Real Estate Tips | California Pacific Brokers

So Where Are These REO Listings?

March 3, 2010 By Michael Koenig

So Where Are These REO Listings?
You are ONE click away from finding some REO listings in the East Bay area. Click here to see them.

Buying bank owned properties
There is a lot of interest in buying bank owned properties these days. A lot of information, some good and some bad, is floating around about the subject. Often the information offered is for sale, with the promise that you can make a lot of money with little effort once you know “the secret formula”. The fact is that there are no secrets, and to make money does require effort.

What’s an REO?
REO stands for “Real Estate Owned”. These are properties that have gone through foreclosure and are now owned by the bank or mortgage company. This is not the same as a property up for foreclosure auction. When buying a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees accumulated during the foreclosure process. You must also be prepared to pay with cash in hand. And on top of all that, you’ll receive the property 100% “as is”. That could include existing liens and even current occupants that need to be evicted. A REO, by contrast, is a much “cleaner” and attractive transaction. The REO property did not find a buyer during foreclosure auction. The bank now owns it. The bank will see to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing. Do be aware that REO’s may be exempt from normal disclosure requirements. In California, for example, banks are exempt from giving a Transfer Disclosure Statement, a document that normally requires sellers to tell you about any defects they are aware of.

Is it a bargain?
It’s commonly assumed that any REO must be a bargain and an opportunity for easy money. This simply isn’t true. You have to be very careful about buying a REO if your intent is to make money off of it. While it’s true that the bank is typically anxious to sell it quickly, they are also strongly motivated to get as much as they can for it. When considering the value of a REO, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale. The bargains with money making potential exist, and many people do very well buying foreclosures. But there are also many REO’s that are not good buys and not likely to turn a profit.

Ready to make an offer?
Typically the REO department of a bank will use a listing agent to get their REO properties listed on the local MLS. Before making your offer, you’ll want to contact either the listing agent and find out as much as you can about what they know about the condition of the property and what their process is for receiving offers. Since banks almost always sell REO properties “as is”, you’ll want to be sure and include an inspection contingency in your offer that gives you time to check for hidden damage and terminate the offer if you find it. As with making any offer on real estate, you’ll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender. After you’ve made your offer, you can expect the bank to make a counter offer. Then it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer. Realize, you’ll be dealing with a process that probably involves multiple people at the bank, and they don’t work evenings or weekends. It’s not unusual for the process of offers and counter offers to take days or even weeks.

So Where Are These REO Listings?
You are ONE click away from finding some REO listings in the East Bay area. Click here to see them.

Filed Under: Foreclosure, Real Estate Tips, REO Tagged With: Bank Owned Listings, Bargain, Multiple Offer, Offer, Offer preparation, Opportunity, Real Estate Owned

CONSUMER ALERT!! – FORECLOSURE RESCUE SCAMS

March 3, 2010 By Michael Koenig

If someone who is not your mortgage lender promises to save your home and asks for you to pay money up front, WATCH OUT. Fraudulent foreclosure consultants target homeowners who are behind on their mortgage payments. Here’s what you can do to avoid becoming a victim:

DON’T transfer title or sell your house to the foreclosure rescuer. Fraudulent foreclosure consultants often promise that if the homeowners transfer title, they may stay in the home as renters and buy it back later. The foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to preventforeclosure. BEWARE! This is a common scheme “rescuers” use to evict homeowners and steal all or most of their home’s equity.
DON’T pay money to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect money before (1) they give you a written contract describing the services they promise to provide and (2) they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan.
DON’T pay your mortgage payments to someone other than your lender, even if he/she promises to pass the payment on to the lender. Fraudulent foreclosure consultants often keep the money for themselves.
DON’T sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the “rescuer.”
DON’T ignore letters from your lender. Consider contacting your lender yourself, as many lenders are willing to work with homeowners who are behind on their payments.
DO contact a housing counselor approved by the U.S. Department of Housing and Urban Development (HUD), who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at 1-800-569-4287 (TTY: 1-800¬877-8339) or www.hud.gov.
DO consider contacting the Homeownership Preservation Foundation(HOPE), which assists consumers facing foreclosure, at 1-800-995-HOPE or www.995hope.org. HOPE is a non-profit organization that partners with community-basedorganizations, mortgage companies, and government agencies and is part of the HOPE NOW Alliance supported by the U.S. Department of Treasury and HUD.

IF YOU TRANSFERRED YOUR PROPERTY OR PAID SOMEONE TO “RESCUE” YOU FROM FORECLOSURE, YOU MAY BE A VICTIM OF A CRIME. Please file a complaint with the Attorney General’s Office at the following address: Office of the Attorney General – Public Inquiry Unit, P.O. Box 944255, Sacramento, CA 94244, or online at www.ag.ca.gov/consumers

Filed Under: Foreclosure, Loan Modification, Real Estate Tips, REO, Short Sale Tagged With: Consumer Tip, HOPE, HUD, Real Estate, Scam

Fixer Uppers – Buyer Beware

February 27, 2010 By Michael Koenig

The oft heard phrase “Buyer Beware” is never more appropriate than when considering the purchase of a fixer-upper. You really need to know exactly what you’re getting into before buying.

It’s commonly believed that fixer-upper properties represent easy money that is ripe for the taking – that you can buy it, do a little work on it in your spare time, and then resell quickly for a large profit. Usually, this simply isn’t the case. Although, with proper planning and foresight, good profits can be made by buying “distressed” properties at less than market value, making appropriate improvements and repairs, and then reselling. And for many first time buyers who intend to live in the house while working on it, buying a fixer-upper can be the very best option. It’s less risky buying a fixer-upper when you can live in the house while fixing it. And of course, by living in the house for at least 24 months you should be able to avoid paying regular income taxes on the profits.

The most important thing to know before making a decision on such a purchase is what needs to be fixed. Any time you are spending money on improving a home with the notion of selling it later, strive to spend your money on things that buyers can easily see. Things like new paint and removing trash from the property cost little but have instant impact on curb appeal. Houses that have only cosmetic problems like peeling paint, a trashy yard, bad carpet or wallpaper are the best bet. This is especially true for the first time buyer looking to live in the house for a while before reselling. Fixing and cleaning cosmetic issues is fairly easy and inexpensive. It virtually always gives gives a good return on investment, particularly when you can do the work yourself. Kitchen and bathroom remodeling usually pays a nice return. Don’t be afraid of buying a fixer-upper in need of this kind of repair. Properties with structural damage, or a floor plan that requires major work to remedy, usually can’t be “fixed up” at a profit.

Always have an inspection for hidden damage performed by a home inspector or construction professional before buying a fixer-upper. Make sure that satisfactory completion of such inspections are a condition of purchase in any contract you sign. Then be sure to negotiate to try and get the seller to pay for all or part of the cost of needed repairs uncovered by the inspection. Often, sellers will be willing to lower the sales price to sell the home “as is” instead of paying for the repairs.

Be careful that you don’t over pay. Especially if you plan to resell quickly, paying too much up front can doom your plans for quick profit. Research the market for reselling and have an exit plan for selling the house in place before making an offer.

Filed Under: Buying A Home, Real Estate Tips, REO Tagged With: Fixer, Handyman, hidden damage, remodel, repair

Tax Credit for Homebuyers

November 13, 2009 By Michael Koenig

Uncle Sam's Tax Credit

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Tax Credit Versus Tax Deduction

It’s important to remember that the tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sale price of $800,000. Remember, the new tax credit program includes a number of details and qualifications. For more information or answers to specific questions, please call or email me today.In addition, you may be able to benefit from additional housing related provisions, including the following:

Tax Incentives to Spur Energy Savings and Green Jobs

This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings

This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing

This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance

This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

Filed Under: Buying A Home, Real Estate Tips

First-Time HomeBuyers

December 7, 2008 By Michael Koenig

First-Time Buyer

Your decision to buy a home is both a sound financial decision and a commendable achievement. As your real estate agent . . .

I will lead you through every step of the exciting home buying process.

I will help you define your “wish list” of features you want in your home, your neighborhood and your school district.

I will walk you through the mind-boggling financial details associated with buying a home, including understanding the various mortgages and home buying programs available to you.

I will monitor all new listings and alert you to new houses as soon as they are put on the market.

I will, at no cost to you, negotiate the deal to save you money and commit my time and energy to finding you the right home.

I will eliminate the stress involved with buying a home by putting my years of real estate experience to work for you.

Finding the perfect home is my business. Contact me today!

Filed Under: Buying A Home, Real Estate Tips Tagged With: financial, first-time, firsttime, home-buyer, homebuyer, Real Estate, steps

Selling One, Buying Another

March 3, 2008 By Michael Koenig

Family Pic

In a perfect world, you sell your old home and buy the new one on the same day. Given that things rarely turn out perfectly, here are some things to keep in mind as you negotiate the sale of one house with the purchase of another.

Time it right

Fall and spring are the best times for homes to move and you want to consider the season of the year when buying and selling. And if the closing dates aren’t going to coincide, a bridge loan can help…uh…bridge the gap.

Selling First

Selling your home before buying a new one minimizes financial hazards. Even if you have to find temporary housing, it’s generally cheaper than two mortgages.

Get an appraisal first thing off the bat. That way you’ll have a good idea how the sale of your home will effect your purchasing power on the new one. This will help keep you from over extending your mortgage abilities.

Get pre-approved on a loan for the new home.

Until most of your contingencies have been met, wait to put an offer on a new house. You don’t want to be left holding the bag, or in this case, the house.

If you’re ready to accept an offer on your home, but haven’t found the right new home, negotiate a long escrow or a sale/lease back. This will give you more time to look for the new home. Otherwise, look for temporary housing.

Buying First

It happens. You’re only thinking of buying, and suddenly the right home shows up. Now you have to sell your old home quickly. Here are some tips on making things work in your favor:

Negotiating a long escrow on this side of the sale works, too. You can also make the purchase contingent on your house selling. This will work better in a slow market, but it’s worth a try in any market. You never know what may also work best for the seller of your new home.

Try and schedule the closing date of your current home prior to the closing on your new home. Temporary housing is generally a better situation than two mortgages.

Take a close look at what price you’re going to ask for your home. Make sure it’s realistic in the current market.

When you get an acceptable offer, check the buyer’s credit history. You don’t want any surprises that are going to delay things. If you’ve closed on the new home, but haven’t sold the old one, consider renting it out, or taking it off the market until the next season (or until the market improves).

Same Market or Across Country

Generally, if you’re buying and selling in the same market, you can negotiate closing dates to work for you. But when you’re dealing with a cross country move, it’s a lot harder. A real estate professional really comes in handy at this point. Legal documents can be faxed or sent via overnight courier and your focus won’t be stretched to the limit. You may end up renting one home or the other, or have to consider a bridge loan. But with someone local in the market on your side, it will hopefully be less stressful.

Show Me the Money

Make sure you have a tight hold on, and a clear understanding of, your financial situation. Cash reserves are always helpful, but never more so than during the purchase of a home. Two to three months is the recommended reserve, but if you don’t have it, this is where the bridge loan comes in handy. Some lenders are more inclined to make a loan if it’s for the purchase of a home. If you’re a smart shopper/seller, you’ll accept an offer from someone who’s flexible about move-in dates. It can save you money in the long run. Too many moves with storage costs can quickly eat up any profit you may have made in the transaction.

Filed Under: Buying A Home, Real Estate Tips, Selling A Home Tagged With: Buying first, cash reserves, legal documents, Market Timing, moving, negotiation, pre-approval, preapproval, prequalification, purchase power, selling first

The 9 Steps to Home Ownership

April 28, 2006 By Michael Koenig

Step – 1 Make the Decision to Buy

It seems obvious, but it’s good to note that the first step to buying a house is making the decision to buy. Consider the reasons you want a new house and write them down. Determine how long you want to live in the new house does buying still make good financial sense? Can you afford a house that will meet your list of requirements? A good rule of thumb is your mortgage payment should not exceed 1/3 of your net monthly income.

Step 2 – Seek Professional Guidance

I’d like to schedule a time to meet with you to hear the reasons you want to buy a house and your plans for the future. We’ll talk about neighborhoods, schools, economic factors liable to affect the market today and tomorrow, as well as how you would like your house and neighborhood to grow with you.At this time, I will also help you get pre-qualified for a mortgage loan. Pre-qualification is a written statement from a loan officer indicating his or her opinion that you will be approved for a mortgage loan up to a certain amount. The fact that you are pre-qualified will help us when we are negotiating the deal.

Step 3 – Begin the Hunt

After our initial meeting, I’ll search all my resources for houses on the market that fit your criteria. I’ll preview these houses to eliminate the duds. Then, I’ll schedule appointments to tour the houses at times convenient to you. As we tour houses, I’ll point out positive features and negative features. I’ll ask you to tell me what you like and what you don’t like. You’ll probably amend your “wish list” as we tour houses, some things will become more important and others less important. With this new information, I’ll refine our search criteria to narrow in on the house of your dreams.

Step 4 – Know the Market

My knowledge of the local market is an essential factor in the house search. I’ll let you know when the market in a particular neighborhood is “hot” and requires immediate action or when the market is “cool” and allows for thoughtful consideration.As we tour houses, I’ll let you know when the asking price has negotiating room and when the house is “priced to sell”. My unique market knowledge will keep you a step ahead of the “house hunting competition”.In a “seller’s market” it is not unusual to see multiple offers on a property, full-price offers and even above-price offers. On the flip side, during a “buyer’s market” there are more houses for sale than buyers. This gives us more negotiating room as houses are taking longer to sell.

Step 5 – Find Your Dream House

I’m confident we’ll find your dream house. When we do, I’ll put together the purchase offer tailored for your needs including appropriate contingencies (such as obtaining financing, favorable home inspection, clear title, etc.).The offer is normally presented with “earnest money”. This is a cash deposit made to a home seller to secure an offer to buy the property. The amount is applied to closing costs. If the seller accepts the offer, generally closing is held 30 to 60 days from the offer date (generally dependent on the turn around time of your mortgage financing).

Step 6 – Negotiate the Deal

It is not uncommon to receive a counter offer when the initial purchase offer is submitted. Don’t let this discourage you. We will discuss the counter offer and decide whether or not to accept the counter offer, submit our own counter offer, or reject the counter offer and move on.Market conditions will play a role in how aggressively we negotiate the deal. We will also work within your limits. Emotions can lead to buyer’s remorse. It is better to set limits prior to negotiating an offer and stick to these limits.

Step 7 – Get a Loan

During the closing period, you will be working with your mortgage lender to close the loan. Since you pre-qualified for the loan before starting your home search, you will be that much closer to the end. I’ll gather the necessary property information your lender will need to close the loan.

Step 8 – Close the Deal

You will receive a “Good Faith Estimate” of closing costs at the time the loan application is submitted to the lender. The estimate is based on the loan officer’s past experience and may not include all the closing costs. I will be glad to review the “Good Faith Estimate,” answering questions and highlighting missing costs and estimates I believe to be low.

Step 9 – Move In

Congratulations! It’s time to move into your new house and make it your home!