Search results for 'selling'

Do Your Homework Before Buying A Foreclosure Property

tipsandtoolsadmin — Tue, 03 Nov 2009 16:18:00 GMT

EDITOR'S NOTE: With foreclosure properties still dominating the housing landscape in the U.S., we've asked our friends at RealtyTrac® to guest author some articles to shed light on the foreclosure crisis. RealtyTrac is the most trusted source of foreclosure information in the country. We hope that the information provided here and in other articles will be beneficial to understanding, avoiding and even leveraging (as an opportunistic buyer) home foreclosures.

By Rick Sharga, Vice President of Marketing for RealtyTrac

There are two words that give pause to the most motivated foreclosure buyer: due diligence.

Those words mean researching all the risks involved in a property purchase, which in the past meant extensive legwork and expense. But that’s no longer the case, thanks to exponential advances in information technology and the establishment of Web-based property data aggregators like RealtyTrac.

Don’t be fooled – buying a foreclosure property doesn’t equate to easy money by any means. A savvy player in this market is willing to do a bit of homework. But the tools and resources needed to do that homework are much more accessible now than ever before.

"While buying a foreclosure property is certainly not without risk, the right examination and due diligence on the part of buyers can significantly improve their ability to make a strong investment," explains James J. Saccacio, chief executive officer at RealtyTrac, the leading online foreclosure marketplace.

Web-based services like RealtyTrac can help investors and homebuyers tap into the previously hidden foreclosure market by providing access to property data formerly available only to professional real estate brokers and investors. Today, homebuyers can use these services to identify and research potential home purchases, as well as to find the tools and professional resources they need to help them close the deal.

It makes sense to give any foreclosure property under consideration a thorough examination – possibly even more thorough than for a traditional real estate property. There are three stages of foreclosure that require different research strategies: pre-foreclosure, auction and bank owned.

Before buying a pre-foreclosure property directly from the owner, run a preliminary title check for all debts secured by the property. You can research the title online using RealtyTrac’s Legal and Vesting Report or Transaction History Report. Subtract the total amount owed from the estimated market value to determine the potential bargain. After making contact with the owner, arrange a walk-through of the property to evaluate its condition. Factor estimated repair costs into your purchase offer. Before you close the deal, hire a professional home inspector to inspect the property and enlist a title company to run a final title check.

In most states, you don’t have a chance to inspect a property before buying at a public auction, which makes this type of purchase more risky. But if you’ve researched the title and determined the amount owed is far less than the market value, you’ll have some margin to cover unexpected repair costs. Before you go to the auction, set a maximum bid based on your research and stick to that bid at the auction.

Although you’ll be able to inspect the property if it’s bank owned, the bank typically knows little about the property and will sell it in “as is” condition. This means the bank will disclose all the needed repairs it knows about, but is not held responsible after the sale for any repairs it did not know about. Factor the known repairs into your purchase offer and have a professional inspection conducted before closing the deal. You should also have a title company run a final title check before closing, although most banks will make sure the title is clear before selling.

Here are eight steps for doing a professional-level property examination for all stages of foreclosure:

Identify desirable neighborhoods – Find specific neighborhoods where you would like to live or own a home. This will limit the search to a manageable size for you and your agent, and give you a sense of relative property values.

Cast a wide net – There are a number of Web-based services like RealtyTrac that can put hundreds of thousands of foreclosure properties at your fingertips. But remember, the best savings are often found in pre-foreclosure properties; therefore, it’s important to check the percentage of pre-foreclosure (vs. REO) properties in any database before subscribing.

Determine the property value – Look at the original purchase price and recent comparable property sales to determine the current value of the property. You can obtain information on recent sales in the area via Multiple Listing Service (MLS) comps from your realtor or by ordering a report such as RealtyTrac’s Comparable Sales Report. Ideally, you should look at comparables sales in the area over the past six months. Then you can drive by each property on the list of comparables and note its condition, size, appeal and location. You should also look for properties that are currently listed for sale in the area and research the same information for them. From this information, you can get a good idea of what the property you are interested in is worth.

Find out the amount in default and the remaining loan balance – In order to determine a reasonable offer price, you’ll need to know – at a minimum – how much money it will take just to satisfy the debt to the lender. This information is available on the foreclosure documents filed by the foreclosing lender and from online foreclosure-tracking websites like RealtyTrac.

Check for other liens – Before purchasing any foreclosure property, make sure it is free and clear of any bankruptcies, tax liens or other financial liabilities. A title search will examine records used to determine the legal ownership of the property and all liens and encumbrances on it. A title company or attorney can run a title search for you. You can also research the title online using RealtyTrac’s Legal and Vesting Report or Transaction History Report.

Assess the condition of the property – In addition to visiting the property yourself, hire a professional inspector to inspect the property to make sure that the property is in acceptable condition, or to determine how much of a rehab budget you’ll need to build into your deal. If you buy during pre-foreclosure or directly from the bank (REO), it’s usually possible to conduct a thorough inspection. But if you buy at the public auction, it may not be possible to view or inspect the property beforehand.

Build a positive relationship with the seller – Before purchasing a property, try to make sure that you’re entering into a win-win situation with the seller, so that they’ll be more willing to do what they can to make the process easy and leave the property in good condition for you.

Leverage your timing – Knowing when a property is going to be auctioned gives you an extra bargaining chip when negotiating with a seller or a lender. You can sometimes contact the seller just before the auction to see if a last-minute sale is possible. At the very least, knowing the intended date can help you organize time to research the property as much as possible, review comparable sales, calculate values and potential profits and ultimately determine a bid price so that you’re well prepared to compete with other investors on auction day.

It’s sometimes said that in real estate, selling is about business while buying is controlled by emotion. While this may generally be true, it’s important to keep your head about you and think through the process so that you can make the most informed decision possible. Remember, a little preparation before the sale can help you reap huge benefits. So, it’s worth your time and energy to do a little homework!

Back to Basics, Part 2--Your Product

Bru5W — Fri, 18 Sep 2009 13:03:00 GMT

I talked about the Four P's of marketing in my previous post (product, price, placement and promotion) and in this post, I'd like to spend a little time talking about YOUR product. What are you selling? If you answered "real estate," you're wrong. If you answered "myself" then you are correct!

We get caught thinking that when we are marketing a product, there has to be a tangible object-something that we can hold, see, and touch. But in terms of a real estate agent, you are selling something intangible. You are selling yourself. When you are on a listing appointment, you don't sell the company you work for. The company will not negotiate for the owners. The company will not advise the sellers on curb appeal. The company will not take a buyer's family out to visit homes on the weekend.

The company you choose to work with should provide you tools to help you get business. RealEstate.com has an incredible lead generation program that provides company generated leads to its agents. But after that warm transfer, it is completely up to the agent to convince that customer that they are the best person to help them with their real estate needs.

There are countless books on sales and marketing. You've read some. I've read a bunch. We find authors and philosophies we agree with and then try to emulate them as long as we don't get distracted by the next big shiny philosophy.

A familiar theme in just about every book is to sell yourself, you need to provide something of value. Then you need to believe in the value you provide.

One of the authors I have read is Jeffrey Gitomer. A self-professed sales guru. I don't agree with everything he says but in one of his books, I think he nails the concept of value:

"If you want to build a relationship, if you want to get referrals, you have to become known as an expert or the expert in whatever you do. This requires hard work and study on your part. If you're not willing to do that, my immediate recommendation is run down to the post office and get a nice safe job down there selling stamps at the counter. If your customers value the knowledge and the expertise that you have delivered to them, they will think long and hard before they entertain the dregs of humanity who also sell your product. You may know them as your competitors."

Are you an expert?

According to Wikipedia, "Many accounts of the development of expertise emphasize that it comes about through long periods of deliberate practice. In many domains of expertise, estimates of 10 years experience or 10,000 hours deliberate practice are common."

I think what has happened in our industry, is many, many people became REALTORS® because they thought they could make money quickly and easily. Many did, but when the market declined, so did the number of real estate agents.

I would argue that the agents that have left the industry were never experts. I would also argue many of the ones that are still in the industry aren't experts either.

Conversation Agent, a blog I read, recently described their Five Attributes of Being an Expert. Here's their hit list:

"An expert is:

One who has tried, who has practical experience in a field.
Conversely, one who has been tried has a few wounds to show for it. If you don't have a glorious failure or two under your belt, you're probably not ready to be an "expert" for others hoping to avoid the same thing.
One who has acquired comprehensive knowledge and continues to learn about a field.
One who has authority as appointed to them by the community for having demonstrated they know their stuff.
One who experiments - taking the field further."

The more you are able to define the areas you are strongest in, the neighborhoods you specialize in, and the qualities that make you an outstanding agent the more you will be able to articulate those areas of expertise you may find useful in marketing yourself with consumers.

Don't be afraid to self-evaluate or ask friends, family or past clients for help. Most people are willing to offer opinions and if you are sincere about wanting to improve, they will be happy to help you.

Back to Basics, Part 1

Bru5W — Thu, 27 Aug 2009 13:19:00 GMT

I recently read a blog from 1000Watt Consulting. Many of you may read them, so this may not be surprising to you. But the subject of the blog was shocking to me and I couldn't help but wince through the video. But while the author laments about how terrible the video, content and execution was, I couldn't help but think seven years ago, I may have fully supported agents wanting to do something like this. I would have tried to improve the production values, but in 2002 (or earlier) I probably would have had no problem with the content.

It's interesting how perspectives can change so quickly. But in this case, what seems so obvious to me and to the writer of the blog, probably doesn't even register for so many agents in our industry.

Three weeks ago, I was sitting in a presentation at the Inman Conference, and was bowled over by the amount of information that was being shared. There was so much. Too much. I jotted down the following:

"When does natural reduction occur?

So many sites
So many blogs
So many places to get info

When does it retract?

(When does it become) information overload?"

I think there is a wealth of information available to consumers and agents are trying to figure out how to stand out in the crowd. They're trying to do anything they can to find their place and be noticed. They're focused on the latest and greatest tool, program, idea or whatever is current and they are losing sight of the basics.

I'm certain that I'm culpable as I'm promoting social media, tools, ideas etc. but I wanted to step back and get back to basics. This blog is going to be the first in a series of blogs about the basics of marketing. I fully expect to have additional blogs off this topic. I don't know how many parts there will be to this particular discussion, in fact, it could be continuous and never really "end" but I want to begin the discussion with a general understanding of what marketing means to me, and what I think it should mean to you.

The Three R's of Education

I hate this. I really do. Reading, wRiting and aRithmetic. Frankly, it's only one R. I guess the creators of this decided they didn't want RAW to be the slogan of early education. Though I hate the error and the irony, the fact that there is a fundamental core to what kids need in early education. Once they have that, everything will build upon those core tenets.

Marketing is similar in the way it is taught. There are core tenets that have been fairly consistent though many marketers adopt and change them to fit a particular ideology or philosophy. You can Google the word marketing and get 502 million pages. There's a lot out there, but a definition I like, was crafted by Jay Conrad Levinson, author of "Guerrilla Marketing," "Marketing is EVERYTHING you do to promote your business, from the moment you conceive it to the point at which customers buy your product or service and begin to patronize your business on a regular basis. The key words to remember here are everything and regular basis."

The Four P's of Marketing

In the early 60's, the Harvard Business School began teaching students about what goes into the Marketing Mix. According to Wikipedia, they can be described as below:

Product: The product aspects of marketing deal with the specifications of the actual goods or services, and how it relates to the end-user's needs and wants. The scope of a product generally includes supporting elements such as warranties, guarantees, and support.
Price: This refers to the process of setting a price for a product, including discounts. The price need not be monetary; it can simply be what is exchanged for the product or services, e.g. time, energy, or attention. Methods of setting prices optimally are in the domain of pricing science.
Placement (or distribution): refers to how the product gets to the customer; for example, point-of-sale placement or retailing. This third P has also sometimes been called Place, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc. also referring to how the environment in which the product is sold in can affect sales.
Promotion: This includes advertising, sales promotion, including promotional education, publicity, and personal selling. Branding refers to the various methods of promoting the product, brand, or company.

In real estate, you are the "product," your time and commission is the "price," your geographical areas/territories/farms are your "placements" and what you do to communicate to your constituencies is your "promotion." For this first post, it is purposefully simplistic.

Consider this the foundation we will begin working from. My hope is to give you a greater understanding of each P and expound on each. We'll cover related topics and provide some examples you can use and work from.

We'll talk about knowing your audience, crafting your message, and developing your brand. I'll try to refrain from jargon and try to be as straightforward as possible. When I get into suggestions and ideas, I'll want to hear from you. I want to know what works for you but I want to know WHY it works! We can learn from each other and the more we share, the more we gain.

So let's try to simplify. Let's work forward and not get into information overload. Let's just get back to basics.

Re: Need Help Finding Mortgage Broker

Matthew Pope — Tue, 18 Aug 2009 03:11:48 GMT

Hello Susan,

I'll be happy in guiding you to a professional mortgage consultant and attorney as well. Please feel comfortable in reaching out anytime to ask further questions.

Matthew’s elite partnership team, Group Pope, are representatives of Real Estate Com Realtors ( #1 Real Estate search engine) who offer the traditional full-service aspect of a real estate brokerage firm, as well as experience in 1031 Exchanges and Buyer's Agency. As exclusive sales and marketing real estate firm that guides customers to success, no one will work harder to protect your best interests in a deal.

In addition, Matthew Pope has been working closely with European brokerage firms and investors for several years, and boasts solid experience in new development that clarifies complex everyday situations one may face with new construction and/or conversions. His great patience, attentive service and keen negotiating skills combine with his proven expertise to make him an invaluable asset to customers and clients alike.

Became a Gramercy Park resident in 1987, Matthew has been investing and helping with (new & existing) properties in New York, Florida and California since 1989 and works full time in Real Estate. Outside of work, he enjoys the arts, fishing, tennis, windsurfing, camping, gardening, and of course, barbequing with friends at his Mattituck home in Long Islands North Fork.

Respectfully,

Matthew Pope

917-687-9145

matthew.pope@realestate.com

Testimonials

"Just wanted express our gratitude Matt and thank you for help in finding our home. You went above and beyond what nobody else would have done. As a first time homebuyer, I expected it to be a long dragged out process, but you made it joyful and pleasant. My family and I are very happy, in our new home. You made our dreams come true, thank you again."
JG Tue Jun 9

"He was professional throughout the process. Matthew suggested us an area (Park Slope-Brooklyn) where we live today that really knew nothing about and are very thankful of his insight and persistence. We hope that this letter will help in choosing, there are few Matthew Pope's out there."
Enrique M. Thu Feb 16, 2006

"I'll be glad to vouch for Mr. Matt Pope. He had handled the selling of our home with much ease and savvy. He definitely had our best interest by introducing an interior designer that convinced us to add some furnishings and eliminate or put away what was not presentable, allowing our home to be more open than a box of clutter, as it was. Cannot forget, we also had some problems with the buyer and Matt kept on top with the agent to make sure the communication channel was open. We found out later that Matt went beyond his role to make this happen and are very thankful We're very happy to refer you, thank you again."
D. & K. Dimond Wed Sep 29, 2004

"(As far as your help with the sale of my Mom's apt. at Chatham Green you were aces. You coordinated the removal of the old furniture; the obtaining of the new flooring & the painting of the apt. and the best of all getting the apt. sold within 10 days at the highest price ever paid in that condo for a 1 bedroom apt.. So what else can I say besides thanks for everything. If I can do anything else please let me know.)"
Tony D. Tue Dec 4, 2007

"(Thank you for your help in both selling my Tribeca. loft and in helping me find my new townhouse in Brooklyn. You found several buyers for my loft........one who ultimately paid close to 1000 a square foot.......more than any other at 366 Broadway. You also helped coordinate the timing of both closings and went beyond the call of duty to arrange many visits to my new home before it was mine. After a long search for a broker (and I met many) I found you to be absolutely trustworthy and hard working-a rare find.)"
JB Mon Jan 23, 2006

In The First Place: Thoughts on The Second Day of Looking At Houses

jasoncook — Tue, 11 Aug 2009 23:36:00 GMT

It's been a little over a week since we headed out to look at homes with our REALTOR®. Those pesky vacations can really get in the way of buying a home! But now we are "back in the saddle", as the saying goes, and pretty excited about the results! After that first day of looking at potential homes, I wrote about things that we learned or had reinforced. This day was less about what we learned. It was about what we may have found. Our first home, perhaps?

Today, we only visited three homes for sale, but we packed a lot of quality into those three appointments. The search almost got off to a rocky start as it appeared that the weather would create havoc on our home search. But short of a few sprinkles of rain and some gusty wind, the search went off without a hitch. And boy was it productive. Each home seemed to be more of a fit than the last, culminating with the final home of the day - which we both instantly fell in love with almost immediately.

Our home...I'm sorry - this home - offered many of the needs and wants that we outlined for our first home. Actually, it met all of our "needs". Let's review, shall we?

Min. of 3 Bedrooms: 4 bedrooms. Check
Min. of 2 Bathrooms: 2.5 baths. Check
2 Car Garage: Check
Min. of 1600 Sqft: 2100+, according to tax record. Check
Min. of 0.18 acres: 0.22 acres. Check
Flat/Semi-flat yard with some privacy: Yard would fit the semi-flat description with a rather large grove of evergreens lining the back. Check
Space for a home office: Could use the 4th bedroom or the formal living room. Check
Sidewalks: Sidewalks directly in front of and on the side of the house. Check

As great as it was to find a home that covers or exceeds all of our needs, this house met many of our wants and even provides some additional benefit that we hadn't really anticipated. This potential home is located in the first neighborhood that really caught our eye once we moved to southwest Charlotte. Out of necessity, we had slowly gravitated away from that neighborhood since most of the homes for sale in that area were either on the high end of our price range or far above the upper bounds.

In many ways, it feels like we've come full circle. Could we really have found a home that meets all of our needs, most of our wants, is in one of our favorite neighborhoods and is in our price range? I've always heard that it's never a bad thing to have the "cheapest house on the block" as the more expensive homes will raise your home's value. I guess it is kinda the opposite of college, where the smart kid would ruin the curve for everyone else, huh?

We're definitely serious about this one and it is an equally nervous and exciting feeling. Our REALTOR® is going to contact the selling agent to obtain a property disclosure statement and to feel him out. This home has only been on the market a few days, so we want to get a feel for the seller's motivation level. Will they be likely to sit on just about any offer to see what else comes in later? Or will he/she be excited at the prospects of unloading the home quickly and be receptive to our early offer? I can tell you this: I can't wait to find out!

Remember, if you missed any of our previous In The First Place posts, you can find them all here.

Locating Lucrative Investment Property Requires Finding Motivated Sellers

tipsandtoolsadmin — Fri, 07 Aug 2009 14:50:00 GMT

By Rick Sharga, Vice President of Marketing for RealtyTrac

With real estate outperforming most other investment vehicles, it’s not surprising that an increasing number of buyers are pursuing investment properties. With the rapid appreciation in many real estate markets, investors can realize a quick profit in the short term by reselling a property. Even if a particular real estate market is not red-hot, investors can profit over the long term by initially using the property as a revenue generator—leasing the property while allowing equity to build. That doesn’t mean it’s always easy to find investment properties. But with the right strategy for pinpointing investment opportunities, investors can realize sizeable profits even in an overheated real estate market, according to T.J. Marrs, a real estate investment trainer and author based in Vancouver, Wash.

“In general, if you can trade a 20 to 30 percent spread between your costs and your resale price, you can be fairly safe that you’re going to make a profit no matter what, even in a bubble market,” he said, adding that costs include not just the purchase price but other fees and expenses involved in buying a property.

Locating investment properties
The ideal investment purchase involves a motivated seller who has built a solid amount of property equity but doesn’t have the time, money or other resources to sell the property at its full market value. “There are literally dozens of ways to find properties. But the key is to find a property where there is a motivated seller involved,” Marrs said, noting that one of the best ways to find motivated sellers is to search pre-foreclosure properties. Although the hidden market of foreclosures and pre-foreclosures has previously been available only to industry insiders willing to sift through public records at the local county courthouse, services like RealtyTrac have made this information easily available online. Visit www.realtytrac.com to search pre-foreclosure, auction and bank-owned properties nationwide. A property enters the foreclosure process when an owner defaults on monthly loan payments, and the property is scheduled for public auction. The owner can stop the auction during a pre-foreclosure period by paying off the amount in default or by selling the property for a price that covers the balance of the loan. Many real estate investors contact the owner during pre-foreclosure and offer to buy the property at a bargain price. If a deal is worked out, the owner avoids having a foreclosure on his or her credit history and usually walks away with some cash in his pocket.

“The reason they’re willing to sell is that they are very motivated sellers. And they’re going to lose the property if they don’t sell,” said Marrs. When contacting the owner, investors need to be aggressive marketers because they are often contacting the owner before the owner has made the final decision to sell the property. “With any kind of marketing campaign, you need to get a penetration beyond first impact,” Marrs said. “One letter is pretty much useless. Three letters is about five times more effective than one letter to the same lead.”

If the owner doesn’t sell or pay off the amount owed during pre-foreclosure, investors can bid for the property at the public auction. Auctions often represent great bargain-buying opportunities, but they also represent more risk and more competition from other bidders, according to Marrs, who usually buys before the auction. The foreclosing bank sometimes bids on the property at the public auction. If the bank is the winning bidder, it takes ownership of the property. Banks are usually motivated sellers since they consider foreclosed properties nonperforming assets and often want to unload them quickly. Many banks are willing to sell foreclosed property below market price as long as they break even.

Judging profit potential
A good investment property is bought below market price and appreciates in value after the purchase. This requires a motivated seller, but it also requires the numbers to work for both the buyer and the seller. A real estate investor should crunch the numbers on any potential investment property to determine if it meets the criteria of a good investment while still meeting the needs of the seller.

The total amount of any debts secured by the property should be significantly below the property’s market value. Investors can research all the debts owed at the county recorder’s office or online using RealtyTrac’s or Transaction History Report.

RealtyTrac provides estimated market value information for each pre-foreclosure and foreclosure property posted in its database, and investors can order a Comparable Sales Report for a detailed list of comparable sales. If the total amount of debts owed is 20-30 percent below the market value, the investor should continue to pursue the property. If not, the investor should probably move on to another property. The amount of bargain an investor is happy with can vary depending on the structuring of the purchase agreement. If he can take over the current loan on a property, Marrs is willing to buy it for up to 90 percent of its market value. But if he has to secure a new loan to buy the property, he wants his purchase costs to be at most 75 percent of the market value.

“If I can avoid using my credit or my money, then I’m gaining leverage. The more leverage I can use, the lower risk it is for me,” he said. In addition to evaluating the potential bargain, investors should consider how to generate a profit after buying the property. Investors should weigh whether reselling or leasing provides a better return on their investment. If interest rates are low and property values are increasing rapidly, it may be better to resell the property after making any needed repairs and improvements. The cash profit can then be re-invested in more real estate.

Leasing may be a better option if rental property is in high demand. Marrs uses lease options or installment land contracts to sell the property on an installment basis. This allows him to obtain a higher purchase for the property in the long run and maintain a monthly cash flow in the process. “I look at my exit strategy and entrance strategy at the same time to determine what makes up a good deal,” he said. “It’s not just about the price of the property. It’s about how I can structure financing to make the most amount of profit with the least amount of risk.”

Homeowners in Default: Contact with Care

tipsandtoolsadmin — Thu, 06 Aug 2009 13:38:00 GMT

By Jim Saccacio, RealtyTrac Chief Executive Officer

As home prices continue to escalate, more and more potential homebuyers find themselves on the outside looking in, unable to find a property in their price range that they’d be comfortable calling “home.” Partly because of this, interest in foreclosure properties — especially pre-foreclosure properties — is at an all-time high. These properties often represent an opportunity to purchase a property at significant savings. Pre-foreclosure properties can often be purchased for prices well below market value. These properties, which have entered the foreclosure process but have not yet been repossessed by the lender, fall into two general categories: notice of default and notice of sale. Property owners in default are usually in some type of financial distress and the closer it gets to the auction sale, the greater the risk the homeowner runs of being foreclosed on by the lender. (For a more detailed explanation of the Foreclosure Process, visit RealtyTrac’s Foreclosure Overview.) Timelines vary from state to state, but in most cases once a property owner has been put on notice, the house will be sold at an auction within 90 – 120 days unless the past due payments have been cleared up by the homeowner.

Since it involves dealing with someone who’s already under duress, communicating with owners in default can be mentally, physically and emotionally draining for many homebuyers and real estate investors. You endure the hassle of tracking down the owner’s contact information and then summoning the courage to actually make contact, only to have the door slammed in your face – figuratively and maybe literally. The prospect of contacting owners in default is enough to turn some people off buying pre-foreclosure properties, despite the deep discounts that can be found in this hidden real estate market. That’s unfortunate because much of the discomfort involved can be mitigated with the right approach and the right communications strategy.

The right approach includes viewing the purchase of a pre-foreclosure property as a win-win situation. While it’s true that the home buyer is hoping to purchase a home at a price below full market value, it’s also true that in the process, the distressed home owner will be able to avoid being foreclosed on, and will often walk away with a reasonable amount of cash. To be sure, buying pre-foreclosures isn’t for everyone. It takes careful preparation, aggressive marketing and dogged persistence to negotiate a purchase agreement with an owner in default. But the rewards you can reap from a successful pre-foreclosure purchase make it worth it. You can potentially save tens of thousands of dollars – sometimes much more – and walk away with feelings of satisfaction and accomplishment rather than frustration and failure.

Real estate investor and trainer T.J. Marrs has reaped the rewards from several successful pre-foreclosure purchases. He provided a recent example in which he had negotiated a purchase price of $240,000 with the owner of a pre-foreclosure property with a market value of $310,000. He credited the successful purchase to persistent marketing that targeted the owner’s built-in motivation to sell.

“The reason they’re willing to sell is that they are very motivated sellers. And they’re going to lose the property if they don’t sell,” Marrs said. The first step to contacting owners in default is to find pre-foreclosure properties with default notices filed against them. Those default notices are available at the local recorder’s office, or you can access the same information online with services like RealtyTrac, which maintains the nation’s largest database of pre-foreclosure properties, which are updated daily. Once you find some pre-foreclosure properties that interest you, the following tips should help you effectively contact and communicate with owners in default.

Preparation is Paramount
Before you contact the owner, take some time to get your ducks in a row so that you’re prepared to communicate intelligently. First call the trustee or attorney listed on the default notice to make sure that the loan is still in default. You don’t want to waste time contacting owners who are no longer in foreclosure. Research the property’s investment potential by subtracting all the debts encumbering the property from the estimated market value. Check the property for any outstanding tax liens, bankruptcy filings or other encumbrances. This research will become extremely important when negotiating a purchase agreement with the owner. If the outstanding debts add up to more than the property’s market value, it’s probably not worth contacting the owner in the first place. Similarly, if the owner has filed bankruptcy, there’s a good chance that the foreclosure process has been forestalled, and you may want to move on to another property.

RealtyTrac provides information on all of these criteria on hundreds of thousands of properties, but it can also be found at the county recorder’s office or by contracting with a local real estate agent or title company. Make sure you have financing in place and the proper real estate forms on hand if the owner agrees to sell the property. You can get financing options and contact a local real estate agent to help you with the necessary paperwork using RealtyTrac’s nationwide network of prescreened real estate professionals and lenders.

If you can show that you’ve done your research and have the pieces in place to buy quickly, owners in default will regard you as a competent buyer who is ready and able to help them out of a tough situation.

Marketing makes a difference
Your first communication with owners in default should be a letter or postcard focusing on what you can do for them. Let them know that you can help them benefit through a sale of the property and that you’re prepared to move quickly if needed. Include a phone number and e-mail where they can contact you. “Marketing should be about what you can do for that motivated seller, not about you,” Marrs said. Avoid any explicit mention of default or foreclosure because that could humiliate the owner if someone else reads your letter or postcard. Owners will already know if they’re in default and be motivated to get out of the situation. Your marketing should focus on how they will benefit from selling the property to you.

When owners contact you back, find out as much as you can about their situation so that you can work out a purchase agreement that will truly benefit them and still provide a good bargain for you. Owners will respond much more positively when they see that you truly care about their welfare and aren’t just taking advantage of their situation to make a quick buck. A word of warning: your job as an investor or buyer is not to solve all the owner’s problems. Your focus should be to provide the owner with a good alternative to losing his or her property to foreclosure. Try to avoid getting caught up in the owner’s other financial and personal problems. In an ideal transaction, you get a great deal on the property, and the owner walks away with cash to use for rent or for purchasing a less expensive property. In addition, the owner doesn’t have a foreclosure on his or her credit history that could hamper future efforts to purchase a home.

Persistence pays off
Most owners in default won’t respond to the first letter or postcard you send them, but you shouldn’t give up after just one attempt, according to Marrs. “One letter is pretty much useless,” he said. “Three letters is about five times more effective than one letter to the same lead.” Your letters will become increasingly effective the closer it gets to the date of the public foreclosure auction. If the property is sold at auction, a foreclosure is placed on the owner’s credit history, and the owner often doesn’t receive any of the auction proceeds. The auction occurs if the owner doesn’t sell the property or pay off the defaulted amount during the pre-foreclosure period, which can range from a month to more than a year depending on state foreclosure laws.

You could follow up your postcards with a phone call or personal visit to the house, but carefully consider these options as they are inherently more confrontational. Default notices don’t usually include the owner’s phone number, so you’ll need to track down the phone number by cross-referencing the name and address. If you knock on the door, be respectful and polite and realize that you may not always receive a friendly response. Most buyers and investors contact several owners in default before they find one willing to work with them. Even while you’re sending out multiple postcards to owners of pre-foreclosure properties that you’ve already located, you should continue to search for new properties every day so you can expand your pool of pre-foreclosure leads.

With good marketing and persistence, some of those pre-foreclosure leads will turn into meetings with owners in default. And if you’ve done the proper preparation, some of those meetings will turn into great bargain-buying opportunities.

The Summer Heat of the Tucson Real Estate Market

Jennie James — Tue, 04 Aug 2009 18:35:00 GMT

The last 2 months have been a blur for me as I have been so busy showing hundreds of properties in this fabulous heat. Being the beginning of the month and having closed all the transactions I had in Escrow last week, I have a temporary breather, which gives me some time to update everyone that will read this on what I interpret to be happening in Tucson real estate.

Most properties that are priced under $200,000 are seriously selling fast, if the property is priced correctly. Three months ago there was little need to call to see if a property that was marked as "Active" was indeed still active, however in the last 2 months almost every property that my clients have shown even just a little interest in has at least one other offer that is being negotiated. Several times I have been able to slip my offer in before the others are presented to the seller, so don't lose all hope. The farther below $170,000 that these properties are priced the more offers they seem to be getting. A couple weeks ago, I saw the absolute perfect property for some clients that was really close to the U of A and was priced at $90,000, by the end of the first week it was on the market it had 12 offers, and sold for $125,000. $125,000 for this foreclosured 3bedroom/ 2bath, a couple blocks from the U of A was still a steal, as property values by the U of A always stay pretty high because of the huge demand from lack of student housing, and that many of the homes in the area are historic and very well built. The reason I tell you this is because buying a house under $200,000 can take perseverance and patience, in the end all that effort leads to the great reward of home ownership, plus if you are a first time home owner you will most likely get up to $8,000 from the federal government!

To give you more specific data, I analyzed single family residence sales for 2 zip codes( 85711 & 85742). I live in 85711, which is usually considered Midtown ( or the Eastern part of Central). In July, 54 houses sold, and the average sold price was $148,396. These properties sold for 97.95% of their list price, and averaged 61 days on market. If we look back a few months we will see that in April only 27 houses sold and the average sold price was $137,594; In May, 26 houses sold and the avg. price was $150,000; And in June, 47 houses sold for an avg. of $154,219. The percentage of the list price was higher in July than in the 3 previous months. So it looks like the momentum was building and with more people buying the inventory is going down and buyers are having to offer closer to the list price to get the house. There is currently only about 2 months of inventory in this zip code for houses. A healthy market typically has about 5 to 6 months of inventory.

In 85742, which is mostly Northwest, about 40 houses have been selling each of the last 4 months, except May when only 28 sold. There is currently about 5 months of inventory and the average days on market for houses that sold in July was 66. For July, the average sales price was $206,792, and properties were selling for 95.35% of their list price, which is up from 93.37% for June solds.

So, generally there are less houses all around the Tucson Area, especially nice move-in ready ones under $200,000, than there were at the begining of the year. There are still some really great deals to be had if you and your Realtor keep an eye out for them, plus interest rates are pretty low and the tax credit expires the end of November.

What to do When You Can’t Afford Your Mortgage Payments

tipsandtoolsadmin — Thu, 30 Jul 2009 12:42:00 GMT

By James J. Saccacio, Chief Executive Officer

No one who buys a home intends to miss any mortgage payments. But unexpected life circumstances can quickly stymie the best of intentions, and homeowners can’t always prevent defaulting on their payments. If you’re one of these homeowners, it’s important that you take steps to prevent the situation from getting worse. Many homeowners fall into the traps of procrastination or overreaction, neither of which is helpful. Instead, you should adopt a measured response in which you take into consideration all the options available and act decisively before you lose your home. Below are some suggestions.

Contact your lender
Once the due date for your mortgage payment has come and gone, it’s only a matter of time before your lender knows you’re in default. But don’t wait for them to contact you; act preemptively and call them right away. If you leave it up to them, they may contact you for several months – when it will be much harder to resolve the situation. Lenders deal with defaulted customers every day, so they often can provide solid advice. And most lenders aren’t eager to expend the money and time it takes to foreclose on your home, so they’re open to other alternatives. Before you sign any agreement with your lender, have it reviewed by a real estate agent, attorney or a local housing counseling agency approved by the U. S. Department of Housing and Urban Development.

Know the deadlines
If you default on your loan and don’t work out a plan of resolution with your lender, the lender will schedule a public foreclosure auction of your property. In some states the countdown to the auction is less than a month; in other states it is more than a year. In either case it’s critical that you understand exactly how much time you have before you lose your home. A tangible deadline will help you set goals and take control of the situation. Consult RealtyTrac’s State Foreclosure Laws Summaries to find out more about the foreclosure timeline in your state.

Consider your alternatives
Homeowners in default have several viable options to stop the foreclosure process. Not all of these options will work for every homeowner, but you should consider the advantages and disadvantages of each option and determine which is best for you if you are in default.

Adjust your budget: If you haven’t done so already, take a look at where all your money is going. Look for ways to bring more money in and cut non-essential expenditures.
Restructure your payments (Forbearance): Find out if your lender can offer you a forbearance agreement that allows you to lower your monthly payments now and pay the difference when you’re back on your feet financially.
Refinance your loan: If interest rates have fallen since you last financed the home, ask your lender if they would be willing to refinance your loan so that you have lower payments.
Sell your property: Although this probably isn’t your first choice, it can allow you to walk away with any equity you’ve built and it’s a better alternative than losing your property at a public auction.
Deed your property in lieu of foreclosure: If you don’t have any equity in the property, you may choose to simply transfer ownership to the lender so that they stop the foreclosure proceedings against you.

Consult a real estate professional
Whether you decide to restructure your payments, refinance, sell or deed the property in lieu of foreclosure, you should enlist the help of a local real estate professional — such as a real estate agent or attorney — to guide you through the process. Many homeowners in default don’t have the money to pay an attorney and don’t want an agent’s commission to eat away at any profit from a home sale. But keep in mind that just an hour or two with an attorney may be sufficient to ensure that you’re avoiding any pitfalls in the process. And a good agent will give you solid advice even if you can’t afford to have them list your home. They know that if they help you out now, you’re more likely to use them the next time you buy or sell a home. And they know you’re more likely to refer them to a friend.

Be wary of scams
Some people take unfair advantage of homeowners in default. These scammers will promise to help you but will only leave you in worse shape. According to HUD, the most common scams are equity skimming and phony counseling agencies.

Equity skimming: you will be approached by someone who promises to pay off what you owe to the foreclosing lender if you hand over ownership of your property, usually through what’s called a Quit Claim Deed. Once you’re out of the house, the new owner rents it out for a few months and never pays off your mortgage, causing the lender to foreclose. You end up with a foreclosure on your credit history and with little or nothing to show for any equity you had built in the property.
Phony counseling agencies: phony counseling agencies contact homeowners in default and offer help for a fee. Once they have your money, they may not do anything for you. If they do help you, it will be by contacting your lender or suggesting that you sell your house — tasks you can do on your own.

On its website, HUD suggests the following precautions to avoid scams:

Don’t sign any papers you don’t fully understand.
Make sure you get all “promises” in writing.
Beware of any contract of sale or loan assumption where you are not formally released from liability for your mortgage debt.
Check with a lawyer or your mortgage company before entering into any deal involving your home.
If you’re selling the house yourself to avoid foreclosure, check to see if there are any complaints against the prospective buyer by contacting the state’s Attorney General, State Real Estate Commission or the local District Attorney.

If you find yourself unable to make your monthly mortgage payments, the key is to take control of the situation by knowing all your options and acting decisively to stop the foreclosure. That will allow you to make the best out of a difficult situation.

In The First Place: The Story of Two First Time Home Buyers

jasoncook — Mon, 27 Jul 2009 12:02:00 GMT

For months now, I've spoke emphatically (and probably annoyingly) of the need for "real" content on our site. We've made great strides with the launch of Town Square, but we weren't (aren't) quite there yet. "What we need are real folks telling their story - sharing their experiences in buying, selling, managing or improving a home", I'd often lament. Here's the funny thing about that. All the while, my wife and I were researching and discussing a potential home purchase. Not only that, but we are first time home buyers, like so many that are charging into the market this year due to the first time home buyer tax credit.

A-ha! The very content that I've been looking for was playing out right before me in my personal life. So after that revelation - and the blessing of my wife to share our story - we both set out to document our home buying experience through the pun-a-licious series, In The First Place. As much as possible, we'll try to document the steps that we've taken up until this point first, then provide updates as we navigate the home buying market here in the Queen City of Charlotte, North Carolina.

Ok, so you are probably asking yourself (at least) 2 questions:

Who are you guys and Why should I care about your home buying experience?

My wife, Stephanie, and I are both in our early 30's. College educated (Go Hokies...and Highlanders!). We both work full-time. The third member of our family, our golden/lab mix Brady, runs the house. I grew up in southside Virginia; my wife in the northeast suburbs of Philadelphia. We met in late 2005 in Blacksburg, Virginia while she was finishing her Master's down the road at Radford University. After graduating from Virginia Tech in 2001, I had returned to the area for work. Only months after we met, I accepted my current job here at RealEstate.com and off the Charlotte I went. Stephanie completed her Master's a few months later and became a Charlottean as well. 6 months later we were engaged and planning our wedding, which took place in July of 2008. That October, we ditched our rental townhome and moved into our current home, a single family rental home in southwest Charlotte. Now, here we are. Just entering our second year of marriage and ready to take the big step of owning our first home.

Whew! Now that you know a little about us, why should you care about us as first time home buyers? Well, this series is meant to be more about our situation than about us. If you are a first time homebuyer yourself or if you have plans to be in the future, you'll likely want to know what you can expect from the home buying experience. Sure, there are articles available everywhere (including our site) that will provide beneficial information on the process. But we hope that, by documenting our own process, we can provide you with an unfiltered, "main street" account of what it's like to be a first time home buyer.

We also hope that this will be an interactive experience. If you have questions, we want to hear them. If you have advice, we REALLY want to here that! If you just want to share stories from your own experience, do it. Sound interesting yet? If you want to keep up with our journey, here are some helpful tips to do so:

Subscribe to this blog using the RSS feature to the right
Follow along on twitter (@thesearchguy)
Become a fan of RealEstate.com on Facebook
Use the Town Square search function to look for "First Place"here.

Ok, enough about us. Let's go buy a home, shall we?!