Archive for November, 2010
Huge Profits When You Buy Forelcosures
Buying foreclosures can be extremely profitable for real estate investors. It means that you need to be aware of local laws and how they may affect the ownership of a property. Buying below market value with no money down is easy you just need to know how to do it. You can usually purchase a foreclosure for no more than 75 of retail price.
Homeowners usually face foreclosure on their properties for failing to pay their mortgage payments.Because the homeowner has been delinquent their mortgage they are now in a position to entertain offers by investors. Depending on your state the lender will issue this notice when the homeowner has been 3 months delinquent on the mortgage payments. In order to buy during this period you first have to make a deal with the homeowner. Buying a preforeclosure means dealing and working out an agreement with a homeowner attempting to buy the property from them before it has been foreclosed on.
Buying foreclosures can be lucrative but smart investors get plenty of advice from CPA’s Real Estate Professionals and mortgage brokers before they buy. Buying foreclosures involves four ways to purchase from the seller in foreclosure also known as a preforeclosure you can also negotiate a short sale. Buying from the lender at a public auction or purchasing a REO. Buying a foreclosure property can be risky especially for the novice but it can have its rewards too. In the end it usually turns out to be a wise investment.
Buying foreclosures at the auction is a great way to purchase. They typically attract investors looking to flip the property and others who’ve been involved in the foreclosure market for a while. Auctions can be held on courthouse steps in the county clerk’s office or in front of the foreclosed house. Buyers who bid at public auctions will benefit from getting as much information as possible beforehand.
Real Estate Owned properties or REOs represent another way to buy foreclosures. REO just means the lender reclaims the property and attempts to decrease losses. REO sales are often handled by real estate agents. They will be a major thing in late 2007 and 2008 over parts of the country that have experience abnormal amounts of appreciation over the last few years.
Short Sales for sellers clarifies how to transfer title to a buyer before the foreclosure redemption period ends by persuading the lender to accept less than the unpaid mortgage balance. So a short sale is something of a win/win situation for lender and borrower. Potential Home Owners and investors want to buy short sales and foreclosures because they want to obtain a home for less than the current market value. Sometimes both parties can come to a conclusion and enter into a profitable transaction for both parties.
By now you’ve discovered that there are several options when it comes to buying foreclosures and after reading this general overview perhaps you’ve discovered the choice that’s right for you. The pros of buying foreclosures in many cases outweigh the cons. The pros of buying foreclosures can be summed up by the fact that the properties can be purchased by an investor at a price below market value. By buying foreclosures you are making it easier on yourself and your bank account in the long run. There are many different resources out there to help you get started in buying foreclosures.
About the writer: To Learn More… www.ForeclosureMoneyReview.Info
How To Reduce Your Own Property Taxes
The chances are the value of your home has decreased in the past couple of years. The county has likely lowered the value and tax base but perhaps not as much as you think it should be.
You may not realize it but every homeowner has the right to go to the tax assessor and request that their property taxes be lowered. Of course the assessor won’t do it just because you ask and will usually tell you to bring him proof that the amount should be lower.
Now that you know that its not going to be as easy as you thought you need to be fairly certain that the amount should be lower and the amount is enough to justify the work or money you’ll expend to comply with the assessors requirements.
The first thing to do is ask yourself why you think your property has decreased in value. Maybe you heard the one around the corner sold for a lot less than your assessed value. Before you jump to conclusions you need to do some detective work. Heres a list of items you need to find out about that property:
a. What was the square footage of the property? How many bedrooms and baths? How many square feet?
b. How was the interior and exterior condition compared to yours? Ask the owner or a real estate agent.
c. What kind of amenities did it have? What kind of flooring for example fireplaces remodeling etc.
d. What is size of garage? How was landscaping? How is the location such as backing to busy street across from park desirability of area etc.
e. In todays market one of the most important considerations is the reason behind the sale. Was it a normal sale or was it a problem sale such as foreclosure job transfer or something similar.
If there are significant differences in your home and the one youre comparing it with you will need to adjust for the differences. In simple terms you estimate the value what a buyer would pay for the difference. If the feature of the comparable is more valuable than your home you would subtract the amount from the sales price of the property that you are comparing yours to and if it is less valuable you add the estimate to the price. For instance your home has a remodeled kitchen and the comparable doesn’t then you would add whatever amount you feel the remodel would increase the value. Another adjustment would be if the comparable had a different number of bedrooms or bathrooms than yours. There again you add for fewer and subtract for more.
Now that you’ve got an idea of what your home is worth its time to make a decision. If it appears your home is worth enough less than the assessor has valued it to pursue a lower valuation you’ll need to decide the best way to prove it. If you have the time and expertise to do it yourself then you need to find at least two more sold properties to compare yours to. You’ll want to approach this like an appraiser the same basic requirements. Try to keep the comparables as similar as possible keep them within a 1/2 mile radius same tract if possible and sales with the last 6 months. If you find a listing or pending sale you can add it but make sure you have at least 3 sales within the parameters. The more you deviate from these rules the less value your argument will have.
A report from a certified appraiser is the most important and most costly as far as the assessor is concerned with one from a realtor Brokers Price Opinion next in importance and cost. A real estate agent will often give you a property profile and evaluation of what they think your house is worth for free. This is helpful but the assessor won’t give it much validity. Still the profile will come in handy if you decide to do your own appraisal.
With information and documents from the internet along with some spare time you can do a pretty good job of putting an appraisal together. As long as you have the facts straight the appraisal doesn’t have to be perfect but keep in mind the more professional it looks the more weight it will carry.
Be careful in picking your comparables and don’t try to make things fit. If you have a comparable thats out of whack with the others get rid of it and choose another one. Explain why you chose the comparables you did and the reasons you used the amounts for the adjustments. If you have to use a comparable that doesn’t fit the requirements we mentioned earlier be sure and explain why. Go into a lot of detail as long as its logical and helps your argument. The more information that proves your case the more chance you’ll have in convincing the assessor to change your value.
About the writer: Don Levy is the owner of Real Estate where you can find out about lowering your property taxes along with many other real estate subjects. To find out how to lower your real estate taxes and click here to get a Free Ebook Report to learn more.
How To Make Sellers Offers That Get Accepted Over Higher Offers
Getting a seller to accept an offer for his house that is lower than another offer can be done with a little preplanning. Sellers are not always looking at the highest possible price for their house despite their telling you that from the time you meet them. You must determine what type of offer to make the seller based on how you will sell the house later.
This “exit strategy” is critical to your offer because you may be able to combine your exit strategy with a creative method of giving the seller what he actually wants more than his price i.e. knowing you will close staying in the house for a number of months cash to move etc.. You can determine his true motive for selling if you listen carefully to what he says.
Sometimes an excited newbie investor will offer too much and have second thoughts especially when he has been gurutrained to get the deed or contract above all else. Other times the perspective buyer will put a house under contract knowing he is not going to buy it but rather wholesale it during the inspection period and not lose his deposit.
Clearly you need an exit strategy before you look at buying a property; otherwise you will be wasting your and the seller’s time. As an investor you have choices including:
Purchase as a rental property. If this is the reason there is little decision about the offering price because the property will trade at a price to yield a minimum net rental income and return on principal to the buyer. The price constraint here is income on the property when rented.
The property can be wholesaled and in this case it is critically important to determine all the associated costs with rehabbing the property. Even though you won’t be rehabbing it your buyer will be and he needs to know he can make money which limits the “spread” or dollar profit you can make. The price constraint here is about a 10 spread that the buyer will not “miss” if he purchases it from you to rehab.
The property can be rehabbed and sold to a retail buyer. With this exit strategy it is even more critical that the repair costs and true ARV are accurately determined. Also a rehab budget must be fixed so you don’t overrehab the house and not get a reasonable return on your investment of money and labor. The price constraint here is you can pay 5 more than a wholesaler would and still save money doing it.
The property can be chosen so that it can be wholesaled to a retail buyer which allows you to bid over every other investor. The guidelines are the property must not need more than two weeks paint and patch and you must have a strong marketing strategy to minimize your holding costs. The price constraint is very interesting because you have the ability to offer as much as 80 of Fair Market Value FMV and still make an excellent profit on the sale.
The last example for wholesaling to retail buyers is not for the fainthearted until you learn the entire process of how to sell within a couple of weekends and have a buyers’ list with motivated and preapproved buyers ready and waiting. The true pros are using this method in these extremely adverse markets and making profits like in the hayday markets of 2005.
In summary to be continually successful the investor must have an exit strategy based on repair estimates what market he is selling to and most importantly a surefire method of determining FMV. The usual methods of comparable sales appraisals Broker Price Opinions BPO’s Comparative Market Analysis’s CMA’s no longer are accurate in many parts of the country and the method we use to overcome falling markets will be discussed in future articles.
The methods above are the primary methods to actually purchase the property and not discussed are lease options options and equity agreements.
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