How Credit will affect your Ability to Buy a Foreclosure

So you want to get in on the great real estate deals before they are gone but you’re not sure about your credit scores and how they will affect you ability to buy. Maybe you know your score but you think it’s too low to qualify for a home. Maybe you’ve filed bankruptcy in the past and are wondering how long before you’ll be able to qualify for a mortgage or maybe you’ve got bad credit and want to know what steps to take in order to clean up that credit score to qualify for a mortgage.

These are all great questions and things every person should know before they venture out into the real estate market in search of great deals. By contacting a lender you’ll have a good source of information regarding your scores and how they stack up. But that lender won’t be able to help you repair your credit. Getting a grip on credit situations will help you in the long run whether buying a new home a car or applying for a credit card knowing what you can expect and how to handle your credit will make your life easier know and in the future.

Is Now the Right Time to Invest in Real Estate?

You see it on the news every evening…foreclosures continue to rise. Prices continue to fall. But there is some good news as well, sales are up. That’s right the market for foreclosures is booming and sales are rising at a steady rate. Short sales are selling as well. Does this mean it’s time to finally get into the real estate market for a good investment? Who knows? But if you think it’s the right time for you to get in on the deals consider a few things.

Qualifying for a home isn’t as easy as it used to be and most people will need a down payment. If you are a buying a home to live in you may be able to get an FHA loan with only 3.5% down and asking the seller to pay your closing costs. If you are buying a rental, be prepared to put 10% or more down and probably closer to 20% plus your closing costs.

Remember that home prices may not stabilize for a while longer so don’t get caught in bidding wars with too good to be true foreclosure prices. The banks prices their homes low for a fast sale at a higher price so don’t fall into that trap.

Homes are not the only real estate investment out there. Vacant land has dropped significantly as well and many vacant land sellers have the ability to call the paper on their land. Before the bottom fell out many small builders and investors were buying land lots, building homes on spec and selling at a significant profit. Buying a lot now for future use may be an excellent investment since building a home is not necessarily a quick process. You’ll need to plan for many things and you’ll need home plans before you can plan much of anything. There are many different Home Plans to choose from featuring different sizes and styles and amenities. Vacant land can be an excellent investment and spec homes are a gold mine if done properly.

Whether you are buying a home to live in, to rent or a piece of land for a custom or spec home remember we are not out of the woods yet but there are deals to be had if you are in the right place at the right time. Be on the look out.

Actions and Consequences: Buying Before Foreclosure

Loosing a home to foreclosure is never an easy choice but for some people it may not even be a choice...for others, they weigh the consequences and make an educated decision. Which ever scenario applies there are definitely hurdles to over come and penalties that apply. Many people over look the causes and focus on the action without taking into consideration that most banks expect people to get foreclosed on. That’s why they structure their mortgage contract to spell out exactly what steps will be taken to protect their interest in the property. It’s business for them and nothing more.

When banks started making money easier, they knew there would be people who would default. What they didn’t realize is the magnitude of the crisis they created. With the nation facing foreclosure, home prices falling and neighborhoods turning to ghost towns is it a wonder that people who aren’t loosing their home are letting it go into foreclosure also? Picture this:

Mr. and Mrs. Taylor bought a home they could afford. They put 20% down and were very comfortable with their payment. Many of their neighbors however were not as responsible and chose to buy more home than they could afford and applied for a bad loan to do it with, banking on future equity to bail them out. So, now the crisis hits and people everywhere are stuck. They have a house worth far less than they owe and have a payment they simply can’t afford. What choice do they have but to let it go?

Now let’s look at Mr. and Mrs. Taylor again. They are happy with their home. Unfortunately everyone around them is loosing theirs. The neighborhood is slowly turning into a slum as vacant homes are vandalized. Yards are dead. The value of their home declines further and they start to realize they have made a mistake also. The home they invested in is now worth far less than they owe as well, despite their 20% down payment. What should they do? Should they stay in a home where they could be paying on a mortgage for literally years before they break even or should they use their good credit to escape this mess? A mess that was never their fault to begin? They are an innocent victim of the foreclosure crisis.

Should they buy another home then let theirs go into foreclosed or sell as a short sale? Or should they suffer the upcoming years of a mortgage and home that are worth less than they owe; paying money into limbo never to be seen again. If they buy another home now they’ll have a new loan for less than they are paying now, bought in a market where equity is guaranteed in the next 5 years. It’s not an easy choice because Mr. and Mrs. Taylor have always taken their responsibilities seriously. Do they do the right thing or the smart thing? This choice is one being considered all over the United States and more and more people are making the smart choice, knowing full well the consequences they’ll have to deal with.

Buying a New Home Before Letting The Old Go Into Foreclosure

Why would anyone want to let their home go into foreclosure? Many people however are facing this situation but before they let their current home go into foreclosure they will simply go buy another home. Some view this practice as immoral. Maybe it is and maybe it isn't. I would think each person's reasons for considering this solution are very different and can range from a loss of income or relocation where the homeowner cannot hope to sell his home for what he owes to those who simply refuse to pay a mortgage payment every month on a home where the mortgage amount is drastically higher than the home is worth. Is the current real estate market their fault? Is it immoral to want the best for your family? Is it immoral for a homeowner who will most certainly face foreclosure due to unforeseen circumstances to be penalized for those unplanned events?

There are many reasons why someone would consider buying another home then letting their current home go into foreclosure and I for one do not consider myself a judge and jury of other people's decisions. I simply help people buy homes.

This practice of letting a home go into foreclosure after buying another is not new. Every major downswing in the real estate market has experienced this situation and this practice. It's not against the law to let your home go into foreclosure and the consequences are high...ruined credit and limited buying power, not to mention the stigma attached to foreclosure. Despite the pitfalls some people will choose this path. I help people navigate this complicated process.

If you are considering this as a financial solution please do not take my general advice as the the one and only truth. Consult an attorney and/or a tax specialist to determine how a foreclosure can affect your specific situation. There are many instances where my advice may not fit your circumstances. The internet is a vast and endless resource of information and can answer almost any question. If, after investigating other options you feel this is your only alternative please feel free to contact me, I may be able to help. If you are not within my service area I can refer an agent to help you locate a home.

Closing Costs and Bank Owned Homes

I’m often asked if banks will pay closing costs in the purchase of REO property (Real Estate Owned)...in other words a bank owned property. The answer is yes. Most banks will pay closing costs. These costs are added to the purchase price, so if you offer 250,000 for a property and ask for $5000 in closing costs the bank sees the purchase price as $245,000. If this isn’t their bottom line they’ll counter for a higher price which reflects the closing costs. If they won’t take less than $250,000 the purchase price better be $255,000.

I think the more important question here is what do banks consider their closing costs to be. In a normal real estate transaction in California the seller pays specific fees and the buyer pays specific fees. Everyone understands this except banks. Banks feel they should pay the absolute minimum in order to recoup their loses. Banks usually don’t pay tax stamps and some won’t pay for the termite inspection or the necessary repairs. For this reason as well as others home warranty insurance is always adviseable and some banks may pay this cost. Many banks consider their own escrow fees and title as their responsibility the rest will come out of the buyer’s pocket. Most REO properties are sold “as is” this means whatever is wrong with the house is the buyer’s responsibility. The purchase price can be renegotiated to include any outstanding repair bills required inorder to sell the home but these costs will have to be added to the purchase price which sounds simple but in actuality with a declining market once you start adding costs to the price of a home the buyer runs the risk of out pricing the home for the market or offering more for a home than it’s worth. If the home won't appraise you won't get the loan.

So now that I’ve totally confused you here is the bottom line. The seller considerers his closing costs responsibilities to include sellers escrow fees and seller title fees(this can vary). The buyer will be responsible for the rest. You can request the seller pay these fees but the total for these fees will have to be added to the purchase price of the home. If you are asking for 3% IN CLOSING COSTS, that 3% will be added to the purchase price, making the home 3% higher in cost. The buyer does not have to come up with this money at the end of escrow he is actually financing it. Make sure the price of the home will not exceed what the home is actually worth or this won’t work.

Temecula Real Estate...What to Expect When you Buy a Foreclosure

It's inevitable, with the number of foreclosures on the market right now some of you may find yourself buying a foreclosure. They are a great way to get a great value. But will the end result be worth the hassles and delays of the transaction?

First of all, not all foreclosures are a hassle, in fact many of them may be as easy as buying a home from an owner seller and it will mostly depend on your real estate agent. A good buyers agent will deal with and solve the multitude of minor but annoying inconveniences often related to a foreclosure purchase. Most of these are just the normal delays of dealing with a bank and usually few of these have anything to do directly with the buyer but rather revolves around slow and incomplete paperwork from an out of state management company or bank.

A good buyers agent will make the transaction seem effortless with few if any problems. An inexperienced agent will have their clients in a state of frenzy from the get go simply because they don't understand these delays are normal and rarely effect the outcome of the transaction but are rather one of the hurdles overcome on daily basis in a foreclosure.

Another factor that will effect the purchase of a foreclosure is the experience of the listing agent. While browsing through the MLS recently I've noticed many newer inexperienced agents are listing foreclosures. This is most often because their spouse is a loan officer for the lender and has gotten them the listing. If the listing agent doesn't know the process of a foreclosure and the normal and usual progression of a foreclosure sale they can make a transaction a nightmare as I recently experienced. My clients never new of all the mistakes the other agent made and is still making. The home has closed and my clients are happily living in their new home. The listing agent has taken some big hits on commission due to her lack of knowledge regarding the paperwork and I'm still waiting for needed paperwork. But the important thing is my clients got a great deal with few if any inconveniences on their part because I didn't run to them everytime the lender or the agent did something to cause problems. I just handled them, that's my job.

If you are experiencing a particularly troublesome foreclosure transaction take a close look at the problems. Is your agent giving you a daily report on all the problems the other agent and bank are causing? Is your agent calm and professional or is he or she more stressed than you? These can be signs of an inexperienced agent dealing with a normal transaction.

Temecula Real Estate Foreclosure Sale

Well, the foreclosure sale at the Temecula Creek Inn on Tuesday evening was well attended. About 200 people came to watch and bid. The atmosphere was charged as buyers received their bidding number and waited anxiously for their choice to come up for bid. I'm pretty sure all the homes sold; at least in the eyes of the buyer. It seems most homes sold for about $100. per sq ft on average. Unfortunately, many of these homes will not be sold to the highest bidder. Despite the fact that someone won the bid on a particular home doesn't ensure the bank will except their final bid. Many of the homes sold at pretty low prices and I'm sure many of them will have the high bid rejected by the bank. Of course the bank will give the buyer a chance to raise their price to one more acceptable to the bank but I don't thing the price the bank has in mind and the price the buyer has in mind are very often the same. Especially when the home is at auction. Every buyer there wanted a deal, while every bank there wanted the buyers to foolishly overbid. With the amount of foreclosures out there, no buyer has to overpay for any house. After all there are more than enough homes to go around right now.

Buying Temecula Real Estate: Foreclosure or Short Sale

It's a buyers market and you're a buyer. You want the very best deal you can get. There are loads of homes for sale; over 1000 in Temecula alone. So where do you start? That question is easy. Find a good buyers agent and tell them what you're looking for. Let them do the work and present you with their findings. Chances are some of the homes they find will be bank owned homes and these are usually among the lowest priced. There will probably be a few short sales on the list also and they may see like a good deal also. But each of these presents their own set of problems.

Foreclosures

Bank owned homes are homes that have already gone through the foreclosure process and now the bank wants to get rid of them. The bank has contacted one of their agents, received a brokers price opinion and now the home is for sale. If you put in an offer on this house, make sure you have a buyers agent, never use the listing agent. The listing agent usually has an ongoing relationship with the bank and may not be completely committed to you as the buyer. So don't sell yourself short, get a good agent to represent only you.

Bank owned homes will be sold AS IS which means you can do a home inspection but the bank will not do any repairs. Most banks will have very strict time lines as to how soon you need to have your home inspection in order to back out of the deal and not forfeit your deposit. So 5 days for inspections is not unusual. The bank will want proof of funds upfront and will not approve the offer until they've seen this information. They can take several days to accept an offer so be prepared for a wait. As part of their acceptance the bank will have it's own addendum, that the buyer will need to sign. One of the conditions in the addendum will be a late fee accesses on escrows that close after the closing date. These fees can range from $100 and up and have additional per day charges as well. These can add up quickly, so get a 45 day escrow if possible with the intentions of closing in 30. This will give you sway time for unexpected delays.

Short Sales

Short sales can be deceptive. Often a short sale will read contingent on bank approval This means that what ever is in the MLS as far as price may not necessarily be what the bank is willing to accept. A short sale is where the owner still lives in the home, he may or may not be making payments, he needs to sell his house but will not be able to sell for what he owes. In a short sale the bank has final approval not the owner. The listing agent most often has arbitrarily put a sale prices (often low) in the MLS, hoping to attract a buyer and this usually works. The problem arises when the bank doesn't want to sell that low and negotiations start between the buyer and the bank. This can be a very lengthy process and the end result can often be weeks of wasted time. If you want to attempt to purchase a short sale the key is understanding it can be a very lengthy process with an outcome that is not what you were hoping for.

Whether you buy a short sale, a pre-foreclosure home, a bank owned home, or a seller owned home, make sure you have a knowledgeable agent that can work with any of these scenarios. The more complicated the transaction the more things can go wrong and the more the transaction can cost the buyer time and money. So do yourself a big favor and get a good buyers agent.

Do I Need A Buyers Agent?

The Internet has made finding a home so much easier these days, and often buyers wonder why they even need an agent. But finding the home is only the first step in buying a home and many times it’s the easiest step as well.

A buyer’s agent can be your biggest asset and your best ally, all at no cost to you. So why would any buyer, in their right mind turn down professional now cost service? Beats me.

For a buyer, there is no cost of taking advantage of the services of a professional real estate agent. The seller’s agent charges a commission, then offers a referral fee in the local MLS to the buyer’s agent. The buyer’s agent will only get paid for bringing a ready willing and able buyer who purchases the home and is only paid upon the successful closing of escrow.

10 Reasons the Buyer Should Have a Real Estate Agent

1. A real estate agent knows the homes available for purchase and has access to these homes even when the seller isn’t home.
2. The real estate agent has access to the local MLS which will provide additional information regarding listed homes.
3. A real estate agent will drive buyers around using their vehicle and gas, so buyers sit back and relax. And if they play their cards right the agent may spring for lunch as well.
4. A real estate agent will help and advise the buyers on negotiating tactics to help them save money. This is especially true for short sales and foreclosures.
5. A real estate agent has access to all the needed paperwork, has training in all the needed paperwork and can explain the buying process.
6. A real estate agent can handle all the necessary paperwork to protect the buyer in the home buying process. It’s absolutely crucial that your paperwork is prepared and handled properly. This will help avoid lawsuits and other legalities later down the line.
7. A real estate agent will help the buyers find home inspectors and meet them at the house if the buyer isn’t available.
8. A real estate agent will help the buyers locate utilities and other companies to help in the moving process.
9. A real estate agent will handle many of the small problems and details between the two agents, escrow and the lender so the buyers are not bothered.
10. A real estate agent will do everything in his or her power to protect their client and ensure that the purchase runs smoothly and closes on time.

A real estate will do all these things and more for their client, at absolutely no cost to the buyer. That sounds like a great deal to me. I always like something for nothing. So next time you wonder whether you need the services of a buyers agent, call me and I’ll remind you of the 10 reasons why you need a buyers agent.