February 22, 2010

Short Sales Aren't Short When it Comes to Closing Them!

Short Sale Buyers Face Difficulty Closing Deals Quickly That's the headline of a recent RISMedia article.  At first, this seemed like a very strange article to publish.  Of course buyers have difficulty closing short sale deals quickly!  There is nothing quick or short about a short sale deal.

But as I read through the article I realized that this isn't some "Oh I just found out this information" from the higher powers that always somehow seem to be one step out of the loop of real world events or even a "slow news day" editorial.  Though the article doesn't say it, it's all about agents not fully informing the buyers about how a short sale works.

The premise of the article is that many buyers may miss out on the $8000 tax credit because they are in contract on a short sale and the process is looking like it's not going to the closing table in time.  Well, I may be reading a bit more into it than most, but if the buyer wasn't fully briefed by their agent on how long a short sale could possibly take, then it's clearly a fault of the agent.

Now, I'm assuming that the buyer is utilizing the services of a buyer's agent.  If you're planning on buying a potential short sale, I don't recommend going in unrepresented.  It's not for the faint of heart.  And as this article clearly shows, it matters WHO is representing you, too.

Now, I'm sure that if these buyers had an agent, if they WEREN'T told about what to expect when dealing with a short sale property, it was because the agent themselves probably didn't know what to expect.  Trust me, most agents try to avoid short sales, be it as a listing agent or a selling (buyers) agent, simply because of the time-frame and work involved with them compared to a "normal" sale.

State laws vary greatly on how short sale transactions are handled.  There are even different rules and procedures on them between the different MLS'es within the state.  So, if you are even considering looking at short sale listings as a possible buy for your new home, then you need to find an agent that has experience dealing with them.  And if you're a first time home buyer and you're not already in a contract, you may want to reconsider any offers on properties that are potential short sales because even the fastest short sale often takes months before it gets to the closing table.



February 05, 2010

Get $14900 to Buy Foreclosures in Hickory NC (1st Time Home Buyer)

Yes, you heard me right.  If you're a first time home buyer and you're interested in buying a home in the Catawba county, NC area, I can get you an additional $14900 of funding if you purchase a local foreclosed property.

A little details then. 
This is NOT a tax credit (like the $8000 tax credit) and it's not extra money in your pocket.  What it is, is an essentially free loan of up to $14900 to help purchase a foreclosed property.  That's like getting a $100,000 home for $85,100 without even negotiating!

So how does it work?
I did say "essentially" didn't I?  There are conditions.  The $14,900 will be a zero percent interest 2nd mortgage on the home that will be forgiven 20% for each full year of ownership.  So, if you own and live in the property for at least 5 years, the money is free.

As you might expect, there are a few conditions that must be met, too.  Here's the main points.


  1. The property must be in Catawba county and be a single-family detached, condo or townhouse (manufactured housing is not eligible).
  2. The can't be any structural repairs or deferred maintenance issues (per NC licensed home inspector)
  3. All properties must be purchased at or below 99% of the appraised value and the price cannot exceed $210,000
  4. All necessary repairs must be completed prior to closing.
  5. Eligible borrowers must meet the mortgage financing requirements (you have to qualify for a loan)
  6. There is an income limit of approximately $46000 annually (this may be different, but close)
  7. Borrowers must contribute $1000 of their own funds into the transaction.
  8. Borrowers must complete 8 hours of classroom or one-on-one home buyer counseling from a HUD approved housing counseling agency prior to loan closing (we'll help you find one)

There's a few more particulars, but that covers the big ones.

So, if you're a first time home buyer in the market for a Hickory NC area home for sale, it may be worthwhile to check out some area foreclosures and see if you qualify for an extra $14900 in funding. 

Need more information or ready to go look at some homes, just give me a call or visit my website at www.HickoryNCHomes.com



February 03, 2010

So, Where is the "Moral Obliation" on Commercial Loans and Stategic Defaults?

There has been article after article and blog post after blog post on the subject of strategic defaults and the 'moral dilemma' of it (or lack there of, if that's your position).  Many believe that it is immoral for a person to decide to strategically default on their mortgage.

Let's stop there for a minute and define strategic default.  In a nutshell, strategic default is when a borrower who is financially capable of making the monthly mortgage payment, decides to stop paying and let the bank foreclose on the property.

People who think that it's immoral to make the decision to default strategically have pretty much called those that do every name in the book.  The best: if you can pay, but choose not to, you're a low-life, greedy SOB.  My response to this is pretty simple: umm...so were the banks that chose to lend the money.

So, why am I bringing this up again, when it has been knocked around til it's already battered and bruised?

Because recently, the largest ever residential property purchase in the nation just ended in a strategic default.

In 2006, Tishman Speyer Properties bought the 56-building, 11,232 unit Peter Cooper Village & Stuyvesant Town apartment complex in New York City for 5.4 BILLION dollars.  Last week, they decided to "hand over the keys" (ie, strategic default/walked away) to their lenders on a 4.4 BILLION dollar debt on the property, which is now estimated to be worth 1.8 Billion.

Where are all the outcries of "that's immoral!" "those greedy SOBs!"

They were replaced with "they made a sound business decision."  After all, this is a commercial company and that was a commercial loan.  It's only business, and business understands that sometimes you default.  Since it's "just business," it's hardly made a splash on the strategic default radar.

Now, just to be clear, I'm not advocating strategic defaults.  If you default on your loan, there are repercussions to doing so, and if you're considering it, I'd strongly advise you to talk to your legal counsel as well as your financial adviser and tax professional, so that you will fully understand the position BEFORE you choose that option.

Still, I think it's an option that must be considered from a business standpoint and not a moral obligation.  I'll say what I normally say about it here: "please show me where, in the loan documents, that the borrower is morally obligated to make payments."  Otherwise, I'll stick with if it's good enough for big businesses, then it's good enough for little home owner as well.


For further reading, try: Strategic Defaults and the Moral Imperative and The 'walkaway' double standard
__________________________________________

Roger Johnson is a Realtor with CENTURY 21 American Homes in Hickory, NC.
I service the Catawba and surrounding counties, and the Hickory, Newton, Conover, Taylorsville, Claremont, Statesville and Charlotte, NC real estate markets.
You can contact me via Email or give me a call at 828-381-9245 or 828-568-2121 ext 310
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February 01, 2010

5 Reasons Self-Directed IRA's Should be Your Best Friend When Raising Private Money

The article below was written by Adam Davis of Ultimate Private Money and is being republished with permission.
If you are a real estate investor, especially in this market, it pays to know how to raise private money for your real estate investing deals.  Not only does private money solve a key problem in today's market of obtaining bank loans, it gives you the power to confidently make 'all cash' offers and know that you can indeed close in 10 days or less.  Both are strong motivators to sellers to accept lower than "normal" offers on their properties.
If you're a real estate investor looking for properties in the Hickory NC real estate market area, be sure to contact Roger Johnson today.  I'm an knowledgeable REALTOR® with experience both dealing with, and as an, investor, so you can count on me for solid, professional service.
There are easy ways and there are hard ways to raise private money. One of the easiest of the easy ways to raise private money is to incorporate self-directed IRAs each time you talk to a prospective private investor. 
Self-directed IRAs are still relatively unknown outside of the niche real estate investor world, which means you have some huge advantages - you're not just a face in a crowd saying the same thing everyone else is saying. Lest you forget that there are a lot of other forces out there competing for your private investors capital (financial planners, stock brokers, banks) it is critical that you have a unique proposition for them.
As soon as I began showing potential private investors self-directed IRAs - which meant
educating some of them on what they were and the benefits - the floodgates really opened up. Soon, some of my biggest investors began developing in the process of converting their old 401(k)s and SEP/SIMPLE IRAs into self-directed accounts and then placing those funds into my real estate investment projects.
At their core, self-directed IRAs are simply Individual Retirement Accounts that allow the account owner to make decisions about where the funds go. The funds can be invested in real estate, promissory notes, private placements and more.  The accounts we're talking about aren't offered by most financial service companies (like Fidelity or T. Rowe Price). There are special custodian companies that handle these accounts. Per IRS rules, a custodian or trustee must be involved and all the same tax rules apply for early withdrawals, roll-overs and treatment of distributions/RMDs (required minimum distribution).
Here are 5 Reasons that Self-Directed IRAs should be your best friend when raising private money for real estate investments:
  1. Tax-deferred growth - The basic benefits of a traditional IRA apply to self-directed IRAs: investors can contribute money to an account on a "pre-tax" basis and defer income taxes on those gains until the funds are withdrawn, at which point distributions are taxed at ordinary income tax rates. This is great because it allows the private investor to compound larger sums using what would be tax money owed to the government. Deferring income taxes alone can lead to huge percentage difference in investment value after just a few years.
  2. Tax free growth - Self-directed ROTH IRA's can be used to place funds into your real estate investments as well, whether for private placement of equity capital or a promissory note. With a ROTH IRA, the investor contributes after-tax dollars and does not pay any taxes on the gains after a 5 year minimum holding period if over 59.5 years old. Principal funds can be withdrawn without tax consequence if the account has been open for at least 5 years. ROTH benefits may be even bigger for your private investors, because they have the potential of big gains long term without yielding anything to Uncle Sam.
  3. The 'wow' factor - Since most people, accredited and non-accredited investors alike, are unaware of the fact that they can invest in real estate with their IRA, you have what I call the 'wow' factor going for you. You can take on the role of educator and provide valuable information to investors who never knew this option existing for their money. Most private investors are quite receptive to learning about new ways to make money and grow their retirement accounts.  Who better than you to tell them.
  4. Ease of use - Self-directed IRAs are quite easy to work with. The paperwork process is really no different than opening up an account with a large financial institution or bank. The private investors mind is put at ease because their custodian will handle all of the tax reporting requirements and account maintenance.
  5. Access to more capital - Your investment pool widens significantly with self-directed IRAs. Private investors can roll over or transfer funds from an existing IRA/SEP/SIMPLE/401(k) or they can contribute funds from another source. In many cases, private investors have investments that are under performing or languishing and will happily move them to a new account for a few percentage points more in return.
There are many more reasons why Self-directed IRAs should be your best friend when raising private money, but the preceding 5 reasons should suffice in lighting a fire under you to incorporate these awesome tools in your business right away. Creating information sheets, brochures or other materials to show private investors these benefits and how they can take advantage of them by investing with you is a great start. Uncle Sam doesn't usually hand out a lot of breaks, so when he does (and it can actually result in a truckload more private money) you should take full advantage.
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Roger Johnson is a Realtor with CENTURY 21 American Homes in Hickory, NC.
I service the Catawba and surrounding counties, and the Hickory, Newton, Conover, Taylorsville, Claremont, Statesville and Charlotte, NC real estate markets.
You can contact me via Email or give me a call at 828-381-9245 or 828-568-2121 ext 310
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3 Secrets to Getting Your Property SOLD!

I'm sure that you've heard the old saying that there are three things that sell a home, "Location, Location, Location."  I'm going to let you in on another little secret.  It AIN'T SO!  Sure, location is a prime factor in the sellability of your house, but even a bad location can be overcome.  The following 3 things are the Real secrets to getting your property sold.

PRICEdollar signs clipart


The price of the property is the single most important aspect of getting your home sold.  If the home is priced correctly for the area, the market and it's condition, then it will sell.  It's as simple as that.  What makes pricing difficult to do correctly is that several factors make it hard to determine sometimes what a person would be willing to pay.  For example, you may have a nice 3 bedroom, 2 bath home that compares to others in a nearby neighborhood suggesting a price of, let's say, a $150,000.  However, you happen to live on an old side road, next to the newly built county landfill.  That's going to affect value, without a doubt, but determining that effect is difficult to do in some cases.

MARKETINGhome 4 sale clipart


If you have a great house worth $150,000 and you want to sell it for only a $100,000, you'd think that people would be climbing the fences trying to get at it.  But, if you don't let anybody know that you're wanting to sell, how will they know about the great house with the even better price?  You cannot be a "Secret Seller," especially in a a slow market, like the one were in now.  Running ads is a great start to marketing, but there is really more to it than that.  Slapping an ad everywhere you can think of is good, but target marketing is MUCH better.
Putting the ads in the correct places where they will get the most exposure is better than the 'spray n pray' method of throwing them out everywhere.  The BEST marketing, though, is putting the RIGHT ad in the best locations.  Anybody can put a "House 4 Sell.  Call XXX-XXX-XXXX."  You need to put together a marketing plan with several good ad layouts.

TIMEhttp://www.clipartheaven.com/


Time is the final factor in getting a house sold.  How much time are you willing to wait in order to sell your home?  A property will eventually sell for any price you want...if you're willing to wait on the market to "catch up" to what you're asking for the property.  If you have something that could sell for $150,000 today, but you want a cool $1 million for it, you can eventually get.  No Really!  Of course, you may have to wait 100 years or more, but you CAN eventually get that price.
But if time is a real issue for you, then it's a factor in selling, too.  If comps for your house so a reasonable selling price of $150-160,000, with an average time on market of 6 months, then you can expect (assuming that you're marketing!) to sell in that range in the given time, more or less.  If you price it at the top end of the range, it will likely take longer to sell, while pricing at the low range, less time to sell.
Again, if you're willing to wait it out and see, price a bit high may work, but if you need to be moving NOW, then you'd want to price it on the low side, or maybe even lower, in order to get the quickest sale possible.
____________________________

Roger Johnson is a Realtor with CENTURY 21 American Homes in Hickory, NC.
I service the Catawba and surrounding counties, and the Hickory, Newton, Conover, Taylorsville, Claremont, Statesville and Charlotte, NC real estate markets.
You can contact me via Email or give me a call at 828-381-9245 or 828-568-2121 ext 310
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FSBO Selling Tips

If you are ready to sell your property and want to try it on your own before committing to list with a local Realtor, below are a few tips that will help better your chances of successfully selling your property.  And also, a few tips you need to do BEFORE you try to sell.

Before Tip #1: Get a Home Inspection

Hire a good local home inspector to review your property and then fix everything that they find that needs attention.  This will help.  And don't worry, I can assure you that when the buyer's home inspector comes through, they will find more stuff.  This will just make it much easier to deal with later.

Before Tip #2: Know Why You're Selling

Sounds dumb, I'm sure, but why you're selling is very important to the success of selling.  Your marketing will depend on it.  Marketing to get top-dollar is different from marketing for a quick sale.  Also, if you're putting your house for sale because you're facing a possible foreclosure, STOP THINKING FSBO, and call a Realtor that specializes in your situation.  Read this ARTICLE for more information.

Selling Tips

1. Buy a few books on Home Selling and Home Marketing.
2. Set your price by researching it on the Internet, and by reviewing other homes in your neighborhood or area that are listed for sale.  You may also be able to research your county's tax office to see what other homes have sold for in the past.
3. Setup your marketing budget and your marketing plan.  Marketing will usually cost a minimum of $1000 to effective showcase your home, and frequently more.  This includes such things as daily and Sunday edition newspaper ads, signs, flyers, a property website, Internet listings, local magazine listing, etc. This does not include the cost of using a flat-fee MLS service, which usually runs between $400-1000.
4. Be prepared to take phone calls.  Buyers want to talk with someone when they call.  Most will not leave messages.  If you will not be available to answer the phone, make plans for SOMEONE to answer.  You may have to hire an answering service for this.  The first contact with a prospective buyer is usually the most important.
5. Pre-Qualify potential buyers.  Before you let someone in your home, you need to make sure that they can actually buy it and that they are actually interested in buying.  Some basic questions to ask are, "have they been pre-qualified for a mortgage?" "if so, for what amount?" "Do they have a home for sale?" "Is it under contract or still listed?" "If under contract, is their buyer pre-qualified and do they have a home to sale?"
The next two points fall into marketing, but are too important to simply lump them in.
6. Buy a professionally made yard sign.  Stand out from the usual red and white "By Owner" sign.  Not only will it get your property noticed faster, a large typed phone number is much better than a small, rain-smeared hand-written one.
7. Take good quality digital pictures of your home.  These will be the main source material for all your advertising, so make the shots count.  You may even consider hiring a professional photographer to do your photos as in many cases, what the buyer sees in the pictures determine whether or not they even call on your home.

You can find more information on home selling at www.HickoryNCHomes.com
 ______________________________________

Roger Johnson is a Realtor with CENTURY 21 American Homes in Hickory, NC.
I service the Catawba and surrounding counties, and the Hickory, Newton, Conover, Taylorsville, Claremont, Statesville and Charlotte, NC real estate markets.
You can contact me via Email or give me a call at 828-270-9330 or 828-568-2121 ext 310
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