Tag: Real Estate

3 ways Homebuyers kill their OWN real estate deals…

Hello  again!  Below is a great article I read in Inman News that I thought I would share.  I truly see this often….

Got questions – the Caton Team is here to help.  We are a click away – email us at Info@TheCatonTeam.com

 

3 ways homebuyers kill their own real estate deals

Mood of the MarketBy Tara-Nicholle Nelson

I recently bought a couple of spa treatment packages for a friend’s birthday (as much as a gift to myself as to her, to be sure). The package included a pedicure and a massage for the price of the massage, but had a bizarro restriction that required I pick the gift cards up at least one day prior to spa day.

The problem: The spa was across a bridge from my town. Despite my very best calculations, I hit unexpected traffic and it took me an hour’s drive just to pick them up.

It’s a good thing for the spa that I was literally stuck on that bridge, unable to turn around; otherwise, that would have been an undone deal. I was very clear that the value of my hour far exceeded the value of those two “pedis.”

In the end, the conditions I had to surmount to take advantage of the bargain negated the value of the deal — and then some.

And that happens much more frequently than you’d think in the world of real estate. Today’s ridiculously low prices and interest rates, combined, seem like the perfect storm for finding a great deal.

But some buyers run into — or even unwittingly create — circumstances in an effort to cash in on the bargain that deactivate or diminish the full value they otherwise stand to gain from buying at the bottom of the market, for both home prices and interest rates.

Here are three ways homebuyers are defeating their own deals in today’s market:

1. House hunting too long. As many as 60 percent of the homes for sale in some markets are short sales. Many other listings are bank-owned (also known as real estate owned or REO) properties, and those homes tend toward two extremes: terrible condition, or so nice at such a low price they receive multiple offers.

Even the nicer, nondistressed homes on the market can end up in and out of contract over and over again due to appraisal or other lending-related issues.

As a result, it is not at all bizarre to hear homebuyers today say they’ve been house hunting for a year, 18 months, even two or three years. When you house hunt that long, you become susceptible to house hunt fatigue, which causes irrationally extreme overbidding out of sheer exhaustion.

Alternatively, it can cause you to settle for whatever house you can get, even if it doesn’t actually meet your needs — then spend the next 10 years obsessively spending to upgrade, improve, repair and furnish the place to try to make it more like the home you actually wanted.

Both of these outcomes negate and deactivate the bargain you stood to score.

To avoid house hunting too long, it’s uber-important to get and stay clear on the differences between what you want and what you need, and to work with a local real estate professional you trust.

Look to your agent to get and keep your expectations centered in reality, so you can make more strategic decisions throughout your entire house hunt, like house hunting in a price range where you’re likely to both find homes that will work for your life and be successful in your efforts to obtain one.

2. Making lowball offers way too low. Overbidding seems like an obvious way to cancel out the bargain potential of your deal. But making excessively low offers — offers sellers couldn’t afford to take if they wanted to — can have the very same result.

Buyers who think they can operate strictly on the basis of buyer’s market dynamics — without realizing that most sellers will need to make enough to pay off their mortgage or at least receive the fair market value for their home — are cutting off their own noses to spite their faces, all in the name of trying to score an amazing deal.

Note to “lowballers”: If you don’t actually secure the home, the superlow price you offered is no deal at all.

3. Freak-outs, stress, drama and mayhem. Once was, it was mostly the buyers uneducated about the homebuying process who tended to freak out and stress the most, especially at the top of the market. These were the folks who found themselves defeated at every turn by buyers who knew what they were up against and were prepared to make their best offer on their first offer.

Fast forward, and now the norm is for buyers to spend much more time reading up on what to expect, but the inundation of information can create brand new mindset management challenges.

Almost every buyer is stressed about whether they can qualify for a loan, and about buying into a down market. Some buyers try to apply national headlines about home prices being depressed to the superlocal dynamics of their neighborhood market.

This is unwise if you happen to be, for example, trying to buy a home in the boomtown real estate markets of Silicon Valley. Others go the opposite direction and deny that the basic truths about, say, buying a short-sale listing will actually apply to them (attention homebuyers: buying a short sale usually takes a long, long time).

The emotional freak-outs that result from having your expectations shattered, sometimes brutally, in the course of buying a home often lead to panic-based and fear-based decisions, which can be costly in the short and long term. Additionally, the stress itself can take a toll on your ability to be productive at work, and can even impair your relationship with your mate, neither of which are worth any deal you think you stand to strike.

Again, managing your expectations by working with a trusted broker or agent you feel comfortable relying on to understand the market in your neck of the woods and the type of transaction you want to pull off is essential to downgrading the role emotion plays in your real estate decision-making.

Got Questions? – The Caton Team is here to help.  Email us at Info@TheCatonTeam.com or visit our website at:   http://thecatonteam.com/

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6 Tips for a Successful Loan Modification

Below is a great article I read from Inman News that I thought I would share regarding loan modifications.  Please enjoy…

Got Questions?  The Caton Team is a click away – email us at Info@TheCatonTeam.com

 

6 tips for a successful loan mod

Avoid rookie mistakes when preparing, submitting your document packageMillions of mortgage borrowers who can no longer afford their mortgage payments but can afford a lower payment can avoid foreclosure by getting a modification of their loan contract. While the path to a modification remains torturous, it is not quite as bad as when I wrote addressed the issue in a 2009 column.

Are you unqualified?

It is not possible for borrowers acting on their own to determine whether they qualify for a modification because they don’t have access to all the criteria. Some is kept under wraps by loan servicers. However, borrowers can determine that they are not qualified for a government-supported modification by accessing aquestionnaire provided by the U.S. Treasury Department.

Bear in mind, however, that servicers also offer modifications outside of the government’s program. You might qualify for one even if you don’t meet the government’s requirements.

Compiling the information the servicer wants

The single most important step in obtaining a loan modification is providing the servicer with the exact information the servicer needs to make a decision. Each servicer has its own set of forms that must be completed, and its own requirements for the documentation you must provide.

In my first stab at this problem, I placed the information required by each of the major servicers on my website. Now borrowers can access the DMM Document Wizard, provided at my request by Default Mitigation Management LLC, which is a lot better. Based on your answers to the questions it asks, you will be provided with a customized list of forms you must complete and documents you must provide. It is free and will take the guesswork out of what you need.

Don’t exaggerate your financial shortcomings

Warning: The servicer will examine your statements of income and expenses to determine whether you can afford a reduced payment. Exaggerating your financial weaknesses may open his heart but close his purse, if it makes you appear to be a lost cause.

Assuring accuracy

Having the right form is one thing, but filling it out correctly is something else. Some industry executives estimate that about 95 percent of all packages submitted are incomplete or contain errors. A package with obvious errors may fall to the bottom of the pile, or it may lead the servicer to conclude that you do not qualify for a loan modification when, in fact, you do. Remember what you were taught in second grade: Neatness counts!

In addition:

1. Use a cover sheet that identifies all documents in your package.

2. Write your name and loan number on every page.

Assuring delivery

Preparing an accurate and complete set of documents is one thing, but delivering the package to the servicer is something else. Servicer systems have been overwhelmed by requests for help, and documents routinely get “lost.” You want to minimize the chances of that happening to you.

Using fax or certified mail: Make sure you have the correct contact information. Treasury providesaddresses and fax numbers of every mortgage servicer. Certified mail is more reliable than fax, but neither guarantees prompt attention by the servicer, or even that the documents won’t subsequently be misplaced or lost.

Using the DMM portal: The best way to deliver documents to servicers is to use the DMM portal, available through the DMM Document Wizard by clicking on “Submit,” or visit www.dclmwp.com. I have no financial interest in DMM.

Using the portal, your documents are delivered to the servicer electronically, and the portal then becomes a direct communication channel to the servicer. The servicer uses the portal to acknowledge receipt of your documents and to request additional information or documents. You use the portal to make corrections, to send additional information, and to update yourself on what has been completed and what remains to be done.

Questions by you are automatically directed to the specific employee who can answer them. All communications are time-stamped and remain in the portal as a record of borrower/servicer exchanges.

Unfortunately, not every servicer subscribes to the DMM Portal. The list of those that do is shown on the DMM Wizard.

Follow up, and then follow up again

Because the process of modifying mortgages remains slow and error-prone, you may need to nudge the servicer. If you faxed your documents, you should follow up to make sure the papers haven’t been lost and the case is in an active queue. But even if you use the DMM Portal, you should follow up with the servicer regularly to make sure your application is on track.

By Jack Guttentag
Inman News®

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HARP Refinance Program Expanded

Got questions about the new HARP Refinance Program?  Clink on the link below to access up to date information.

Click to access HARP_release_102411_Final.pdf

Got Questions? – The Caton Team is here to help.  Email us at Info@TheCatonTeam.com or visit our website at:   http://thecatonteam.com/

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How to Write a Great Offer on a Short Sale Property…

So you’ve found your dream home only to find out it is a short sale.  Nuts.  Now what?

A short sale is a pre-foreclosure property.  Perhaps the seller has stopped paying their mortgage and are in default, or perhaps the seller is on top of paying their mortgage, but are forced to sell when the market is down.  Either way it comes down to one thing – the seller owes more than the home is worth and in order to sell the property free and clear of any liens the seller must ask the bank to take less than they are owed – thus the term short sale.

For a seller to qualify for a short sale they must be in financial distress and prove this to the bank.

For a buyer in requires great patience while the offer package and seller financial documents are reviewed by many many many investors.

Because of the tedious review process – a buyer must be wise when writing their initial offer.

How to write a good offer on a short sale home…

To be frank, when writing an offer on a short sale property you only get one shot.  Once and if the bank accepts the short sale offer – that price is firm.  During the buyers contingency period – if they find out there is an expensive issue – there is no going back to the bank and re-negotiating.  The buyer can either walk away from the deal due to the new information – or the buyer can take a look at their other options on the market and decide what is best for them.  Of course, as your Realtors – the Caton Team will try to renegotiate the price and if an appraisal comes in low – that’s ammo.

The good news – since generally the owners still occupy the home, it is not in too bad of shape and disclosures can be provided up front.

So, how do we write a good offer?  Buyers and their agent will take into consideration the pro’s and con’s of the home and write their best offer after taking a look at comparable properties on the market.  The short sale bank will conduct one or more appraisals of the home and if the buyers offer price is in line with market price – generally the bank will move forward with that offer.

Price is important but sometimes it is not everything.  When writing any offer, a buyer will need to have a bank pre-approval letter, copy of their bank statements and pay checks to show their financial security.  The short sale bank wants to be sure the purchaser is strong.

The terms of the contract are equally important.  Time is always of the essence in Real Estate – it is even a term in the contract.  When dealing with a short sale bank – a buyer and their Realtor have got to think like a bank – that means moving fast when the bank is ready.  Close of Escrow should be a 30 window – shorter if possible.  Longer than 30 days tends to turn the bank away.  As for as contingency periods (time for the buyer to conduct their inspections and appraisal) the short sale bank will give the buyer the standard window of time – generally 10-17 days after acceptance.  Having a tight contingency period will make the short sale bank a bit more happy.  Also, the bank doesn’t move at anyone’s pace except their own – so giving the bank at least 3 months to review the short sale package is acceptable, longer is better if a buyer doesn’t mind.

Now on my end, as the Realtor – I want to make sure I send the bank your offer and all the paperwork by mail instead of fax so the bank has everything it needs and hopefully cutting down on the back and forth.

In the end, a buyer must write THEIR best offer, and whether they get the house or not, be comfortable with their purchase.

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

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Loan Limits Have Changed… check out this site…

For more information on the change in loan limits – visit the Fannie Mae webiste at:  https://www.efanniemae.com/sf/refmaterials/loanlimits/

-Sabrina

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

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How to Write a Great Offer on Bank Owned Homes (post foreclosure)

Point Blank – Writing a good offer is writing a good offer.  Price is most important, then close of escrow, contingency terms and then buyer qualifications.  Just about in that order.  So when a buyer is faced with writing an offer on a Bank Owned home – it is just about as easy as writing an offer on a home where the buyer is working directly with the seller.

The Caton Team Realtors, will provide the buyer with comparable market information – homes of similar condition and size – and what they are selling for.  Armed with this info, the buyer can decide a fair market price to offer.  Since the home is bank owned – the bank is very aware of the homes market value and has elected to sell the property in the open market instead of an auction – most likely because the bank will get more money in a normal sale versus an auction.  So our advise to a buyer – be realistic in your offer price.  Too low and the bank will move on, there can be some back and forth counter offers – but generally it is cut and dry or the bank will hold onto an offer till a better one comes along.  (At least that is how it feels to the waiting buyer.)

Next are the terms.  A bank owned home can move MUCH faster than a short sale.  A buyer will want to keep their property and loan contingencies tight – 10 – 17 days and generally a 30 days close of escrow is acceptable – if not shorter since the home is already vacant.

The downside bank owned homes – no disclosures except for the CA State Mandatory Disclosures – but those pertain more to the area than the actually home.  Why?  The bank has NEVER lived in the home and cannot disclose if there are neighborhood nuisances, or if the downstairs bathroom floods every years.  So it is more buyer beware – however – once a buyers offer is accepted, they will have their contingency time frames (stated in the offer) to conduct any and all inspections they want and to make sure the home appraisals for their loan.

Sounds like any offer right?  Right.  Bank Owned homes are like normal sellers.  The turn around time for an offer response in a couple of days – a week max.  Meaning, when the buyer get’s the offer accepted phone call – the clock starts ticking for contingencies and in 30 days I hand them the keys 🙂

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

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Interested in Investing in Real Estate? Great article link from the WSJ

Great article for Investors from the Wall Street Journal:

http://online.wsj.com/article/SB10001424053111904103404576558484074477822.html?mod=WSJ_RealEstate_LeftTopNews

 

 

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

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What Costs of Home Ownership is Tax Deductible?

I just came across this great article that I thought I’d forward along.  It talks about what is and is not tax deductible in home ownership.

http://lowes.inman.com/newsletter/2011/09/13/news/152084

 

 

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

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How Much Insurance Do I Really Need?

How Much Insurance Do I Really Need?  It’s a great question that I get often.  Found this great article and thought I would pass it along:

http://www.washingtonpost.com/realestate/if-you-arent-sure-what-your-homeowners-insurance-covers-ask

 

Got Questions? – The Caton Team is here to help.  Email us at:

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A Cinderella Story… Jake and Sophia

It was 2008.  Jake and Sophia had been working hard and saving their money to buy their first place.  The market had fallen enough to make a home a reasonable dream.  Armed with their pre-approval from Melanie Flynn, we took a look at homes in San Carlos and Redwood City.  It didn’t take long for us to find a darling place in Redwood City.  It was a short sale.  Two loans on the property with two different banks.  We knew it would be a tricky deal, but the home was well worth the work.

We wrote an offer and the sellers accepted right away.  The offer was sent to both banks and together we waited on pins and needles to hear back. Weeks passed.  Each Wednesday I’d call the Listing Agent to get the scoop.  And each week she told me she hadn’t heard back.  Months passed.  Six – I think – could have been more.  Finally I get some answers.  The two banks were at a stand still.  Neither would budge.

Now during these six months when everyone was in the dark – Jake wanted to propose to Sophia and wanted to do so in their future home.  At the time – The Caton Team didn’t know the shenanigans going on with the bank – so we arranged to show them the home again and hang out in the car so Jake could properly propose.  It was super cute and of course, Sophia said yes.  (They are high-school sweethearts.)

We all went home with hearts and stars in our eyes – that lasted until I got the phone call.  You see,  a short sale with one home loan is easy compared to a home with two loans.  One loan, means one bank decides their bottom line.  Two loan, and now we have a fight.  Technically, the 1st loan has precedence over the 2nd loan, so much so, the 1st loan could foreclose on the home and own it – wiping the 2nd loan off the face of the earth – the 2nd loan would have no recourse and just take the loss.  But since the 1st loan was trying to work with the sellers to avoid foreclosures – the fight is over how much the 2nd loan would accept in the short sale and walk away.  Typically, the 1st loan gives about $1000 – $3000 to the 2nd loan as a courtesy since the 1st loan is not foreclosing.  Generally the 2nd loan is happy to get anything – and accepts what the 1st loan gives them.  Well not this time.  The 2nd loan was demanding more money – the 1st loan wasn’t going to give it to them.  Both Realtors tried every which way to put the deal together, but in the end, nobody had enough money to satisfy this 2nd loan.

After a long talk with Jake and Sophia we knew it was time to walk away.

Thankfully, since we saw the writing on the wall – we started looking for other homes.  Seems like everything that would work was already pending or sold.  Except for one.

The trick to being a great Realtor is also being a great detective.  Combing through the pending listings, Susan saw a cute home which was pending but in the agent comment section – it was begging for a back-up offer – it appears the current buyer was threatening to walk away since they were tired of waiting for the short sale bank to respond.  The Listing Agent knew she was so close to a short sale approval – but the buyer had enough.

We called right away and showed the home that night.  Jake and Sophia loved it.  Sadly, the home was priced about $50,000 over their budget.  That didn’t stop the Caton Team.  We knew the buyer was going to walk, the bank was ready to sell and we knew to strike when the iron was hot.  We wrote the offer right away.  The seller accepted the offer and sent it to the bank.  In the mean time, the other buyer rescinded their offer and suddenly we were the only offer on the table.  It was the banks call – wait another 356569546 days or sell it now…

With bated breath we waited.  Two offers on two short sales – it was like roulette.

Before we knew it, the bank accepted our $50,000 below price offer and we were in the home stretch.  We rescinded our offer on the 1st house and about 25 days later handed the keys to Sophia & Jake.  They couldn’t be happier.

Just so you know – the original house – the two banks fought for over 1 year and in the end the 1st foreclosed on the 2nd.  It wasn’t the best solution for the seller, but thankfully they were finally able to move forward.

In the end – Jake & Sophia got a home that was far better than the first place.  It’s why I tell each buyer upfront – we’re going to see a lot of homes, we’re going to write a bunch of offers, some will be accepted or rejected, some homes will move faster than other – but in the end – what’s meant to be is meant to be.

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

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