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Category Archives: buyers

From the Mailbag… Part VII (Foreclosure deals?)

I did the first six parts of this on my A/R blog.  I thought I would drop one here, too…  Here are the previous visits to the mailbag:

Part I, Buyer’s Price Range

Part II, When should we start to look?

Part III, New Homes inducements

Part IV, Should we sell?

Part V (A), What should we do to our house?

Part V (B), And what else?

Part VI, Why didn’t my house sell?

I get asked a lot about foreclosures.  A LOT.  Seriously.  Everyone is thinking that there is money to be made in foreclosures, or killer, super-duper, bona-fide deals.  And… there are.  But, these are dangerous waters.  Navigate carefully.

What it comes down to is that there are some VERY important considerations to keep in mind when looking at foreclosures.  These are also true with short sales and pre-foreclosure sales… in fact, almost ANY distressed property is going to have pitfalls.

There are only two tools that can be used to address the pitfalls.  Either or both may need to be employed.  Money.  Time. Anything can be solved by money alone.  You can simply hire someone to take care of it.  Some things CAN’T be solved with just time, but time can be traded in for money.

  • Here is the first thing to remember, Time is NOT free.  If you are looking at a house, and it needs paint and other work, even though the money isn’t high (paint is only a couple hundred dollars for a whole house), it WILL take a lot of time if it isn’t hired out.  And that is time that you could work or play or stare at the TV… or blog.

So, since we know that no matter what, there will be expenses, and we can be sure that the “seller” won’t want to come out of pocket with a lot of allowances…

  • Know that buying a distressed property requires cash AFTER the closing. It might be as cheap as paint and serious cleaning… and filters and septic treatments, etc.  Or it might be a roof and fixing foundation damage.

The next thing that needs to be kept in mind is that when people can’t make the house payment, or they are stretched to the absolute limit, maintenance is NOT a priority.  We have a euphemism… deferred maintenance.  Even in homes that look good at first glance, there will be things that have been let go.

  • Next on the list, Inspections are your friend.  And don’t think that the inspection is something you should scrimp on.  Get a good inspector.  Get an inspector that you trust.  Ask questions.  Understand EXACTLY what the results are, and how they will affect you.

Since everyone is asking me about foreclosures and distressed properties, I know that there is competition for the “best” deals.  That’s right.  Right here in the middle of a huge Buyer’s Market, there are properties that have competition.  Low-ball offers and outrageous demands aren’t making it with the banks in general (even on the properties that suck…) and certainly not on the ones that are actually worth buying.

  • Finally, when you find a good deal, be ready to buy it.  Just because Katie Couric and Clark Howard are saying that this is the best buyer’s market in the last 40 years, for money making properties, you have to move and move fast.

I love to get question.  Email me, and I will answer your questions on my blog, or via email.

GarageHomesUSA is updated with the May issue

That’s right.  I have the new market report, and all of the new content for the May issue of GarageHomesUSA on the site.  Wander over and take a look.

I guess it is also a good time to say that I will be putting together the May issue of the GarageHomesUSA/LaneBailey newsletter.  It should go out in the next couple of days.  There is still time to sign up if you haven’t already.

Biggest no brainer in the history of Earth

If you are in the Atlanta area… or even if you aren’t… you’ve probably heard the commercials.  His tagline is “It’s the biggest no-brainer in the history of Earth.”  Usually he starts with some obvious pronouncements… and then he launches into something else.

But a recurring theme is “… no closing costs.  We don’t roll them into the cost of the loan, we pay them…”  There is one little problem.  He fails to mention that the consumer DOES pay the closing costs… in fact, they pay WAY more than the closing costs.  They pay a bit of that every month.

How you ask?

With a higher interest rate.  The broker makes a better spread by charging a higher rate.  So, he makes his money on the front end because he can sell the loan for more money.  If you keep the loan for a while, that extra little bit of interest rate can cost several times the original closing costs.

My friend Ken Cook at Novation Mortgage ran across a Cease and Desist order from the state of Georgia against this company for deceptive advertising practices.  Here is a link to Ken.

Now, why do I bring this up?

Honestly, if you are buying a house from me, I don’t care so much where you get your loan.  To a certain extent.  What I don’t like to see:

  • Buyers getting ripped off by high rates
  • Mortgage brokers that don’t fulfill their promises (fail to fund, don’t stand behind their pre-qual letters, don’t return calls while things are going south)
  • Mortgage Brokers that put their buyers through the wringer before giving them a loan.
  • Buyers being lied to.

So, I don’t care where my buyers get their loan.  I don’t get kickbacks from lenders for steering business to them.  I recommend a few people… because I know that I won’t have to deal with the things I don’t like to see.  Occasionally, I might ask that one of the lenders I know run a buyer through their process (especially when I am working with a seller and things for the buyer are looking wonky).

The reason for the post is that I am tired of this particular company not telling the truth.

And here is how you can tell…

Get several quotes.  Call a couple different brokers.  If someone is out of the normal range, ask why.  If they are low, ask if they are going to bring YOUR loan in to closing at that rate and payment.   Ask how you can be sure of that.

And, the biggest no-brainer in the history of Earth is to think that this guy doesn’t make any money when he writes a loan…

A different kind of property marketing…

One thing is certain is that buyers are using the internet to find homes.  They aren’t looking in the classifieds in any great number.  The “Little house, Little head” books aren’t really a great sales tool.  Instead, Google, Realtor.com, Zillow and local brokers IDX feeds are the preferred choices.

Creative Commons License photo credit: Ingorrr

But, most real estate agents are trying to sell properties with the same tools they were using a decade ago.  Now, there certainly are places for many of the tools used then, but there are better and more effective tools available, and even the old tools are being re-invented.

I should be rolling one out in the next couple of weeks.  I am building a website/blog for a single property.  It will have scores of pictures.  There will be video.  Mapping.  Dozens of links to local information.  Interactive virtual floor plan.  History.

There is something else that will be invisible, and built in… inseparable from the site… SEO.  Search Engine Optimization.  When someone looking for a home in the community does a Google search, this property will rate well within just a few days.  And that is the purpose.  If you are a seller, this will allow a buyer to find YOUR house.  If you are a buyer, you will get more information about the house than you would have imagined from a real estate agent… or anyone else.

Right now I’m teasing… but I will announce the first of these sites
as soon as it is ready to go live.

Do you do del.icio.us?

if you aren’t already familiar, del.icio.us is a “Social Bookmarking” site.  I ran across it last year, bookmarked it (how appropriate…) and then just kind of left it alone.  At the same time I downloaded a plug-in for FireFox… and left it alone.  I thought it was cool, but got sidetracked with running a business and building my website and logo.

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