The disadvantages associated with purchasing a property during the pre-foreclosure stage are few, but worth mentioning. As with any major purchase,negotiations between the buyer and seller can be difficult,especially since the seller would typically prefer not to have to sell the property in the first place. Secondly, transactions are time-sensitive, since there is pressure to complete a sale before the property goes to auction.
Though foreclosure auctions can offer significant savings as well as immediate property ownership, they are not for the faint of heart or the uninformed! Unless the buyer is already familiar with a particular property,there is usually little time to examine it. And, the buyer will be competing against professional investors and sometimes even the lenders at the auction.
It’s definitely possible to find great deals in the foreclosures market. You just need to know where to look and be able to differentiate exactly what you’re looking at. With an understanding of the pros and cons of buying at each stage of the process, you’ll be well on your way to a successful purchase of foreclosure properties you can be proud of.
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Posted in Foreclosure houses
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Tagged (REO), below-market price, Buying foreclosure properties, foreclosing lender, Foreclosure auction sales, foreclosure investing, foreclosure market, foreclosures market, Notice of Trustee Sale, online foreclosure marketplace, Pre-foreclosure Properties, private homeowner, real estate bargain, Real Estate Owned by the lender, Understand foreclosure investing
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So you want to purchase foreclosure property under market value? Well, if you feel that,the high cost of home buying creates a hindrance for you, preventing you from purchasing that house you always wanted too, think gain. As, this may be the best time to dive into the foreclosures marketand take advantage of the many opportunities available.
For people willing to do a bit of homework, the foreclosure market offers some of the best opportunities available in real estate today. Experts point toward significant growth in available foreclosure properties, so there’s never been a better time to line up your resources and educate yourself about this previously hidden market. It’s not unusual to save from 10 to 30 percent of the market value on a foreclosure property, and certain properties offer savings of 50 percent or more! There really are bargains out there. You just have to know where to look.
Web-based services such as RealtyTrac give consumers access to foreclosure and pre-foreclosure information that was previously available
only to professional real estate brokers and investors. Today, home buyers can use these services to identify and research potential home purchases, as well as to find the tools and professional resources they need to help them close the deal. RealtyTrac,which provides all the foreclosure data for both MSN House and Home and Yahoo! Real Estate, has already compiled a list of over 550,000 foreclosure
properties across the country.
The keys to a successful foreclosure property purchase are diligence and patience, along with taking an educated approach to investing in this market. RealtyTrac CEO Jim Saccacio offers five tips to help you close a deal on a foreclosure property:
1. Learn about the different types of properties and the foreclosure process.
Not all foreclosures are the same! You need to educate yourself on the difference between the three basic types of properties, including notice-of-default (NOD),notice of trustee sale (NTS), and real-estate-owned REO, as well as the positive and negative aspects of buying at each stage of the foreclosure cycle.
As a rule of thumb, the best savings can be made at the pre-foreclosure stage, where home owners can avoid a foreclosure and lenders can save the time and cost involved in going through the process. Another critical point in the process is immediately prior to the auction date, when all parties might be most open to a last-minute solution.
2. Secure financing early
It’s important for a buyer to be pre-qualified before engaging in discussions with a seller. This ensures that the buyer is in a financial position to purchase the property, and is in the strongest possible position to negotiate.
3. Engage a real estate agent as a buyer’s representative.
There’s a distinct difference between a buyer’s and a seller’s representative. Buyer’s representatives have the home buyer’s interests at heart, and are charged with finding the right property and negotiating the best price for their clients. Picking the right real estate agent will make your life much easier. Ideally, select an agent who specializes in the foreclosures market and has specific experience in REO properties.
4. Do your homework
Purchasing foreclosure properties is somewhat more risky than buying traditional real estate properties. But, with that risk comes reward in the form of much higher potential savings. With the right examination and due diligence, buyers can significantly reduce the risks. As with any purchase, timing is everything! But, it makes sense to give any property under consideration a thorough examination, including determining its condition and value, finding out the amount in default and the remaining loan balance, and running a legal investing report to make sure the property is free of any financial liabilities. Of course, it never hurts to foster a positive relationship with the seller!
5. Make a realistic offer
If you want to be taken seriously as a buyer, you must be realistic when preparing an offer. Lenders aren’t likely to give properties away particularly in a real estate market where prices continue to rise. Additionally,homeowners in financial distress may be difficult to deal with particularly, early in the foreclosure process. An educated buyer-one who knows how much is owed on the property and what its market value is,can usually come up with a realistic offer; one that offers significant savings,while meeting the requirements of the lender. Foreclosed property listings await!
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You? A Foreclosure Statistic? Stranger things have happened.Many home owners who have lost their dream house to foreclosure never in their wildest dreams thought, they would be a foreclosure statistic. You see, losing a home to foreclosure usually happens to the neighbor down the block, the person who was hospitalized, someone who lost a job, or had an accident,that sort of thing.
So you might be thinking, foreclosure will never happen to me. No way! But lurking in millions of mailboxes each month is a financial time bomb, a threat to home-ownership never before seen in this country.
For the past few years the nation has been flooded with forms of financing which allow buyers to purchase homes that were once unaffordable. The essential deal is this: You buy now, pay less than you should each month and then within five years, sell at a big profit or refinance.
RealtyTrac, the leading online marketplace for foreclosure properties is the place to take advantage of foreclosure properties. “In the summer of 2003, when mortgage interest rates reached bottom at 5.21 percent, no metropolitan area saw a price decline in the second quarter. The market was at its top in 2005 when almost 45 percent of all metro areas saw double-digit price increases. In 2006 the marketplace radically changed. Now we have the greatest percentage of second-quarter price declines in the past few years, virtually double any comparable period.”
Okay, so why are falling metropolitan prices a problem? If you’re not selling and you’re not refinancing, who cares?
Falling prices are not a problem for those with fixed-rate loans. But for millions of borrowers with the latest forms of low-ball financing, falling prices can be financially lethal.
Imagine that you bought a property a few years ago. Since values were going up it made sense to buy the biggest home you could afford and to buy that big house you got a $400,000 interest-only loan at 5.6 percent, a mortgage amount that covered 100 percent of the purchase price.
For the first five years the loan was wonderful: Monthly payments were $1,867 plus taxes and insurance. But after five years, the loan automatically converted to a one-year ARM. The one-year LIBOR rate that was originally at 3.60 percent five years ago reached 5.45 percent this August. Combine the LIBOR index rate with a 2.0 percent “margin” and your loan rate jumped to 7.45 percent.
After five years not only does the rate go up, the mortgage bill now includes the expense of monthly principal payments to reduce the loan balance. The monthly cost for principal and interest? It’s now $2,943. Taxes and insurance are again extra.
Those low-payment loans that looked so good a few years ago are going into their second phase,says Saccacio. Each day more and more borrowers are finding that the low ‘start’ payment is gone and that steeper, fully-amortizing payments have now kicked in. At the same time, homes that were once easy to sell are now harder to market. It’s a brutal combination and what we’re seeing in the Fall of 2006 is likely to get worse.
The instant solution to high monthly costs is to sell the property. During the past five years many areas have seen huge price increases. The odds are good in most markets that a seller with several years of ownership at this can readily sell, often with a significant profit.
But as the market evolves the odds may become less attractive. Not all markets have seen double-digit growth. In such areas price stagnation or actual declines can lead to huge inventory increases. To sell in down markets homes owners will be forced to offer not only price discounts but other incentives such as “seller contributions” to help buyers at closing, new carpets, new kitchens, moving allowances, etc.
But selling also may not be an option. Not only can a sale in a down market produce a bankrupting loss, but losses on the sale of a personal residence are not tax deductible.
What can you do to avoid being a foreclosure statistic, to not get caught in the impossible position of loan costs that are too high and market values that are too low?
“Act now,” says RealtyTrac’s Saccacio. “Don’t wait for the hammer to fall. If you see a mortgage problem looming in the next year or so, refinance to a long-term, fixed-rate loan before your credit report shows any late or missed payments. Take a careful look at traditional loans with liberal qualification standards such as FHA or VA financing. Speak with your lender about a loan modification and see if your adjustable-rate mortgage has a conversion feature, a right to switch to a fixed-rate within the first few years of the loan term. Because a conversion is a loan modification and not new financing, conversion can be quick and cheap.”
If you find a situation where the property cannot be reasonably refinanced, if unaffordable monthly costs are certain, then it makes sense to sell now and move to a less-expensive home with reduced debt, lower monthly costs and fixed-rate financing. Moving is a way to avoid foreclosure and dodge bankruptcy two events no property owner should experience.
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Peter G. Miller is the author of The Common-Sense Mortgage and is syndicated in more than 90 newspapers
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By Rick Sharga, Vice President of Marketing for RealtyTrac
The foreclosures market is quite popular among real estate Agents and first-time home buyers. The reason being, the huge money saving discounts that these future home owners as well as real estate bargain hunters can take advantage of. Foreclosure houses usually sell for 10 to 30 percent less than what they are worth on the market, which makes them very enticing when real estate market prices are at an all time high.
But despite what you may see on late-night cable TV, investing in foreclosure properties isn’t a sure fire “get rich quick” formula. Lenders aren’t likely to give properties away, particularly in a real estate market where prices continue to rise. And, homeowners in financial distress still have some leverage to negotiate the purchase price, particularly early in the foreclosure process.
“You have to practice both diligence and patience when looking to buy a foreclosure property,” explains Jim Saccacio, chief executive officer for RealtyTrac. “There really are some fantastic deals out there, but you have to be willing to wait for the right opportunity, then make a realistic offer so the seller will view you as a serious buyer.”
With interest rates ticking upward, experts predict an increase in the number of foreclosure properties on the market. Web-based services such as RealtyTrac, give consumers access to foreclosure and per-foreclosure information that was previously available only to professional real estate brokers and investors. Today, home buyers can use these services to identify and research potential home purchases, as well as to find the tools and professional resources they need to help them close the deal.
Sales in this marketplace can move rather quickly, so there’s no time to make uninformed or low-ball bids on properties in a half-hearted attempt to save a few bucks. Nothing turns a seller off faster than a low-ball offer on a fairly-priced property. In most cases, doing so may irritate the seller so much that no further negotiations will be entertained, meaning that you’ve essentially lost any opportunity to buy the property. Conversely,making an uninformed offer that is too high may get you the house you want,along with a never-ending monthly reminder that you overpaid!
Find out what the house is really worth
In order to make a realistic offer, you first need to know what the actual value of the property is. Look at the original purchase price and recent comparable property sales to determine the current value of the property. You can obtain information on recent sales in the area from your realtor or via RealtyTrac’s Comparable Sales Report. Ideally,you should look at sales in the area over the past six months. Then you can drive by each property on your list and note its condition, size, appeal and location. You should also look for properties that are currently listed for sale in the area and research the same information for them. This information, along with a thorough examination of the condition of the property, should give you a good feel for what it is really worth.
Find out how much is owed
You should also find out the amount the seller is in default and the remaining loan balance. In order to determine a reasonable offer price, you’ll need to know at a minimum; how much money it will take just to satisfy the debt to the lender (or lenders). Knowing this will help you determine whether the property is within your price range or unattainable considering your current finances.
The estimated loan amount and default amount are included in the foreclosure documents filed with public records,and RealtyTrac posts this information online for subscribers. Additionally you can order RealtyTrac’s Legal and Vesting Report or Transaction History Report to check for any other mortgage loans on the property.
Ultimately, even if you’ve presented what you believe to be a fair offer,you’re likely to receive a counter offer from the seller. That’s to be expected as the negotiation process is a major part of real estate sales in general,even foreclosures. Remember, a successful negotiator in any situation must be informed, prepared and realistic. Again, you must practice patience and diligence in order to get the property you want for a price you are willing to pay.
Lastly, it’s important to remember that real estate purchases can be rather emotional,especially as you grow attached to the idea of owning a particular property. It’s important to know what you are willing to spend on a home,regardless of your emotional attachment to it, so you need to set a limit and stick to it.
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Posted in Foreclosure houses
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Tagged brooklyn foreclosures, Foreclosure houses, foreclosures, foreclosures market, homeowners in financial distress, investing in foreclosure properties, investor, New york forclosures, New york real estate, property, property sales, real estate, real estate Agents and first-time buyers, real estate bargain hunters, real estate market, real estate market prices, realistic offer, value of the property
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Before Buying A Home
Before buying a home, there are things of importance that you really need to know, as buying a house is a dream come true for many and, so much can go wrong; So, if you decide to buy a house, then you need to do your research and cover all the bases. Don’t be surprised,if you experience a feeling of dread and stress as this is a major decision which should not be entered into lightly. People who are interested in buying homes are very anxious and eager to get any information they can about real estate; and this is normal because before you purchase a house, it always helps to learn all that you can.
Zero Percent Bad Credit
The first thing you’ll need to do when buying a home is to find out just how much you can qualify for or afford to borrow. You should also check your credit and know where you stand. If you have any credit issues looming over your head, correct them before you start the process of soliciting loans for your new house. You see credit is a deciding factor in the outcome of any loan and, the greater your credit score rating, the greater your chances of securing a loan and you will also qualify for very low interest.
Trying to obtain pre approval by a mortgage bank or mortgage broker will demonstrate how committed you are to this mortgage loan so it works best in your favor to seek approval from them first. You can also reduce the amount and life of a mortgage loan by looking into available payment or prepaid plans. When mortgage pre approval has been granted and you know that you are sure that you can commit to making those monthly payments, you can proceed with plans of buying real estate.
Home ownership should not be entered into lightly. Decide and draw up a list of what you are looking for in a house. Make note of the things you want. If you have a car and want a house equipped with a garage or parking space, then you should take that into consideration and include it on your list. Don’t just buy any house, explore your options and purchase one that meets your needs. Give yourself leeway and be sure to make provisions for any compromises which may surface.
To further help you in your quest for finding the home of your dreams, the expertise of a good faith real estate agent is greatly encouraged, as he or she will direct you into making the right decisions. Real Estate Agents are usually knowledgeable about property bargains and can assist you in your search for the ideal home.
They are armed with lots of information and can easily make available to you listings of potential properties that may satisfy you. As soon as you complete this list stroll over to the property and conduct your own inspection of the house and the surrounding area. Pay attention to minute details like appearance,easy access to public transportation, property location,nearby shopping centers, schools,safety,fun activities, and so on.
Don’t give up on your dream if the first time around, houses that you’ve looked at do not meet your criteria. Exercise your patience and keep looking as sooner or later you’ll find a house that’s just right for you. Put your real estate agent to use as he or she can help by setting up open house visits for you. They can educate you about particular neighborhoods and guide you in the right direction.
To accomplish your goal of home ownership, enlist the services of a reputable real estate agent- hire an agent who is caring enough to ensure that you get exactly what you want. There are agents who have been known to go the extra mile. Ask around or do an internet search about these Agents before hiring him or her. You need an Agent who will not only sell you a home, but will stand at your side, assisting and advising you until the transaction is complete.
Caring Agents go extra mile until you are satisfied. Still, you can purchase a house without an Agent. It will be cheaper for you; yet sometimes the process is much longer. When we purchased our home,we did it without the aide of a Realtor. We did however used the free services of a lawyer from my husband’s job.
Depending on your affiliations,you can enlist the help of Lawyers from your place of work or Union to handle the intricate details of buying a house. The advice and work that they do for you is free. So,before buying that home,either put the expertise of a real estate agent to use or find out if lawyers from your place of work or Union assist first time home buyers.
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Question: What is the Sub-Prime Mortgage crisis and how does it affect us?
Answer: The sub prime Mortgage crisis comes from the result of the banks greed of making more money.
Banks started extending credit to people who should have not be given loans to start with. The sub-prime loans were the loans offered to rated “C” borrowers.
In regards to creditworthiness, there are three kinds of loans offered to borrowers:
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1- Prime (“A” Paper)……………..A (700+ Fico)
- 2- Alt -A (Alternate “A” Paper)…..B (620-700 Fico)
- 3- Sub-Prime ……………C (500-620 Fico)
Even though, statistically speaking…70% of the sub-prime loans would end up in default, the banks ignored this fact and still offered loans to people with what is considered bad credit.
As we already know…Thousands of loans went into default. As a result, many banks ended up in bankruptcy.
The banks that did not go into bankruptcy changed their guidelines making it harder for people to qualify for a loan. And, most of the banks now days only offer loans to borrowers whose FICO is over 700 or more and the borrower has to come up with at lest of 5% – 10% down.
Before the sub-prime crisis, lenders would offered 100% financing to borrowers with a fico score over 600.
There was a saying that said “As you long as you were breathing, you would qualify for a loan.” And as funny as this sounds…this was true. Now, what does the sub-prime crisis means to us?
The sub-prime crisis has been like a chain reaction to the US economy. As more and more properties were going into foreclosure, property values would drop. The less money in equity meant less money for homeowners to spend in other industries. For example, homeowners were not buying cars anymore, or expanding or remodeling their homes, or buying furniture, or taking expensive trips, etc.
If you ask anybody that works in construction, they would tell you that work is scarce. Since the sales have dropped in almost any industry, this has caused business owners to lay off lots of people and others are about to be laid off.
If you still have a job, be thankful, work hard and take care of your job. There is a lot of people out there that don’t have a clue of where to find a decent job. And if you love this country as much as we do, pray for the economy of the US.Hoe the sub prime mortgage crisis information answers your questions
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First time home buyer programs usually come in the form of incentives and tax credits that first time home buyers can take full advantage of. But first,they have to be qualified. There is the Business Assistance Act of 2009 that covers a person for a first time home buyer credit when purchasing a home for the first time as a permanent resident; this took place during the period of January 1st, 2009 to April 30th, 2010.
The National Association of Builders has hosted a website by the name of federalhousingtaxcredit.com, which offer first time home buyer programs. The site is loaded with information and provides assistance to first time home buyers, military personnel and even repeated home buyers. You can check their resource center that can link you to many other agencies such as, Freddie Mac and Fannie Mae loans, FHA loans and VA loans.
There seems to be a myth out there that many lenders don’t have any desire to corporate with first time buyers because they are unable to create a track record, and probably rather stick with those that have already purchased a home in the past. The financial agencies have gone beyond their mode of business and are now welcoming first time home buyers. Those who do not qualify for these government programs may seek a mortgage lender whose rates are affordable to meet the down payment requirement. Avoid choosing a Lender who has been severely impacted by the sub prime mortgage crisis.
First home buying can be a very complex process for some people, as well for those who have gone through the process before. For most first time home buyers this process can even seem impossible. However, there are first time home buyer programs (grants) for individuals who have specific income limitations. Here is a guide and a few tips which you can refer to.- One of the things that will go a long way is having a good credit. Most financial institutions will require an applicant to have a track record of borrowing money and have paid back in the time specified. So if you don’t have a credit reference it is advisable to get one.
- You can create a quick credit reference by depositing a small sum of money into a local bank probably $500-600, you would then apply for a loan for whatever the amount you deposited using it as security. This is a legitimate way to have a seemingly good credit reference/report.
- Develop a financial plan to which you can refer to as you go along; this will enable you to accomplish your goal faster and efficiently. Here is an example, your goal should involve saving 25% of the purchased price as your down payment, there are many first time home buyer programs that would accept less than 25% down payment, and some even ask for 5%.
Advantages Of First Time Home Buyers Programs
The above information can work to your advantage and also give light to the whole scheme of things. Buying a home for the very first time should be a well thought out plan, as no one wants to pay more for a house than it’s really worth. So, in order to get your money’s worth or a good deal,research the market value in the area you’re interested in. By researching, you’ll have a database of comparable properties, those that are overpriced and those that are under priced. The advantage of purchasing a home when it’s under priced allows you to gain instant equity on your property.
Hope you will use these recommendations and take advantage of these first time home buyers program. They exist to assist you in making the dream of home ownership a reality.
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Investing in real estate for the first time is an exciting move especially when it’s the purchase of a new home. Before you purchase your very first home you should research and address various important issues. You do not want to make any wrong decisions that will hurt you later. You want to be sure that you are on the right path as you decide to take ownership of your very first piece of real estate.
Many sources of information pertaining to real estate listings are readily available just waiting to be used. one of these resources and the one that many people utilize once they have decided to purchase their first property is a real estate agency. A real estate agency contains a variety of real estate listings that extends to land plots. You have the option of purchasing land and erecting a house on the land or you can buy property that is up for sale. If it is your intention to purchase land, and build a house; before you commit to either options you would first want to contact a bank or other lending institution to help you with the financing for your new venture.
Even before committing to any decisions,make sure that you’re approved for a mortgage loan for your new home. In this way, you are securing money so that when you purchase the land you can begin working on your building project immediately.
If you do decide to buy property that is on sale enlist the help of an appraisal who will assess the property to see if you’re getting your moneys worth. Also, if you are applying for a mortgage loan,the lender will demand an appraisal even before the property can be purchased. Bear in mind that,lenders do not care too much about the condition of the home. Yet,it would work in your favor to have the plumbing and electricity checked before you part with your money and purchase a lemon that will require expensive repairs.
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