Foreclosure Homes In Poor Condition Can Be The Best Deal

Homes in less than live in ready condition can be the best bet in buying a home. This small but very important fact is a mystery to most people. This mystery is a benefit to the home buyer that understands the difference. This can also be a benefit to the real estate agent that understands how to navigate the process of buying a home that may need some repairs. This may seem counter intuitive to the average person but when it is explained it makes all the sense in the world. We have to put ourselves in the shoes of the agency, bank or lending institution that holds the property in their inventory.

Housing and Urban  development, Fannie and Freddie Mac and others have a need to sell their homes in order to get the homes off of their books. The average foreclosure costs the bank that owns it $75 every day. These troubled assets are absolutely a cost and not a revenue generator. No one makes money on foreclosures except for the lawyers. The banks don’t want to own the houses and they need to liquidate the homes as soon as possible to avoid the increasing fees to maintain the properties. The maintenance is not what  might be expected. Maintenance is normally limited to safety and security issues. Normal upkeep is not part of upkeep therefore a home that was in good condition when it was originally foreclosed or vacated can become foul and fall into disrepair quickly. This is an opportunity that is overlooked by most home buyers and can be taken advantage of by more savvy home buyers.

The reason the opportunity is overlooked by most people is because they see only what is there and not what can be there. They also mistakenly believe that the cost of repairs are going to be a cash expense to them. The cost of repairs more often than not can be borne by the seller or the bank, HUD or the lending institution. Using HUD as the example there are a couple of FHA loans that are available to buyers of their foreclosures. The loan programs with HUD are called 203B and 203K and are used in different ways for different reasons. The one thing they have in common is that they both allow the buyer to roll repair costs into the mortgage.

Banks and lending institutions also provide repair costs to be rolled into a repair escrow.

The big take away is that repairs do not have to come out-of-pocket and there are options that should be explored.

Going the Distance in Foreclosures

Many agents show only particular types of homes. Other agents show anything and everything. It has been our observation that agents that stick to a particular niche have the best results in their home sales. It is important to stake out a sector and become an expert in it. foreclosures are not like high-end and high-end is not the same as waterfront or defining a couple of neighborhoods as your area of expertise. In order to select a particular area of focus it is also important that we determine who we want to work with as each type of real estate comes with its own set of buyers.

The hottest market in the past several years has been the new home buyer or first time home buyer market. But this doesn’t mean that everyone should be in it. first time home buyers bring with them baggage that more established home buyers don’t have. Un-established or un-managed credit, low savings and unrealistic expectations are more common in the first time home buyer market while rigid standards and low inventory are more common among the high-end buyers. Homes that are priced above a million are turning over more quickly now than they did only a couple of years ago but the rate that they are coming on the market means that the inventory is lower now than it has been for some time.

foreclosureIn the same vein, foreclosures are less common than they were two or three years ago but the inventory like that of diamonds is being controlled so that the market doesn’t base itself on the lowest sales price and therefore the worst case scenario.

As the largest provider of foreclosure information for the past decade, we are particularly focused on that market. The average prices of foreclosures vary depending on the city and state but the overall prices of foreclosures are still lower than the average cost of a similar resale home in the same area.

Econ 101 told us that scarcity increases the price of the goods sold but what we had to wait to hear about during the next semester was that access to the goods would also have to be entered into the equation. That is where foreclosures are able to score high points on our list of desirable products to sell. Because most brokers have never taken the time to teach their agents about the foreclosure market and therefore most agents don’t have a clear concept about the nuances of selling foreclosures the market remains open in most areas. Furthermore the idea of using foreclosures as an introductory tool has not been fully appreciated most real estate agents don’t realize that a foreclosure buyer is not too difficult to introduce to traditional resale homes. These are just some of the reasons have enjoyed the foreclosure arena as real estate agents as well as online. If you have any questions about foreclosures or how to break into the foreclosure market as a loan officer or a real estate agent don’t hesitate to ask. We are always happy to help.

REPOST: New Report Shows Hardest Hit Communities Still Reeling from Housing Crisis

RISMedia recently released an article discussing the areas hit hardest and how they are still reeling from the housing crisis, to see the original posting click HERE to continue to RISMedia.

The nation is abuzz with the positive news that rising home prices will solve our foreclosure issues and the parallel economic crises. However, according to a new report released by UC Berkeley’s Haas Institute for a Fair and Inclusive Society, millions of families across the country owe more on their mortgages than their homes are currently worth and continue to face crippling financial devastation.

This report, released Thursday, May 8, examines national economic trends and identifies the most troubled geo-graphic “hot spots.”These areas– metro areas, cities, and neighborhoods in all regions of the country—are still home to a large number of underwater families.

From the report:

Despite home prices rising in many parts of the country, the total value of owner-occupied housing still remains $3.2 trillion below 2006 levels. Despite rising home prices, there are still some 9.8 million households underwater, representing 19.4 percent of all mortgaged homes—nearly one out of every five such homes. Underwater homeowners are significantly more likely to default on their mortgages than homeowners with positive equity.

In the first report of its kind, the Haas institute analyzes negative equity and foreclosure data together with race and income data, at the ZIP code level, the city level and the metropolitan area level. The report shows that if we drill down to the neighborhood level, a startling number of communities across the country still face very high underwater rates.

The report also clearly shows that the legacy of predatory lending has resulted in a disproportionately negative impact on African American and Latino communities. For example, of the 100 cities with the highest underwater rates, in 71 of them the population is more than 40 percent African American and Latino.

Almost five million families have lost their homes to foreclosure since 2008, and foreclosures continue at rates higher than prior to the Great Recession. For African Americans and Latinos specifically, between 2005 and 2009, they experienced a decline in household wealth of 52 percent and 66 percent, respectively, compared to 16 percent for whites. This reflects, in large part, disparities in foreclosure rates among these groups, since for most Americans, and particularly for people of color, their homes are their largest source of wealth. Homeownership constituted 92 percent of the net worth for African Americans and 67 percent for Latinos, compared to 58 percent for whites.

While some communities across the country have benefited from rising home prices, this upward trend is expected to slow down dramatically in 2014, which means the hot spots that have been left behind by the recovery are not likely to see their fortunes substantially improve any time soon. Market forces alone will not bring the recovery to these severely impacted communities.

Hardest-Hit Cities

In 57 cities, at least 30 percent of all mortgaged homes are still underwater.

Nearly 1 in 10 Americans live in the 100 hardest-hit cities (28.7 million).

34 percent of the 100 hardest-hit cities have median household incomes below $40,000.

The 100 hardest-hit cities are in 27 states.

Hardest-Hit Neighborhoods

In 151 ZIP Codes, at least 50 percent of all mortgaged homes are still underwater.

10.4 million people live in the 395 hardest-hit ZIP codes.

43 percent of the 395 hardest- hit ZIP codes have median household incomes below $40,000.

Hardest-Hit People: Communities of Color

In 71 of the 100 hardest-hit cities, African Americans and Latinos account for at least 40 percent of the population.

In 146 of the 395 hardest-hit ZIP codes, African Americans and Latinos account for at least 75 percent of the population.

In 64 percent of the 395 hardest-hit ZIP codes, African Americans and Latinos accounted for at least half of the population.

For more information, visit are foreclosures still available?

In short, Yes they are!

The trick is to know where to find them.

If you are looking at preforeclosures you will be traveling down a frustrating road that leads to aggravation and little results. If you are looking for the most current and accurate list of foreclosures is the provides the most updated list of foreclosures and all the properties on the site are currently on the market. Preforeclosures are NOT on the market and therefore are not available to purchase. They may be in the future but betting on someone to falter on their mortgage payments is not a wise wager.

REPOST: Boomerang Buyers’ Purchase New Homes after Foreclosures

A new term for home buyers has been catching on as of late, that term is “Boomerang Buyers.” They are buyers that previously lost their home to short sale or foreclosure and are now purchasing a home only a few years later, in some cases only a year later. Mary Shanklin of RISMedia tells the story of one family in particular below. Click here to see the original posting.

Less than five years after Jose and Mary Guadalupe lost their longtime family home to foreclosure, the Orange County couple were able to buy back their house. 

“I didn’t want any other house,” says Jose Guadalupe, a 55-year-old truck driver formerly in Puerto Rico law enforcement. He had added a back porch, new lighting, a loft and a sprinkler system to the home they purchased in 2000. “I only wanted my house back. You don’t know how much I love this house. My children grew up here.”  

The Guadalupes are among an emerging group of purchasers, called “boomerang buyers,” who are able to get back into the housing market under new, more forgiving lending guidelines. 

Although the Guadalupes are unusual in buying the very home that they lost, some foreclosed owners are finding they can qualify for conventional mortgages within three years instead of the previous seven. Buyers who qualify for loans backed by the Federal Housing Administration may have to wait only one or two years. 

“Foreclosures were pretty much seven years on a conventional loan, and now you can go down to three years,” says Rob Nunziata, president of Orlando-based FBC Mortgage. “Short sales used to be seven years, and now they are as short as two years with a 20 percent down payment and meeting the criteria.” 

The new rules have the potential to make buying a home possible again for tens of thousands of Central Floridians. More than 110,000 homeowners in the four-country Metro Orlando area have lost their homes in a foreclosure or short sale since the start of the real-estate-market crash in 2007, according to RealtyTrac. 

Last fall, the FHA revised its guidelines under its Back to Work program. Borrowers must show they fell behind on mortgage payments because of an “economic event,” such as a layoff, that stripped them of at least 20 percent of their household income. In addition, they have to show they’ve re-established their credit for at least 12 months. And they have to complete HUD-approved counseling.  

The Guadalupes lost their home in 2008 after their adjustable-rate mortgage increased their monthly payments from $900 to $3,000 on the house they initially purchased for $150,000. Jose Guadalupe says their mortgage officer who made the loan on the house had assured them they were getting a fixed rate, and they failed to read the details of the home loan. He also lost his job in the downturn, although he is back to work again. 

Though 26 percent of white borrowers were unaware of details of adjustable-rate mortgages, 59 percent of minority borrowers did not know or understand their loan terms, according to a 2006 Federal Reserve report.  

After they lost it in foreclosure, a new owner installed updated kitchen cabinets and granite countertops. But that owner lost the house in a 2012 short sale. When it came back on the market, the Guadalupes were renting. 

Orlando real-estate broker Jennifer Zamora and her husband and real-estate partner, John Conde, says they still recall the day Mary Guadalupe first spotted the sales sign at the house.  

“We were actually at the house putting up the ‘For Sale’ sign and doing some repairs,” Zamora says. “It was her and her daughter. She says, ‘This is my house’ and started talking about all the things they had done to improve it. She was in tears.” 

Priced at $150,000, the four-bedroom house drew four or five offers, including some from cash buyers. Zamora says she connected them with a lender who advised them how to pay off a credit card and take out an additional one with only minimal debt to boost their credit rating. 

“We had a whole bunch of buyers who were better qualified, but this kind of tugged at your heartstrings, so we did everything we could to get them in there,” Conde says.  

Standing in his backyard, Jose Guadalupe complained about crab grass and the cost of new sod. Then he paused, stood back and pointed to the palm trees rising above his roof line. 

“I planted them when they were this high,” he says, pointing to his chest.  

Waiting period for buyers with foreclosure, short sale: 

  • Freddie Mac: Short sale, four years; foreclosure, seven years. 
  • Fannie Mae: Short sale, two years with a 20 percent down payment; foreclosure, seven years. 
  • Federal Housing Administration: Short sale or foreclosure, one to three years.  
  • Department of Veterans Affairs: Short sale or foreclosure, three years. 

SOURCE: John Burns Real Estate Consulting

©2014 The Orlando Sentinel (Orlando, Fla.

Distributed by MCT Information Services reviews Pre-Foreclosures

If you are in the market for a foreclosure you should know the difference between an actual foreclosure and a Pre-Foreclosure. Actual foreclosures are homes that have actually been foreclosed on and are actually for sale. Pre-Foreclosures are homes that may have owners that are behind on their mortgage but who are working on a plan to catch up on their mortgage and get caught up on their payments. If you are a home buyer it is important to differentiate the difference so that you don’t shop for what is not for sale. If you are a real estate professional it is incumbent on you to not allow your clients to fall in love with a home they cannot buy.

The reason most websites provide Pre-foreclosures is that there is no cost for the content and the idea of providing a secret glimpse into a market is too compelling not to. The only losers in this are the unfortunate home buyers that feel that they are getting ahead of the curve by looking into pre foreclosures when the truth is that no one knows the price even if the house were to go to foreclosure and get put on the market. Banks do not commonly sell a home for what is owed on it. They try to sell the home for what it is worth on the market.

Pre-Foreclosures also represent an unsettling prospect of a potential home buyer walking up to the front door of a home and knocking. The owner who has been the victim of some degree of misfortune comes to the door. The interested buyer asks politely if the owner is interested in selling and is met with a fierce and incalculable amount of hostility. This is because the owner doesn’t want to sell. The owner may not have wanted to lose their job or their spouse or their ability to provide shelter to their family. But the innocent perspective buyer doesn’t know any of this because the owner didn’t ask to have their property listed on a website that advertises their misfortune.

I remember growing up as a minority and not an extremely welcome one. The concept of being first at anything was beyond my capacity to understand. People not liking you or even hating you because of the color of your skin still doesn’t sit in my brain with any degree of stability or firmness. The hate on site concept seemed like a lot of people being told who or how to hate without any thought toward why we should hate.

I think hate is good. To hate pain. To hate the pain that others cause. To hate war. These are all things that we should hate in order to reach for things that we can love.