REOs - Contract to Close Pt 2

Thank you for reading my blog. This post was written in 2008 and the real estate market is ever evolving. It is now 2010 and the real estate world is very different, especially in the Northern Virginia area. If you're considering purchasing a bank owned home now, please refer to the updated series found by clicking HERE.

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Okay - so this series started in June... we talked about what an REO is, learning the market, looking for a home, a 3 part series on making an offer, and why you should choose your own title company. That's the interesting stuff... so let's wrap this up. You picked the house, you wrote & negotiated the offer, you ratified, you chose your title company... now what? First, send the ratified contract to the lender, and do whatever they tell you. Send the ratified contract to your title company and check in with them if they don't check in with you about progress. Call your insurance agent and find out about getting home owner insurance. Then, schedule your home inspection (I hope you kept that in the contract, right?). Do your home inspection, but remember, you may not ask for the bank to make any repairs. Well... you can ask, they probably won't dignify your request with a response. The REO is offered "take it or leave it" and that's all they want to know - are you taking it? Often, there will be difficulties getting the utilities on, so your home inspection may be delayed. If this is the case, make sure your agent knows how to preserve your right to be able to complete the home inspection without the time limit running out. Lately, we are seeing banks even refuse to turn on the gas so that a true inspection can be completed. At that point, the risk level gets even higher if you decide to proceed with the purchase. If you have to replace every gas appliance in the home, are you still getting a good deal? If so, then you might be OK taking on that risk. If not, then you may have to move on and look for another home. Chances are that other than the financing, appraisal, title and home inspections you have no contingencies. If you have other contingencies... see them through. In Virginia, if the home has an HOA, then you are entitled to receive a copy of the home owners documents and review them - make sure you do, and look to see if there are violations currently. If there are, you are taking on responsibility to have those things fixed or incur fees until they are repaired. Make sure you can live with the rules of the HOA - they are non-negotiable, so this is a package of paper to read. Now, while we've been doing this, what's going on with the lender? Did the appraisal come in? If it is FHA appraisal, you may have to negotiate to have to have repairs completed. What's going on with the title company? There are usually liens against these properties - HOA fees, county fees for having to mow the grass, perhaps repair fees incurred at some point, tax liens, the list goes on... and they will all have to be cleared before closing. This can take a long time. Manage it. Do not, I repeat, DO NOT start putting stuff in the moving truck until after you've seen the seller signature on the HUD and deed. Sometimes that comes a week or more after you sign everything. You do not get access in most cases until the seller has signed everything. The last few closings I did it took weeks for the seller to sign the paperwork. I don't know how successful I will be, but for my next trick, I shall attempt to negotiate a per diem fee for my buyer clients if the bank doesn't sign everything with 2 business days of the buyer side closing. I think it is only fair- the buyer is paying a mortgage on a property they can not use. I will let you know how that works. In the mean time, just be prepared.

REOs - Contract to Close Pt1

UPDATE: Thanks for coming to my blog. Regardless of how you got here, this series was written in 2008. The market is ever evolving and hopefully you will find this information outdated. A better source of CURRENT information about buying an REO can be found by clicking HERE: REOs in 2010.

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It's taken you months, learning the market, looking for homes, perhaps putting in offers and being rejected, nervously signing the bank addendum, and, after all this time you finally have a ratified contract. Congratulations. So long as you know what to expect from this point, you're on easy street. If it's not already done (or even if it is), the first thing to do is select a title company (in Virginia, this is also known as the settlement company or closing company). This small post is on the title insurance company. Most banks want you to use their title company. Sometimes they try bullying you into it, sometimes they attempt to entice you into it by offering free owners title insurance. If you are scraping pennies together to settle, you might decide to take their offer. Otherwise, in general, I encourage you to hire your own title insurance agent. Why? Several reasons... In general, when your agent selects a title company (or if you do enough real estate business you know one you like), the company is being chosen based on performance, timeliness, honesty, communication, fairness of fees, and service. Sometimes brokerages have an affiliated business relationship with a title company (if so, they must disclose this to the consumer). True, the brokerage (occaisionally the agent, but usually just the brokerage office) gets some financial benefit from referring business to a particular title company. However, that brokerage could have formed that relationship with anyone - they picked this title company for a reason. If the title company was not performing well, your agent would not take you to that title company. Of this, I feel certain. The bank owners of REOs form relationships with title companies, too. But, it is not based on service. It is based on price, and some internal grading scale, and sometimes just a fluke. They flood these title companies with work, way more than most can handle. However, in order to make a profit, they must do it with volume of work. So, they are, quite honestly, too busy to pay attention to your little case, and they certainly do not care if they please you or your agent throughout the process. When you choose your own settlement agent/title company, you won't completely avoid being impacted by the seller's title company, however, you'll have one more agency in your corner, working to see to it that the deal closes, per the contract, as it should. Read this memo from a local attorney. He'll tell you the legalities behind your ability to choose your own agent, and he's offering to sue, on your behalf, if you've been bullied or coaxed into using a title company of the sellers choosing... It's worth a read. http://h1.ripway.com/vchrisner/PlofchanLetter.pdf

Making an Offer on an REO - Part 3: Deadlines

UPDATE: Thanks for coming to my blog. Regardless of how you got here, this series was written in 2008. The market is ever evolving and hopefully you will find this information outdated. A better source of CURRENT information about buying an REO can be found by clicking HERE: REOs in 2010.
* * * * ORIGINAL POST BELOW * * * * *
In Part 1 of this series, we talked about PRICE -the thing most people are interested in. In Part 2, we talked about FINANCING - the thing people become most interested in when they are in the negotiating process, or after they've had an offer or two turned down. So, here in Part 3, we're going to talk about what can be a huge stress and series of pitfalls - timelines and deadlines. Here is how an offer goes... you write, you submit, you wait and wait some more. After a few days - 2-10 business days - you get a response... they call it a "counter offer". If you are not up against multiple contracts their agent may tell you they need some changes in price or terms to accept it. If they are in a multiple offer situation, you will not get this opportunity. If they suggest those changes, and you accept, this is when you will typically get the "bank addendum". These are terribly, scary documents, and they override your contract. So, read carefully. Some will say you can not do a home inspection. I strongly suggest you do not waive this right. DO a home inspection, but understand the bank does not plan on making repairs. So, if you find that the AC doesn't work, you will have to decide if you will buy the house anyway, for the same price, or if you will move on to your next house. These are your only options. Some will say you have a definitive time for financing contingency and appraisal contingency, and if you do not meet those deadlines there will be no extension. If, after that date, you have a financing/appraisal issue, beware - you will likely be considered in default. The most common remedy the bank will use is to refuse to refund your deposit. Theoretically, however, there may be other remedies for default. Each bank is different - as Forest Gump would say they are like "a box of chocolates, you never know what you're gonna get". Do not sign these blindly. Remember it is better to walk away from a good deal and talk about the "one that got away" than to get into a bad deal. Every addendum I have seen removes the typical "X days from ratification" contingency periods in most standard REALTOR forms, and replaces them with exact dates. But, be careful. Let's say you are signing the paperwork on June 15, with a goal to settle July 15. Your contract, according to the bank addendum, gives you until June 30th to complete your home inspection, get financing lined up and have the appraisal back. But, here is what is not obvious to someone new to this process - you may not have a signed contract back until June 28th. You COULD end up with 2 days to complete all of these requirements. So, I recommend a different addendum that you create that says, for example, "Financing and Appraisal contingencies will expire the later of June 30th, or 15 days from the date of ratification of contract. Closing shall be the later of June 15th, or 30 days from the date of ratification." I have created an addendum like this, and if you email me, I will share it with you. This builds in protections for delays caused by the banks, and protects you from dealing wtih the per diem penalties that most bank contracts call for if there are delays in closing, which can quickly get steep. Be ware - every listing agent I've presented this to tells me the "bank will not accept this"... and then I ask them to present it, and every bank has accepted it. The listing agents don't think the banks will, but they don't know, because no one's every tried it before. Once you've signed the bank addendum, and anything else that will be submitted along with it, expect it to take double the amount of time that the original response took. If the bank took 4 days to acknowledge your offer, it will likely be 8 business days before you get a final ratified contract. If the original acknowledgement took 10 business days, it could be 15-20 business days to get to ratification. At that time, the race begins. If you were smart, and anticipated this process, you'll have plenty of time... of course, you may be moving in August, and not July. But, these are the risks with purchasing REOs. All of this goes back to the posts where I warned you to not just focus on REO purchase, and if you are going to buy one, to make sure you are getting a good deal - one that makes it worth a little risk, that makes it worth the frustration, and that makes it worth not being able to move in when you expected. As you can see, someone must have EXPERIENCE with buying REOs in today's climate. Few buyers will be able to anticipate and navigate this process themselves. And, quite honestly, few REO agents wish to deal directly with a buyer, or to deal with an inexperienced agent. If you, or your agent, do not know what you are doing, your offer may not be presented for acceptance, or if it is, the listing agent will say to the asset manager "this one will be trouble", and your otherwise great offer will not be accepted. The lesson here - hire an agent with experience in this arena; and do hire an agent. Your cousin who just got her license should not be attempting to guide you through the murky waters of today's real estate climate.... and even if you DO know what you are doing, believe me, there is no financial incentive to you, the buyer, to deal with this yourself.

You will prove yourself to be much wiser to hire a buyers agent to represent you and advise you. Even the listing agents agree.

Take Action NOW! Save the Down Payment Assistance Programs.

Thank you to my friends at First Savings for keeping us informed about important changes affecting our housing market. Dear Friend, I am turning to you in the 11th hour, urging you to take action to oppose a housing bill that will eliminate downpayment assistance. The Senate and House of Representatives are fast-tracking this bill. See the Washington Post article below. Upon the President's signature, downpayment assistance will be shut down in the United States. Failure to act now will ensure the immediate death of downpayment assistance.In recent weeks, I have come to you requesting your help in defeating HUD in their attempt to eliminate downpayment assistance. HUD and the Senate are now attempting to circumvent the rule making process by going after downpayment assistance via legislation. This course of action is being pursued in spite of the strong support of the Congressional Black Caucus, the Congressional Hispanic Caucus, the U.S. Conference of Mayors and Congresswoman Maxine Waters.The consequences will be devastating! By FHA's own estimates, DPA comprises nearly 40% of FHA's volume. This means more than 300,000 working class families will be locked out of homeownership in the next year alone. Communities across America will take the brunt of the $50 billion in lost real estate sales, not to mention the indirect impact on the real estate, mortgage and building sectors that will be forced to shed tens of thousands of jobs due to this dangerous legislation.Act now! Please call your Congressional Representative, Senators, trade associations and community groups IMMEDIATELY to voice your support for downpayment assistance and your opposition to this bill. Urge your legislators to oppose these provisions that would ravage your local economy by bringing the housing sector to a screeching halt.Locate your elected officials.1. Enter Your Zip Code and click "Go".2. Click on the link of the Representative you would like to call and then click on the Contact tab to find their Washington D.C. office phone number. Sincerely, Scott C. Syphax President & CEO Nehemiah Corporation of America Congress Is Set to Limit Down-Payment Assistance By Dina ElBoghdadyTuesday, July 22, 2008Washington Post Staff WriterMortgage programs that helped nearly 79,000 people buy homes using government-insured loans last year would be eliminated as part of a broader housing package that Congress expects to pass this week, key lawmakers said. Under these programs, nonprofit groups provide buyers with money for down payments. Home sellers then reimburse the organizations and pay an administrative fee. More than half a million people -- including many first-time home buyers, minorities and single mothers -- have bought homes this way in the past decade using loans insured by the Federal Housing Administration.But the FHA said seller-funded down payments present the single biggest challenge to its solvency. Borrowers who take part in these arrangements go to foreclosure at nearly three times the rate of borrowers who put their own money down, according to the agency.The fate of these seller-funded down-payment-assistance programs has been in limbo for weeks. The Senate version of the housing bill would have banned them. The House version would not. Negotiators crafting a compromise bill have agreed to the Senate's position, which also is supported by the Bush administration."We're going to yield to the Senate on that," said Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee and a supporter of the programs. "There are a lot of trade-offs in the bill." The administration has tried for years to end the programs but failed to overcome legal challenges. "No insurance company can sustain that amount of additional costs year after year and still survive," Brian D. Montgomery, the FHA commissioner, said in a recent speech. But supporters of this kind of assistance said it meshes with the FHA's mission to serve low- to moderate- income people. While the system may have its problems, they say, it should be fixed, not abandoned, so that people like Tanika Warrior are not shut out of the market. Warrior and her husband, Jimmy Hicks, suffered housing sticker shock when they moved to the Washington area from Arkansas a few years ago. The couple, recent college graduates, had depleted their savings on tuition and care for their newborn son. But they had steady jobs and did not want to keep sinking money into rent, Warrior said. They also did not want to put off buying a home because they were not convinced that their finances would be stronger in a few years. "We don't want to throw money in a hole," said Warrior, 24, a federal patent examiner. "My thing is we pay our rent every month and we've never been late, not once in five years. If we can pay our rent every month, we can pay our mortgage every month." The couple worked with Nehemiah, the nation's largest down-payment-assistance charity. Nehemiah provided the 3 percent down payment the FHA requires. The couple secured a 30-year, fixed-rate loan for a townhouse in Herndon through First Savings Mortgage. Their monthly mortgage payment is now about $400 more than what they paid in rent, with taxes and insurance included, Warrior said.Scott Syphax, president and chief executive of Nehemiah, which is based in California, has been in Washington pushing to save the programs. After he got word yesterday of the agreement to ban seller-funded down payments, he said he was "angry and saddened" about the fallout for "families and communities who obviously did not get a seat the table as these harmful policies were conceived." Syphax and the FHA disagree about the most basic statistics on these loans. Syphax maintains that the agency's assessment is skewed. He said it has undercounted the number of loans made while properly capturing the number of foreclosures it has had to pay for -- thus inflating the percentage of bad loans. The FHA strongly denies that. It also maintains that programs backed by Nehemiah and other nonprofit groups aim to skirt its policies that prohibit a seller from directly financing a buyer's down payment. Seller assistance distorts "the fundamental economics of a mortgage agreement," Steven Preston, secretary of housing and urban development, said in a letter to Congress.Sellers who reimburse the cost of a down payment and shell out related fees of $400 or more try to recoup that money by raising prices on the homes they're selling, government officials said.Those higher prices result in larger mortgage loans, making it more difficult for buyers to keep up with their payments, they said. The inflated prices also make it tough for buyers to refinance or sell if they lose their jobs, get ill or face some other financial setback -- hence the high foreclosure rates."While the seller and lender are able to close a transaction, it is the home buyer and general taxpayer who ultimately bear the long-term risk," Preston said in his letter. It's unclear how quickly the new policy would kick in if it's enacted. Supporters of seller financing, including members of the Congressional Black Caucus and the Congressional Hispanic Caucus, said they will push to revive it, perhaps under another administration. "The Bush administration does not have a lock on history," said Rep. Al Green (D-Tex.), a member of the black caucus. "They only have a lock on the moment." The administration is not getting all it wants on the FHA front. While the compromise bill would get rid of seller assistance, Frank said, it also would wipe out a new FHA initiative under which the agency charges borrowers insurance premiums based on credit risk, instead of one flat rate. Salmineo Sherman Sr., who recently used seller assistance to buy his first home, is not tuned in to the horse trading on Capitol Hill.But yesterday, he said he felt lucky that he bought his seven-bedroom house in Clinton this month. Without seller assistance, he and his wife would not have been able to close the deal. They have six children, two of them grown. "I do not see myself as any risk at all because I'm not stretching with this house," Sherman said. "We can afford the monthly payments. . . . We're staying put, right in this house." Nehemiah Corporation of America 424 N 7th Street, Suite 250 Sacramento, CA 95811Toll Free: 1-877-634-3642 (877) NEHEMIAH getdownpayment.com

Making an Offer on an REO - Part 2: Financing

UPDATE: Thanks for coming to my blog. Regardless of how you got here, this series was written in 2008. The market is ever evolving and hopefully you will find this information outdated. A better source of CURRENT information about buying an REO can be found by clicking HERE: REOs in 2010.

* * * * ORIGINAL POST BELOW * * * * *

Building on the last post, we'll move to the financing section of the offer. Banks are looking closely at this. Why? Because time is of the essence. These properties need to be sold, quickly.

Banks sell properties "as is, where is": They do not have any interest in replacing the rotted trim around the window or replacing shingles on the roof, both of which are common examples of things FHA and other government funding arrangements require. If a property is missing a stove, or has obvious structural deficiencies, it will not qualify for FHA financing. So, rather than tie a property up under contract with these types of loans, banks will sometimes reject offers with this type of financing.

Because banks understand the "credit crunch": They know that investors are having a hard time getting loans right now, as are other buyers who might be cash strapped. An ideal offer to most banks is a solid CASH offer with proof of funds to close. But, those are few and far between. Second runner up is a buyer who intends to occupy the property as a personal residence, and who has 20% or more to put down.

If you fall into one of these categories, you may find your offer will be accepted, EVEN IF IT IS LOWER, compared to an offer with multiple layers of government financing, & down payment assistance, or the investor who thinks they can put down just 10%. These loans are more likely to run into difficulties, therefore, banks will not accept them if they have a choice.

Conclusion:

Investors:

* Try to become a cash buyer - convert your assets into cash so that you can provide proof of funds.

* If you are a cash buyer, then to get your best deals, target properties that will not qualify for government funding.

Personal buyers:

This needs to remain about your lifestyle FIRST, and the financial investment second. Look at your finances, talk to a qualified lender who will help you assess your financial options. If you are one of those that require down payment assistance, and are purchasing with layered government financing, be patient. Getting a bank to agree will be tough. You might consider targeting traditional sales. If you are targeting REOs, then just know that you might need to put in a lot of offers before one is accepted. Banks ARE accepting these offers, but not as readily as they are accepting other offers.

Making an Offer on an REO - Part 1: Price

UPDATE: Thanks for coming to my blog. Regardless of how you got here, this series was written in 2008. The market is ever evolving and hopefully you will find this information outdated. A better source of CURRENT information about buying an REO can be found by clicking HERE: REOs in 2010.
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It's halfway through 2008, and it seems that almost the only thing I do these days is work with buyers purchasing REOs. Here, I will attempt to share with you what I've learned. For Part I, we'll start with the big one: PRICE. "What should I offer?" is a question I hear time and time again. Will the bank accept a low ball offer? The answer: Maybe. Here's what I know from experience. If the house is priced agressively (meaning low), it will generate fast offers. If you like it, so will someone else. Likely, it will have multiple offers and sell for at or above list price, quickly. This is the goal of most banks. If the home does not qualify for certain financing due to it's condition, it may not generate the same interest level, and may not receive multiple offers. For a buyer, less competition is good. If the listing has been on the market for 3+ weeks with no offer, banks will usually negotiate 3-5% of the listing price without too much fuss. If the listing has been on the market for 30-45 days with no offers, banks are about to adjust their price. They will adjust it based on the recommendations of their agents, but it is not uncommon to see a 10% price adjustment. So, somewhere about the 45 day mark, it starts to become reasonable to make an offer that is 10% below the listing price. After each price adjustment, the bank goes through this process again and again. For example, let's say that a property is priced at $300,000. After 45 days with no offers, the bank lowers the price to $275,000, which is enough to generate quick offers. At this point, an offer that is 10% below the asking price is not likely to get much attention. It is very rare that you will see an offer accepted that is more than 10% below the asking price. That goes back to the explanation I provided you in the beginning, banks need to show they got "fair market value". It is a requirement. In the next post, we'll tackle financing, and how the banks are evaluating your financing plans. Sign up to be alerted when this next post is published!

The Great House Hunt

UPDATE: Thanks for coming to my blog. Regardless of how you got here, this series was written in 2008. The market is ever evolving and hopefully you will find this information outdated. A better source of CURRENT information about buying an REO can be found by clicking HERE: REOs in 2010.


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So, you’re ready to go see some properties. With the REOs flooding the market, the term House Hunt is starting to have a new meaning. Looking at some REOs can be an adventure – think “Wild African Safari”. Here are a few tips on what to expect when you get out there… none of this is fiction, it is based on actual experiences; and it includes mundane information that will bore you, but make you more prepared for the day of "the HUNT".  (Watch this video - it will give you a clue! This was prepared by a colleague at another brokerage, but is similar to stories heard around the country!)

Short Sales – In our area, you’ll find that these are often occupied homes, so you must call ahead before going to see the homes. Many times, they're in good shape and very presentable. Sometimes, however, the "depression" of the owners will be obvious.

REOs – Let’s call these what they are – abandoned properties. You never know what you will find.

- There may or may not be a sign out front. You'll likely be greeted by signs that say "WARNING" and then have a bunch of smaller writing...but they will not be warning you of the stuff that they SHOULD be warning you of! - These homes are generally (but not always) “trashed out” – meaning the owner’s stuff that was left behind has been removed. There MAY have been a surface cleaning done. (Tip - DO NOT OPEN THE REFRIGERATOR, even if the house looks clean.) - Previous owners, depressed and angry about their situation, may have deliberately vandalized the home – and sometimes you find some really gross stuff in there. - Locks have likely been changed and the property may be winterized and/or have no utilities in service. Try to plan your trip when there’s plenty of daylight. Sometimes the locks are broken. I had a door knob fall off in my hand once. Bring a screwdriver with you. And, while you’re at it, you might want to bring a flash light, too, and, oh, a pair of rubber gloves never hurt anyone. - Who knows the last time someone checked this property? Check the perimeter of the property, and enter carefully, some of these vacant homes are being occupied by the homeless, or prostitutes. And wild animals, or dead animals (or dead wild animals) are being found inside. - Consider your dress. You could have to walk through the yard to get to the home. The grass could be overgrown (think trash, pet waste, snakes or ticks) or you could enter a home that has a pest infestation. Wearing sandals or heels and a nice suit may not be a good choice.

I do not say any of this to scare you. Banks are taking more pride and doing more to ensure that the properties are presentable. However, I know I wish someone had warned me before I showed a few of these properties!

Traditional Sales – These may be vacant or occupied, so read the showing instructions carefully. They will generally be in presentable shape, they may even be professionally staged. Utilities are usually on, the home is comfortable, and visiting these homes can be pleasurable. Sometimes, they’ll even have nice brochures, smooth jazz playing in the background; there could be take away promo items or even refreshments! Gosh, you’d think these people want to sell! After your first trip out, you’ll be more educated. Look at the prices, consider what cleaning and maintenance costs might be involved. (I had one home inspector make a written recommendation to a buyer client of mine to have the toilet cleaned by a licensed professional.) Talk to your agent about the timelines and potential negotiation and transactional pitfalls to expect from the various types of sellers. Still thinking of focusing on REOs? It’s something to consider. But, make sure you get a good deal.

Now that you have a clue about the market, are you ready?  Well... come on!  Hop in and let's start looking!

My next post will be on preparing the offer for an REO. So, you can stay up and keep reading... or jump in the car with me, and we'll talk on the way to look at houses!

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Ready to Buy?

UPDATE: Thanks for coming to my blog. Regardless of how you got here, this series was written in 2008. The market is ever evolving and hopefully you will find this information outdated. A better source of CURRENT information about buying an REO can be found by clicking HERE: REOs in 2010. FINANCES How much cash do you have to purchase this property? Will you need financing? What will that financing look like? Interview a few lenders. Find someone that has competitive rates and a wide range of products, and find someone that explains things to you well, and most importantly WHO YOU TRUST. Then, examine your options. Consider both the cash for closing and the monthly payments. Don’t forget about taxes and insurance, and HOA fees. (Tips: If you already have a buyer's agent, ask for a referral to a couple of lenders. Other good sources include a bank or lender you already have an established relationship with; and/or a referral from someone you know.) FIND AN AGENT Now, interview a few buyers agents. Most buyers NEED one, but even those that don’t NEED one, will find a great amount of convenience and pleasure in having someone coordinate this process for you and advise you at every turn. Working with a true professional will bring you great value. Plus, if you make a bad decision, and you don’t have a buyer’s agent, who will you blame? (Tips - find good agents through referrals of friends and relatives; but then interview them. All agents are not alike.) LEARN ABOUT THE MARKET An agent can tell you what’s available that meets your criteria based on an automated search. From there, drive the neighborhoods, get a feel for the areas you like best. Have your agent set you up with an automated search so you’ll be notified of homes coming on the market that might fit your criteria. This online studying will be the start of your education about price fluxuations, neighborhoods, available inventory and the activity level in the areas you're considering. If you are an investor, consider the strength of the rental markets, too, and the property price vs. the rental rates. Your agent should be able to help with this. After you’ve selected a few potential neighborhoods, consider looking at a homes. Here, there may be some minor differences between looking at “short sales”, REOs, or traditional sellers. Choose what homes you’ll see based on your criteria and the price. Don’t specifically target REOs, Short Sales or Traditional sales just yet. I learned along time ago to consider what I hear but to make my decisions on my first hand knowledge. Your agent should share their experiences with you, and be able to prep you on what to expect - like the things I will tell you in my next post… So, before you run out to get that first hand knowledge, wait for tomorrow's post. You'll be glad you did.

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You’re an investor or a personal home buyer, and you are looking for a great deal. You’ve heard that “foreclosures” are the way to go, but after reading my last post, you now know that those “layman” are mostly talking about REOs. Anyway, where to start? Start where all buyers should start – outline your goals and get a plan together. Consider: WHAT DO YOU LIKE For a personal purchase, this is about where you'll live and the quality of your life. Consider what your household needs to be comfortable and happy. How much space, what kind of neighborhood, schools, communities amenities. How many bedrooms, bathrooms? What kind of finishes? How big of a yard? How will you get to and from work? For an investment property, who will be your renter? What will they like and need? How will the property be managed? Can you do it or will it be too far from your home? Are you OK with handling maintenance issues? HOW LONG YOU WILL OWN For a personal property, think about how you believe your family will evolve over the next several years. How’s your health? What about your parents – will they be moving in? Do you plan to have kids or do you have kids going off to college? Will you be getting married, divorced, or getting a dog? How’s your job stability? Are you likely to be transferred? If you lost your job could you find another close by? Really think about this. Based on the answers to these questions, how long do you think you’ll own the property? The average is 7 years, by the way. Some people move more often, some people only move once in their adult lives. What kind are you? Here’s a tip – if you won’t live there (or don’t want to own the property) for a MINIMUM of five years, then consider renting. For an investment property, it's part of the basics. Real estate is a solid investment as a long term hold. This not the market for a fix and flip or pure short term speculation – it’s entirely too risky, so skip it. Put your money somewhere safer. If you’re planning a long term hold, more power to you – this is a great time to buy.