Hello members I wanted to pass along this article from the Federal Reserve Bank of New York.

 

"Flip This House": Investor Speculation and the Housing Bubble"

 The recent financial crisis-the worst in eighty years-had its origins in the enormous increase and subsequent collapse in housing prices during the 2000s. While the housing bubble has been the subject of intense public debate and research, no single answer has emerged to explain why prices rose so fast and fell so precipitously. In this post, we present new findings from our recent New York Fed study that uses unique data to suggest that real estate "investors"-borrowers who use financial leverage in the form of mortgage credit to purchase multiple residential properties-played a previously unrecognized, but very important, role. These investors likely helped push prices up during 2004-06; but when prices turned down in early 2006, they defaulted in large numbers and thereby contributed importantly to the intensity of the housing cycle's downward leg. Read complete story below. Paul

http://libertystreeteconomics.newyorkfed.org/2011/12/flip-this-house-investor-speculation-and-the-housing-bubble.html

 

Tags: bank, business, BUYING, federal reserve, homes, HOUSE, investor, IRS, Licensed, market, money, real estate investor, Realtor, time

Here’s the follow up to last month’s newsletter topic about safety for you and your clients when touring a home. A total of 43 people responded with their stories when going to a home. Here are the results:

43 total respondents

5 said they have been help up at gun point (and not one of them was from Detroit!)

3 people at knife point

4 had the client expose themselves

15 said they were approached in a sexually explicit manner that made them very uncomfortable

16 said they were just made to feel very uncomfortable ranging from the client yelling at them or getting a little too close to the client just starting to act ‘weird’.

As you can see you need to make sure you put yourself in the safest possible position you can. And we have an obligation to protect our clients as well. Here are some precautions that I use when I go to see a house.

I drive the neighborhood first to get a feeling as to what is going on. This also gives me a chance to see the back of the subject property in most cases.

I never park in the drive way or in front of the house. I park across  the street with my car positioned so the driver side door is easiest for me to get to. And in a position that it cannot be boxed in.

I also notify 2 people as to where I am going, how long I think I will be and the name of the people I am meeting. I text them a couple of times. And if I forget they text me. We work as a team and when they are out looking at a property they notify me where they will be.

1. I carry a safety tool box in the car. I have an air horn, mace, door stops, and bungee cord as well as other tools I may need.

I always prop open the front door and a back door just in case I need to get out in a hurry, and especially if the house is vacant. I always announce that I am coming into the house. When I’m with people I always try to stay behind them, not them behind me. I want to see what they are doing at all times.

I carry mace in my pocket and a knife just in case I might need them. And in the rare occasion I feel I need it, I take the 9mm out for a ride. Yes if you’re in this business you should have a concealed carry permit.

Remember you’re on your own and need to consider and prepare for things that could go wrong.

Paul

Tags: air horn, back door, business, carry, client, driver, feeling, gun point, home, homes, HOUSE, IRS, knife, knife point, meeting, neighborhood, newsletter, newsletter topic, obligation, park, people, Property, respondents, safety, safety tool, street, Subject, subject property, time, tool box

No one is saying anything about the people that refinanced their homes and took cash out to buy cars, vacations, and flat screens TV’s pay off their credit cards etc. Add that to people buying deals and flipping them and making 50k on them over night because people thought this was going to last forever. And our politicians made money hand over fist as well. GSE guaranteed the loans so the tax payers were on the hook and banks played the game and gave our politicians millions in campaign dollars for the guarantees and to turn the other cheek. Greed was the biggest factor in the housing market. There is plenty of blame to pass around. And as for home loan being refinanced or modified the program was never meant to succeed. It was only red meet for the underwater homeowners and the special interest groups trying to get them approved “it’s all about the money” congress gave them money to do the work” ACORN” and other groups got millions of taxpayer monies. Congress and FDIC agreed to pay banks for their losses so way agree to a modification of a loan.  Now you add the shadow inventory and the market keeps dropping. The only way to turn this around is to get the shadow inventory on the market and let the bottom fall out. Then you can start to get the market on track. But remember GREED is the reason we are in this mess. And every one is guilty of it!!!

Tags: acorn, anything, banks, BUYING, campaign, campaign dollars, CASH, Congres, Congress, credit, FDIC, greed, guarantees, home, homes, Housing, housing market, interest, inventory, loans, modification, money, money congress, owner, people, program, special interest groups, Tax, taxpayer, taxpayer monies, vacation

Now that it’s April, all our members in the great frozen tundra (aka anywhere North!) are finally seeing grass in their front yards and thinking it’s time to get these properties ready for sale. But before you put that house on the market you better do a little homework.

 All winter long people have been getting daily news flashes on how the market is down, in some areas 20%, since the fourth quarter 2010. They have been told that they could get more for less and all the extras as well. What I am hearing here in Florida from home buyers and Realtors is the home better be perfect and looking good. And that’s the same thing I personally found this winter in dealing with buyers from the north as well from ‘across the pond’. Yes they wanted to see a price reduction but more importantly they wanted the house to look like a palace; everything shiny and new. Fresh paint in and out as well as upgraded landscaping.

One advantage we have in the South is we get people from everywhere for the winter and we learn what people are looking for and can adjust quickly. This winter people were looking for bargains and expected discounts but if they found the right house they purchased. Some cash and some financing but they bought and that’s what’s important.

In our market there are so many homes you’ve got to do something to stand out from the rest. The one thing I’ve noticed is people want you to make it easy for them. I’ve always said it’s smart to have an appraisal and a home inspection done and available as well as all your disclosures. This not only makes it easy for the prospective buyer, but for you as well.

Having an appraisal and inspection on hand shows the buyers you’re serious about selling and you have done a lot of work for them. They can see the appraisal and see exactly why you’re priced as you are. This way you have a negotiating tool in their hands that helps to counter what their Realtor or friends say about the price. A home inspection tells them the house is in tip top shape and any problems have been fixed. Having these two items available helps with the bank appraiser and their inspector. It’s hard for them to devalue and question your numbers when there is another report right in front of them. Now you’re represented even though you’re not there. Keeps people honest. Also if there are issues you can fall back on your reports and have ammunition to protect your price. And I always offer a premium package home warranty with each house.

In one case this winter I had the buyers tell me the reason they choose my house was the inspection reports were already done and they had a good understand of the house before they placed an offer. They were concerned about making an offer then paying for an inspection and not being able to getting all repairs done prior to closing. And they liked the upgraded ceiling fans. See folks, people want everything done for them and if you do it they will pay you for it.

Tags: advantage, ammunition, appraisal, appraiser, bank, bargains, CASH, ceiling, disclosure, disclosures, discount, financing, Florida, fourth quarter, fresh paint, grass, home, home buyers, home inspection, homes, homework, HOUSE, inspector, IRS, landscaping, lot, market, news flashes, palace, premium, price, prospective buyer, Realtor, realtors, report, sale, warranty

Since the Real Estate crash pundits from all over have been saying that the new norm is less home ownership and more people renting. The financial gurus have also started saying there is no financial gain in the long run to home ownership. See what happens when the markets drop: people’s homes go underwater and foreclosures sky rocket.

I want to take a few lines of this newsletter to rehash some of the issues of our present foreclosure market. 1) A large portion of the homes that are being foreclosed were sold to investors with 100% financing. Why do you think the hardest hit states are Florida, Arizona, Nevada and California? Another large portion consists of people who had no business buying homes. They got 100% financing with no credit and no incentive to make payments. 2) Wall Street wanted to make their fees so all they (seemingly) required was that the people be breathing in order to get a loan. They knew the FED would back them when the BS hit the fan.

All that and here we are today with people, and even the President, saying we need to rethink home ownership and the mortgage tax deduction.

I disagree with the premise that a community is no better off with a high ownership rate than one with a low ownership rate. Common sense will tell anyone that this doesn’t ring true. A community depends on stability of its people to thrive and continue to make the quality of life better for everyone. In a community with high rental housing people always come and go. The job market is always in flux because people keep moving. They have no ties to the community. As an example, the house next to me is a rental and in the last 18 months they have had 4 different tenants.

This causes a domino effect. The local schools have trouble keeping teachers because enrollment changes so much from year to year. Vital services such as police and fire are always in flux because of the unstable population. Rental homes are never taken care of like homes that are owned by the people living in them. Yes, I know that’s not always the case but in general you can tell a rental from a home that is owned.

Now don’t get me wrong, I own rental property so I’m not against it. There will always be some people who don’t want to be or are not meant to be home owners and who need someone else to take on that responsibility. Unfortunately, that was part of the problem with the real estate mess we have now. The people in the house never really took ownership; most looked at it as a rental with benefits.

One of the problems I see in the future is that people who only rent will always be paying someone to have a place to live, even as they get older. If this isn’t possible, they may have to move in with the kids. Not a pleasant situation in many cases. As investors we need to figure out the best way to position ourselves to provide a service, and make a living.

As I’m writing this piece I have the TV news on. The anchorwoman is talking about how the housing market is continuing to decline and more people will be going into foreclosure. And isn’t it a shame that all these people are losing their homes and the equity they thought they were going to have at retirement. (Equity that, by the way, was highly inflated, but that wasn’t part of the conversation) Wouldn’t they be better off renting? Next some economist came on and gave all the reasons why it’s better to rent.(I was trying to write them down; I plan on using some of them the next time I talk to a potential tenant, the guy was pretty convincing!)

I believe as investors we can insert ourselves into this conversation and let people know we’re the experts and can help them with their choices. By doing this you can position yourself to make money with renters and people that want to buy. Now you’re the expert in both areas. You’re meeting the needs of people who want to own, but aren’t sure what they need to buy a home in the current economy. And you’re helping people who don’t want the responsibility of home ownership. One thing I would do if you’re going to buy single family rentals is buy them in areas that have high owner occupancy. These homes will have a higher value and will be more desirable rentals.

I found this list of homeownership by countries on the Internet. As you can see the U.S. is not even close to the top of the list. I got this from a Google search so you can get more info if you like.

Showing latest available data.

Rank   Countries    Amount  # 1   Ireland: 83%    # 2   Italy: 78%    = 3   Australia: 69%    = 3   United Kingdom: 69%    = 5   Canada: 67%    = 5   Finland: 67%    = 7   United States: 65%    = 7   Belgium: 65%    = 9   Japan: 60%    = 9   Sweden: 60%    # 11   France: 54%    # 12   Denmark: 53%    # 13   Netherlands: 49%    # 14   Germany: 43%      Weighted average:    

 

Home ownership is still important to the country as a whole. As an investor, though, you need to be in both the rental business and the find, fix, and sell programs. Be pro active and get involved in the market and in the conversation.

 Paul J Da Costa is a Real Estate Consulant.

Can Be Reached at 941-716-2597

E-Mail paul@pauljdacosta.com

www.pauljdacosta.com

Tags: business, BUYING, California, common sense, consulant, country, credit, domino effect, economy, equity, estate crash, financial gain, financial gurus, Florida, foreclosed, foreclosure, foreclosure market, foreclosures, Happen, home, home ownership, homes, HOUSE, Housing, housing market, investor, investors, IRA, job, large portion, local schools, market, money, mortgage, mortgage tax deduction, owner, pauljdacosta, people, Property, quality of life, rate, Real Estate, retirement, single family, sold, Tax, wall street

Ok, I know what you’re thinking: Yeah, Paul, everyone says that every New Year and they go right on doing the same things they did last year. And I would say you’re right on with that and the key is …they keep doing the same thing year after year and expect a different result. According to Albert Einstein, that’s the definition of Insanity! Sound familiar? You might even say this is you?

I work with numerous Realtors and Investors and the one overriding theme I keep hearing is the economy is so bad and there’s no money and no one is buying anything. The only problem with that is it’s not true. Yes, finding financing is harder but homes are being bought with bank financing. Investors are buying homes with investor loans. And Realtors are selling homes! Just check those facts with the National Association of Realtors.

I know one investor in my REIA group who has bought 20 properties this year, fixed them up and sold every one with bank financing. Other investors have bought homes with bank financing with 30% down. I have bought 2 homes in the last 4 months with bank financing.

As for Realtors, I am working with one husband and wife team on their marketing program. They had sold a home to a couple from Philadelphia and within 3 weeks they sold another home to a friend of the first sale. So we put together a 3 step mailer to people in their area along with an 800 number to call for more information. They sent out info on the area and as I am writing this they have sold 6 more houses.

Now they are doing the same marketing plan to the surrounding areas and are getting great results. Other agents I know are marketing to the Midwest about all the great deals in Southwest Florida.

I am working on a multi-level marketing program with web sites and a multi-step marketing campaign to California telling people how great it is in Florida: great weather, no income tax, and some of the most beautiful beaches anywhere. I’m using the same program ‘selling’ the Atlanta area.

I also have 5 education seminars scheduled for myself this year. If you plan on succeeding you must keep learning. How many education events have you already scheduled? You should plan at least one on marketing.

The way I see it, everyone has 2 choices: do the same thing as last year then sit around and complain that all the dark forces are against them, or decide to change their mindset and business plans. 2011 depends more on you than any outside factors. I encourage you to look at the things that worked well for you in 2010 and do it again, and to always look for new opportunities to succeed.

Change the people you hang around with if they are negative and surround yourself with positive forward thinkers.

I am available for one on one coaching and help with your marketing. And I will be doing a couple of master mind programs again this year. Call me at 941-716-2597 for more information.

Good Luck and make 2011 your best year yet!! 

1181 South Sumter Blvd Suite 301                      

North Port, Florida 34287                                                          

941-716-2597                                                                            

Paul J Da Costa

Is a licensed Realtor in Georgia. He is a Real Estate investor, educator, and national speaker.

Paul is available for select speaking engagements and can be reached at 941-716-2597

www.pauljdacosta.com

paul@pauljdacosta.com

Tags: agent, albert einstein, Association, Atlanta, atlanta area, bank, bank financing, beaches, business, BUYING, California, coach, coaching, cost, courage, deal, definition of insanity, economy, education, educator, Florida, Georgia, GOOD, great deals, hearing, home, homes, HOUSE, houses, husband and wife, income, income tax, information, Insanity, investor, investor loans, investors, IRS, Licensed, loans, market, marketing, marketing campaign, marketing plan, marketing program, master mind, midwest, money, multi level marketing, National, national association of realtors, national speaker, new year, pauljdacosta, people, Philadelphia, Port, problem, real, Real Estate, real estate investor, Realtor, realtors, REIA, rent, sale, sellingâ, site, sold, South Sumter, southwest florida, Tax, weather

Just the other day I was having a conversation with a couple of realtors from my friend’s real estate office and the topic of investors came up. Both of them said flat out they will not work with investors. When I asked why they said they are too hard to work with, only want to steal a property and don’t care about the seller or the agent.

And when I ask investors why they don’t like working with agents they say they are lazy, don’t return calls in a reasonable amount of time and don’t understand the business of investing in real estate.

So there you have it: a complete breakdown of communication.  And since I am a realtor and an investor let me try to explain each point of view.

The biggest issue I see with the realtor/investor relationship is lack of communication. First the investor fails to make it completely clear what he or she expects from the realtor, what type of property they are looking for and what they are willing to pay for it. Realtors often fail to ask for specifics from the investor, and so can’t understand what the investor is trying to accomplish. As a realtor, when I work with investors, I get the details of what they expect, and also an idea of their exit strategy. If the investor doesn’t have an exit strategy I know it’s going to be a uphill battle. So I work on that before even trying to find a property.

So let me start with the investor side of the story. First and foremost we are buying property to make a PROFIT not to live in it or get a warm and fuzzy feeling about the color of the walls. Many realtors fail to make sure they understand completely what the investor is looking for and not bring a bunch of stuff that doesn’t match their exit strategy or their perceived exit strategy.

Both realtor and investor need to make sure they each have the same definition of what ‘timely manner’ means for returning calls and getting other information. This causes big problems when someone thinks 2 hours is timely and the other party thinks the next day is timely. In dealing with realtors all over the country this is the one issue I find the hardest to deal with. If you say you will have it to me by 6 PM you need to get it here or call and say it’s going to be late. This is nothing more than the same consideration you would want from me.

As a realtor, I know I’m not alone in finding that too many investors think their own time is valuable and treat everyone else’s time as unimportant.  I can’t tell you how many times I’ve talked to investors who say they have ten realtors trying to find them homes in the same area. I ask them why and they say who cares, it’s free and not my time. Too many other investors don’t value the relationship they have with a realtor; they will see one house with one realtor and write a contract with a different one.  Eventually these people will find that no realtor will work with them, and they’ll wonder why.

All these issues cause needless problems for the realtor and the investor and make the buying process much harder. Clear communication and the respect of one professional for another would eliminate this.

                 1181 South Sumter Blvd Suite 301                                             695 Mansell Road – Suite 120

                   North Port, Florida 34287                                                           Roswell, GA  30076

                    941-716-2597                                                                                  678-287-4800

Paul J Da Costa

Is a licensed Realtor in Georgia. He is a Real Estate investor, educator, and national speaker.

Paul is available for select speaking engagements and can be reached at 941-716-2597

www.pauljdacosta.com                                                     

Tags: agent, amount of time, business, BUYING, contract, country, exit strategy, Georgia, homes, HOUSE, information, investing in real estate, investor, investor relationship, investors, IRS, lack of communication, Licensed, national speaker, pauljdacosta, people, point of view, professional, Property, Real Estate, real estate investor, Realtor, realtors, rent, s real estate, seller, specifics, timely manner, uphill battle

Last week at both of my REIA meetings members were asking how to figure the value of a piece of property when the comps are all over the place. And how to advertise in this market; just putting signs out is not working like it used to.

Since this is really two different questions let’s tackle them one at a time.

Let’s start with marketing your properties first. Some cities and counties have made it their life’s work to take down our signs as soon as we put them up. In my areas the ‘sign police’ have full time people trying to catch you in the act so they can ask you for a donation to the city bank account.

I’ve come up with something that works for me. I go to private property owners and ask if I can place my signs on their property. I offer to pay them with a $5.00 Starbucks gift certificate if they let me put my sign up. This way I avoid the sign police and I get traffic to my houses. I have other ideas but that will be for another post. Now the big issue: COMPS

Well this is the million dollar question. If I could be right on this one 100% of the time I would be on the Forbes 400 list. The biggest problem is that with all the foreclosed properties you can’t figure out what the real value is. Here’s how I handle it.

First, I look at all the foreclosed properties and figure out which ones need repairs and which ones are in good shape. I get this from the MLS or Realtor .com site. This helps me separate fact from fiction and I get a good idea as to what’s happing in my area. Next, I see how many of those homes are back on the market, under repair or being rented out. Then I get the Sold’s in that area that were not distressed. (Sometimes none were sold that were not distressed). I also try to get rental comps as well; this will help me determine price to some extent. I then get a full appraisal done because this will help get a better picture of value from a third party. All these little things help to put a value on your property, and give you credibility when someone from the lender’s office or tax office asks where you got your numbers. But remember, in the end the value of your property is only what someone is willing to pay for it.

Paul J Da Costa

Has been a Real estate Investor for many years. He is a licensed Realtor in Georgia with Keller Williams Realty Consultants.

Paul can be reached by E-Mail  at paul@pauljdacosta.com

Tags: account, act, appraisal, bank, comps, Consultants, credibility, forbes 400 list, foreclosed, foreclosed properties, full time, Georgia, home, homes, HOUSE, houses, investor, IRS, lender, Licensed, market, marketing, mls, pauljdacosta, people, private property owners, Property, Real Estate, real estate investor, Realtor, Realty, rent, rental, signs, starbucks, Tax, third party, traffic

There has been a lot of talk from Washington and Wall Street about the continuing housing slump and foreclosure problems. The lament is about how to get the foreclosure rates down and housing moving again. Some say the

$ 8,000.00 first time home buyers credit was a bust.  But consider this:  every house that was sold with the $ 8,000.00 credit was a success because someone just became a homeowner for the first time. Realtors, closing agents, home inspectors, lenders and a host of other people collected a pay check for that one sale.

Washington keeps saying that banks must make funds available to lend. Banks say they are doing just that, and point to all the houses that are reported as sold from the National Association of Realtors and other data collecting agencies. While it’s technically true that there are loans being made, there are not enough to make the impact needed in the market to really get it moving in the right direction. So here is what I feel what must happen if this market is to get moving for real.

1) Congress and the President, as well as the private sector, must stop talking about creating jobs and actually work together to create them. Just as important, they must keep jobs from going elsewhere. Don’t worry I’m not going to get political on you. I’ll leave that to people who have nothing else to amuse them.

American business has to start looking at the long term business plans not just the next quarter.

(Wall Street created this monster) The CEO’s can only care about the next quarter earnings and being a Wall Street favorite. So they sacrifice quality and service, looking for the cheapest labor they can find and cutting corners. This way they hit their numbers, Wall Street is happy, the CEO is considered a genius and the cycle starts all over again. But what really happens is every time people here are laid off, and the jobs are outsourced to a country with fewer regulations and lower wages, it limits the number of people who can afford their product here. It’s a vicious circle.

Now our leaders in Washington have to take as much blame for this as the CEO’s because they make it hard to do business in America. They have so many overlapping regulations and laws it’s impossible to keep track of them. Hiring regulations and tax laws change all the time and each government agency has its own set of requirements. It’s hard to plan your future if the rules changes daily. Fear of lawsuits is a big and costly issue. Employee and consumer safety must be prime considerations, but frivolous and outright stupid lawsuits must be stopped.

 I know the Government and Private sector can work together to solve this and many more issues. The economy will not get better if people don’t have jobs or feel their job is next to be eliminated.  Spending will not increase as these people will either not have the income, or will hold on to what they do have, just in case.

2) Banks and other agencies must give us a true picture on the actual number of homes that have been foreclosed on and that are behind on payments. The number of homes that are reported and the numbers of homes that are on the market are not even close. Conventional wisdom says that there is a big ‘shadow inventory’ out there that nobody wants to talk about. This is flat out wrong.  But until people have a clear picture of the problem how do we know how to fix it? And Government alone is not capable of changing this perception. Until this is revealed people will not feel comfortable making any decisions and will take a wait- and-see approach.

3) Finally the housing market is not going to improve if the banking and the financing industries continue to refuse to work with the small investor. A large number of the foreclosed homes are in complete disarray and are unable to be sold to an end user. So this only leaves the investor class to pick up these properties and make them usable. But banks and other agencies have put so many hurdles in the way of small investors it’s hard to get a deal done. Private cash is available but harder to raise because of the reasons stated above. FHA with the 90 day rules and 180 day rules makes it almost impossible to fix a house up and sell it to an end user quickly. These rules don’t help home buyers at all, but somebody in Washington feels that they have the right to dictate how much money an investor can make. And the banks add their own set of rules on top of the Government. Some of the big banks won’t even loan money on a house that the owner has owned for less than 90 days. And others dictate how much profit investors can make for up to 6 months. (These rules, however, don’t apply to the banks themselves)

It’s the small investor who will restart the housing market, not the big institutional investor who buys 500 homes at a time ( and who, by the way, still needs to sell to someone)  The small investor is the key to the whole recovery. Banks and the government need to work together to allow the small investor to buy homes and fix them up and sell them or keep them for their rental portfolio.

 

Paul J Da Costa

Is a licensed Realtor in Georgia. He is a Real Estate investor, educator, and national speaker.

Paul is available for select speaking engagements and can be reached at 941-716-2597

www.pauljdacosta.com

paul@pauljdacosta.com

 

 

 

 

 

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I’ve talked to hundreds of Realtors and REO specialists about contract offers and the biggest complaint I hear is (and pardon the French) “…the offer sucks!” The price is in line but the bidder did not follow the bank’s requirements to submit a bid. Too many investors and Realtors think it’s ok to skip a few unimportant steps when submitting an offer, as long as they name a good price.

When you fail to submit all the required documentation with your offer, the lender is probably going to put it in the dead pile. They don’t care what’s missing, they just care that anything missing means more time and effort on their end. The Realtor is required to present all offers but the seller is not required to look at all offers. So, unless every required item is included your deal is dead on arrival.

You lost another deal. Why? Your offer did not solve the Bank’s problem..

Let’s look at this from the banker’s point of view. More than likely they are handling properties from a few counties to all over the place in a small state. That must be taken into consideration: they may have 100’s of properties to manage and 50 different realtors calling on deals and problems with the properties.

This is why your offer must address the bank’s problem as well. If you submit a half-baked offer or an incomplete offer the lender doesn’t have the time to deal with it. Period. The bank representative has to deal with the realtors and with his/her supervisor as to why these properties are not yet under contract. S/he is being pulled from both ends and they feel the pressure. It’s your job to solve that problem. Every month the representative has reports showing how many loans they have closed. This may translate to a bonus. Is your offer going to add to that for the month or quarter? If not, you lose.

You bid over the asking price and still lost? Read your own offer. Would you accept it????

I’m dead serious about this one. Look at your own offer from the lender’s perspective. Would you accept it? My close friends in the business tell me stories about offers that make them laugh until their sides hurt. Here is a list of the biggest ones. Remember, you’re buying a foreclosed home from a bank.

·       My wife is not home now she will sign it later

·       I can’t close for 120 days

·       I have to sell my other house first

·       Well just loan me the money since you already own the house

·       Offer contingent on wife’s approval ( bet this made the wall of idiots)

·       Will you loan me the money to fix it since I am doing you a favor and buying this house?

 

And the list goes on but you get the idea:

Not all deals for Foreclosed properties revolve around the offer price. Your contract may be the problem.

Let’s take some time to look at the offer. First, read all the requirements from the lender. You can offer full price but if you haven’t submitted all the required documentation you’re not going to get taken seriously.

A lot of banks require you to get approved with one of their accepted lenders first. You’re not required to close with that lender, but the bank wants to make sure you can get the loan. I have been told if their lenders say you’re not approved…. Next! (See, your price was not the issue)

I’m surprised at how many people fail to supply proof of funds. The money must be liquid or you must be able to get it in a few days.

A big problem is a buyer who says he is buying the home cash, but is actually financing it. This is not a good idea because you lose the mortgage contingency in the offer and you may lose your earnest money. (OUCH)

Two of the bank’s biggest concerns in an offer are the right to inspect and the closing date. So let’s take each one by itself.

Right to inspect. Some Realtors have told me their buyers wanted 30 days to inspect because the house was a mess and they wanted to make sure of the rehab cost. This is all well and good but if your contractor needs 30 days to figure out a bid, get another contractor.  No bank or seller should ever have to keep a property off the market that long while you do your due diligence.

Closing date is a big issue for the banks. Remember, they answer to Wall Street (and now the Federal Government) and the faster they can get a non performing asset off the books the better (Remember they have a problem and you’re there to fix it) So know when they report to the SEC and Wall Street. This is easy: Google it. I personally think your realtor should do this but I wouldn’t hold my breath. Be ready to close when you make your offer.

I’ve presented some very compelling ideas on making offers and getting your bids accepted. But you must also do your homework before you present an offer.

When I am looking for a home I go through the following steps every time. It’s like the pre-flight checklist- nothing is omitted.

·       Is the contractor available for the whole day and ready to give me bids on the spot? (Don’t buy the “I need time to check the prices” excuse. Both of you should know the cost of carpet and light fixtures, appliances, etc) They and you should have a rough estimate of the electrical costs and A/C

·       Have the funds in place and liquid so all you have to do is wire transfer funds to the closing attorney

·       Know the comps in the area on foreclosed and rehabbed homes. Bring your laptop so you can get on the web right there and figure out the issue

·       Have the MLS sheets, owner information and due diligence on the bank done before you go out. The bank information will make a difference in your offer

·       And be prepared to buy a house if it fits into your buying program.

 

Good luck!

 Paul

 

 

Paul J Da Costa

Is a licensed Realtor in Georgia. He is a Real Estate investor, educator, and national speaker.

Paul is available for select speaking engagements and can be reached at 941-716-2597

www.pauljdacosta.com

paul@pauljdacosta.com

 

 

 

 

 

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