How do I keep this from happening to me again?
There aren't any guarantees, of course, but the suggestions below may help. After five years, I've heard about a lot of the scams out there. Use the information below to protect yourself as well as you can. However, you won't have real protection until local communities are required to register rental units, so that you can find the owner's name and contact information easily. Often that requires legislative bodies to act, and you already know what I think of legislative bodies.
It's very important that you check out your prospective landlord before paying any money or giving out any private information--like your bank account or Social Security numbers. There have been a raft of stories now detailing the perfidy of landlords who, facing foreclosure, rent out the house to unsuspecting tenants, and opportunists who break into foreclosed properties, and then collect security deposits and rents for houses they don't own.
As a tenant, you have to protect yourself. You have NO friends. The State Legislature is not your friend. The Board of Supervisors is not your friend. The City Council is not your friend. All of these people work to support and defend the interests of the real estate industry. So here's how you can give yourself a wee bit of protection:
1. Property management firms are not your friend either. They receive a percentage of the rent from your landlord and are therefore working for him, not you. Do not assume that the property management company knows or cares whether the house is about to go into default. Do not make the assumption that, because a landlord has hired a property management firm, he is somehow more trustworthy.
2. Insist on knowing the name of the property owner. Do not give out any personal information to anyone until you have that information. Ask to see identification. I mean it. Anyone can show up at a rental unit and say that he's the owner, Joe Smith. You want to know that he is--in fact--Joe Smith. If the person showing the house says that he's a property manager, get his card and the telephone number of the owner. Then call both the property management office AND the owner to verify that it's a legitimate rental. Reputable landlords and property managers should expect that tenants would want to insure that they aren't paying large sums of money to people who have no right to rent the property.
If you have one of those cell phones that takes pictures, take a couple of pictures of the unit, and just get the person showing the property into one of them. Then, if it does turn out to be a scam, you can present your local police department with a photograph of the scammer.
3. Then call your County Recorder and find out the following: when the last mortgage was taken on the property, whether or not a Notice of Default or Notice of Trustee Sale has been filed. A Notice of Default is the first step in foreclosing on the building. A Notice of Trustee sale means that the landlord failed to pay the arrears and the lender is going to take back the building. If either of these has been filed, you don't want to move there. Really.
4. Be very careful when considering any property with a mortgage taken out in 2004 or later. You will need to ask a lot of questions of your prospective landlord and listen carefully to all responses to those questions to determine whether or not the landlord is in trouble. If the landlord is not forthcoming, it's better to pass on the property.
5. Take a copy of your credit report with you when you look at a property, after inking out your Social Security number. If enough tenants do this, and do not permit their landlords to have that information, perhaps landlords will change their practices. You are, after all, being required to hand out your most important personal number to a complete stranger.
6. Do not sign a lease. If your agreement is month-to-month and the landlord defaults, you can just move. If you sign a lease, you have to pay rent until the foreclosure sale. (I know that this goes against the ruling conventional wisdom, but so many soon-to-be-foreclosed landlords have signed leases that it no longer makes sense to sign one.)
If you want to sign a lease, consider adding a provision that allows you to break the lease if any lender (many properties have more than one mortgage) files a Notice of Default or Notice of Trustee Sale on the property. If the landlord will not agree to such a provision, it's a clue that all is not well with his finances.
You should also insist on a provision, whether you have a lease or month-to-month agreement, that allows you to withhold rent to recover the amount of your security deposit if any lender files a Notice of Default on the property you are renting. If, for instance, you paid a month's rent and $250 for each of your two pets, you would, after a Notice of Default was filed, be allowed under the terms of this provision to withhold an entire month's rent and then part of the next month's rent for the $500 you paid for your pet deposit.
Don't spend the money though. Were your landlord to cure the default (pay the arrears or renegotiate with the bank), you'd have to pay back the entire deposit to your landlord.
I know it's odd, as tenants haven't generally been able to negotiate lease terms. But the landlord puts your home in jeopardy by not paying his mortgage(s) and you should be able to protect yourself as any contracting party can.
7. Be very suspicious of any landlord who overlooks your foreclosure or credit problems in exchange for a large deposit. Many people who have suffered foreclosure themselves are being victimized by the unscrupulous, who allow tenants to rent in exchange for large deposits. Then the tenants finds out the landlord hasn't been paying the mortgage.
8. You do not want to get into a "lease option." Really. Some landlords are offering "lease options" to unsuspecting tenants. What this means is that you agree to pay an upfront deposit of $5-10,000, and a higher monthly rent, for an option to purchase the property at a set price at the end of the lease period (which can range from one to three years). Lease options are never a good idea in the best of times and, in the present period, are potentially disasters. First, the value of the house may fall over the option period, and you will have agreed to pay much more for the house than it is worth. But you've also put in a lot of money, so not exercising the option (not buying the house) means that you are giving up your deposit and the additional rent you paid. Second, if the landlord defaults on his mortgage during the lease period and the lender forecloses, you lose all the money you paid for the option. And if you did enter into a lease option, you'd have to keep track of your landlord's mortgage payment--demanding copies of the canceled checks or a print-out from the lender showing that the payment had been made. I've had a couple of tenants tell me that their soon-to-be-foreclosed landlord offered them lease options, but the tenants refused them--counting themselves lucky when the building then went into foreclosure. Landlords are trying this scam to either get enough money to pay the mortgage for another month, or to milk the building for everything you're worth before foreclosure. Please--just say no.
9. Do not ever pay the rent and deposits in cash. Cash is untraceable. You can't stop payment on cash. Pay by check.
10. You can do a lot of checking online, so take advantage of the resources out there. You can check the property history on Zillow, which will often tell you if the property is a recent foreclosure. That's not bad, as the new owner may have bought the property out of foreclosure at a very low price. (This will not be reflected in the asking rent, however.) You can also check the neighborhood crime stats on Trulia. Type in the address of the property, then scroll down to the map. Click on "Crimes" and the map will show the extent and nature of criminal activity around the property. If the map is colored orange or red, you don't wanna move there. Really.
It's important to do this, as investors purchased a lot of foreclosures in bulk from lenders and Fannie Mae/Freddie Mac. Some of these properties are in neighborhoods best described as "dicey".
Source: http://tenantsforeclosure.blogspot.com/2008/06/more-notes.html
Thursday, February 16, 2017
Short Sale vs. Foreclosure
"Short sale" refers to the sale of a property in circumstances where a secured party such as a mortgagee will not be paid in full. The mortgagee's cooperation will be necessary because, absent payment in full, the mortgagee is not necessarily required to satisfy the mortgage.
There are a variety of reasons why a home owner may consider a short sale. Debt on the home may be greater than the home's market value. This can occur when the debt-to-ratio is high and then the property depreciates in value. Another common reason is that financial distress due to a job loss or a medical emergency may cause a borrower to default on a mortgage note. Once a borrower is in default, the lender typically calls the note due meaning the entire principal balance must be repaid. However, the fact of a default damages the borrower's credit such that it may be impossible to refinance the debt in order to repay the entire principal balance.
When a home owner/borrower either is in default or is considering defaulting, the borrower has 2 basic options.
Short sale: One choice is the "short sale" whereby the owner sells the property for market value and the creditor "bank" agrees to release its mortgage even though it is not paid in full on the mortgage note. This requires the owner to market the property (let in prospective buyers, etc), to negotiate a proposed sale, and then to seek the bank's cooperation.
Default/foreclosure Alternatively, the owner could default (stop paying) and lose the house through foreclosure. Typically, the bank serves notice and then files suit, eventually obtains a judgment, and then has a sheriff's sale after which the owner must leave.
How do these two options compare?
A short sale involves substantial cooperation between the borrower/seller and the lender. From the perspective of the borrower/seller, the short-sale approval process often is long and frustrating. The lender often gives conflicting or unclear direction as to when or whether the short sale will be approved. The lender typically requests numerous documents from the borrower such as the borrower's budget, income, expenses, wage statements, tax returns, utility bills etc. Often, the lender requests these same documents numerous times and/or in numerous different formats. The process can take an unlimited amount of time since the lender need not necessarily agree to the short sale. The short sale process is entirely a process of negotiation.
The foreclosure process, to the contrary, is a legal proceeding with timeliness set by statutes and the court. A typical owner-occupied home foreclosure typically takes 7-18 months depending upon a few key factors. At the conclusion of the process, if the lender is entitled to and obtains a judgment, there will be a sheriff's sale.
One key concept related to either option is the "deficiency." The deficiency is the amount owed to the bank less the amount received by the bank. Either option could result in the owner owing the deficiency amount to the creditor(s). However, with respect to the first mortgage debt, either option typically results in forgiveness or waiver of the deficiency. (Caution: this is not necessarily the case and is an important area for review by an attorney. Also, there may be important tax consequences to how this situation is treated.)
Contrary to conventional wisdom, according to FICO Banking Analytics Blog 2011, there is no difference in credit score damage between a short sale and a foreclosure. Depending upon where the borrower's credit started, either a short sale or a foreclosure will cause the credit score to drop 100-160 points. The time needed for the borrower's credit to recover is estimated to be the same for a short sale as for a foreclosure (3-7 years). The only difference between the two options with respect to credit score seems to be that the credit score recovery will begin earlier in the case of a successful short sale since the timeframe presumably will be shorter for a successful short sale than for a foreclosure.
Source: http://realestatelawinwisconsin.blogspot.com/2015/03/short-sale-vs-foreclosure.html
When a home owner/borrower either is in default or is considering defaulting, the borrower has 2 basic options.
Short sale: One choice is the "short sale" whereby the owner sells the property for market value and the creditor "bank" agrees to release its mortgage even though it is not paid in full on the mortgage note. This requires the owner to market the property (let in prospective buyers, etc), to negotiate a proposed sale, and then to seek the bank's cooperation.
Default/foreclosure Alternatively, the owner could default (stop paying) and lose the house through foreclosure. Typically, the bank serves notice and then files suit, eventually obtains a judgment, and then has a sheriff's sale after which the owner must leave.
How do these two options compare?
A short sale involves substantial cooperation between the borrower/seller and the lender. From the perspective of the borrower/seller, the short-sale approval process often is long and frustrating. The lender often gives conflicting or unclear direction as to when or whether the short sale will be approved. The lender typically requests numerous documents from the borrower such as the borrower's budget, income, expenses, wage statements, tax returns, utility bills etc. Often, the lender requests these same documents numerous times and/or in numerous different formats. The process can take an unlimited amount of time since the lender need not necessarily agree to the short sale. The short sale process is entirely a process of negotiation.
The foreclosure process, to the contrary, is a legal proceeding with timeliness set by statutes and the court. A typical owner-occupied home foreclosure typically takes 7-18 months depending upon a few key factors. At the conclusion of the process, if the lender is entitled to and obtains a judgment, there will be a sheriff's sale.
One key concept related to either option is the "deficiency." The deficiency is the amount owed to the bank less the amount received by the bank. Either option could result in the owner owing the deficiency amount to the creditor(s). However, with respect to the first mortgage debt, either option typically results in forgiveness or waiver of the deficiency. (Caution: this is not necessarily the case and is an important area for review by an attorney. Also, there may be important tax consequences to how this situation is treated.)
Contrary to conventional wisdom, according to FICO Banking Analytics Blog 2011, there is no difference in credit score damage between a short sale and a foreclosure. Depending upon where the borrower's credit started, either a short sale or a foreclosure will cause the credit score to drop 100-160 points. The time needed for the borrower's credit to recover is estimated to be the same for a short sale as for a foreclosure (3-7 years). The only difference between the two options with respect to credit score seems to be that the credit score recovery will begin earlier in the case of a successful short sale since the timeframe presumably will be shorter for a successful short sale than for a foreclosure.
Source: http://realestatelawinwisconsin.blogspot.com/2015/03/short-sale-vs-foreclosure.html
Mobile Marketing for Real Estate Professionals
Mobile marketing is changing the way real estate professionals interact with clients. In every business industry, smartphones are creating new and cost-effective ways to network, close sales and stay in touch. If you are still using email to communicate and advertise, you may want to rethink your strategy.
According to CTIA.org, it only takes a minute and half for someone to read and reply to a text message. In contrast, it takes over an hour for the same person to reply to an email, which many people associate with spam. Astonishingly, over 91% of people with smartphones have them within arm's reach. In fact, experts predict that mobile device usage will soon overtake the traditional desktop and laptop PC market.
The Power of Mobile Marketing for Real Estate Professionals
Text messaging is now one of the top methods we use to communicate with others; in fact, people now text message about three times as often as they email. Young people under 45 are more likely to use text messaging, but even older adults are starting to enjoy the convenience of this ubiquitous smartphone feature.
The mobile marketing program uses the 90210 SMS gateway harnesses the power of SMS for real estate agents and brokers. These professionals usually have their own websites they use for marketing purposes. In order to start building a mobile marketing client list, they need to invite their website visitors to opt-in to receive text messages from them. Real estate professionals can use websites, social media, email lists, print ads or even TV/radio ads to get people to sign up for SMS ads.
Once the real estate agent has built up a sizable list, he or she can start to construct attention-getting text messages to incite interest in available properties. The business professional only has to hit "send" to blast out the text to the entire database of potential clients. Since people are more likely to read texts than emails, the message could reach hundreds or even thousands of people interested in buying or selling real estate.
Mobile Marketing for Real Estate Professionals Tips and Tricks
Real estate agents can use giveaways as an opt-in incentive. They can hold raffles or contests for people who choose to accept text ads. Alternatively, the website visitor could receive a free eBook on First Time Buyer Tips, The Short Sale Process and How to Purchase a Foreclosure in exchange for an opt-in. These tactics work because everyone loves free gifts and information, even if they are inexpensive.
The advantage for the real estate professional who uses a mobile marketing or text platform is the ability to have a simple keyword associated with the property listing. This will allow a potential buyer to text a keyword on the for sale sign and in return receive all the listing information and even a virtual video tour. The beauty of this is that the instant the potential buyer text the keyword on the sign the Real Estate agent will receive a text and email alert with the phone number of the potential buyer. This will give the agent a potential list and sale which generates larger commissions. This also gives the agent another database of clients with their cell phones for easy access.
With the convenient "set it and forget it" feature on our mobile media platform a real estate agent can schedule the perfect date and time to send out a text message. Generally, buyers and sellers have more free time on the weekends, so the business owner may want to blast out texts during these days. The Marketing Technology Blog states that Saturday is one of the best days for sending out texts, since people have more time to read messages on their phones. Typical text messages contain information about open houses, sales, new listings, price changes or information about the local real estate market.
Text messaging is easy, and most professionals who use our mobile media platform do not have computer science degrees because it is easy and cost effective to setup. In addition, the company provides full support for its business owner customers.
If you are a real estate professional, you could increase your profits by thousands of dollars this year by joining the mobile revolution. Mobile marketing for real estate professionals will be the biggest advertising platform and if you are not communicating via mobile, you are not communicating effectively with today's consumer. For more information on a mobile media platform to increase sales check out my blog.
10 Essential Open House Tips for Home Buyers and Sellers
Spring and Summer are the busiest times in real estate according to statistics nationwide. For home buyers, this busy season means doing your homework to find as many homes that fit your needs and scheduling times to attend open houses. For home sellers, it’s all about the prep work and taking those extra steps to boost your homes curb appeal so that it stands out from your competition. In any case, an open house is a long-standing tradition that's essential in any real estate transaction. It allows sellers to showcase the best features of their home, while giving buyers an opportunity to visualize themselves living there. Based on 20+ years of real estate experience, we can tell you that an open house has the potential to make or break a home. Knowing the tips and tricks of getting the most out of an open house will not only give you an edge over your competition, but will also help you to find the right real estate agent to work with. So for those of you who are looking to start this process the smart way, here are 10 Essential Open House Tips for Home Buyers and Sellers.
HOME SELLERS
1. Take advantage of technology
Did you know that 90% of buyers are going to look at your house virtually before attending an open house? This means that you not only need professional photos that'll entice buyers to want to look into your home more, but you also need to know how to get your listing the most visibility. That's why it's important to hire a real estate agent that works with an experienced photographer and can get your listing on every major real estate website such as Realtor.com, Trulia.com, Zillow.com, as well as portals on Yahoo and Google. What we like to do is give a sneak preview of a home through our social media channels (Facebook, Twitter, Linkedin, Instagram, Blogger) days before the open house so that we can generate a buzz and attract the most potential buyers as possible.
2. Enlist the neighbors
You would think that the last thing you'd want at an open house are your neighbors nosing through your closets. However that might not be such a bad thing considering that neighbors could act as scouts for you. They're the people who want their friends or family members to move into the neighborhood, so you can bet that they'll be helping you spread the word. Consider mailing out invitations or fliers to the open house and make sure to give your neighbors an incentive for helping you get leads.
3. Clear out your storage
We all know the importance of depersonalizing a home before an open house and keeping things as neutral as possible so that buyers can picture themselves living there. However, what many sellers don't think about is that serious buyers will look at the home's storage options. This means that they'll be looking through all the cabinets, drawers and closets so it's best if you don't hide your personal belongings there. It's also important to remove or hide all of your medications because open houses tend to be a hot crime for pharmaceutical thefts. Rent out a temporary storage space for all your personal and valuable items and make sure that all storage areas in your home are clear of clutter before hosting an open house.
4. Time your open house right
In most cases, you'll find that an open house is usually held on the weekends (Saturdays and Sundays tend to be the most popular) because those days bring in the most traffic. However with the busy season bringing more sellers to the market, you'll want to set your open house at a strategic time so that you'll stand out from your competitors. We recommend having an open house from 3PM to 5PM on Sunday or even from 5PM to 7PM on Thursday. Chances are that buyers will hit several open houses in one day and if they're still looking by the end of the day, you'll get serious consideration. Study your competition and make sure you know what open houses are going on around the area so that you can avoid any overlaps.
5. Create a lasting first impression
The front entry of your home is pretty much the first thing that home buyers will see, so give your home its best shot of grabbing some attention by enhancing it's curb appeal. Do this by mowing the lawn, planting some fresh flower beds and removing any dead/unhealthy shrubs or plants. Also be sure to create a soothing and welcoming environment for buyers by playing soft background music and enhancing the lighting in each room (opening up windows to let natural light in and sometimes even increasing the voltage of your lights). We like to stick with some good old classical music and depending on the home's ambiance, we'll spruce it up with some jazz. We like to throw in some pupus and wine/champagne as well to help get the guests comfortable. Trust us...if there's food and alcohol involved, people will come and be more willing to engage in meaningful conversations about your home.
HOME BUYERS
6. Ask the right questions
At an open house, the beautiful light fixtures and appliances will most likely catch your attention. However, don't assume that they come with the house. Ask the listing agent about it and if they're important to you, make sure they're on the contract when you right up the offer. Also be sure to ask the agent about any special assessments, fees you may be unaware of and their general opinion about the neighborhood. The best time to pick an agent's brain is at an open house, so get as many details about the house as possible. Keep in mind that the agent works for the seller so try not to share too much personal information about yourself or your housing situation. You don't want to share any information that could compromise your bargaining position.
7. Arm yourself with a toolkit
Prior to attending open houses, create a list of all the must-haves and deal beakers for a home so that you know exactly what you want going into each situation. Have a notebook ready with all the listings you'll be visiting that day and take notes on each home so that you can compare it to your list at the end of each visit. Bring a measuring tape so that you can measure the spaces in the house to see if your furniture will fit in the spaces you want it to. If the listing agent gives you the OK to take photos, capture pictures of the most important things in that home and also things that you have questions about (ex: a leaking pipe or a crack in the whole). You could use these photos when it comes down to negotiation time.
8. Look past the decor
Anyone can fall in love with a home at first glance. Home stagers are paid to make a home look beautiful, not functional. When you're looking at the home, look past all the fancy decor and try to look out for any moisture issues or cracks. You don't want to move into a home with lingering issues that will end up costing you more in the long run, so be sure to bring these up to the listing agent if you spot them. Also make sure to thoroughly inspect the basement since it's the foundation of the home and can tell you a lot about the structural health of the house.
9. Know the DOM of a home
DOM stands for days on market and can tell you how a particular listing in faring in the marketplace. If you see a home priced a little higher than what you can afford but its DOM is at 100, chances are that home won’t be selling at its list price. Knowing the DOM of a home before going to an open house can better prepare you to ask questions. Probe the listing agent for some history details on the home to see why other buyers haven't been biting at the opportunity. If the home has been on the market for a while, you're more likely to convince a buyer to negotiate.
10. Get a feel for surrounding areas
Before stopping at an open house, take a quick drive around the neighborhood to study the surrounding areas. This will help you to spot things you might've overlooked during your research. Is the home near railroad tracks? Is it near commercial buildings? Is it near a quiet location or busy location? How's the parking situation for nearby areas? These are all important factors in determining if a home is the right fit for you and your needs.
Short Sale Investing - Tips and Tricks for Getting Involved With Short Sales
Short sale investing is important as it will allow you to purchase homes a price which is below average with a promise of high returns as well as quick profit. Currently, investing interests have increased due to the volume of distressed homes available in the market. Buyers currently have more choices available when it comes to price range, properties and terms for investment. The choice for investing is attractive as it will work for both parties involved. Buyers will benefit from the low prices of these investments while sellers will be able to dispose of mortgages that they can't afford and begin on a clean slate. On the other hand, lenders can eliminate loans that are non-performing without necessarily going through the complete foreclosure process, which can prove to be more expensive and much longer than traditional sales.
So what are the tips and tricks for getting involved with short sales?
Finding a decent real estate agent is the first step in short sale investing. The best direction is locating an agent that has had experience with this type transactions because a short sale could be more complicated than a usual real estate deal. Many sellers are often drawn into short sales without full understanding of their implications. Therefore, unless you are a legal or real estate expert, you will need to get an assistance of a more skillful person. It is important that you work with individuals who have experience in investing in short sale and who have a good knowledge of the market to provide you with a factual, practical advice. The agent can be able to assist you in finding more potential properties, planning your investments better and even help you in negotiating each sale to guarantee the best results that you desire. Even if the kind of help you get is expensive, it is not comparable to making a mistake in a high risk field such as short selling.
So what are the tips and tricks for getting involved with short sales?
Finding a decent real estate agent is the first step in short sale investing. The best direction is locating an agent that has had experience with this type transactions because a short sale could be more complicated than a usual real estate deal. Many sellers are often drawn into short sales without full understanding of their implications. Therefore, unless you are a legal or real estate expert, you will need to get an assistance of a more skillful person. It is important that you work with individuals who have experience in investing in short sale and who have a good knowledge of the market to provide you with a factual, practical advice. The agent can be able to assist you in finding more potential properties, planning your investments better and even help you in negotiating each sale to guarantee the best results that you desire. Even if the kind of help you get is expensive, it is not comparable to making a mistake in a high risk field such as short selling.
Another tip is that you don't need to put your hopes on one property only. Continue to aggressively look for several properties and keep your choices open. Buyers should stay optimistic as the most appropriate property will eventually come along. Having many offers out at any time which have good contingencies is absolutely risk-free and legal in most areas. It is also important to keep in mind that short sales are not timely at all times; though the process of making a bid on the 'approved short sale' could be quicker. The 'approved short sale' always has a price that has already been accepted by bank because probably another buyer who is interested made a bid that was accepted, but never bought the property finally. These kind of sales are among the most highly desirable.
Whenever you get an approval, you have to close on time since there is no leniency when it comes to the closing escrow date in short sales. However, if at all there is any matter that could stop you from closing in time; you will need to make a request for extension immediately. Requests made on time are likely to be granted by banks but never assume it will simply happen.
This type of investing can be a great chance for finding a new home at a modest price, though it is necessary to understand factors that could result into a successful short sale to ensure that is profitable and enjoyable experience. As always, my intent is to empower you, enabling you to make knowledgeable decisions.
Source: http://carlesnegre.blogspot.com/2012/04/short-sale-investing-tips-and-tricks.html
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