Tuesday, June 10, 2014

Review of houses for sale sale::House for sale - What's Your ...







Review of houses for sale sale::House for sale - What's Your ...








By               now,               most               of               us               have               seen               shows               on               TV               about               "flipping"               houses.

This               means               buying               houses               that               are               in               some               sort               of               distressed               condition               and               fixing               them               up               and               selling               them               for               a               whole               lot               more.

That               sounds               like               a               great               way               to               make               money,               doesn't               it?

Actually               it's               not               THAT               easy.

First,               you               should               know               the               difference               between               a               "short               sale"               and               a               foreclosure               because               if               you're               considering               a               career               in               "flipping               houses,"               you'll               see               a               lot               of               both.

In               a               short               sale,               the               owner               of               the               home               is               probably               still               living               in               the               house               and               is               a               regular               person               and               not               a               bank               or               the               government.

The               owner,               however,               is               in               the               position               where               they               owe               more               on               the               house               than               they               can               sell               it               for               and               for               whatever               reason,               they               need               to               sell               it.

They               are               now               going               to               ask               the               bank               for               permission               to               take               less               than               what               they               owe               and               get               out               from               under               the               financial               obligation,               thus               "selling               short"               of               what               they               owe.

Wow,               aren't               those               bankers               sweet               and               thoughtful?

How               generous               of               them.

Well,               don't               count               on               them               yet.
               How               does               this               happen               in               the               first               place?

How               does               someone               buy               a               house               and               then               owe               more               than               they               can               sell               it               for?

There               are               a               number               of               things               that               can               cause               this               issue.

First,               is               the               fact               that               in               many               (if               not               most)               areas,               real               estate               is               no               longer               appreciating.

The               values               have               gone               down.

A               person               who               bought               their               house               20               years               ago               bought               in               a               much               lower               priced               market               and               stands               a               good               chance               to               make               a               profit.

But               someone               who               bought               their               house               5               years               ago               or               2               years               ago               may               be               "upside               down"               on               their               loan.

They               bought               at               one               price               and               houses               like               theirs               are               selling               for               less               now.

Then               there               was               the               "creative               financing"               that               evolved               over               the               last               few               years.

The               entire               mortgage               industry               has               really               revamped               their               procedures               over               the               last               couple               of               years               but               there               was               a               wild               time               a               few               years               before               that               when               it               was               "anything               goes"               for               some               lenders.

It               seemed               almost               anyone               could               get               a               loan.

We               joked               in               my               office               that               one               lender               we               knew               would               give               someone               a               loan               if               they               were               1               week               out               of               jail               and               1               day               out               of               bankruptcy.

There               were               deals               that               were               easy               to               get               and               not               every               buyer               took               their               responsibility               very               seriously.

Easy               come,               easy               go,               certainly               applied               in               some               of               their               minds.

There               were               deals               like               the               "interest               only"               loan.

In               that               deal,               the               buyer               paid               only               on               the               interest               of               the               loan               for               the               first               few               years.

Then               at               the               end               of               that               time,               they               would               begin               paying               also               on               the               principal               and               they               might               have               even               had               a               "balloon               payment"               (one               large               payment)               at               the               end               of               that               period.

Mostly,               buyers               didn't               worry               when               they               were               presented               with               this               option.

It               got               them               into               a               house               they               might               not               otherwise               have               been               able               to               afford               (in               truth               they               could               NOT               afford               it)               and               they               were               likely               told               "don't               worry,               when               the               3               year               period               is               up,               you               can               refinance!

You'll               be               making               more               money               by               then!

You'll               have               gotten               raises!"               But               the               company               they               got               their               loan               from               is               now               out               of               business,               wage               freezes               are               everywhere               and               they're               lucky               if               they               still               have               a               job,               and               the               time               is               up               and               that               mortgage               company               isn't               there               to               refinance               them               and               every               other               bank               has               a               much               higher               standard               for               loans               than               they               had               a               few               years               ago.

The               banks               lost               a               lot               of               money               and               are               super               cautious               now.

And               there's               the               poor               buyer               with               NO               equity               whatsoever.
               Add               in               unemployment               rates,               and               maybe               they               were               counting               on               two               incomes               to               pay               the               bills               and               are               down               to               one               or               even               none               and               they               can't               afford               their               house               payments               any               more.

Unlike               "mom               and               dad's               generation"               some               of               the               new               buyers               didn't               think               of               all               this               as               that               big               a               deal.

If               things               got               tight,               they               were               much               more               likely               than               the               prior               generation               to               simply               walk               away               from               the               deal.

Maybe               they               were               employed               in               a               service               industry               that               counted               on               business               that               is               no               longer               there,               such               as               high-end               restaurants,               or               tourist               trade               and               they're               earning               less               than               they               counted               on.

Now               they               need               to               sell               short               and               get               out               from               under               this               deal.

That's               where               short               sales               come               in.
               I               am               sorry               to               say               that               my               experience               with               banks               and               short               sales               is               very               disappointing.

I               have               seen               many               cases               where               a               seller               did               everything               the               bank               required,               got               a               good               offer               from               a               buyer               for               their               house               and               then               was               turned               down               by               the               bank.

And               to               add               insult               to               injury,               in               many               of               the               cases               I               have               seen,               the               situations               eventually               escalated,               the               sellers               ended               up               losing               the               homes               to               foreclosure               and               six               months               or               a               year               later,               the               bank               ended               up               with               substantially               less               than               the               offers               they               turned               down.

It               is               simply               ridiculous               but               it               happens               every               day.
               Remember,               in               this               economy,               the               banks               are               overwhelmed               with               requests               for               short               sales.

Bankers               don't               seem               to               work               overtime               much               and               that               means               that               your               offer               on               a               short               sale               may               sit               for               weeks               before               the               bank               even               considers               it.

Markets               vary               and               many               loans               have               been               sold               to               large               lenders               in               places               like               New               York               or               California.

Their               markets               may               be               radically               different               than               your               market               and               the               bank               employees               who               make               the               decision               may               simply               be               incapable               of               believing               that               your               good               offer               is               a               value               they               should               take.

So               they               turn               it               down.
               This               is               the               kind               of               situation               that               leads               to               foreclosures.

When               the               short               sale               fails,               eventually,               after               months               of               no               payments,               the               bank               comes               in               and               forecloses.

The               house               is               sold               at               sheriff's               auction               and               the               bank               sends               someone               to               bid               on               it               and               usually               buys               it               back.

Then               it               depends               on               how               fast               the               bank               gets               around               to               putting               it               on               the               market.

If               there               were               issues               with               the               house,               the               bank               is               rarely               going               to               fix               them.

They               will               probably               send               in               a               field               appraiser               to               give               them               an               idea               of               its               value               and               they               will               probably               "winterize"               if               there's               a               chance               water               could               burst               the               pipes.

They'll               turn               off               all               the               utilities               and               lock               the               house               up.

Eventually,               after               6               months               or               a               year,               they'll               get               around               to               listing               it               with               a               Realtor.

Until               recently,               those               Realtors               didn't               even               earn               a               commission               for               doing               this.

All               they               got               was               the               "glory"               of               having               their               signs               in               front               of               all               these               not-so-lovely               homes               and               the               hope               that               they               could               sell               the               house               themselves.

The               Realtor               who               actually               brought               a               buyer               to               the               house               got               all               the               commission.

So               the               banks'               Realtors               had               no               desire               to               help               you               or               your               Realtor               with               advice               about               the               house               and               they               often               had               so               many               of               these               listings,               they               didn't               remember               all               of               them               anyway.

That               system               has               changed               lately               but               we               find               those               Realtors               still               aren't               really               used               to               answering               questions               and               returning               phone               calls,               even               from               eager               buyers.
               When               you're               shopping               for               foreclosed               homes               and               short               sales,               remember               that               a               person               who               couldn't               afford               to               make               a               house               payment,               probably               couldn't               afford               to               do               a               lot               of               maintenance.

Things               were               neglected               when               they               lived               there.

Some               of               these               people               are               angry               and               will               damage               the               house               before               they               move               out.

Sometimes               after               they               leave,               people               break               in               and               do               damage               (stealing               copper               pipes,               etc.).

Add               in               the               fact               that               simply               put,               houses               do               not               "like"               to               be               left               empty.

They               do               not               do               well.

They               get               a               musty               smell               and               things               that               go               wrong               aren't               always               caught               in               time.

The               power               may               go               out               or               be               shut               off               and               that               may               mean               that               the               sump               pump               in               the               basement               can't               do               its               job.

Then               you               have               water               in               the               basement               and               next               comes               mold.
               There               are               worse               things               even               than               that.

Some               houses               are               foreclosed               because               the               former               owners               were               running               meth               labs               and               are               now               in               jail.

As               hard               as               it               may               be               to               believe,               we               see               houses               like               that               often               and               in               almost               every               community.

And               we               often               aren't               told               that               this               is               even               an               issue.

Before               you               buy               a               short               sale               or               foreclosed               home,               take               a               minute               and               call               the               local               sheriff's               office               and               find               out               if               this               home               was               a               known               meth               lab.

If               it               was,               proceed               with               extreme               caution               and               get               an               expert               in               to               assess               what               needs               to               be               done               to               make               the               house               liveable               again.

Meth               labs               leave               behind               very               dangerous               conditions               and               you               absolutely               should               have               this               taken               care               of               by               someone               who               knows               how               to               make               the               house               safe               for               you,               your               children               and               your               pets.

The               walls               and               carpets               are               literally               soaked               in               poison               and               it               is               critical               that               you               know               and               that               you               have               it               fixed.
               But               it               looked               so               easy               on               TV:               On               the               TV               "house               flipping"               shows,               you               should               bear               in               mind               that               some               of               those               shows               were               taped               3               or               4               years               ago               when               the               real               estate               markets               were               better.

Often               they               were               taped               in               California               where               prices               were               sky               high               and               kept               going               higher               for               a               long               time.

That               meant               that               someone               who               badly               misjudged               what               it               took               to               rehab               their               "flipped               house"               could               still               make               a               profit.

You'd               see               these               TV               "flippers"               make               terrible               mistakes               and               bad               decisions               that               you               certainly               wouldn't               make,               and               yet,               at               the               end,               the               person               would               make               a               huge               and               almost               unbelievable               profit               and               of               course,               that               sounds               like               something               you'd               like               to               do,               too.

Check               with               your               Realtor               and               your               county               auditor.

Is               real               estate               appreciating               in               your               area?

The               answer               is               probably               not.

Then               explore               what               needs               done               to               the               house               you               are               considering               buying.

Are               you               able               to               do               electrical,               plumbing,               construction,               demolition?

Remember,               every               workman               you               have               to               hire               cuts               into               your               profit               margin.

The               people               who               make               money               on               these               houses               are               very               careful               shoppers               and               then               many               are               "jacks               of               all               trades"               who               can               do               much               of               the               work.

Find               out               what               the               best               case               scenario               is               for               the               price               once               it's               fixed               up.

If               you're               in               a               bad               neighborhood,               you               may               do               a               beautiful               rehab               but               still               not               be               able               to               sell.

Get               lots               of               advice,               shop               long               and               carefully.
               Five               years               ago,               when               my               market               was               appreciating,               my               surveys               indicated               that               there               was               money               to               be               made               on               investing               in               rehabbing               houses               ONLY               if               you               could               do               most               of               the               work               yourself.

If               you               had               to               hire               electricians,               plumbers,               painters,               carpenters,               crews               of               demo               people,               you               would               not               make               a               profit.

In               that               better               market,               you               could               only               make               money               if               you               could               do               almost               all               the               work               yourself.

Now               my               market               (and               most               others)               is               depreciating               and               that               means               even               less               chance               for               profit.

House               flipping               is               a               risky               business.
               My               advice               is               to               really               do               your               homework               on               every               house               you               consider               buying.

Get               a               home               inspection               to               find               out               what               issues               exist               with               the               house.

This               will               cost               you               about               $300               up               front               but               it               could               save               you               from               making               a               mistake               that               costs               you               thousands.

Get               good               advice               from               builders               and               rehabbers               on               what's               involved               cost-               and               time-wise               on               what               needs               to               be               done.

Work               up               a               good               and               reasonable               budget               before               you               buy.

Price               materials               and               make               sure               you               can               afford               to               buy               what               you               need               to               do               the               job.

Don't               think               so               big               that               it               costs               too               much               to               turn               a               profit.

Then               get               that               house               rehabbed               as               fast               as               you               possibly               can               and               list               it               with               a               Realtor.

This               is               not               going               to               be               the               time               for               a               "sale               by               owner"               when               you               get               your               flip               ready               to               sell.

You               want               your               money               fast               and               that               takes               every               tool               in               the               book.

Remember               the               market               in               most               areas               is               already               saturated.

Consider               staging               your               house               to               give               your               buyers               an               idea               of               how               it               will               look               when               they               live               there.

Good               luck.

If               you               do               it               right,               you               can               make               a               profit.

But               you               must               do               your               homework!






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