The right questions can make the most of an open house

If you are in the market for a home, attending open houses is one of the best ways to see the type and style of home you are seeking in full 3D. It can be a great way to gather information and intelligence about various neighborhoods and quality of homes. Many people find their dream homes while visiting open houses. By asking the right kind of questions, you can get a lot more out of an open house in terms of specific details of a property which you may not get by simply walking through the house, seeing the staged decor or reading the property’s flyer. Agents and real estate experts recommend asking the following key questions to the listing agent while attending an open house.

When was the home listed? This will let you know how long the property has sat on the market. If it’s been a while, it could mean it is overpriced and you should consider making a lower offer. Also ask if this was the original asking price or if it has been lowered since it went on the market.

Have there been previous offers on the property? The answer to this question can help you build a strategy to negotiate if you are interested in the property. Reasons for rejection of any previous offers can help you prepare an offer that is more likely to be accepted. The frequency and number of people that have seen the house can give you clues about the competition you may face for the property from other buyers. Also ask if the house was under contract at any time after it was put on the market and the reasons it didn’t sell. Find out if a home inspection was done during this process and if yes, ask for a copy of the report. This will help you probe deeper about any issues that you must be aware or concerned about.

Why is the house being sold? Agents may give you a short and standard response to this question. But it helps to ask if the owners are relocating and if so, why and where to? This may help you determine the owner’s sense of urgency to sell. You can also ask if the owners are building a new home, moving to a bigger house, or downsizing because they became empty nesters. Any subtle clues or answers you get to these questions can help you determine if the owner is under any kind financial pressure and their timeframe to move out.

Do you have comparable sales data for the past three months? With the rise in short sales, foreclosures, price declines, and bank repossessions, the appraised worth of the house at the time of listing may not be the current value. Also, ask your agent to check pending sales of homes in the neighborhood prior to initiating any steps of the buying process.

Are there any additional costs or rules? You may be able to buy the house for a bargain, but the high homeowner association dues may be a deal-killer. Planned communities may have special regulations for parking vehicles and owning pets. Ask for a copy of the homeowner association’s manual.

Be sure to get the listing agent’s contact information and don’t hesitate to call back if you have any other questions. If the answers have any financial or legal implications, be sure to request a written response for your records.

If you need assistance, please consider a Realtor from Coldwell Banker Ackley Realty.  CBAR has Realtors that specialize in  assisting the buyer and are experts at property selection and negotiation.   

Preparing to buy an investment property

The combination of low home prices, rock-bottom interest rates and an abundant supply of undervalued homes has made this one of the best times in recent history to invest in real estate. If you have good credit rating, have money in the bank and if you can obtain financing, real estate can be a lucrative investment.

Investing in real estate is complicated and if you are a first time investor, it can get slippery and treacherous. It is best to learn the ropes before jumping in. You don’t need to go to school or pay a fortune to attend seminars peddled by late night infomercials to learn the tricks of the trade. Bankrate.com offers these tips for people who want to get into the real estate investment business.

There are many types of real estate investors and you must first determine where you fit in. Some people buy because they want to diversify their investment portfolio by purchasing real estate. There are people who want to become landlords and take care of their property on their own because they are passionate about it. Some may be interested in buying fixer-uppers and reselling them for a profit after doing some repairs. There are many who want to buy a home and let a professional property manager handle the tenant, upkeep and management. It is best to start within your comfort zone till you become familiar with the concepts.

The next thing you ought to do is check your financial situation. It may be a good idea to pull your credit scores and talk to a financial advisor to check your financial health to determine availability and access to capital. A real estate investment requires a substantial amount of cash reserves for down payment, property management fees, to pay mortgage when you don’t have a tenant, and for unexpected breakdowns or repairs.

Location is everything in real estate. You must consider buying in areas where the schooling system is good if you are considering buying a home that suits families with school-going children. If you are buying the property to target younger tenants, you must consider the quality of shopping centers, public transport, access to work, and entertainment options. You must focus on the location as if you are buying a home for you to live in, with one key difference. Unlike the home you live in, you must not have any emotional attachments to your investment property.

You must find and build rapport with an experienced real estate agent who knows the area in which you want to buy. The agent’s knowledge of the local investment climate and the ability to find ideal target properties for your purchase are very crucial in getting the best return on your investment. A long term relationship with an agent can also help you in selling the property in future or finding additional investment opportunities.

You buy a property for a great deal and now what? You would need to find the right tenant and you would also need to figure out who you would hire if things break down. Instead of waiting to do all this after you purchase the house, it is best to find and build a support team comprising a property manager, plumber, electrician, landscaper, and attorney to manage various aspects of a rental property.

The process of investing in real estate may seem complicated, but it is not difficult if you plan ahead, have clear goals, learn the procedures, paperwork and other nuances involved.

Beating out Investors for REO Properties

The ongoing real estate crisis has created huge opportunities for buyers and investors in the Real Estate Owned (by bank) or REO properties. Where there is opportunity, there is competition. Since banks usually prefer cash for REO transactions, individual buyers considering purchasing a REO must often combat competition from investors. But there are ways for home buyers to stay ahead of the competition from investors.

The first step starts with picking the right agent. It’s a good idea to call and interview a bunch of agents in your area. Ask them about their experience with REO sales. Ask them how many they have sold in the past few months. Get some client references. Experienced agents can help find homes that are in better shape than others, and can also help you with various aspects of the paperwork involved.

The fiercest competition for REOs is for the entry level or first time home buyer properties. This is because such homes can be rented quickly by investors, which gives them positive cash flow. Investors also like fixer-uppers because they can be easily fixed and flipped to first time homebuyers that qualify for FHA mortgages. Most first time buyers make lowball offers on REOs and this is where they get beat by seasoned investors. That’s why it behooves to seek the services of an agent that’s well-experienced in REOs.

Since most REOs are sold as cash-only deals by banks, it is imperative to get prequalified and obtain a “proof of funds letter” from your bank. This must be submitted along with the initial offer. This letter is typically a bank or brokerage statement which proves that the buyer has cash in hand to purchase the home immediately. So if you have liquid cash and an experienced agent to represent you, buying a bank owned property can be a very good deal.

Both Fannie Mae and Freddie Mac are currently offering incentives to buyers and selling agents as a way of liquidating their REO inventories. Fannie Mae sells its REOs through its HomePath program. Agents can get $1,200 as selling bonus on qualified properties. Buyers can get up to 3.5% of the sales price to put toward closing costs if they make the REO their primary residence. Buyers must request the incentive during the initial offer. Offers submitted on or after June 14, 2011 and closed by the end of October 2011 are eligible.

Freddie Mac’s HomeSteps’ program also includes a $1,200 bonus for selling agents, and up to 3.5% of the buyer’s closing costs on offers that meet the criteria. Initial offers must be received between May 16 and July 31, 2011 and closed by September 30, 2011. Buyers also get a 2-year Home Protect Home Warranty, which covers plumbing, electrical, air conditioning, heating, and other major systems and appliances. These offers are only available for owner-occupied homes.

Freddie Mac, Fannie Mae and the Department of Housing and Urban Development (HUD) prefer buyers that occupy homes over investors who typically rent or resell them. Therefore, some banks will only accept offers from potential owner-occupants for the first 10 or 15 days that a property is on the market. If you are fully prepared, you can move fast and capitalize on the opportunity.

In addition to being prequalified for financing, you must also have an inspector lined up to help you evaluate any property you are seriously considering buying, since foreclosed properties tend to be in worse shape than those sold by homeowners. The few hundred dollars you would spend on the inspection is definitely worth it because you’ll know what’s wrong and how much it would take to fix. Having this knowledge can help you negotiate with the bank.

Although these steps cannot guarantee that you would beat an investor in scoring a REO, it will certainly improve your odds.