All Forum Posts by: Fred Winer

When a home goes into foreclosure, it generally means the owner of the home is 90 days or more behind on his payments. At this time, the lender can start foreclosure proceedings. If the homeowner cannot stop the foreclosure, the property goes to auction. The process of selling a home in foreclosure requires the involvement of the county where the home is located and willing investors who want to buy the property.It’s important to get up-to-date auction information and act on it as quickly and on a regular basis . Develop a system to keep track of properties that interest you. A good tracking system is important since most successful auction buyers pursue several properties sometimes over a period of several months.

After you find a property online, it’s a good idea to drive by the property to get a better idea of the property’s condition and the type of neighborhood. For some buyers and investors, driving by the property has also facilitated a casual meeting with the owner (you may be able to still work out a last-minute deal before the auction) or yielded a wealth of unexpected information from a talkative neighbor.after a property is scheduled for auction, the owner has a chance (typically less than a month) to stop the auction by paying the amount owed to the foreclosing lender. It’s also not uncommon for auctions to be postponed without a new date being published. Although cancellations and postponements are announced at the time and location of the originally scheduled auction, you can call the trustee to find out beforehand. .

Most auctions are at a public place in the same county where the property is located. In many states, all the auctions in each county are at the same location. If the auction location is not listed on Realty trac, you can typically get that information from the trustee or the county clerk. If you call the county clerk, make sure you clarify that you are looking for the location of mortgage foreclosure auctions, not tax foreclosure auctions.

The bidding procedure varies from state to state, so you should become familiar with the procedure in your area before bidding at an auction. In some states, bidders are required to bring the full amount they want to bid in the form of cash or cashier’s check to the auction. In other states, bidders are required to bring a certain percentage (10 percent is common) of the bid amount to the auction and pay the remainder of the amount within a certain time frame if they are the highest bidder. If you get a friendly representative when you call the trustee, you might be able to get information about how the bidding works in your area, but in most cases you’ll need to educate yourself. You can get started by reading laws. You could also contact a local real estate agent or attorney in your area. Of course, the best education will come from simply observing a local auction.You need to find out as much as you can about the estimated market value of the property, how much is owed on the property and if the owner has any other liens against the property. This is all public information and you can research on your own with the county recorder or you can use Realty track  property reports and tools to help.

The opening bid at the auction is based on the total amount owed to the foreclosing lender and may include fees incurred because of the foreclosure proceedings. If no one bids above that amount, the foreclosing lender will take possession of the property. It’s important to know this amount so you can determine if the auction represents a potential bargain purchase when the opening bid is compared to the property’s market value. Realty Track subscribers have access to the opening bid amount and the estimated market value for properties scheduled for auction.

If there are outstanding liens on the property, the winning bidder at the auction may be responsible to satisfy these liens in some cases, so it’s important to check for any liens and the priority of the liens before you bid at the auction. A real estate attorney or title company can check for liens, or you can check directly with county records.

The priority of a lien is usually determined by the date it was placed on the property. So a first mortgage will usually have the first priority, and all other liens will be considered junior liens. In most states, the public auction clears out any junior liens, but there are exceptions such as tax liens, which typically will continue to be in effect after the auction.

Both the buyer and seller will likely need an attorney or agent -- perhaps both -- or some other qualified professional experienced in seller financing and home transactions to write up the contract for the sale of the property, the promissory note, and any other necessary paperwork.

In addition, reporting and paying taxes on a seller-financed deal can be complicated. The seller may need a financial or tax expert to provide advice and assistance. -- check for daily and weekly rates in the area of the property, not national rates. Be prepared to offer a competitive interest rate, low initial payments, and other concessions to lure buyers.

Because sellers typically don't charge buyers points (each point is 1% of the loan amount), commissions, yield spread premiums, or other mortgage costs, they often can afford to give a buyer a better financing deal than the bank. They can also offer less stringent qualifying criteria and down payment allowances.

That doesn't mean the seller must or should bow to a buyer's every whim. The seller also has a right to decent return. A favorable mortgage that comes with few costs and lower monthly payments should translate into a fair market value for the home.

To those unfamiliar with real estate, it can seem like inspections are just what’s expected. Watching enough reality TV can give you the impression that everyone completes all of their inspections because they are waiting for a huge problem to arise (right in time for commercial break, of course). In the real world, it’s up to the buyer to decide which inspections they would like completed – if any at all.

Generally speaking, inspections are a great idea. They give you an idea of a home’s problems before you buy it and most times will allow you to negotiate with the seller to cover the cost of some repairs. Essentially, they give you an idea of whether or not you’re equipped to handle this property or if you should move onto another that better suits your needs.

However, there are a few possible exceptions: mainly condos and other living situations where the bulk of home maintenance is covered by an association. Before you decide to go this forgo the inspection make sure you’re aware of your responsibility when it comes to fixing problems that arise when you own the property. You should also check with your bank to make sure they don’t require one as a condition of the mortgage.Most first-time home buyers don’t realize that they are responsible for the inspections. This means that, in order to get to the settlement table, they agree to hire the home inspector, have the inspections completed within a reasonable amount of time, and shoulder the cost.

Remember to leave yourself a sufficient time to pick an inspector and bring him out to view the property. Trust us, a home inspection is not something you want to rush through last minute. Do yourself a favor and leave a little wiggle room since you’ll likely be putting that timeframe in a binding legal document.

Financially, you need to budget for the cost of inspection services. While your initial reaction may be to balk at the price tag and wonder why the seller isn’t covering this cost, paying truly is for your benefit.

Think of it this way: The home inspector really works for you, not the seller. He or she is there to point out all the potential problems in the home. Even though it would be extremely dishonest, if the seller were to hire the inspector, there is a chance of the two working together to falsify the report. Since the seller has no impact on the inspector when you pay, you can rest easy knowing your report is sincere.A home inspector and a contractor are not the same thing. While a contractor may have know how to fix existing home maintenance problems, home inspectors are specifically trained on how to identify problems, even if they are slight enough to be easily missed by others.

Every country has its own home inspection standards that must be met. But, the unifying factor for a sale to be considered legitimate? The home inspection must be done by a certified professional. While qualified home inspectors may cost more than a contractor, you’ll know that you’ve received a complete report.

As for how to find a home inspector, your realtor is a great place to start. He or she probably has a few reliable contacts from past transactions. The internet, is always another option. Either way, be sure to ask the inspector if they are certified and keep up with any continuing education credentials.

As a rule of thumb, think of a home inspection like a well visit to the doctor. Your doctor takes looks at several of your body’s individual components – reflexes, blood pressure, and medical history – to make an overall all determination of your health. Home inspectors work in much the same way.

Since every property is different, the specifics of what is checked during your home’s inspection may very slightly.Qualified inspectors will check the following areas:

• Foundation and basement
• Any additional structural components
• Interior plumbing systems
• Interior electrical systems
• Heating and cooling systems
• Condition of windows
• Condition of doors and door frames
• Condition of floors, walls, and ceilings
• The attic and any visible insulation

Whether you’re in the process of buying your first home or your tenth investment property, home inspections can seem overwhelming. After all, there are many aspects of the property to consider, lots of paperwork to read over, an extensive negotiations to consider. Not to mention the gnawing worry that there could be something truly wrong with your DREAM HOME. But don’t let yourself get too worked up just yet! We’ve compiled a inspection cheat sheet that every buyer should read. Let us help you go into your inspection armed with the knowledge needed to make informed decisions.

Don't panic if the appraisal comes in low. It's tough to remain calm when it appears the pending sale will fall apart, but both parties have options:

• Buyer can make up the difference in cash.

  The lender cares about the appraisal only to the extent it affects the loan-to-value ratio. A low appraisal does not mean the lender won't lend. It means the lender will make a loan based on the ratio agreed to in the contract at the appraised value. Sometimes the buyer's lender will not allow the buyer to give cash for the difference and, in that event, have the buyer pay instead some of the seller's closing costs.

• The seller can lower the price.

  If the home was overpriced or the value was inflated, often this is the best solution. It makes the buyer happy and the lender is satisfied. There is no guarantee that if the buyer walks away, the seller won't receive a low appraisal from the second buyer's lender, not to mention the time and trouble it takes to sell the property again. Sometimes a bird in the hand is best.

• The seller can offer to carry a second mortgage for the difference.

  If the buyer really wants the home but cannot come up with the difference in cash, making payments or a lump sum payment at a later date to the seller is an option. After the escrow closes, sellers often retain the right to discount the second mortgage, sell it for less than face value to an investor.

• Order a second appraisal.

  First, if your loan is an FHA loan, ask the lender for a list of approved appraisers. Either the seller or the buyer can pay for the second appraisal. Sometimes the second appraisal will come in higher than the first, especially if the first appraiser was inexperienced or made mistakes.

  If your loan is a conventional loan, then it is subject to the rules of the home valuation code   Barb Torres, an accredited senior appraiser says, "As soon as the parties find an appraiser is coming out who is not familiar with the local market, they have every right to contact the lender (preferably in writing) to DEMAND a local appraiser be used."

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  Ask the agents involved to put together a list of recent comparable sales that justify the agreed-to sales price. Submit that list to the underwriter and ask for a review of the appraisal. Try to use comps closer to the subject property than the comps used by the appraiser.

• Also, ask the agents to call the listing agents of pending sales to try to find out the actual sales price of those properties. Listing agents do not have to disclose the sales price, but many are happy to help out because they could find themselves in the same situation. You can always ask if the agent thinks your price will appraise if the agent refuses to divulge the pending price.
• Compromise on the value. Sometimes sellers will back off a little bit on the buyer paying the entire difference and will settle somewhere between a full cash contribution and completely lowering the price. Regarding a difference of say, $10,000, a seller might agree to accept $5,000 in cash and lower the price by $5,000.
• Cancel the transaction.

  Many  purchase contract contain a  loan contingency  . If the appraisal comes in low, the buyer does not qualify to buy the property at the agreed-to terms in the contract. A properly written loan contingency allows the buyer to cancel the contract and requires the seller to release the buyer's Ernest money deposit

• Likewise, the seller might sell for more by putting the home back on the market and looking for a new buyer. As long as the low appraisal was not FHA, the new appraisal could be very different. FHA appraisals are assigned a case number so if the first buyer was FHA and the second buyer was FHA, the same appraisal would be used.

NC SC AND GA EXCELLENT MARKET FOR NEW INVESTORS 

ABSOLUTELY 

I'll start this answer by clarifying an absolutely FUNDAMENTAL issue in REI. RE investors do not make money over time. Well, they do, but that is not normally the primary focus. Successful RE investors make money when they BUY properties. You do that by buying for less than the fair market value of the property, OR by buying properties for fair market value and adding additional value to those properties. For anyone that doesnt' know, 'flipping' a house is the process of buying a property for realy cheap, fixing it, and reselling it at a profit. This works because normally houses that can be bought really cheap need some significant amount of work in order to be resold at any reasonable price. What is a signifcant amount of work? Well, normally flippers need to have some fundamental issue - foundation problems, termites, structural problems including roof, water damage, mold issues, etc. Those fundamental problems make the property essentially unsaleable. Theoretically the idea is to find properties that are in poor condition, but where market OVERVALUES the cost of the renovations. That way you can make renovations and there is still room for profit. Obviously flipping hinges on the ability of the flipper to resell the property later on. The best time to be a house flipper is the time at which there are lots of motivated sellers trying to get rid of properties. That time is now. I know what you're thinking - the market is real slow, i'll never sell my property. Not true. Granted, you may have to hold the property longer than you expected. But you will sell it. Just be sure to factor that longer holding period into your purchase price. Many successful RE investors make a business out of 'flipping' properties to themselves. They buy and fix, but rather than selling they refinance and rent. IMO, this is the best way to make money in RE. This is essentially what I do, just on larger properties like apartment complexes and mobile home parks

show decent returns over time as is, and more importantly 2) the investor can add significant value to by increasing the bottom line. What I want to do is buy a property that is under performing due to bad management. I then transform the property by improving management, making improvements, increasing rents, filling the property, and lowering expenses. Remember that at a 10% cap rate, each additional dollar netted is equal to $10 in additional equity. So finding properties where we can add significant value is important to getting rich in REI. I'm getting tired right now, so I'm going to stop typing. I hope that this thread can help people get a better understanding of REI. I don't know everything about REI. But I know a little about a lot of areas of RE investing.

I recommend that you buy a financial calculator. they cost about $15 at WalMart. Every investor should have a financial calculator. something that a lot of people don't really understand about REI is that its not really about properties at all. Lots of people think that location is the most important part of REI. Its not. To paraphrase Donald Trump, buying the best locations and best properties won't make you successful in REI. Making the best deals makes you successful. Gorgeous properties in great locations are expensive, have negative cash flows, and will show small or 0% returns over time. What I look for is properties that other investors won't touch - rooming houses, run down apt complexes, half empty mobile home parks, that kind of thing. These are the properties that 1) are inexpensive and

I HAVE THE GREATEST MENTOR IN THE WORLD AND NO YOU DON'T NEED A REAL ESTATE LICENSE TO BE AND INVESTOR....IN FACT WE TEACH HOW TO AVOID THE REALTOR AND DEAL DIRECTLY WITH THE SELLERS IF POSSIBLE AND POCKET THE COMMISSION YOURSELF