Very often I'll come across someone who'll request all the foreclosed properties I have access to. It's from my years of experience that I've found foreclosures are simply not the deal they are made out to be. Not, at least, to the person who's never experienced them before. The reason this market has so many foreclosed properties is because people could not afford their homes after they got into them. The taxes went up, the adjustable rate mortgages adjusted, other expenses went up, whatever their situation was. Below is the definitions of short sales and foreclosures, then I'll discuss why they are not always the best way to go:
Short Sales: A sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments.
Foreclosures: When a homeowner defaults by failing to make payments on his or her mortgage, the bank or financial institution that holds the mortgage note may foreclose on the property. Foreclosure gives the legal ownership of a property to the bank to allow the bank to recoup its investment.
For a short sale, the owner still owns the property. Some downsides of buying into either of these are…. time. It often takes the bank a long, long , long, time to decide whether or not to accept your offer. They don’t play by the same rules as a 'normal' sale. They have their own rules, and if you don’t follow theirs, then forget about that house. It could take 2 months just to hear a response as to whether or not your offer is accepted. My typical ‘normal’ offer gives the seller 1 – 2 days to respond. And if a better offer happens to come in at that time…you won’t hear about your rejection until after they accepted the other one, which again could be 2 months.
Buying and selling real estate is a very emotional journey. When dealing with a bank-owner, you are a file on their desk. You also might need to take responsibility for fines that were assessed to the home. You could have a home inspection, but know that the bank won’t likely renegotiate. And finally, foreclosures are NOT this great deal of the century that we hear they are. They are often trashed, I showed one just this week that had 3 dead mice floating in the kitchen sink….. And most of all, the bank will still try to get fair market value. Occassionally, once in a blue moon, as lightening does strike and people do win the lottery, you might come across a great deal, but the 99% majority will not be.
Tuesday, September 23, 2008
Friday, September 12, 2008
September Homebuyer Seminar
La Casa de Esperanza will be hosting this month's HBC Service's Homebuyer Seminar.
HBC Services is a non-profit organization which offers credit and homebuying counseling, and has various government grants available to qualifying buyers.
This month's seminar is:
Saturday
September 20, 2008
9 am - 3 pm
This is a one day class. Speakers will include a representative of HBC Services talking about credit and how to decide if buying a home is your best financial move at your current situation. I will be the guest realtor speaker and will discuss the whole homebuying costs and procedures and what to expect and when. Other guests speakers will include a mortgage lender, home inspector, and an insurance agent.
This seminar will be jam packed with educational material for whatever stage of homebuying you are in. Seminars are usually held monthly, so if this date doesn't work out for you, please check back for future dates!
To ensure you have a seat and materials, please RSVP to HBC Services: 262-522-1230. For information about HBC Services, visit their website at http://www.hbcservices.org/.
Wednesday, August 20, 2008
Mistakes Sellers Make
Sometimes sellers have their own ideas of what is right, what works, and what it takes to sell in this market. This is a list of just a few that I have run into:
1. Pricing too high. What I do for my clients when pricing their house is to pull comparable properties, not just properties in the neighborhood, or what they want for it, and I use the same addition and subtraction that an appraiser would use when setting fair market value. You are much more likely to get a full price offer on a house that's priced right than you are to get a low ball offer on a house that's priced too high.
2. Questioning the first offer. If there's one thing I've learned from my broker (who's been selling real estate for some 40 years) it is that the first offer is usually the best offer. It's likely from the person who's been out there looking and just waiting for their perfect house to show up.
3. Not responding to all offers. Sure a low ball came in, but what do you expect from a buyer in this market...that's what their programmed to do! Never be the one to let the negotiations die.
4. Using a stager. That's what you're realtor is for! I work with plenty of buyers, and I know what they notice, how they see it, what makes a room look usable vs cramped...let your realtor work for you!
5. Picking the wrong buyer. The highest bidder might not be the best one, especially when it comes to closing day and oops their not qualified after all! Your realtor will be familiar with area lenders and will know the signs of what to look for in qualifying a buyer.
Of course nothing is fool proof. But as you can see, using a well qualified realtor will lessen your chances of making a mistake by using their expertise in marketing, person skills, and knowledge in the closing of the deal. It pays to use a realtor!
1. Pricing too high. What I do for my clients when pricing their house is to pull comparable properties, not just properties in the neighborhood, or what they want for it, and I use the same addition and subtraction that an appraiser would use when setting fair market value. You are much more likely to get a full price offer on a house that's priced right than you are to get a low ball offer on a house that's priced too high.
2. Questioning the first offer. If there's one thing I've learned from my broker (who's been selling real estate for some 40 years) it is that the first offer is usually the best offer. It's likely from the person who's been out there looking and just waiting for their perfect house to show up.
3. Not responding to all offers. Sure a low ball came in, but what do you expect from a buyer in this market...that's what their programmed to do! Never be the one to let the negotiations die.
4. Using a stager. That's what you're realtor is for! I work with plenty of buyers, and I know what they notice, how they see it, what makes a room look usable vs cramped...let your realtor work for you!
5. Picking the wrong buyer. The highest bidder might not be the best one, especially when it comes to closing day and oops their not qualified after all! Your realtor will be familiar with area lenders and will know the signs of what to look for in qualifying a buyer.
Of course nothing is fool proof. But as you can see, using a well qualified realtor will lessen your chances of making a mistake by using their expertise in marketing, person skills, and knowledge in the closing of the deal. It pays to use a realtor!
Tuesday, August 12, 2008
Testing Potential Dangers in a House
When purchasing a home, you have the right to have a home inspection done. You do not have a right to certain testing, unless it's written in and agreed upon in the accepted offer. Some testing you might know beforehand, some the home inspector might recommend. These common tests are:
1) Radon
2) Lead
3) Asbestos
4) Mold
RADON is a colorless, odorless gas that seeps into the home from the ground, such as from a basement. There are radon mitigation systems to remove the gas from the home.
LEAD based paint was used prior to 1978, and can contribute to many health problems. A buyer, when submitting an offer, will need to either ask for the right to have this tested, or must waive their right to testing. There is a separate form that must accompany an offer to purchase on all homes built prior to 1978.
ASBESTOS This fibrous material was very popular in building materials but was banned in 1985. It is still found in many homes. Asbestos is dangerous when it's been disturbed, causing fine dust particles to enter the air.
MOLD The opinions vary greatly. Mold needs water and dampness to grow, and finding the source of the leak is something the home inspector can try to do.
1) Radon
2) Lead
3) Asbestos
4) Mold
RADON is a colorless, odorless gas that seeps into the home from the ground, such as from a basement. There are radon mitigation systems to remove the gas from the home.
LEAD based paint was used prior to 1978, and can contribute to many health problems. A buyer, when submitting an offer, will need to either ask for the right to have this tested, or must waive their right to testing. There is a separate form that must accompany an offer to purchase on all homes built prior to 1978.
ASBESTOS This fibrous material was very popular in building materials but was banned in 1985. It is still found in many homes. Asbestos is dangerous when it's been disturbed, causing fine dust particles to enter the air.
MOLD The opinions vary greatly. Mold needs water and dampness to grow, and finding the source of the leak is something the home inspector can try to do.
Tuesday, July 8, 2008
Kudos to The Equitable Bank
Several years ago I purchased some investment duplexes. To get the lowest interest rate possible, I did what many, many other people were doing at the time...getting an adjustable rate mortage. I knew that it would adjust in 3 years, and I knew the maximum it could adjust was 2%. The first two mortages were with St. Francis Bank, and I was very happy with the service I recieved from them. Unfortunetly, they were bought by Mid America Bank. When the 3 years were up, they adjusted. However, much to my surprise, they did not adjust to the current interest rate. Rather, they adjusted the maximum amount they could! This new rate was way above the the normal interest rate, causing me to incur the cost to refinance, with a different company of course. I was lucky that I was able to refinance...my credit was good, my loan to value was good, and the properties had not depreciated in value. This is where many other people ran into problems though. When their ARMS adjusted, they weren't as lucky.
So this month, my ARM was due to adjust on my 3rd property. I was expecting the worst. However, my lender for this one, The Equitable Bank, did NOT adjust the maximum amount they could. Rather, they adjusted to an amount LOWER than what I could get if I did a refinance! While my payment did raise, it went to a reasonable amount, better than I expected. So my hat goes off to The Equitable Bank! Their action shows they really do care for their customer.
PS my loan officer is Cara Reese, out of the Delafield office! I'd recommend her to anyone.
So this month, my ARM was due to adjust on my 3rd property. I was expecting the worst. However, my lender for this one, The Equitable Bank, did NOT adjust the maximum amount they could. Rather, they adjusted to an amount LOWER than what I could get if I did a refinance! While my payment did raise, it went to a reasonable amount, better than I expected. So my hat goes off to The Equitable Bank! Their action shows they really do care for their customer.
PS my loan officer is Cara Reese, out of the Delafield office! I'd recommend her to anyone.
Monday, June 2, 2008
Closing Checklist
Alot of my buyers were requesting a closing checklist of things they should do and have in line ready for the closing. To accomodate their request, I've compiled this general list that would apply to everyone in the Milwaukee/Waukesha area.
1. Home owners insurance: you will need to have a homeowner’s insurance policy in place before closing. Check with your car insurance company first, often times you’ll get a reduced rate if you have both your car and home insured with the same company. You can always change down the road, but you need this policy in place before closing.
2. Gas/Electric: Call we energies before closing to have the gas and electric transferred to your name on closing day. 800-242-9137
3. Water: You don’t need to do anything, the bill will be sent to the house every 3 months. The seller’s credit for their portion used for the quarter is credited at closing, and you pay the full amount on the bill when it comes.
4. Phone: Personal preference if you want a land line and with who.
5. Cable: Personal preference, again. Time Warner Cable is the local provider: 800-627-2288
6. Mail: make sure to fill out a change of address at the post office prior to closing.
7. Subscriptions: make sure to contact your magazine/newspaper subscriptions to go to your new address.
8. Amount to bring to closing: your lender will let you know the day or two before closing what the exact amount is. You’ll need to bring it in a cashier’s check or money order.
9. At closing, you’ll receive a HUD 1 statement, you’ll likely be able to use this on your 2008 tax return, so put it somewhere where you’ll find it easily.
10. Movers: if you are hiring movers, have this scheduled well beforehand. Don’t wait until the last minute to pack; you have more stuff than you think!
1. Home owners insurance: you will need to have a homeowner’s insurance policy in place before closing. Check with your car insurance company first, often times you’ll get a reduced rate if you have both your car and home insured with the same company. You can always change down the road, but you need this policy in place before closing.
2. Gas/Electric: Call we energies before closing to have the gas and electric transferred to your name on closing day. 800-242-9137
3. Water: You don’t need to do anything, the bill will be sent to the house every 3 months. The seller’s credit for their portion used for the quarter is credited at closing, and you pay the full amount on the bill when it comes.
4. Phone: Personal preference if you want a land line and with who.
5. Cable: Personal preference, again. Time Warner Cable is the local provider: 800-627-2288
6. Mail: make sure to fill out a change of address at the post office prior to closing.
7. Subscriptions: make sure to contact your magazine/newspaper subscriptions to go to your new address.
8. Amount to bring to closing: your lender will let you know the day or two before closing what the exact amount is. You’ll need to bring it in a cashier’s check or money order.
9. At closing, you’ll receive a HUD 1 statement, you’ll likely be able to use this on your 2008 tax return, so put it somewhere where you’ll find it easily.
10. Movers: if you are hiring movers, have this scheduled well beforehand. Don’t wait until the last minute to pack; you have more stuff than you think!
Thursday, April 10, 2008
April is Open House month!
It's spring and the sun is shinning, the birds are chirping, snow pants and boots are put away...OK maybe not here in Wisconsin, however the buyers are out in full force! Spring is the busy season in real estate. The weather is warmer, not freezing cold, not boiling hot, which makes for nice moving weather, and most families want to be into their new house before the start of the next school year.
April has become "Open House Month". This is a great and fun way to preview houses. Here is some simple open house etiquette:
Introduce yourself, and sign in on the sign-in sheet.
If your shoes are dirty, take them off!
Let the agent know if you are currently working with another agent. You may even want to sign in your agents name and number instead of your own.
Please don't try to avoid the agent! We are not the plague! We are there to show you around the house and answer questions. Homesellers don't really like strangers having free reign in their house.
If you happen to show up at the very end, please only take a quick peek! Chances are the agent has another appointment to get to. If you want to see more for longer, make an appointment for a private showing.
Most importantly, enjoy!
Monday, March 31, 2008
84th Realtors Home and Garden Show
SHOW VENUE & LOCATION
Wisconsin Exposition Center at State Fair Park
8200 W Greenfield Ave, West Allis, Wisconsin
SHOW DATES & HOURS
Friday, March 28: 11AM - 9PM
Saturday, March 29: 10AM - 9PM
Sunday, March 30: 10AM - 6PM
Monday, March 31: Closed
Tuesday, April 1: Closed
Wednesday, April 2: 4PM - 9PM
Thursday, April 3: 4PM - 9PM
Friday, April 4: 11AM - 9PM
Saturday, April 5: 10AM - 9PM
Sunday, April 6: 10AM - 6PM
ADMISSION
Adults: $8.00
Children 12 & under: FREE
SPECIAL GUESTS & FEATURESVisitors to the REALTORS Home & Garden Show will have the opportunity to get decorating, gardening, cooking and home improvement tips from some of their favorite national and local celebrities.
For more information, visit: www.realtorshomeandgardenshow.com
Wisconsin Exposition Center at State Fair Park
8200 W Greenfield Ave, West Allis, Wisconsin
SHOW DATES & HOURS
Friday, March 28: 11AM - 9PM
Saturday, March 29: 10AM - 9PM
Sunday, March 30: 10AM - 6PM
Monday, March 31: Closed
Tuesday, April 1: Closed
Wednesday, April 2: 4PM - 9PM
Thursday, April 3: 4PM - 9PM
Friday, April 4: 11AM - 9PM
Saturday, April 5: 10AM - 9PM
Sunday, April 6: 10AM - 6PM
ADMISSION
Adults: $8.00
Children 12 & under: FREE
SPECIAL GUESTS & FEATURESVisitors to the REALTORS Home & Garden Show will have the opportunity to get decorating, gardening, cooking and home improvement tips from some of their favorite national and local celebrities.
For more information, visit: www.realtorshomeandgardenshow.com
Thursday, March 13, 2008
Sixth Annual Property Owner/Manager Seminar
The Waukesha Police Department will be hosting its sixth Annual Property Owner(s)/Manager(s) Seminar on Tuesday, April 8, 2008, from 8:30am to 12:30pm. The event will be held at the Meadows Apartments Clubhouse located at 2400 Springdale Rd., Waukesha 53186.
This seminar is to provide assistance to Property Owners and Managers in running an effective apartment complex through education. The seminar will also create and maintain a partnership with the Waukesha Police Department.
Snacks and beverages will be provided!
Please RSVP by March 28, 2008.
For additional information, contact Officer Chip Moilanen or Officer Dean Zastrow of the Waukesha Community Policing Unit at 262-524-3916 or by email at hmoilanen@ci.waukesha.wi.us or dzastrow@ci.waukehsa.wi.us.
This seminar is to provide assistance to Property Owners and Managers in running an effective apartment complex through education. The seminar will also create and maintain a partnership with the Waukesha Police Department.
Snacks and beverages will be provided!
Please RSVP by March 28, 2008.
For additional information, contact Officer Chip Moilanen or Officer Dean Zastrow of the Waukesha Community Policing Unit at 262-524-3916 or by email at hmoilanen@ci.waukesha.wi.us or dzastrow@ci.waukehsa.wi.us.
Friday, February 29, 2008
Why Fed Rate Cuts Do Not Equal Lower Mortgage Rates
This is a copy of an email that came to me from Keith Borngesser of Mortgage Bankers of WI:
By Barry Habib, CEO
Last Updated: February 28, 2008
The Federal Reserve has been on a rate cutting spree once more. Many mortgage applicants are calling their mortgage representative and expecting a lower interest rate. Others who have been waiting to refinance are puzzled as to why mortgage rates have not moved lower during the recent five Fed rate cuts. This is difficult to explain to consumers who have watched a 2.25% reduction by the Fed with very little benefit in mortgage rates.
Is a Fed rate cut really good news for mortgage rates? The facts may be surprising. The Fed can only control the Discount Rate and the Fed Funds Rate. This is very different from mortgage rates. A mortgage rate can be in effect for 30-years while a rate set by the Fed can change from one day to another.
It is often said history repeats itself. And if history is any teacher, we can learn from what happened to mortgage rates the last time the Federal Reserve was in a rate-cutting cycle.
The last time the Fed was in a lengthy rate cutting cycle was back in 2001 from January 3, 2001 to December 11, 2001. In the span of 11 months, they cut the Fed Funds rate 11 times with eight of those cuts by 50bp. This resulted in a total of 475bp or 4.75% in short-term interest rate cuts taking the Fed Funds Rate from 6.00% down to 1.75%. Now most uninformed people would naturally think because the Fed cut rates by so much during this time that mortgage rates would follow suit and trend lower as well. Not so. Mortgage rates actually moved higher during this time of significant rate cuts because inflation, the arch enemy of bonds, gradually rose.
Now let’s take a look at what happened with the Fed’s most recent cutting cycle, the first since 2001. On September 18, 2007 the Fed cut the Fed Funds Rate by 50bp. The mortgage bond market briefly enjoyed a “knee-jerk” reaction to the Fed move by closing higher that day, but lost 140bp over the following two sessions. Then on October 31, 2007 the Fed lowered the Fed Funds rate by 25bp. The mortgage bond market responded by losing 78bp over the following five trading days. On December 11, 2007 the Fed once again lowered rates by 25bp and the mortgage bond market lost 88bp in the next three days. So far this year, the Fed delivered a surprise 75bp rate cut on January 22, 2008 and mortgage bonds lost a whopping 144bp in just 2 days. Eight days later and as widely expected, the Fed cut rates by 50bp. Within 13 days from that 50bp cut, mortgage bonds lost 269bp.
Keith then closed the email by saying:
Remember that a loss in bp(basis points) means an increase in mortgage rates. As volatile as the market is right now I do not want to forecast too much, but the experts are looking for short term lowering of mortgage rates.
Have a great weekend.
Keith
Keith Borngesser
Mortgage Bankers of Wisconsin
16655 W Bluemound Road STE 330
Brookfield, WI 53005
262-784-6600 x 224
262-784-6699 fax
262-391-9450 mobile
By Barry Habib, CEO
Last Updated: February 28, 2008
The Federal Reserve has been on a rate cutting spree once more. Many mortgage applicants are calling their mortgage representative and expecting a lower interest rate. Others who have been waiting to refinance are puzzled as to why mortgage rates have not moved lower during the recent five Fed rate cuts. This is difficult to explain to consumers who have watched a 2.25% reduction by the Fed with very little benefit in mortgage rates.
Is a Fed rate cut really good news for mortgage rates? The facts may be surprising. The Fed can only control the Discount Rate and the Fed Funds Rate. This is very different from mortgage rates. A mortgage rate can be in effect for 30-years while a rate set by the Fed can change from one day to another.
It is often said history repeats itself. And if history is any teacher, we can learn from what happened to mortgage rates the last time the Federal Reserve was in a rate-cutting cycle.
The last time the Fed was in a lengthy rate cutting cycle was back in 2001 from January 3, 2001 to December 11, 2001. In the span of 11 months, they cut the Fed Funds rate 11 times with eight of those cuts by 50bp. This resulted in a total of 475bp or 4.75% in short-term interest rate cuts taking the Fed Funds Rate from 6.00% down to 1.75%. Now most uninformed people would naturally think because the Fed cut rates by so much during this time that mortgage rates would follow suit and trend lower as well. Not so. Mortgage rates actually moved higher during this time of significant rate cuts because inflation, the arch enemy of bonds, gradually rose.
Now let’s take a look at what happened with the Fed’s most recent cutting cycle, the first since 2001. On September 18, 2007 the Fed cut the Fed Funds Rate by 50bp. The mortgage bond market briefly enjoyed a “knee-jerk” reaction to the Fed move by closing higher that day, but lost 140bp over the following two sessions. Then on October 31, 2007 the Fed lowered the Fed Funds rate by 25bp. The mortgage bond market responded by losing 78bp over the following five trading days. On December 11, 2007 the Fed once again lowered rates by 25bp and the mortgage bond market lost 88bp in the next three days. So far this year, the Fed delivered a surprise 75bp rate cut on January 22, 2008 and mortgage bonds lost a whopping 144bp in just 2 days. Eight days later and as widely expected, the Fed cut rates by 50bp. Within 13 days from that 50bp cut, mortgage bonds lost 269bp.
Keith then closed the email by saying:
Remember that a loss in bp(basis points) means an increase in mortgage rates. As volatile as the market is right now I do not want to forecast too much, but the experts are looking for short term lowering of mortgage rates.
Have a great weekend.
Keith
Keith Borngesser
Mortgage Bankers of Wisconsin
16655 W Bluemound Road STE 330
Brookfield, WI 53005
262-784-6600 x 224
262-784-6699 fax
262-391-9450 mobile
Tuesday, February 5, 2008
Home Buyer Seminar, Waukesha
Where will you live when your lease is up?
A home is the smartest investment you'll ever make.
HBC Services is a non-profit, HUD certified agency which offers free home buying education and credit counseling. Grants and downpayment assistance up to $5,000 may be available to qualifying buyers.
Attend "The Home Buyer's Advantage" Seminar! Realtor speaker Sarah Steelman will explain the home buying process and answer any questions you have. Other professional guest speakers include a mortgage lender, home inspector, and homeowners insurance agent.
DATE: Monday and Tuesday, February 18th & 19th
TIME: 6:00pm - 8:00pm
LOCATION: Goodwill Industries (west end offices)
Community Service Center
1400 Nike Dr., Waukesha, WI 53186
Monday's speakers will be Realtor Sarah Steelman and a mortgage lender. Tuesday's speakers will be a home inspector and insurance agent.
Reservation required! Please call Gina Sanchez, HBC Services, at 262-522-1230 or email gina.sanchez@hbcservices.org.
Visit www.sarah-steelman.com for more information.
A home is the smartest investment you'll ever make.
HBC Services is a non-profit, HUD certified agency which offers free home buying education and credit counseling. Grants and downpayment assistance up to $5,000 may be available to qualifying buyers.
Attend "The Home Buyer's Advantage" Seminar! Realtor speaker Sarah Steelman will explain the home buying process and answer any questions you have. Other professional guest speakers include a mortgage lender, home inspector, and homeowners insurance agent.
DATE: Monday and Tuesday, February 18th & 19th
TIME: 6:00pm - 8:00pm
LOCATION: Goodwill Industries (west end offices)
Community Service Center
1400 Nike Dr., Waukesha, WI 53186
Monday's speakers will be Realtor Sarah Steelman and a mortgage lender. Tuesday's speakers will be a home inspector and insurance agent.
Reservation required! Please call Gina Sanchez, HBC Services, at 262-522-1230 or email gina.sanchez@hbcservices.org.
Visit www.sarah-steelman.com for more information.
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