We live in a world where information is readily available at our fingertips anytime we want it, day or night. This information includes real estate listings and online home valuations. Web sites like Zillow.com, Cyberhomes.com and others offer a lot of information, often through dramatic interactive maps. And they can help prospective buyers tune into a neighborhood’s real estate trends, such as which nearby homes have recently sold – and for how much.
For many homeowners the home value estimates keep them coming back to these websites. The sites are packed with so much information that some homeowners end up taking the estimates a bit too seriously. This is a big mistake.
The valuations at these sites have been known to be off by as much as 10-20%. They use computer generated valuation models to come up with their estimates. The information is pulled from tax records and previous home sales in the area. The problem with this is that information being used can be innacurate and no two home interiors are identical. Even in cookie-cutter communities where homeowners have a certain "model", interior finishes are a matter of taste and have a big effect on pricing. Some homes will have more upgrades than others. The computer will not know this to take it into consideration. So even though you and you neighbor have the same model, actual values can vary.
Also, tax record information on a property may be innacurate. It may not take into account home additions or remodelling that was done. It may list the home as a 2 bedroom when it is actually a 3 bedroom. Again, the compuer valuation model will be off by a high percentage.
The bottom line is that every homeowner loves knowing what their home is worth on any given day. The online valuation sites are a fun way to get an idea of a neighborhood's value. They will never be as accurate as we want them to be. When you take away the human element, you get a computer generated value. This cannot be relied upon to make decisions about your home.
If you really want to know what your home is worth, stop "zillowing" it. Call a local Realtor who knows the neighborhood or pay for a professional appraisal. Then you know you are getting good information.
Tuesday, June 24, 2008
Sunday, June 22, 2008
Avoid Pitfalls When Buying Foreclosures
Buying a foreclosed home is no easy task. It can be a easy way to lose money if you aren't knowledgeable and careful of what you are getting yourself into. Here are some points to consider before diving head first into the foreclosure market.
- Avoid outstanding liens. Make sure the property has a clean title. Any outstanding liens and fees incurred by the original owner will be transferred to the new buyer. There may be utility liens, vendor liens or other judgements against the property. As a buyer of a foreclosed home you will be responsible for settling the previous owner's debt on the property.
- Bid conservatively. The market in many places is still depreciating. That unknown added to transaction, repair, and marketing costs could sour the deal. Lenders are already taking a huge loss when a home is foreclosed. You would be best advised to make the lender an offer on the foreclosed property you are interested in. Some lenders are willing to deal even further just to get the property off their books. Other lenders have been known to be firm on the asking price. It never hurts to make an offer and see what they say.
- Beware foreclosure concentration. Prices in neighborhoods where there are lots of foreclosures have declined the most – and prices in these areas are still declining. A buyer should confirm that there’s an opportunity to make money if prices fall another 15 percent. This is a tough point to consider since there are foreclosures EVERYWHERE. Most neighborhoods where homes were built in the 2000s are full of foreclosures and short sales. Its just the fact that these homes were all purchased at inflated prices with adjustable rate mortgages. Buyers burned themselves by buying more house than they could afford and then over paying for it with a terrible mortgage product.
- Beware the appraisal. If the price is discounted from an appraisal done before August 2007, it is almost certainly unrealistically high. In late 2007 and 2008 the market has dropped around 3% per month. Prices from 9 months, even 6 months ago are not indicative of the current market. Due your own due diligence and have someone pull the "comps" for you and pay for a real appraisal. It could save you from seriously over-paying for a house.
- Cash is king. Even a buyer with a renter lined up and enough money for a 20 percent down payment needs still more cash to weather another two or three years of a depressed market before unloading the property. Most landlords in today's market are house rich and cash poor. They have this expensive property and the income being received on that property most likley only covers a portion of the expenses of owning it. There are many landlords who have negatie cash flow and cannot weather the storm. They can only sustain paying out of their own pocket for so long. Eventually it will become too much to bear and the owner will no longer be able to supplement every month. The property will end up in foreclosure as well.
Tuesday, June 17, 2008
Renters Beware: New Craigslist Scam is a Nasty Surprise
Some consumers using Craigslist classified ads to find bargain rentals are getting a nasty surprise. Phony landlords are collecting security deposits and first month's rent. When the renter shows up ready to move in, they find their new keys don't work or that the property is occupied.
The scams are happening all over the country from Covina, California, to Austin, Texas, to Annapolis, Maryland. One property in Covina has been leased to about 50 different renters, but in this case, it is the owner who is allegedly scamming the public. Pardeep Singh is taking the rent money, but leaving the renters homeless. According to reports, he has defrauded renters out of as much as $120,000, and police have not yet located him.
The rise of rental fraud is yet another effect of the housing bust. There are a lot of accidental landlords out there, as well as properties being rented by third-parties. That makes it harder to know if you're renting a legitimate home or not. Here are a few ways to do your own due diligence.
1. Is the agent real? Contact the agent and ask for his/her state license number. Confirm the agent's license at ARELLO.org, the website of licensing officials. Ask to meet the agent at his or her office before viewing the property.
2. Is the landlord real? If you're renting from a homeowner, check property records to make sure the landlord and owner's names match. Visit the property and don't be shy about asking neighbors for information about the home and the landlord. Contact law enforcement and community sites to see if there have been any complaints filed against the landlord.
3. Is the property real? If the rental is being marketed by a real estate agent, look for the listing on other local and national real estate sites. Ask the agent for comparables (yes, they are available for rentals, too) so you'll know you're paying fair market value per square foot for the location. Your state real estate commission should also have a standard rental agreement for you to download and compare against the lease the agent wants you to sign.
Don't hand over any money before inspecting the home you want to lease. Make certain that the apartment or building covenants allow sub-letting, if that's the kind of lease you want to do. Ask for a copy of the apartment or building rules. A legitimate landlord will have standard leases and rules handy for you.
If you don't want to do all that, you can always hire your own agent to find a rental and do the due diligence for you.
The scams are happening all over the country from Covina, California, to Austin, Texas, to Annapolis, Maryland. One property in Covina has been leased to about 50 different renters, but in this case, it is the owner who is allegedly scamming the public. Pardeep Singh is taking the rent money, but leaving the renters homeless. According to reports, he has defrauded renters out of as much as $120,000, and police have not yet located him.
The rise of rental fraud is yet another effect of the housing bust. There are a lot of accidental landlords out there, as well as properties being rented by third-parties. That makes it harder to know if you're renting a legitimate home or not. Here are a few ways to do your own due diligence.
1. Is the agent real? Contact the agent and ask for his/her state license number. Confirm the agent's license at ARELLO.org, the website of licensing officials. Ask to meet the agent at his or her office before viewing the property.
2. Is the landlord real? If you're renting from a homeowner, check property records to make sure the landlord and owner's names match. Visit the property and don't be shy about asking neighbors for information about the home and the landlord. Contact law enforcement and community sites to see if there have been any complaints filed against the landlord.
3. Is the property real? If the rental is being marketed by a real estate agent, look for the listing on other local and national real estate sites. Ask the agent for comparables (yes, they are available for rentals, too) so you'll know you're paying fair market value per square foot for the location. Your state real estate commission should also have a standard rental agreement for you to download and compare against the lease the agent wants you to sign.
Don't hand over any money before inspecting the home you want to lease. Make certain that the apartment or building covenants allow sub-letting, if that's the kind of lease you want to do. Ask for a copy of the apartment or building rules. A legitimate landlord will have standard leases and rules handy for you.
If you don't want to do all that, you can always hire your own agent to find a rental and do the due diligence for you.
Monday, June 16, 2008
Quick Tips - 5 New Rules For Home Buyers
Surviving and thriving in the real estate market these days means following a whole new set of rules. The following five items are important for new home buyers to know.
1. Timing the market doesn't work. There's a chance that the home you buy today will be worth less next year. So instead of trying to time the market, drive a hard bargain for a home you really love. (Comment: There is no such thing as timing the real estate market. It is impossible to know when the bottom has been set.)
2. Real winners get the lowest mortgage rate. Financing is getting more expensive. Celia Chen of Moody's Economy.com predicts rates will hit 7 percent in mid 2009. (Comment: The interest rate effects your payment more than the price of the house. Shoot for the lowest rate, not the lowest purchase price.)
3. Jumbos are a big bargain. A new law temporarily allows Freddie Mac and Fannie Mae to buy mortgages as big as $729,750, which is keeping the jumbo rates down. The deal disappears at year-end. (Comment: This is a blessing. If you are looking in this price range, take advantage of this while you can.)
4. Good schools count. Neighborhoods with highly rated schools are holding their value better than most, according to a recent study by real estate site Trulia.com. (Comment: Location is the most important thing when buying a home. Buy a home with great schools nearby.)
5. Honesty is the best policy. A Realtor should provide as much information as possible even if the buyer doesn't want to hear it. It will help them make a better decision.
1. Timing the market doesn't work. There's a chance that the home you buy today will be worth less next year. So instead of trying to time the market, drive a hard bargain for a home you really love. (Comment: There is no such thing as timing the real estate market. It is impossible to know when the bottom has been set.)
2. Real winners get the lowest mortgage rate. Financing is getting more expensive. Celia Chen of Moody's Economy.com predicts rates will hit 7 percent in mid 2009. (Comment: The interest rate effects your payment more than the price of the house. Shoot for the lowest rate, not the lowest purchase price.)
3. Jumbos are a big bargain. A new law temporarily allows Freddie Mac and Fannie Mae to buy mortgages as big as $729,750, which is keeping the jumbo rates down. The deal disappears at year-end. (Comment: This is a blessing. If you are looking in this price range, take advantage of this while you can.)
4. Good schools count. Neighborhoods with highly rated schools are holding their value better than most, according to a recent study by real estate site Trulia.com. (Comment: Location is the most important thing when buying a home. Buy a home with great schools nearby.)
5. Honesty is the best policy. A Realtor should provide as much information as possible even if the buyer doesn't want to hear it. It will help them make a better decision.
Monday, June 09, 2008
Housing Downturn is a Boon For Some Renters
News Article – June 5, 2008 – Renters may be the biggest winners in the current housing slump, especially in places like Florida, Las Vegas and Southern California, that have thousands of vacant for-sale and foreclosed homes and condos on the market.
Apartment vacancies are edging up in many areas of the country as frustrated sellers instead try to rent out their homes and condos in once red-hot housing markets. And that is making it harder for landlords to raise rents. In the toughest markets, apartment owners are even offering lease incentives to snag renters. This “shadow market” of investor-owned homes and condos accounts for almost half of the rental stock, and attracts displaced homeowners more often than your typical apartment renter.
“What’s different now is the degree of excess homes and condos being put on the rental market. The sheer volume is creating more competition for traditional rental markets,” said Hessam Nadji, managing director at Marcus & Millichap Real Estate Investment Services.
"As the sale activity for condos and single-family homes declined over the last 24 months, investors decided to rent them instead of trying to sell them at reduced prices,” said Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors Inc. in Miami. Since the beginning of the year, the number of rentals on the Miami and Ft. Lauderdale markets combined has risen more than 11 percent to 10,000 from 9,000.“
The new supply is preventing some landlords from increasing rents, and others are even being forced to offer freebies like one free month with a one-year lease or upgraded unit fixtures.“ People realize they’re getting substantially more value than what they’re spending on that rental,” said Snyder, who is also president of apartment manager R.A. Snyder Properties Inc.
But there could be some unseen risks behind these bargain shadow rentals. Renters who got homes or condos on the cheap may find a sheriff knocking at the door with an eviction notice if their landlord fails to pay the mortgage.“ Some investors will take any dollar amount to have any cash flow,” Nadji said, noting that the rent often only covers a portion of the mortgage payment. “We’re seeing a lot of tenants being displaced when landlords get foreclosed upon.”
In Southeast Florida, renters have taken notice and have begun to avoid those properties, said Susan Whitney with property management company Riverstone Residential Group in Boca Raton, Fla. The shadow market battered the rental market in the last two years, Whitney said, as renters opted for investor-owned homes and condos, which helped to drive down rents in the area. But as news spread of tenants getting burned by delinquent landlords, renters returned to the traditional market.
Apartment vacancies are edging up in many areas of the country as frustrated sellers instead try to rent out their homes and condos in once red-hot housing markets. And that is making it harder for landlords to raise rents. In the toughest markets, apartment owners are even offering lease incentives to snag renters. This “shadow market” of investor-owned homes and condos accounts for almost half of the rental stock, and attracts displaced homeowners more often than your typical apartment renter.
“What’s different now is the degree of excess homes and condos being put on the rental market. The sheer volume is creating more competition for traditional rental markets,” said Hessam Nadji, managing director at Marcus & Millichap Real Estate Investment Services.
"As the sale activity for condos and single-family homes declined over the last 24 months, investors decided to rent them instead of trying to sell them at reduced prices,” said Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors Inc. in Miami. Since the beginning of the year, the number of rentals on the Miami and Ft. Lauderdale markets combined has risen more than 11 percent to 10,000 from 9,000.“
The new supply is preventing some landlords from increasing rents, and others are even being forced to offer freebies like one free month with a one-year lease or upgraded unit fixtures.“ People realize they’re getting substantially more value than what they’re spending on that rental,” said Snyder, who is also president of apartment manager R.A. Snyder Properties Inc.
But there could be some unseen risks behind these bargain shadow rentals. Renters who got homes or condos on the cheap may find a sheriff knocking at the door with an eviction notice if their landlord fails to pay the mortgage.“ Some investors will take any dollar amount to have any cash flow,” Nadji said, noting that the rent often only covers a portion of the mortgage payment. “We’re seeing a lot of tenants being displaced when landlords get foreclosed upon.”
In Southeast Florida, renters have taken notice and have begun to avoid those properties, said Susan Whitney with property management company Riverstone Residential Group in Boca Raton, Fla. The shadow market battered the rental market in the last two years, Whitney said, as renters opted for investor-owned homes and condos, which helped to drive down rents in the area. But as news spread of tenants getting burned by delinquent landlords, renters returned to the traditional market.
Friday, June 06, 2008
Borrowers Can Improve Their FICO Credit Scores- FREE Tele-Class Reveals All
On June 18th, at 1pm EST, a colleague of mine is having a FREE teleclass on using little known secrets to boost your credit score. For more details visit his website at http://www.boostmycreditscorefast.com/.
Some borrowers may find it harder than ever to get credit loans. This month many mortgage lenders have increased their credit and FICO score requirements to qualify for a mortgage. Those who have lower FICO scores will be penalized and may have to pay up to 4 points to their lender just to get their loan. In the past, conforming lenders ignored credit scores as long as a borrower’s file was approved through an automated underwriting system.
As the number of foreclosures has exploded lenders are now taking more precautions when issuing new loans to protect themselves and minimize their exposure to risk. These recent changes force consumers to fully document all of their income and also require higher credit scores just to qualify for a loan.
At the same time, credit card companies are now monitoring consumers credit scores regularly looking for adverse changes in payment habits. Just one late payment can now trigger off reduced credit limits and higher interest rates even if the late payment was on a mortgage or different credit card.
“It’s time for consumers to fight back and do all they can to have the highest credit scores possible” says Brian Saviano a successful mortgage broker with Elite Financial located in Chicago, IL. Saviano says, “Many times consumers can raise their credit scores by as much as 40 points in less then 30 days using little known secrets.”
In order to help consumers learn how to raise their credit scores, Saviano will be hosting a free tele-seminar giving consumers free information. Having the highest credit scores will enable borrowers to acquire debt at the lowest interest rates available. Those interested in attending the free credit tele-class should sign up at http://www.boostmycreditscorefast.com/.
Some borrowers may find it harder than ever to get credit loans. This month many mortgage lenders have increased their credit and FICO score requirements to qualify for a mortgage. Those who have lower FICO scores will be penalized and may have to pay up to 4 points to their lender just to get their loan. In the past, conforming lenders ignored credit scores as long as a borrower’s file was approved through an automated underwriting system.
As the number of foreclosures has exploded lenders are now taking more precautions when issuing new loans to protect themselves and minimize their exposure to risk. These recent changes force consumers to fully document all of their income and also require higher credit scores just to qualify for a loan.
At the same time, credit card companies are now monitoring consumers credit scores regularly looking for adverse changes in payment habits. Just one late payment can now trigger off reduced credit limits and higher interest rates even if the late payment was on a mortgage or different credit card.
“It’s time for consumers to fight back and do all they can to have the highest credit scores possible” says Brian Saviano a successful mortgage broker with Elite Financial located in Chicago, IL. Saviano says, “Many times consumers can raise their credit scores by as much as 40 points in less then 30 days using little known secrets.”
In order to help consumers learn how to raise their credit scores, Saviano will be hosting a free tele-seminar giving consumers free information. Having the highest credit scores will enable borrowers to acquire debt at the lowest interest rates available. Those interested in attending the free credit tele-class should sign up at http://www.boostmycreditscorefast.com/.
Tuesday, June 03, 2008
It's Time to Stop Waiting and Start Buying - Part 2
I think the perfect real estate storm is brewing and many people will miss out because they will fail to act. Inventory is high but homes are selling. Here are the key ingredients which make this such a crazy market. There are plenty of foreclosures, pre-foreclosures, short sales and regular homes for sale. People are out looking but they are just afraid to make a decision. As I mentioned earlier you have home prices that have been slashed up to 50%, interest rates are still hovering at historic lows, there are thousands of homes to choose from, sellers that are desperate for an offer and lenders with money to lend to those who have the best qualifications. Insurance rates have come down and so have taxes. This is the best buying opportunity in the past 5 years and it will continue to be so into the future.
The media will eventually change from doom and gloom to paint a rosy picture of how it's the time to buy. Once buyers step in and start scooping up the inventory, sellers will wake up and desperation will subside. The low to middle priced homes in the best condition will sell the quickest. It will take 6-12 months for the public to catch on and by that time it will be too late. Prices will start to creep up again and buyers will kick themselves for not acting. There are great deals out there and it's time to start recognizing that what goes up must come down. But what comes down, doesn't stay down forever. After 3 years of being stretched to the downside, the rubber band (read: prices) is reaching its limit and could snap (start to go up) at any time. Buyers need to act now or they will be chasing the market again.
I will leave you with a stock market analogy. The time to buy is when no one else wants to. You buy on the way down and hold for a while. You will never be able to call the bottom. You won't even know the bottom hit until at least 6 months afterwards. By that time the market will be on the way back up and you will be chasing it. But if you stick your neck out and take a little risk, you will be handsomely rewarded.
The media will eventually change from doom and gloom to paint a rosy picture of how it's the time to buy. Once buyers step in and start scooping up the inventory, sellers will wake up and desperation will subside. The low to middle priced homes in the best condition will sell the quickest. It will take 6-12 months for the public to catch on and by that time it will be too late. Prices will start to creep up again and buyers will kick themselves for not acting. There are great deals out there and it's time to start recognizing that what goes up must come down. But what comes down, doesn't stay down forever. After 3 years of being stretched to the downside, the rubber band (read: prices) is reaching its limit and could snap (start to go up) at any time. Buyers need to act now or they will be chasing the market again.
I will leave you with a stock market analogy. The time to buy is when no one else wants to. You buy on the way down and hold for a while. You will never be able to call the bottom. You won't even know the bottom hit until at least 6 months afterwards. By that time the market will be on the way back up and you will be chasing it. But if you stick your neck out and take a little risk, you will be handsomely rewarded.
It's Time to Stop Waiting and Start Buying - Part 1
There are so many articles written on the death of real estate. This just isn't true. The market is in bad shape, especially in hard hit areas like Florida, Arizona and California. But it is not dead. In South Florida home prices are down 20-30% across the board. In some cases prices have been slashed from up to 50%. This isn't just a buyers market, it is so much more and people are not seeing it. Pay attention folks, REAL ESTATE IS ON SALE!!! The deals out there are incredible. I have seen homes that were 400k - 500k that are now in the high 200s to low 300s. These are good quality homes that have plenty of upgrades and don't need any work. Builders have finally got smart and slashed their own pricing just to move stale inventory.
Buyers are fearful that they will buy a home and prices will drop even further. This could happen but is it really that important? Are you going to be flipping the home in a few months? How much lower can prices go? The market has come full swing and we are back to 2003 - 2004 price levels. That is where the market originally took off from. You need to keep the home for several years in order to realize any profit. But keep in mind home equity is just a bonus of home ownership. You buy a home for a place to live, to raise your family, to have pride of ownership, to showcase your taste and style, to own part of the American dream. Over time you gain equity by paying down the mortgage and realizing price appreciation. You should not buy a home to live on the equity. By refinancing and taking money out of their home homeowners raised their mortgages. Then the market fell and now higher mortgages plus falling prices have created the perfect storm for a surge in buying.
Buyers are fearful that they will buy a home and prices will drop even further. This could happen but is it really that important? Are you going to be flipping the home in a few months? How much lower can prices go? The market has come full swing and we are back to 2003 - 2004 price levels. That is where the market originally took off from. You need to keep the home for several years in order to realize any profit. But keep in mind home equity is just a bonus of home ownership. You buy a home for a place to live, to raise your family, to have pride of ownership, to showcase your taste and style, to own part of the American dream. Over time you gain equity by paying down the mortgage and realizing price appreciation. You should not buy a home to live on the equity. By refinancing and taking money out of their home homeowners raised their mortgages. Then the market fell and now higher mortgages plus falling prices have created the perfect storm for a surge in buying.
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