Posted by Annalisa Burgos | October 30, 2009
For those of you who’ll be house hunting as well as trick-or-treating this Halloween weekend, your friends at FrontDoor.com have come up with some tips for foreclosure buyers. We call them:
And check out these other Halloween-themed homebuying and selling tips on FrontDoor.com:
Posted by Annalisa Burgos | October 27, 2009
Even celebrities are having a tough time unloading their multi-million dollar properties in this market.
From rapper 50 Cent’s money pit to pop star Ryan Cabrera’s short sale, you may find a deal if you’re in the market for a luxury home.
Check out these 10 celebrity homes for sale:
http://www.frontdoor.com/home-finance/Top-10-Celebrity-Homes-For-Sale/55319
Posted by Annalisa Burgos | October 7, 2009
The housing market can be very scary. Just ask any homebuyer or seller — a seemingly normal situation can easily turn into a nightmare.
In this month’s Top 10, read 10 hair-raising real estate horror stories, from showings gone awry to frightening HOAs to houses plagued with unwelcome guests and ghastly pasts.
Plus, get tips on how to avoid these nightmares and ensure your homebuying or selling experience is drama free.
Happy Halloween!
Posted by Annalisa Burgos | September 8, 2009
FrontDoor insider Rick Sharga, SVP of foreclosure data provider RealtyTrac, offers valuable advice in this guest blog post:
“Foreclosure properties have always been an area of keen interest to real estate investors. Over the years, homes in foreclosure and those already repossessed by the banks have been hidden gems, most often the purview of seasoned investors with “insider” contacts who have given them early notice of upcoming deals.
And the deals have been significant; it’s not unusual to hear of foreclosure and bank-owned homes selling for discounts of 50 percent or more compared to prior sales.
With the advent of the Internet, companies like RealtyTrac have made finding foreclosure properties much easier. Today, virtually anyone with an Internet connection and a valid credit card can start searching for, analyzing and ultimately buying properties in all stages of foreclosure.
The value proposition is compelling: home prices have fallen between 20 and 30 percent in most markets; foreclosure homes tend to sell at even lower prices; and mortgage rates continue to bump along near historic lows. Finding a home that represents a great deal isn’t nearly as difficult as it once was.
Turning that deal into an investment with a high rate of return, however, is as challenging as ever.
In the early part of the decade, foreclosure investors tended to be “flippers.” Neither dolphins nor pizza makers, these flippers would buy homes at a discount and resell them at a profit within a very short period of time.
Foreclosures were prime properties for this pastime. Often, flippers would work directly with the distressed homeowner and lender, leveraging the equity in the home to negotiate a purchase price that covered the bank debt while still allowing the investor to buy the property at a discount. Other times, the investor would work with the bank to purchase, rehab and resell bank-owned properties. This activity gained such momentum that it spawned several TV series, and, fueled by continually appreciating home prices, drew more and more inexperienced investors into the mix, often with disastrous results.
Today’s investor is much more likely to be a landlord than a flipper. While we probably won’t see this turn into a craze punctuated by a new hit show (“Rent this house!”), we are likely to see a more stable, more realistic and ultimately more successful approach to real estate investing.
Apartment occupancy rates often drop during foreclosure cycles, as homes become available to rent at equivalent (or better) prices. There’s a market for rental homes as well, since over 1.5 million property owners have lost their homes to foreclosure since the beginning of 2006. Rental units provide ongoing cash flow to investors. And while there’s usually a long-term appreciation in the value of the properties, which many owners will profit from in subsequent sales, the cash flow helps the investors ride out any short-term price depreciation.
Buying a foreclosure property at a deep discount, doing some repairs, finding a good tenant and holding the property as a long-term investment is a lot of work, isn’t as sexy as flipping a property, and certainly isn’t a “get rich quick” formula. But for investors who are smart enough and willing to work hard enough, buying to rent can be a much safer, less volatile approach to successful real estate profits.”
Check out FrontDoor.com for more real estate tips and advice:
Posted by Annalisa Burgos | July 10, 2009
In this week’s vlog, I talk to real estate broker and attorney Tara-Nicholle Nelson about how homeowners who are struggling to make their mortgage payments can get their loans modified and avoid foreclosure.
You’ve heard about extending the loan, converting an ARM to a fixed rate mortgage, and reducing the interest rate, but what about loan forgiveness? Will the lender write off all or part of your loan? Do you need to hire a company or can you work directly with your lender and do it yourself?
Get more tips and advice about the loan modification process:
Posted by Annalisa Burgos | June 24, 2009
Real estate auction company REDC (Real Estate Disposition Corp.) works with lenders to sell thousands of foreclosure properties at auctions throughout the country. And in this market, lenders need all the help they can get to unload this excess inventory, quickly and efficiently. Note: REDC auctions are for bank-owned homes or REOs, and are not the same as the public auction, which takes place at the local courthouse.
On June 7, more than 1,200 bargain hunters attended an REDC auction in New York City, where 113 bank-owned houses in the tri-state area were sold for a total of $10 million in sales.
Watch the video to see what it’s like to buy a bank-owned home at an auction.
AUCTION TIPS:
1) Research. Before you buy at a foreclosure auction, do your research. Print out the auction brochure (if there is one), note the open house dates for the properties you’re interested in and see them in person. You more than likely will have to buy “as-is” and you won’t be able to get a home inspection done. When you visit the homes, look out for these 10 red flags for homebuyers.
2) Crunch the numbers. Estimate how much you expect to spend on home improvements on top of the purchase price, which includes a premium the auction company charges each buyer. If you’re an investor, subtract those expenses from the income you expect to generate from the home (rent) and decide if it’s a smart investment.
3) Register and be prepared. Each auction has different requirements, but all of them require you to register and bring a cashier’s check or cash for the required earnest money deposit. Many transactions are cash-only, but some auctions will allow you to finance the purchase through a lender, so get pre-approved beforehand so you know what your maximum bid will be.
For more tips on how to buy a foreclosure, go to www.frontdoor.com/foreclosures.
Posted by Annalisa Burgos | June 16, 2009
Despite its name, a short sale is by no means a “short” process. But unlike what you may have heard, getting a short sale approved by your lender is not as hard as you may think — if your real estate agent knows what they’re doing.
In order to orchestrate a successful short sale, you need a master negotiator, says Troy Huerta, short sale division leader at Coldwell Banker Residential Brokerage in San Diego. “Many agents forgot how to negotiate. There was no negotiating in the past. You would list a home at a ridiculous price and someone would pay it.”
Those days are long gone. Home values are falling. Unemployment is at 9.4 percent. And according to RealtyTrac, there were more than 321,000 foreclosure filings in May, 18 percent higher than a year earlier. That’s expected to get worse.
But there’s a way to help ease this flood of foreclosures, Huerta says. Do more short sales.
In the past, lenders have been reluctant to do short sales. And why would they? They stand to lose a LOT of money. But the reality today is that if a lender doesn’t do a short sale, it may get stuck with a property that is harder to sell or will sell for less than it could have gotten. (A buyer is more willing to buy a short sale in good condition than a bank-owned foreclosure that needs a lot of work.) Not to mention the cost of pursuing the foreclosure process.
Even Fannie Mae felt short sales could help reduce foreclosures. It launched a pilot program pre-approving short sales for homeowners in Phoenix and Orlando.
Now, lenders should be more motivated than ever to get these deals done — as part of President Obama’s economic stimulus plan, the federal government will pay lenders up to $1,000 for each completed short sale or accepted deed-in-lieu of foreclosure.
READ HUERTA’S TIPS FOR BUYING AND SELLING A SHORT SALE…
Posted by Annalisa Burgos | June 11, 2009
RealtyTrac’s May foreclosure report is out, and as usual, the news is grim. Foreclosure activity is up 18 percent from a year ago. Even worse, most real estate experts are warning us about “shadow foreclosure inventory” which is set to hit the market later this summer. Oh yeah and the unemployment rate is at 9.4 percent. So if you think we’ve hit the so-called “bottom,” think again.
The good news is that President Obama’s stimulus plan seems to be working. Lenders are now more willing to work with struggling homebuyers to refinance or modify their loans or negotiate short sales, in which a house is sold for less than what the borrower owes and a portion of the loan balance is forgiven by the lender. Why would they do this? Because the federal government is giving them money to do this, and besides, better to sell and write off the loss now than deal with the foreclosure process and try to sell a property in crappy condition. I spoke to a short sale expert for Coldwell Banker in San Diego, Troy Huerta, who has some great insight and advice on the subject. Stay tuned for my blog post on that.
Meanwhile, FrontDoor Insider and Freak Out Prevention Specialist Tara-Nicholle Nelson is spreading the word about her Drama-Free Real Estate Guide, which provides concrete solutions to some of the most common issues consumers are facing today. Just in time! Situations like losing your job and trying to make your mortgage payment. Or you got preapproved and suddenly your lender says “no money for you.” Yours truly will post a vlog later taking you behind the scenes of our media tour.
Posted by Annalisa Burgos | June 2, 2009
Every now and then, we’ll invite one of our Insiders, FrontDoor’s team of savvy real estate experts, to write a guest blog. Today, Rick Sharga, SVP of foreclosure data provider RealtyTrac, shares his tips for buying a foreclosure property and how to minimize the risk:
“Interest in buying foreclosure properties has never been higher. In a Harris Research study conducted for RealtyTrac and Trulia, over 55 percent of homebuyers expressed an interest in buying a foreclosed home or bank-owned property. A number of foreclosure-related Web sites, including www.realtytrac.com, are among the most frequently visited real estate Web sites.
And it’s no wonder: according to RealtyTrac research, a homebuyer will see an average discount of over 30 percent on a foreclosure property or bank-owned home across the country. In some of the harder hit areas, discounts are considerably higher, with homes selling for 70 percent or 80 percent less than what they sold for just a few years ago. Those lower prices, combined with historically low mortgage rates and an $8,000 tax credit for first time homebuyers make this an ideal time to be on the market.
Even with all of the interest in purchasing foreclosure homes, and the financial incentives to do so, many people have concerns about possible hazards. According to the Harris study, 71 percent of those surveyed were concerned about “hidden costs” and 46 percent were afraid that the process was “risky.”
In fact, the most common mistakes people make when buying a foreclosure property are overvaluing the property itself and underestimating the amount of money it will take to repair and refurbish the home. But there are simple steps that homebuyers can take to minimize risks and ensure a more successful purchase.
Avoiding “hidden costs”: Buying a bank-owned property is the safest bet. The bank will typically have cleared the title, meaning there are no outstanding liens against the property. If the bank is servicing a loan for Freddie Mac or Fannie Mae, they will generally have to bring the property up to a minimum level of repair as well. Smart homebuyers will engage the services of a professional contractor before purchasing the home, to get a formal estimate of how much work needs to be done, and what it will cost. Many contractors will prepare an estimate for free in the hopes of securing the job. Both Fannie Mae and the FHA also have loan products that allow a homebuyer to build the cost of some repairs into the actual mortgage, further minimizing out-of-pocket costs.
Taking the “risk” out of the process: Anyone concerned about the process being risky should avoid foreclosure auctions. Purchases are made without the opportunity to inspect the property and on an as-is basis. Auction purchases are almost always cash only, and there is no recourse if the property turns out to be a lemon. Buying a bank-owned property or a foreclosure home via a short sale conducted by a professional real estate agent minimizes risks considerably.
As with any other investment, there are trade-offs between risk and reward. But given the state of today’s market, and the enormous discounts available on foreclosure and bank-owned properties, the rewards are great and the potential risks can be managed. It’s a buyer’s market that may only come along once in a generation — time to get busy!”
Thanks for the tips, Rick. For more great advice, check out FrontDoor’s step-by-step guide to buying a foreclosure home, whether it’s in pre-foreclosure, at auction or bank-owned at http://www.frontdoor.com/foreclosures.
Posted by Annalisa Burgos | May 27, 2009
I never bought a Snuggie. I saw the informercial and laughed at such a ludicrous idea. A year later, Snuggie’s creators are the ones laughing, having sold more than 4 million of those things. Everyone I know has one and raves about them.
I didn’t see that coming.
So it dawned on me, if an infomercial can sell blankets with sleeves, chopping devices, a metal bar you hang on your doorway (Iron Gym) and other random stuff, it can sell houses.
Now bear with me, I’m going somewhere with this.
I was up late one night and one of those “make millions in real estate” commercials came on. You’ve seen these ads — some self-proclaimed millionaire investor goes on TV to hawk their book about how to strike it rich. This particular night a guy named Dean Graziosi was on. I had never heard of him before, but he claimed to have the secret to cashing in on our turbulent housing market. Normally I would have changed the channel. But he must have said something right cause I ended up listening to what he had to say.
What struck me about Dean’s pitch was that he didn’t approach it like “Hey! This is your chance to make money off of people’s misery. Go buy a foreclosure now!” Instead, he talked as if the viewer was a homeowner in financial distress or in danger of losing their home. Sure he’s an investor trying to make a buck, but his testimonials were from people who had major debt and were able to overcome it. I did some research on him, and he generally got good reviews. In a market like this, where so many are frozen with fear, it was nice to hear a positive message of empowerment.
Okay, no, Dean wasn’t actually selling homes on his infomercial, but he was selling a strategy for buying bargain-priced homes that most people are unaware of. And doesn’t that help reduce inventory? The National Association of Realtors (NAR) says housing inventories are up 8.8 percent to nearly 4 million units. Normally, you should have no more than a six-month supply of inventory. At the current level, it would take more than 10 months to sell all these houses.
This week’s batch of housing data shows things are not as bad as they could be, but we’re in no way near recovery. (A few “positive” reports and some economists are throwing that word around again). NAR said April’s existing home sales rose 2.9 percent, with distressed properties, including foreclosures and short sales, accounting for 45 percent. That’s still putting pressure on home prices, which according to NAR, are down 15.4 percent year-over-year.
Meanwhile, the S&P/Case-Shiller National Home Price Index says home prices in March fell 18.7 percent from a year earlier, in the 20 major cities it tracks. Furthermore, home prices have fallen 32.2 percent since the market began its decline in mid-2006.
Oh and did I mention that a new wave of foreclosures are expected to hit the market through the end of this year? More ARMs are about to reset and more properties are moving through the foreclosure process, so expect the number of foreclosures to continue to rise.
Bottom line: There are so many houses for sale out there and not enough buyers to buy them. So maybe an infomercial isn’t such a bad idea. If more people knew how cheap a house can be, more people would buy one, especially if there’s an $8,000 tax credit and tax benefits. I mean if it worked for the Snuggie, maybe it’ll work for real estate.
And yes, I did buy Dean’s book. I’ll let you know how it is after I read it.
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