found a seller who will work with you, the next step is negotiating the terms of the deal.

When negotiating your deal you will want to find out if the seller will require any type of down payment and if all of the monthly payment will go towards the purchase price of the home.  Some sellers may require a smaller down payment just to insure that you are serious about the deal.  Others may not require any, if you agree to pay the first and last month’s payment.  You will also want to know if all of your monthly payment will be applied to the agreed on sale price of the home.  Some owners may choose to only apply a percentage of each month’s rent while others will apply the full amount.  In the long run, you will want to negotiate that all of your monthly payment be applied to the balance. 

Working with an agent who has experience in these types of sales is important.  They will help you spot a good deal and steer you away from sellers who are negotiating a one-sided deal.  Once you have found a seller who you feel comfortable dealing with, you will want to seek the advice of an attorney who is experienced in these types of contracts.  This will insure that the contract offered is a fair one that benefits you as much as it does the seller.

Having the counsel of professionals when negotiating a rent to own deal is extremely important, what you may feel is a good deal may not appear so to them.  They will look out for your interests and insure that you are not throwing money away on a bad deal.  First time home buyers may walk away with a better deal when this route is taken than if they would have gone the traditional route and sought funding from a lender.  For other prospective buyers this choice offers them the chance to become homeowners without having to meet all of the guidelines set forth by lenders.  Whether this is the right choice for you is something that you will have to think about and decide on your own.

Times are tough all over. People who are selling their homes want to save money just like everyone else. It is common for thrifty people to consider selling their homes without a Realtor. That way they can save themselves the commission and make more money on their home sale. It all sounds so simple. Yet the fact is that there are many problems in trying to take the For Sale By Owner route.

Poor Advertising Opportunities

Realtors have the advantage of being able to list your home on the most advantageous advertising system for real estate of all – the Multiple Listing Service (MLS). FSBO sellers cannot use the MLS, and so they cut themselves off from a very large majority of the people who are looking for a home. They are forced to take out advertisements online or in newspapers or simply put up a sign in the yard. These methods are usually much less effective.

Buyer’s Perception

When you are a FSBO seller, the buyer makes certain assumptions about you and about the sale. He automatically assumes that, since you are saving the cost of the Realtor’s commission, you can afford to drop the price below your asking price. He probably will not trust your evaluation of the home’s worth in any case because he knows you are not a trained professional. He may think that you are trying to hide defects in the home even if you are being totally honest. The buyer’s perception of you can damage your ability to sell your home.

Emotionalism

Buyers who are looking for their first home may be very emotional about the process. When you are selling your own home, you compound that emotionalism with your own strong feelings. If you are showing these buyers your home without a Realtor present to add a note of professionalism to the situation, the results can be very unpleasant. The worst thing is that if you upset the buyer you are not likely to sell your home.

Legal Requirements

There are many legal requirements in selling a home, no matter which state you live in. Realtors take large amounts of time and effort to learn how to cross all the t’s and dot all the i’s in meeting all the legal obligations necessary to sell a home. They will make sure all the inspections required are done on time and all the paperwork is filled out in full. If you are selling the home yourself, these tasks can be very intimidating, and in fact many people never get them completed correctly.

Some people may be suited to selling their homes for themselves. If you have experience in real estate, a cool head and a clear eye, you might be able to pull it off. For most people, the opposite is true. While they try to save money by eliminating their Realtor’s commission, they create more problems for themselves than they can handle. In the end, many FSBO sellers end up using a Realtor after all. It is not a sign of failure, but an acknowledgement that Realtors are best suited to selling houses.

Here is a list of the five best places you can buy hot real estate now. With the market currently a buyer’s market and sellers unable to move houses as much, this real estate list can help you choose a great place to live.

The first hot area to buy real estate is Austin, Texas. Why is this a hot real estate area?

Austin is a beautiful place to live. If you have lost your job you will be happy to know that Austin, Texas, had a 14.1% of job growth in the year 2010. You may want to apply ahead of time to find a job before moving. If you are into a tech career there are more then 2000 tech companies in the capital of Texas. The national USA average of unemployment is 9.8% whereas Austin, TX is 7.1%. When looking to buy a home the average median price is $122,921. If you currently own a home, sell it and you may already be ahead with the low cost of homes here. All of these benefits make Austin a great place to live!

Another one of the hot areas to buy real estate is Broomfield County, Colorado which is located between breathtaking Denver and Boulder. In this area you will find jobs galore including high tech jobs. In the last ten years jobs increased by 50%. Average median home price is $239, 000. Get skiing and hiking in Colorado now!

Looking for someplace warm to buy hot real estate? Check out Deerfield Beach, Florida. The median home price is only $89,400. Enjoy a home with a view of the beach. Imagine waking up every morning, grabbing a cup of coffee and relaxing by the beach.

If you are looking to retire and find a new piece of real estate check out Durham, North Carolina. The median home price is $174,900. Enjoy as many of the one hundred plus activities the Duke University has to offer seniors. You can also enjoy your golden years playing golf, seeing Broadway hit shows as well as concerts and stay young hiking.

On the opposite spectrum if you are looking for a hot piece of real estate to buy and raise your children check out Woodbury, Minnesota. In this area of Minnesota the schools are phenomenal. Plenty of jobs await at 3M and the state government. Enjoy the wonderful lakes for swimming, fishing and boating. Other fun activities include winter activities such as snowmobiling, snowshoeing, making snowmen with your kids, sledding, ice skating, etc. You and your family can hike, enjoy the grassy parks and biking. There is never a dull moment. Median home price in this hot real estate area is $245,000.

The fifth best place to buy a home is Madison, Wisconsin. You can choose to live in Madison or buy a hot piece of real estate rental. There is so much to do in Wisconsin’s capital including many sports, cultural events, affordable housing, one of the top rated colleges, shopping, variety of restaurants, four season activities and so much more. The average median home price is $199,900.

With a little research and help from a real estate agent you can find the best place to live for your current situation. Start living the dream now.

I.              What is an REO Property?

Foreclosure results when a homeowner is unable to pay the mortgage or has defaulted on his/her loan. When this occurs, the bank will auction the foreclosed home for a minimum bid that includes the loan balance, accrued interest, attorney’s fees, and any costs associated with the foreclosure process.  The successful bidder at a foreclosure auction must agree to produce a cashier’s check for the full amount of his/her bid on the spot, and must accept the property “as is.” 

Should a foreclosure auction fails to result in a sale, property ownership is automatically transferred back to the mortgage company.  It then becomes a Real Estate Owned property, or an REO.

At this point, the bank will evict any current tenants, and handle urgent repairs.  They will also work with the IRS to remove any tax liens and pay off any homeowner’s association dues.  However, most banks are unlikely to absorb the cost of REO inspections or major repairs.  And while they generally allow you to incur such costs, they won’t lower the price to account for necessary repairs found upon inspection.

II.            Making an Offer

A.   Before you make an offer, consider:

·          Inspection contingency period.  Should inspections reveal damages that the bank failed to disclose and refuses to correct, this will allow you to terminate the sale.

·         Sometimes the bank will renegotiate the “as is” conditions you initially agreed to, rather than putting the property back on the market. It is worth requesting that the bank make repairs or give you credit after you’ve completed your inspections.

·         While most banks don’t provide REO financing, ask anyway.  In cases of extensive property damage, they may make exceptions.

B.   Then, you/your agent should ask the listing agent:

·         Are there any inspection reports?

·         What work has the bank agreed to?

·         Is there a special “as is” form?

·         How long does it take the bank to accept an offer?

·         How does your agent deliver the offer?

To expedite the process, provide the listing agent with a pre-qualification.  If you can provide an actual pre-approval letter and buyer biography, your offer will be that much easier to accept.

III.           Deal or No Deal?

While an REO may seem like a bargain, you must do your research. What is the current value of other homes in the same neighborhood?  Is there investment potential in the home?  Will location increase the value or over time?  How much upfront investment is required? (Don’t forget to consider the added costs of living elsewhere while you make this property livable!)

Since banks must show investors, auditors, and shareholders that they attempted to get the highest possible price on the property, REO’s generally sell at pretty close to full market value.  However, if you plan, save, and know exactly what you are looking for in a property, it is possible to find the REO home of your dreams at a price you can afford!

With one of every seven residential mortgages in delinquency and with one in every 350 homes already in the foreclosure process, the REO marketplace will provide investment opportunities for years to come.  CNBC reported that as of September 2009, more than 7 million homes were in the “shadow market” soon to be coming on the market.

Unlike the short sale or sale at auction, the REO allows the investor direct access to decision makers.  These decision makers want action and quick resolution.  In fact, the qualified buyer who can move quickly solves a myriad of problems for the REO.  Investors can increase profits by being professional and submitting professionally prepared documents that provide solutions to the REO seller.

This means verified financing, quick contingency dates, clean offers and a streamlined approach.  For the most part, REO transactions follow a “let the buyer beware” approach.  The buyer who is aware stands to do well, but that does not mean every REO is a winner.  The investor should build a team of professionals that accumulate information and assist in the decision making process.

·                     Real estate agent – assemble a comparative market analysis, help draft an offer to purchase the REO, perform a background check including all historical information about the property and help negotiate the contract.

·                     Qualified home inspector – while many REO owners will not entertain repairs, the purchaser can strengthen their case and protect their investment with information form a qualified contractor or inspector.  This expert should prepare a written report describing the property’s systems, structural strengths and weaknesses, perform a radon test and pest inspections and furnish estimates for repair to the buyer. 

·                     Attorney – to serve as consultant and review all offers and contracts prior to issuance.

·                     Lender – REO sellers must see support for the purchase offer.  The REO investor should forge a relationship with a reliable lender who will provide pre-qualification letters and be prepared to move rapidly upon acceptance.  The buyer should get a general overview of the lender’s policies and closing costs as relates to REO purchases.

The REO marketplace is competitive.  Purchasers should assemble their team and be ready to act.  Opportunities are out there are ready for profit making.  Get your REO investment team on the same page with a plan to either sell or rent the property upon taking title.  The REO purchaser who is prepared will most likely come across the same seller on other occasions.  Build an REO acquisition team and be ready for action.