Wednesday, July 13, 2011

Bank-Owned Buyer Survival Skills: Outwit, Outlast, Underbid

Experienced Investors Share Secrets to Buying Unlisted & Listed REOs
As a real estate investor specializing in low-end condominiums in Orange County, Calif., Lin He knows the value of doing his homework and relationship building. They are the two key factors that have given him a jump on his competition when it comes to buying bank-owned properties — either before or right after they are listed on the local multiple listing service.

“Buying pre-listing REOs definitely is a viable strategy. In fact, it's my major property acquisition strategy for me,” said He. “It takes time to develop a relationship with the REO agents. They need to be able to trust that you’ll perform.”

The relationship strategy has worked many times for him. So well in fact, that sometimes he’s able to submit an offer immediately when the property hits the MLS, and other times he’s been in the situation where he doesn’t even have to make an offer up front. The agent just sends him the paperwork on the deal and he decides whether he wants to take it or not.

His focus has been not only on getting to know the key REO agents in the areas he buys, but also on building good relationships with the local homeowners associations, the property management companies that represent the HOAs, and even the neighbors surrounding the condos he owns. These relationships translate into a better chance that he’ll know early on about units headed into the foreclosure process.

Outwit Other Buyers
An investor in REO properties for 20 years and a well-known coach to real estate investors nationwide, Andy Heller believes working the unlisted bank-owned market is good for as much as a 25 percent to 30 percent discount before the property hits the MLS.

Utilizing a foreclosure listing service such as RealtyTrac, Heller teaches his students how to scan the lists of pre-foreclosure properties looking at location, loan amount and loan type as key criteria for sorting through properties. Next, the investor should identify 15 to 25 potential properties that are expected to go REO based on location.

While the larger banks don’t have to talk with you, and the chance of an investor getting in with the bank directly are slim and none, that strategy might be feasible with smaller, more local or regional banks. The key is timing, Heller noted.

“What you want to accomplish is to have the bank view you as an alternative to their normal structure of how they do things,” he said.

He suggests a three-step approach:
  • Call in the days following the foreclosure sale but before the bank begins its normal process to market the property.
  • Make a specific property inquiry for a single property based on your identified property list. Tell them you’d like to make a quick sale offer which will separate you from other investors.
  • Say the right things. After telling them you’d like to make a quick sale offer, ask them for nothing more than access to the property and tell them you should have an offer on their desk in two to three days after that.
Heller said he calls 15 to 20 banks and expects that two or three will give him the time of day and grant him access to the properties. He ends up buying one or two properties a month that way.

Outlast the Lenders
Although he’s an investor, Sham Reddy spends most of his time working as a real estate agent representing other investors in Dayton, Ohio. Given the plentiful inventory of properties available in the area, Reddy said he trains his investors to wait on REOs until after they’ve hit the MLS and been on the market for at least 30 days before making a move.

“The longer the property is on the market the better negotiating position we have,” said Reddy, who is president of both the Greater Dayton Real Estate Investors Association and the Ohio Real Estate Investors Association.

Reddy said one of his key strategies for working REOs is following the sheriff’s sales and keeping track of the results. He knows that it usually takes four to six weeks before the property eventually ends up as someone’s REO listing (VA and HUD properties take a little longer to show up on the market).
This article is excerpted from RealtyTrac's award-winning Foreclosure News Report.

Tuesday, July 12, 2011

Our Office Has Moved!

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Friday, January 28, 2011

F.H.A. Loan Information! GREAT!

How to spell “F.H.A.”!!!                                                                               1/28/2011

Today’s conventional interest rates30-year fixed = 4.625%     5/1 ARM = 3.25%
Learning to suggest FHA financing as a possible option for buyers in need of flexibility will be a great tool for you.  You will NOT need to know many specific details of the FHA product – that’s MY job – but it does pay to know that flexibilities do still exist – however limited they may be, these days!


·FHA offers the lowest down payment possible – just 3.5%.  (USDA and VA still offer 100% financing for those borrowers/properties that qualify.)

·Highest allowable debt ratio – if your buyer has too much debt, FHA can save your deal!

·Low interest rate – often lower than the best conventional!

· Flexible guidelines for receiving gifts for down payment funds – for those buyers with little cash….but PARENTS!!! 

·Flexibility to deal with ‘special credit circumstances’ – FHA allows for letters of explanation that make sense of unusual circumstances on your buyers’ credit report, such as:
o   Credit card payment on credit report has always been paid (and will continue to be) by dad.

o   Ex-husband didn’t make the payments on this item, and we can show proof.

o   Newly-separated buyer can show that soon-to-be-ex-husband is responsible for mortgage payment on marital home.

The BAD:

·FHA financing ALWAYS means mortgage insurance – for at least 5 years.  I view it as the cost of the flexibilities benefiting your buyer.

·This mortgage insurance has TWO components:

o  Up-front fee of approx 1% of their loan amount – this is rolled into the loan amount, so not paid out-of-pocket!

o  Monthly premium is added to the buyers’ payment each month.

FHA scenario from today:

· Purchase of a primary residence, single-family home

· Purchase price - $250,000

· Down payment of just 3.5% (that’s just $8,750), of which $7,000 was a gift from family!

· Buyer had a great deal of debt, including two big cars and student loans.

· Interest rate for a 30-year fixed loan = 4.25%!!!  (that’s NOT a misprint!!!)

· The same scenario with a 20% down payment and a conventional loan would have been 4.625%!  However, this buyer would not have qualified for conventional due to debt ratio and lack of cash, but….FHA SAVED THE DEAL!!!

Let me know your questions about FHA financing today.  

Real Estate Mortgage Network, Inc. NMLS #6521. New Jersey Licensed Lender and Mortgage Banker #L041053. MLS # 322102

R. Roy Dunn (843) 446-4663   Fax: (803) 753-9432

Monday, January 17, 2011

Looking to buy? Buy NOW before the RATES RISE!

It's been said that "no news is good news...." And while that can be true, lately many of the economic reports we have seen have been very good news, as they show signs that our economy continues to improve.

Stocks just enjoyed their seventh straight week of gains, due to the positive economic reports that have been streaming in. While this is certainly cause for celebration, an important question we need to consider is what does this mean for home loan rates in the short and long term?

On the one hand, improvement in the economy is good news on the housing front, as once people feel better about keeping their job or getting a new job, home purchasing activity will rise, and values will follow. But on the other side of the coin, as the labor market and economy improve, home loan rates will have to gradually rise as well. And remember, this all ties in with the Fed's plan to inject the full $600 Billion into our economy as part of their latest round of Quantitative Easing, known as "QE2."

Remember, the three part goal of QE2 is to create inflation, lower unemployment, and boost Stock prices - and we are seeing evidence of these goals occurring. Not only have Stock prices improved over the last seven weeks as we discussed above, but December's Jobs Report posted the lowest unemployment rate since May of 2009. And last week, we saw some evidence of inflation as the Producer Price Index (PPI), which measures inflation at the wholesale or producer level, came in higher than expected. While December's Consumer Price Index wasn't quite as hot as the PPI, going forward our increasing budget deficit could cause inflation to spike down the road.

So what's the bottom line if you have been thinking about purchasing or refinancing a home? Home loan rates are still very attractive right now, so call or email me if you want to get started. Or forward this newsletter on to someone you know who may benefit from today's historically low rates.

Wednesday, January 12, 2011

Monthly Marketing Report for the Grand Strand.

During December, SFR and condo sales were up versus prior year levels.  The increase was driven by a record number of distressed sales (37% of all sales).  This level of distressed activity led to a low median sales price of $169,900 and $109,900 for SFR and Condos, respectively.  For the full year, SFR and Condo sales were up approx. 15% and 20%, respectively.

(Source:  SiteTech Systems)

Tuesday, January 11, 2011

Local Real Estate Association Monitors Market Conditions

The numbers for 2010 give a hopeful sign that the economy is slowly improving. According to data compiled by Site Tech Systems, SFR sales rose 14.6% from 2009. Condo sales rose 19.3% in the same time period. We will continue to monitor the local market trends and keep you informed throughout the year.

(Source:  Coastal Carolinas Association of REALTORS® 2010 Annual Report)