How to Buy a Foreclosed Home

ks14446There is a major sale going on in the housing market, and with real estate appraisals coming up with comparables that are lower than ever, it may be the perfect time to buy. One of the questions my real estate appraisers in Valley Village are getting is how to buy a foreclosed home. This is also a big issue for real estate appraisers in North Hollywood. Though there are a lot of bank-owned properties available these days, trying to buy one can be risky. With a conventional home purchase, you have all sorts of protections against being taken, but in a foreclosed deal, its buyer bewares. There are, however, steps you can take to protect yourself and get a great bargain. Keep in mind that one of the best ways to find out what a house is worth is by checking on the comparables of the surrounding neighborhood and what their home appraisals were valued at.

 

The first thing you want to look out for is if the website you are going through to find out how to buy a foreclosed home is charging a fee. There are free ways to find out about foreclosures in your area like calling local brokers, real estate appraisers and agents. Like I said, my real estate appraisers in Valley Village as well as my real estate appraisers in North Hollywood are constantly out in the field doing home appraisals, so they have some of the most up-to-date information. The same is true for real estate agents and brokers; and because they want more business, they are more willing than ever to dole out free advice and information.If that’s a concern, try to negotiate to have the utilities turned on for inspection before you close on the home. A home inspection usually runs from $250 to $400 and can save you a lot of money if something is wrong with the home’s structure or systems. You need to know what repairs you’re on the hook for to determine whether the price is fair. This is also where a home appraisal comes in, because they document all of these factors in their official real estate appraisals that get used to determine the value of the home.

 

 One important thing to keep in mind is the fact that if the property has been on the market for less than 30 days, lenders are usually looking for full-price offers. After 30 days they may be willing to accept a lower price. After 60 days you can offer even less. So this is basic economics and supply and demand. Logically, the general rule is the longer the house has been vacant, the lower the price will be. So, one of the best things you can do when you’re trying to figure out how to buy a foreclosed home is find out which homes in your area have been on the market the longest.

 

Once you’ve found a home you want to purchase, you’ll want to invest in a full home inspection. This is always a good idea when buying a home and my real estate appraisers in Valley Village along with the real estate appraisers in North Hollywood recommend this to all of our clients, but it is especially important when buying a foreclosed home. Vandals may have stripped fixtures and appliances. What’s more, the utilities have probably been shut off, making it impossible to gauge the shower pressure or test for leaky pipes.

 

If you are looking at how to buy a foreclosed home, you also want to beware of the fact that s0me states have a redemption period that lets the original homeowner satisfy his or her debt and take back the foreclosed home during a specified period after a foreclosure. This is especially true right now, with all the steps President Obama is taking to try and save homes from foreclosure. You’ll also need to be patient because banks may take 60 days or more to decide whether to accept your offer on a foreclosed home. These lenders are looking at things like your finances, the home appraisal of the house and other competing offers. In fact, one of my real estate appraisers in North Hollywood just saw one of our clients go through a bidding war on a foreclosed house in the area.

While the housing market is clearly a mess right now, there is an upside to it; the fact that homes haven’t been this affordable in years. That being said, you want to be smart about your purchase and learn everything you can about how to buy a foreclosed home such as what the home appraisals in the area are going for. Find yourself professional and trustworthy real estate appraisers, lenders and agents and get as much information as they are willing to offer. Once you have done all that and researched as much as possible, you’ll be ready to go out and find your dream home.

Help From Home Foreclosure is Finally Here

imagesWith President Obama’s foreclosure prevention program in place, home owners may now start to begin the process of saving their homes. This is especially good news for homeowners in the San Fernando Valley, where my real estate appraisers in Valley Village as well as real estate appraisers in North Hollywood have seen the price of homes drop dramatically over the past year. Keep in mind that one of the biggest components to a home appraisal is finding what the comparable prices of surrounding homes are selling for, and when you see foreclosure signs peppered throughout a neighborhood, everybody’s home value goes down. This is one of the reasons so many people are now seeing their homes underwater, which means they owe more than what the house is worth and this makes it very difficult to get a loan modification.

With the help of President Obama’s foreclosure prevention program, many homeowners may get a chance to apply for a loan modification, which will better suit their current economic condition. The plan, which is a multipronged fix, calls for companies to help as many 4 million struggling borrowers by modifying loans so monthly housing payments are no more than 31% of monthly gross income. Separately, homeowners who haven’t missed a payment can refinance into lower-cost loans even if they have little or no equity. This is expected to help up to 5 million homeowners. This will help stop the foreclosures that are steamrolling through cities and towns like the San Fernando Valley, and that in turn will help raise the value on a home appraisal.

The $75 billion foreclosure prevention plan will allow for loan modifications that will provide incentives to borrowers and loan servicers and investors to spur mortgage modifications, even if your home is underwater. The government will also subsidize interest rate reductions to get borrowers to affordable monthly payments. More than likely this will mean that you will need to reappraise your home to find out what it is currently worth, and for real estate appraisers in Valley Village as well as real estate appraisers in North Hollywood, this is most welcome news as their cities have been two of the hardest hit in the housing market crash.

“This plan will help make home ownership more affordable for nine million American families and in doing so, help to stop the damaging impact that declining home prices have on all Americans,” said Housing Secretary Shaun Donovan. This is more than just great news for homeowners, it’s great news for everybody because, as Mr. Donovan states, declining home prices have played a huge roll in the recession we find ourselves in. A rise in home appraisals is one of the signs that things are beginning to improve for everybody, not just people in jeopardy of losing their home, which is why President Obama’s foreclosure prevention plan is a huge part of the stimulus package and good for us all. This will also help raise the value of homes underwater, and bring prices to a reasonable level.

As of today, borrowers can start contacting their servicers to see whether they are eligible for assistance, and they may want to begin to look around for a professional to do their home appraisal so they know what their home is currently worth when they begin the loan modification process. Federal officials will promote the program at homeownership events nationwide, and real estate appraisers are getting up to speed on the new loan modification guidelines. I know, for example, that many real estate appraisers in Valley Village along with their counterparts, real estate appraisers in North Hollywood, are in constant contact with lenders so that they are all on the same page when their customers are ready to begin the process.

There are, however, eligibility criteria you need to meet. For example, the loan modification plan focuses on people who are behind in their payments or are at risk of default, which Federal officials clarified as those: suffering serious hardships, declines in income or increase in expenses; facing an interest rate hike; having high mortgage debt compared to income; owing more than their house is worth, or demonstrating other reasons for being close to default. But if you fit into these categories, the foreclosure prevention plan may be the Godsend you need.

If you or anybody you know is thinking about applying for a loan modification and need help finding out what your home is worth, please visit our real estate appraisers in Valley Village and our real estate appraisers in North Hollywood at www.iappraiseforyou.com and we can help you get the fair market value of your home. You may also want to check out www.hud.gov for more information on who qualifies for President Obama’s foreclosure prevention plan.

Fannie Mae and Freddie Mac Roll Out New Deal for Homeowners

There’s finally some good news on the real estate front; “Fannie Mae and Freddie Mac have directed their network of servicers to halt all foreclosure and eviction proceedings between Nov. 26 2008 and Jan. 9, 2009, meant to give a recently announced rescue plan time to work,” according to money.cnn.com. It’s been a few months since these mortgage giants got bailed out by the government, and this is the first sign that they are finally doing something to try and at least help, if not fix, the problem they helped create in the housing market.

This action is meant to keep homeowners afloat while they await the start of the Streamlined Modification Program, which begins Dec. 15, and will allow homeowners behind in their mortgage to get a modified mortgage to no more than 38% of their gross incomes. Some people may feel as though this is bailing out those who never should have gotten into the real estate market to begin with, but the fact is that home foreclosures hurt us all, by lowering home values and draining our economy.

Notification to the homeowners who have already received eviction notices and/or have homes up for auction, should begin immediately, which should make for a much brighter holiday season. Unfortunately, homeowners who are in jeopardy of eviction between Nov. 20 and Nov. 26 will not get to benefit from this new deal; however, they may qualify for other deals offered by FHA.

This is good news, to be sure; however, it will boil down to a small percentage of homeowners in the shaky real estate market, even though Fannie Mae and Freddie Mac hold the mortgage for approximately half of the people currently in the housing market.

There are several factors that will go into the eligibility of this new deal. First, homeowners must be 90 days or more late in their mortgage payments, owe at least 90% of their home’s current value, live in the home on which the mortgage was taken and have not filed for bankruptcy. Again, it’s a good offer, but will only end up helping a small percentage of people, so I wouldn’t say it’s going to put a huge dent in the housing crisis.

On the up side, something has to be done and at least this is a start. The real estate industry is a vital part of our economy, and even the global economy as a whole. Things will get better in the housing market, but it may take a bit longer than we originally thought. Holding off on at least some of the foreclosures out there, is a good first step.

 

     

Nervous Home Buyers May Miss Their Chance at Cashing in

Is now the right time to get into the housing market? That’s what many people are asking themselves. With the price of real estate falling on a daily basis and more and more homes going into foreclosure, the future is looking bright for people who couldn’t afford to buy a house when the market was more favorable for sellers. While it is true that many mortgage lenders out there have either decided to stop giving out new mortgage loans or tightening up their qualifications for a mortgage loan, there are still mortgage lenders out there who are willing and able to take a chance on a qualified buyer.

 

The key word there is qualified. You probably won’t find those no down payment loans, or interest only loans anymore, mortgage lenders are already taking a bath on those. But the truth is that those should never have been offered in the first place. Because of the creative and sneaky financing that was going on during the first part of the new millennium, the housing market is in a sour tasting pickle right now. However, if you are a buyer who was just biding your time, and waiting for the price of real estate to come back down to earth, you may be in luck. That being said, many buyers are still very wary of getting into a new home right now, fearing that prices will go down even further.

 

For those of you who want to get into the housing market, right now may the best time ever because, according to the National Association of Realtor, “the market is expected to turn around, over the next year,” which means, “existing home sales are expected to rise 50% in 2009.” That means hitting a mortgage lender and getting your own piece of real estate right now may end up bringing you high dividends by the end of 2009. Not only are home sales expected to rise but so are the rates for a 30-year fixed loan, which is still extremely low based on historical data, but much higher than we saw over the past eight years or so.

 

I understand that with all the bad news coming from mortgage lenders across the nation it’s hard to imagine making money off of real estate anymore, but remember that real estate is cyclical. That means it will bounce back and forth between a buyer’s market and a seller’s market, and if you do your research you can hit the housing market at the right time and get the biggest bang for your buck. Mortgage lenders are still in business, so if you think you can qualify with their tighter restrictions, I say jump in while you still can.

 

    

Increase the Value of Your Home Without Breaking the Bank

Real estate is still one of the best investments you can make. Whether you want to get a fixer upper you can turn around and sell for a profit, which believe it or not is still possible even in this housing market, or a home you can move yourself and your family into and plant roots. Either way you go, it’s always a good idea to spruce up your little corner of the world; it will help increase the value of your home and make you feel like you are living in a little piece of heaven. One more plus is the fact that mortgage lenders hire real estate appraisers to research the value of your home, and the better it looks, the more money you can get for it.

 

 

The good news is that you don’t even have to put in a lot of money to add value to your home and do well in this housing market. Even the smallest improvements can add a significant amount of cash to your pocketbook. In the world of real estate, the three key words you should know are location, location, location. To that end, before you even hit that mortgage lender up for your loan, decide the most advantage area to purchase a home in. That’s even more important in today’s housing market, because certain areas are starting to show signs of a rebound, so if you can get in now, you can make out big.

 

Another thing you want to keep in mind, storage is king when people are looking to buy. Even if you plan on staying in the home you purchase, adding more storage will make your life more manageable and add value to the real estate appraiser’s report when you get ready to sell. One great and affordable idea you can implement to add more storage is hanging wall units. Places like Target and Wal-Mart sell great looking wall units for prices even people on a tight budget can afford.

 

Another easy way to improve the value of your real estate is to bring those old

cabinets into the 21st century by repainting them and replacing those old rusty handles with bright shiny new ones. Again, these are easy things to do, they are cheap things to do and you would be amazed by how much more attention your house will get in a competitive housing market. While mortgage lenders won’t necessarily tell you about these things, real estate agents will. But doing these things before you even get to the stage of hiring a real estate agent or real estate appraiser will put you ahead of the game.

 

Look around at the home you are thinking about purchasing and search for any latches bolts and hinges that may need a bit of work. If you are a purchaser looking for your dream home, you can ask the seller to fix these before you move in. In today’s housing market you can get sellers to do a lot work for you that they may not have been willing to do when real estate was booming. If you are a seller, these little touches will give you the edge over others trying to sell right now.

 

Here’s another often overlooked fix that can make a world of difference, change the filters in your air-conditioner. This will help avoid musty smells during your walkthrough and avoid any hostility with your buyer when they find out their air-conditioner is spewing out dust. While you’re at it, try hanging a large mirror in the living room, as it will help create a feeling of space in the room. Another simple way to add space is by applying window boxes and hanging baskets around the house. I can’t say this enough, the housing market is very competitive for sellers right now, so all those extra added touches will add value, help the mortgage lender find quality buyers, add value to your real estate appraiser and make your home more attractive than the others trying to sell in your neighborhood.

 

If you can, try adding rooms to your house. It may sound like a huge undertaking, but if you already have a patio or attic, it’s simple and cheap to turn those into separate rooms. Why not turn that attic into a game room, or extra bedroom. Create a cozy breakfast nook in your patio. Again, these can be as small or big a renovation as your budget allows, and will bring you extra cash in the end.

 

It’s a difficult time in the housing industry right now, but as you can see, there are ways of improving your chances of getting out ahead. Real estate is now and will always be a good investment, especially to your personal future. This cycle will eventually turn back around, so if you apply what you’ve learned here now, you will be ahead of the game when the right time to sell comes around.

 

If you or anybody you know is thinking about buying a house, selling a house, refinancing a house or simply want to find out the current value of your house, please visit us at Mahler & Associates for all your appraisal needs.

 

    

Why the Future Now Looks Bright for Freddie Mac

Freddie Mac has a plan to stay in business and save taxpayers money. One of the nation’s top mortgage lenders, Freddie Mac, has been facing some serious financial problems of late, which has had severe implications for the housing market and real estate industry. But, on Friday, Freddie Mac announced plans to raise $5.5 billion by selling common and preferred stock, in order to bolster their economic outlook.

 

This announcement may help aleve fears the housing market has of another government bailout. Freddie Mac had previously said it would raise that money, but on Friday it finally registered its stock with the Securities & Exchange Commission, a move that allows the company to proceed. This is good news to home buyers who count on Freddie Mac to purchase their first piece of real estate as well as people who fall in the higher-rick category. The housing market has definitely taken a downward spiral, but mortgage lenders may be the ones hurt the most in this situation because they run their businesses off giving people loans.

 

Raising, say, $2.75 billion by selling common stock at current prices would entail issuing more than 300 million shares – reducing current investors’ stake in the company by a third. Freddie would presumably raise the rest of the money by selling preferred stock, but that won’t come cheap either. Even though it is nice to see Freddie Mac trying to get themselves out of the hole they are in, they may still end up needing help from the government. That being said, the housing market needs Freddie Mac to stay in business, so it will behoove us all to root for a good outcome for this mortgage lender.

 

Selling this stock could help this company put itself in better position to weather the housing market meltdown and resume making money when the economy and real estate industry rebounds. It’s been a tumultuous few weeks for Freddie Mac, and the companies’ shares lost more than half their value last week, amid fears that falling house prices will lead to big losses on the mortgages the companies own and on the mortgage-backed securities they insure.

 

Even though this new plan of mortgage lender Freddie Mac is a sign of better days ahead, there are some who believe Freddie Mac should be nationalized, wiping out shareholders and putting an explicit government guarantee behind the companies’ obligations. But Treasury Secretary Paulson has said he believes the company should continue to be shareholder-owned. One of the reasons for this, according to experts, is that they “see a parallel in the Chrysler bailout of the early 1980s, in which the government took warrants in the automaker in exchange for providing an emergency loan guarantee, and when Chrysler returned to health later in the decade, the government was able to cash in the warrants, allowing taxpayers to share in the fruits of the company’s recovery.”

 

Whether or not Freddie Mac’s new financial plan works remains to be seen, but it does show that the mortgage lender is at least trying. The housing market needs mortgage lenders to survive this crash; otherwise we could all see ourselves renting for the rest of our lives. Real estate is cyclical, so there is no doubt there will be a rebound. The only question now, is when and how big?

 

    

New Plan That May Help The Housing Market Rebound

Rest assured the housing market slump will turn around. It has to, not only for people who purchase real estate, but also for mortgage lenders whose livelihood and businesses depend upon it. Not only that, the nation’s economy needs a rebound in order to stabilize. Based on that, a group representing the buyers and sellers of mortgage backed securities unveiled a plan on Wednesday to recharge the declining housing market.

 

Just to give you a little background, here’s how mortgage lenders have handled real estate loans up till now; most of the nation’s mortgage loans are packaged together by their issuers – such as Countrywide, Wells Fargo and Wachovia and they in turn sell theses loans to investors as mortgage backed securities. That’s how mortgage lenders raise more money to make more loans. Now, when the housing market is booming, these practices help everybody, which includes homeowners who purchase real estate.

 

However, once the housing market began to crash, losses in these investments began to pile up. This caused individuals and institutions like pension funds, hedge funds, insurance companies and banks to stop buying these pools of residential mortgages from mortgage lenders. That left lenders cash-strapped, and made it harder for home buyers to get loans. So you can see how the trend began, and how it became a vicious cycle. The real estate market has always relayed upon all kinds of investments, but as you can see, once one begins to falter, the rest follows; it’s like a house of cards.

 

But now the American Securitization Forum hopes its plan, Project RESTART, will increase the supply of mortgage loans available to borrowers and help to lower the costs incurred by mortgage lenders in these trying time in the housing market. Now, once the mortgage lenders are in a better position in the real estate market, so too will follow home buyers and home sellers. The goal of Project Restart is to build up confidence in the people who invest in these securities.

 

This plan, if it works, couldn’t come at a better time for the housing market, as people in the real estate industry are starting to question the fiscal health of mortgage lenders Fannie Mae and Freddie Mac, especially when you consider the fact that Fannie Mae and Freddie Mac have provided the majority of mortgage funding over the past year or so. This plan aims to revive the segment of the secondary market that trades in mortgages that are not backed by the two mortgage giants.

 

Here’s what this plan will try and accomplish; it will try and clear up the details of these funds, for the people who are investing in them. This transparency will help the investors better understand the risks involved and potential benefits from individual pools and help them judge their pricing more accurately, which they hope will encourage them to continue buying these securities. Not only will this help investors make more money, it will help mortgage lenders stay afloat, which in turn will boost the housing market and real estate industry back up.

 

Initially the focus will be on residential mortgages of all types, jumbo, prime, Alt-A and subprime. So if the plan works, mortgage lenders would be able to give out loans to people looking to get into the housing market on both ends of the spectrum; upper-end and those in the higher-risk categories. Keep in mind, these people all want to make money, and the real estate industry has always been a good investment, even with all its ups and downs. That means the more people who can get into the housing market the better for them and their pocketbooks.

 

 I know it’s a scary time out there for people. There are sellers who are desperate to get out of their current real estate without taking a loss and there are buyers who want nothing more than to move their families into their own homes. Combine that with the real estate industry’s desperation to stay afloat and the government’s desire to keep this country out of a major recession, and you have a recipe for a rebound in the housing market. Keep your chins up, I have no doubt things will begin to level off and sooner rather than later.