Foreclosure Cash

Real estate short sales happen when the bank or mortgage lender agrees to discount a loan balance because of a financial adversity on the part of the borrower. The home owner sells the property for less than the outstanding balance of the loan, and gives the earnings of the sale to the lender.

However, it is not guaranteed that the short selling offer will be accepted or rejected by the bank. Just because a listing is advertised as a short sale does not mean it is a short sale. It means that the short sale listings agent and seller hope that the property will sell as a short sale and the bank will accept the offer. The list price of a short sale home has very little impact on the actual price a bank may accept.

Top five reasons for rejection

• The price offer is very low: Banks will request assessments and may also ask for a Broker Price Opinion (BPO). So when a short sale offer is presented to the bank, the offer should also include a comparative market analysis that validates the price in the short sale offer. If the bank believes that a foreclosure on the same property will generate more income for the bank, then it will reject the offer of a short sale.
• Documentation problem: Banks have a history of losing documents. No matter how many times you send the documents, they will somehow manage to misplace the documents. Also, if you have not sent all the correct documents, then the sale will not be granted.
• The seller is not eligible for the short sale: If the seller is not able to present to the bank a convincing ‘debt forgiving hardship letter’, and also if the seller is unwilling to work out a repayment plan with the bank, then the bank will not go ahead with the short sale transaction.
• The buyer is not eligible: To determine the buyer’s qualification, the bank will examine the buyer’s credit history, length of time on the job, debt ratios, and many other criteria. If the bank is not satisfied with any of these aspects, then there is every chance that the transaction will be rejected.
• The bank has released the asset: If during the short sales negotiation the bank has sold the mortgage to another lender, then the bank has no right to approve a short sale.

If the short selling offer can be pulled off successfully, then it will benefit all – the buyer, the seller and the lender.

Firstly, let me clarify that a flip tax (also known as transfer tax) in real estate investing is not a tax that is levied by the government for the purpose of raising revenue. A flip tax is basically a revenue generating mechanism for a private land authority.

In the early 1980’s many rental buildings started becoming co-operative societies or were transformed into condominiums. During this time, owners started selling their apartments at much higher rates than what they had bought them for. Associations felt that these owners should give a little back to the building that helped them make the profit, and so the association began to charge the flip tax as a way to generate income. Since then, the flip tax has become common on all properties that are undergoing a transfer of ownership.

Who pays the tax?

There are no set rules about who has to pay the flip tax. Depending on the state of the real estate market at the time of the sale, the payer can either be the owner of the co-operative society or condo or the buyer. If the market is dominated by sellers and the buyers are competing against others for the property, then the seller will usually pass the burden of paying the flip tax onto the buyer. However, if it is a buyers market and the seller is finding it difficult to get a reasonable offer on the property, then the seller will usually agree to pay the flip tax in order to attract prospective buyers.

Computing the flip tax

Flip tax varies extensively from building to building. The general formula for calculating the fee is usually found in the building’s by-laws. However, fee based on the percentage of the sale price is starting to become more common nowadays. Some buildings have also come up with more intricate transfer fee structures based on the length of time that the owner has held the apartment.

Whether you are new to real estate investing, or you are an experienced investor in flipping real estate, knowing the nuances of the business will always prove beneficial.

When homes are not sold at foreclosure auction due to no one bidding on them, the bank takes the responsibility of such homes and sells these homes through real estate agents. The homes then become Real Estate Owned property or REO owned property.

Whether you are buying a home for the first time, or you are an experienced investor, buying bank foreclosed homes can be a wise decision especially considering the current economic slowdown.

REO property is a burden on the bank and is subject to vandalism. So banks are always on the look out to sell such properties quickly. This is where the buyer can negotiate the best deal from the bank by exchanging offers and counter-offers. Buyer can also get financing from the same bank, and since the bank wants to get rid of the property quickly, they might make terms favorable for the buyer.

Banks don’t do any repair and fixing work on the foreclosed homes owned by them. However, a buyer can include a clause in his agreement so that he can renegotiate the price of the foreclosed home if he finds any major damages upon inspection.

Benefits of buying bank foreclosed homes

You can strike the best deal: Bank foreclosed homes have a great potential for bargaining, and they are usually sold at very affordable prices. Since the property is bank’s asset, there is not much risk involved in the deal and the process in very clear and efficient.

You can inspect the property before buying it: With the bank foreclosed homes, you get a chance to thoroughly inspect the condition of the house and then negotiate the right price for it.

You get ready possession: Bank foreclosed homes are already vacated before they are handed out to the real estate agents. So you don’t need to worry about expelling people who may still be living in it.

You don’t need to worry about liens and outstanding taxes: When you buy a REO foreclosed home from a foreclosure auction, you can be sure that the bank has removed all outstanding liens and have paid the outstanding taxes.

When you decide to buy bank foreclosed homes, it’s important that you look for the property through the right channel and also look for a listing that is correct, practical and complete in providing the best deals. Buying a bank foreclosed home is the best option in the current economic scenario as you can be sure that the purchase won’t get you broke.

Real estate short sales have always been at the forefront of investment activity. US have seen it going through ebb and tide. Recession has made real estate short selling being used as a decisive tool to rescue finances from going kaput.   Recently, US administration standardized real estate short sales plan that is scheduled to roll out in the next few months. Banks are increasing short sales under pressure from the Obama administration.

If the reports are to be believed,   the volume of default notices that trigger the start of the foreclosure process has been declining for the last two consecutive months. Earlier it was observed that homeowners are falling behind by at least three payments to clear their mortgages. In January, bank repossessions dropped more than 24 percent in some parts of US. Drop in notices of default was observed to be nearly 50 percent; and the amount of foreclosure related filings declined almost 13 percent during the year.

Short sales are also receiving the push up from the increasing numbers of banks. In the first six months of 2009, short sales almost tripled to 40,000 from the same period a year earlier. Yet, according to the data from the Office of Thrift Supervision and the Office of the Comptroller of the Currency, foreclosures started or completed outnumbered short sale by twenty five times, in the first half of this year.

New Treasury Department guidelines for foreclosure alternatives scheduled to take effect in April 2010 will require lenders to consider borrowers for a short sale on their primary residence 30 days after missing two consecutive payments on a modified loan or after the borrower requests a short sale.

To keep tab on the short sales overturns, JP Morgan doubled the number of staff trained to handle short sales since the beginning of this year.

Another interesting fact to note is that as of Oct 1, losses on prime loans going through the foreclosure process averaged 49 percent versus 34 percent for a short sale, according to a report by Laurie S. Goodman, senior managing director of Amherst Securities Group LP. The report adds that for sub-prime loans, losses averaged 73 percent for a foreclosure compared with 59 percent for short sales.

Going by all these facts and figures, real estate short sales are on an ascend, if not a high; and the time is just right to go for real estate investing and make fortunes.

Have you ever thought of making it rich through real estate investing? Have you imagined that flipping real estate could be your key to becoming rich? Did the stories of rich real estate investors made you to dream about money?

Enough has been said and done about real estate investing. It has been a major area for investors to cash on. Investment trends come and go, but there is no sign of real estate investment getting subdued. Though some warning signals were raised by the analysts that recession may blow the real estate bubble, it remains the hottest playing field for those who want to become millionaire through real estate investing.

Think about this

Most of the middle level or small investors often think of hitting the jackpot by flipping real estate. While planning this, they mostly concentrate on foreclosed homes. For last four to five years, foreclosed homes have become an effective means to garner money by flipping them. But small and medium investors often neglect that commercial real estate is an area that offers more returns than foreclosed homes, in a short time. Just have a look at the following figures:

• 300 stores in malls all across US closed down in a short period, when a national chain Ritz Camera filed for bankruptcy protection.
• As per the report from the New York-based research firm Ries, Inc. in just the first quarter of 2009, retail tenants vacated 8.7 million square feet of retail space.
• Vacancy rates at strip malls, neighborhood centers and regional malls are increasing rapidly at never before rates.
• Reis indicated that their forecast assumes positive job growth and an increase in consumer spending starting in 2010.

Get going

From the above reports, it is clear that a lot of space is falling vacant for you to grab it. And future looks better for encashment. These opportunities are available across the US. If you want to make it really rich flipping real estate, concentrate on the commercial real estate. Indeed, commercial real estate will need more investment initially; but then you cannot expect more returns, if you invest less.

To start with, have guts, take guidance and assistance from the experts and get going.

Agreed, that you brought a property you could not afford. You thought you will be able to pay for it. Unfortunately, recession set in. Your incomes took a dip. May be that you lost your job. You had to move to another town or smaller house. You are unable to pay your mortgage, and that’s it. You raised your hands. You read somewhere or someone suggested that you do away with your dream home. You could see your dreams come crashing down. But, then that’s the way things work. Life will not end with a home. So, you decided to sell your home on foreclosure; thinking that it will save you from insolvency and bank will recover some of its due.

But is it that simple? Can a bank refuse foreclosure of your home? Are there any issues involved that can stop foreclosure of your property? Let us check any such issues.

• You are falling too short: Your foreclosed homes may not fetch enough to cater for your mortgages. In such a case, foreclosure will not solve your purpose and bank will not agree for foreclosure. If you still persist with foreclosure, you may lose your dream property at dirt cheap rates and further pay up the balance.
• Improper documentation: If you do not posses or unable to present the relevant documents related to your property, no buyer or the bank will proceed further. You must possess clear documents with all taxes paid and deeds’ certificates.
• No buyers: Recession has hit not only you but every other person around. It has created liquidity crunch. There is a likelihood that you do not find any buyers for your property. Finding buyers will also depend a lot on the location of your property. Some locations are always hot selling, whereas others need push selling.
• Changing market trends: If real estate scenario looks gloomy for the near future, your foreclosed homes are less likely to attract buyers who buy foreclosed property for investment. Amidst the bearish trend in the market, investors are more likely to opt for alternate investment avenues like gold and government bonds.

However, do not feel disappointed. There is a solution to all these problems related to foreclosed homes for sale. Contact experienced agents who can take away your troubles and sell out your property. These agents are very resourceful people and with their wide network can fetch a right buyer for your property.

Houses become available for foreclosures when the house owner does not make payments on his loan for quite some time and as a result the loan becomes a default loan. There are three types of foreclosed homes:

Pre-foreclosed homes

When the bank or the lender sends a notice of foreclosure to the house owner, then the owner gets a grace period often known as the pre-foreclosure period. In this type of home sales, the buyer directly contacts the house owner and saves him from getting blacklisted on the credit report by agreeing to pay the loan. The buyer usually gives some credit to the owner and gets a great deal on the pre-foreclosed homes. However, with pre-foreclosed homes, the buyer has to use a discreet approach to deal with the distressed house owners. Nevertheless, pre-foreclosure sales benefit both the buyer and the owner; the buyer gets the best deal without going to a foreclosure auction and the owner gets some credit in his pocket and also saves himself from getting blacklisted on his credit report for bankruptcy.

Foreclosed homes in foreclosure auction

When a default loan has passed the grace period, then homes become available for foreclosure auction and are sold either through public foreclosure auction or brokers. The only concerning thing about foreclosure auctions is that they come and go very quickly and therefore, give a very limited time to the buyer to act and to inspect the property. Foreclosure auctions usually have limited takers as it requires a huge amount of money at one time or some type of pre-approved finance. However, people who buy foreclosed homes from foreclosure auctions usually get a great value for their money, and they also don’t have to deal directly with upset house owners.

Bank or Real Estate Owned (REO) foreclosed homes

When foreclosed homes pass the grace period and also don’t get any takers in foreclosure auctions, then these homes come under the control of the bank or the real estate owners. The bank then sells this foreclosed home to a buyer directly or through real estate agencies.  Unfortunately, this type of selling does not fetch a very good deal for the investors.

You will most likely strike a good deal if you do your research and make an informed decision about investing in foreclosed homes.

Due to the recent economic slowdown, many home owners are forced to sell their houses on short sale. Excessive loans taken against homes when credit was not very difficult to get, and receding home values in a sluggish real estate market also led some home owners to go for short selling.

If you are thinking of buying a house that is on short sale, then it’s important that you are aware of certain facts and have done your homework so that you get the best deal. You will benefit the most from a short sale purchase if:

You have the patience to wait for the deal to finalize: Just coming to an agreement with the seller to buy the real estate short sales house doesn’t mean that you have got the house. You have to wait for an approval from the seller’s lender before you can close the deal and this might take a few months.

You can show that you have the money: Even if you don’t have all the money to buy a real estate short sales house, it’s important to show to the lender that you can pay the money and your financing is secure. This way you will have a better chance to close the deal than some other buyer who is also eying the property.

You don’t have any emergencies: You would certainly not be favored by lenders if you have any eventualities to meet before you can close on the deal for a short sale property.

Seek help from the experts

Buying a short sale house can be a very tiring process. To simplify the process and also to increase your chances of finalizing the best deal, the following people can be of great help to you:

A lawyer experienced in short selling: Only one out of three short sale deals are closed by the lenders. However, an experienced lawyer can increase your chances of getting your deal approved. He can also help you with the various legal requirements of the deal.

A real estate short sales agent: An experienced agent can help you hunt for short sale homes and also help settle your purchase. He can also take care of all the documentation and communication with the lender.

Beware of the risks

Some of the risks involved in negotiating a house on short sale are:

The deal can be called-off at any time: Mid-way through your negotiation, if the seller manages to repay the amount he owes on the property, then your chance of buying a short sale house is over. You may also not be able to close the deal if the price you quoted for the house is much lower than the current market value of the house. Lenders also have the right to change the terms of contract anytime, which could also result in the deal being called-off.

You might have to bear the repair costs: Lenders would probably not undertake any repair work or give you any repair credit because they have already suffered a loss on the property.

You can pull-off the best real estate short sales deal provided you have done your homework, and are patient and have a strong will to see the process through.

Investing in real estate is perhaps one of the most rewarding forms of investment today. However, venturing into real estate business without proper preparation can be very risky. If you know how to play the game in this business, you can possibly reduce the potential risks and expect to reap rich dividends. So keep in mind the following points when you plan to invest in real estate business:

Set your Goals: Set your goals straight. Think if you want to rent out the house so that there is a nice flow of income every month, or do you want to renovate the house and sell it at a good profit. Your investments should match your investment goals.

Sell intelligently: If you want immediate and handsome profit from your property then it’s always a good idea to give a facelift to your property. Although giving a facelift to your property might be very costly, it will enhance the value of your property significantly.

Keep a check on the market happenings: Real estate business is prone to sudden changes. So closely monitor the happenings in the market and keep yourself updated with the changes that are taking place.

Seek help from the experts: Real estate investing is not a cup of tea for everyone. To succeed in this business you need to be smart and should have an eye for detail. Seeking the advice of an investment professional can increase your chances of making huge profits as the investment professional is well versed with all the nuances of the real estate business. When you hire a professional you also free yourself from the legal hassles of the real estate business.

Flipping Real Estate

Flipping can also be a smart way of real estate investing. Flipping real estate business means that you buy an under priced house, do the minor repairs and then immediately resell it at market value. You will get flipping real estate opportunities swiftly or occasionally. To succeed, you must grab your opportunity when they come. The experience of buying or selling a flipping real estate is different every time. So adaptability and flexibility are the keys to success in flipping real estate.

Carleton Sheets

Going for the Carleton Sheets course can really prove helpful for people who wish to be successful in real estate business. The expert advice that you will get from this course will  reap rich dividends from your real estate investment.

Investing in real estate business can be risky, but investing intelligently will definitely increase your chances of success in it.

Real estate investing has attracted many investors with the lure that it will fetch them more return in a short span. This indeed created many success stories that vouch for the manifold returns a real estate investment generates.

Looking at the statistics and data, clearly  the returns from real estate investment have always been uncertain. Like stocks, it depends largely on the economy and federal policies. It always had its slumps and soars. It has its own heartbreaking as well as record breaking moments.

Median Home Prices Index

The Median Home Prices are more relevant than the Mean Price, since they are not as heavily influenced by a small number of very highly priced homes. Probably, this is what makes real estate investments challenging and enticing at the same time. The median prices in major cities across US show up and down as a common phenomenon.

Interesting Median Price Facts

• The Median Point at which half of all the homes were sold for more and the other half for less, over the last month rose in the west and south, but fell in the north-east and mid-west of U S.
• The Median Price in the west of U S was down 4.1% over the previous year falling to $231,100 but was, however, up over October’s median price of $220,200.
• If you take the south, the median price rose to $151,400 in the month of November from $149,900 a month before. However, this price is still down 1.4 percent when compared with the last year.
• The mid-west of U S experienced only a nominal 0.4 percent yearly decrease in the median price, but it also fell to $140,800 in November from $144,700 just about a month before.
• The median price in the north-east, however, dropped to $223,400 from $235,200 in October, and amounting to a down of 13.1 percent when compared to the same time in the previous year.