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.

Freddie Mac offers incentives on REOs

Freddie Mac has come up with a summer sales promotion to promote its inventory of foreclosed homes. This is being done through Freddie Mac’s real estate sales unit, HomeSteps.


The promotion, which is an extension of Freddie Mac’s First Look Initiative program, hopes to boost sales of foreclosed homes by offering up to 3.5 percent in closing cost assistance to homebuyers. The promotion also offers a $1,200 signing bonus to buyer’s agents for offers received between May 16, 2011 – July 31, 2011 and escrow closings no later than September 30, 2011.

Fannie Mae, which offered a similar closing-cost incentive this past spring on its HomePath properties, requires escrows to close before June 30, 2011. Fannie Mae has also advised that offers submitted after May 15, 2011 may not meet the June 30 deadline.

Similar closing-cost incentives offered by Fannie Mae on HomePath properties this spring require escrow to close by June 30, with Fannie Mae advising that offers submitted after May 15 may not meet that deadline.

The HomeSteps summer sales promotion is not available for investors. This offer is valid only on HomeSteps homes sold to owner-occupant buyers. People taking advantage of this promotion don’t need to be first time homebuyers to be eligible, but they must buy the home as their primary residence.

As an example of savings through this offer, if the purchase price of your home is $150,000, HomeSteps will pay up to $5,250 towards your closing costs. However, it must be noted that HomeSteps will only pay up to 3.5% of your purchase price in closing costs, not to exceed the total closing costs. For example, if your purchase price is $125,000, and your closing costs are $4,250, HomeSteps will only pay $4,250, an amount equal to 3.5% of your purchase price. In any event, HomeSteps will not be obligated to pay any closing costs if you do not pursue and obtain financing for a qualifying home. You will pay all closing costs not covered by HomeSteps.

To make the offer even more enticing to buyers, HomeSteps is throwing in warranty benefits through SmartBuy. Since the home is a foreclosure property, it may have had damaged or missing appliances and systems prior to closing, Home Protect provides discounts of up to 30% on repairs for these instances. It also provides discounts of up to 30 percent on the purchase of appliances. This gives buyers some peace-of-mind, knowing that their home and budget are protected. The two-year Home Protect limited home warranty covers electrical, plumbing, air conditioning, heating and other major systems and appliances.

According to Fannie Mae, its REO inventory was up 39 percent to 153, 224 homes from March 2010. Fannie Mae reported 65,159 single-family homes in its REO inventory at the end of March, which was up 21 percent from March 2010.

Homes in foreclosure may sell more quickly this summer due to the HomeSteps summer sales promotion. To take advantage of this great offer, contact one of our real estate agents to show you HomeSteps homes in your area.

Draft bill would hike FHA loan down payments to 5%, slash loan limits...

A bill has been drafted by Republicans in the House Financial Services Committee which would raise the minimum down payment for FHA mortgages to 5 percent, reduce FHA loan limits in most markets and transfer the Agriculture Department’s rural housing program to U.S. Department of Housing and Urban Development (HUD), FHA’s parent agency.


Although the draft bill has not been introduced, it is likely to be formalized and rushed through subcommittee and committee votes and forwarded to the full House for action. It appears that the draft bill is a partial response by the House Republicans to the Obama administration’s call for reducing the size of federal government in housing.

The bill is expected to shrink the FHA loan volume in the country by lowering the maximum FHA loan limits in large numbers of local areas, which is well below the limits that are currently scheduled to apply on October 1. This will eliminate a resource for some home buyers who find it difficult to obtain a conventional mortgage.

Here’s an example of the current FHA loan ceiling, how it is scheduled to change in October, and where it would end up under the proposed draft bill. Monroe County in Florida would see maximum FHA loan limits go from $729,750 to $425,000. Under the scheduled Oct. 1 statutory decrease, the county which comprises the Florida Keys would have a $529,000 maximum. Sarasota would see a $261,250 drop under the bill, Miami-Dade a decrease of $161,250, and Orange County (Orlando) limits would decline by $128,750.

The FHA loan limit formula under the proposed draft legislation would be revised to 125 percent of the median home sale price in the local county, and the current $271,050 floor for loan limits nationwide would be eliminated.

Many industry groups are criticizing the bill’s call for a 5 percent minimum down payment on FHA loans. The National Association of Home Builders (NAHB) and the National Association of Realtors have opposed such legislation in the past, stating the lack of statistical evidence that adding 1.5 percent to the current 3.5 percent minimum would drastically affect default probabilities of new FHA homes.

It is expected that the higher down payment requirements along with the bill’s exclusion of financing closing costs, would make it difficult to purchase a home for a large number of home buyers. Analysts estimate about 40 percent of FHA borrowers to fail because they will not be able to afford the transaction.

The sponsoring members of the bill said the move to transfer the Agriculture Department’s rural housing program to HUD makes sense because it already has the housing responsibility and the expertise.

The proposed bill has a good chance of passage in the full House because it is controlled by Republicans, but it is definitely a tough sell in the Democrat controlled Senate, where the support for continuing FHA’s role in the market is much stronger, and any drastic cuts in loan limits in expensive housing markets is not likely to happen.

NAR Study finds Americans favor Smart-Growth communities

The National Association of Realtors’ (NAR) Smart Growth program conducts various surveys to gauge public opinion on land use, growth and community issues.


Smart Growth is an urban planning and transportation concept that concentrates growth in dense urban areas to minimize sprawl and advocates compact, transit-oriented, walk-able, bicycle-friendly land use, including neighborhood schools, complete streets, and mixed-use development with a range of housing choices.

NAR’S 2011 Community Preference Survey explores Americans' wants regarding neighborhood characteristics such as proximity to parks and shopping, walk-ability, and commuting time, and the trade-offs in home type and size that people may be willing to accept in order to obtain those neighborhood preferences. Walk-able communities are defined as those where shops, restaurants and local businesses are within walking distance from homes.

Interestingly, the survey reveals that most Americans would like to live in “live, work and play” planned communities where shops, restaurants, and local business are within a short commute (by walk or other means) from their homes, as long as those communities can provide detached single-family homes.

According to the survey, 56% of respondents prefer smart growth neighborhoods over neighborhoods that require more driving between home, work and recreation. The survey also shows that most Americans would choose a smaller home and smaller lot if it would keep their commute time to 20 minutes or less.

When considering a home purchase, 77% of respondents said they would look for neighborhoods with abundant sidewalks and other pedestrian-friendly features, and 50% would like to see improvements to existing public transportation rather than initiatives to build new roads and developments.

The survey also revealed that while space is important to home buyers, many are willing to sacrifice square footage for less driving. Eighty percent of those surveyed would prefer to live in a single-family, detached home as long as it didn’t require a longer commute, but nearly three out of five of those surveyed—59%—would choose a smaller home if it meant a commute time of 20 minutes or less.

Community characteristics are very important to most people according to the survey. When considering a home purchase, 88% of respondents placed more value on the quality of the neighborhood than the size of the home, and 77% of those surveyed want communities with high-quality schools.

So what does all this mean? Is the pendulum slowly swinging back to smaller houses, or is this a reaction to rising energy prices and the push to reduce America’s consumption habits? It could also be due to the aging baby boomers who’ve been tired of long commutes to the ever-sprawling suburbs in metro areas for decades. There are no clear answers and only time will tell if this trend is here to stay.

NAR’s President Ron Phipps said “Realtors care about improving communities through smart growth initiatives. Our members don’t just sell homes, they sell neighborhoods. Realtors understand that different home buyers are looking for all kinds of neighborhood settings and that many home buyers want walkable, transit-accessible communities.”

Regulators, Banks Reach Deal to Correct Foreclosure Flaws

Complaints about the foreclosure process being unfair to delinquent borrowers who have been trying to keep their homes were finally addressed in the second week of April, when the country’s largest mortgage lenders reached agreements with federal banking regulators.


Consumer advocates had been raising red flags for a long time about what they considered to be fundamental flaws in the foreclosure process. These flaws are expected be corrected by the settlement that was reached with the largest banks. In a related development, the attorneys general from all 50 states as well as the Department of Justice and other federal agencies are also seeking to settle with lenders.

The Federal Reserve and other enforcers of bank regulations launched a review of banking practices last year, which unveiled many violations of foreclosure processes and unsound practices. Rules were allegedly bent to hastily process applications, with an emphasis on quantity rather than quality and accuracy. The newly reached agreement is expected to fix the problems unearthed during the investigation, as well as improve governance, and the loan-modification process.

The agreements require the mortgage servicers to improve their communications with borrowers and to limit the extent to which they can pursue foreclosure during the loan-modification process.

Lenders are also required to ensure foreclosures are not pursued once a mortgage has been approved for modification. It also requires a single point of contact for borrowers throughout the loan-modification and repossession processes.



The agreements mandate lenders to establish systems to govern external companies that conduct foreclosures and related services on their behalf, including outside law firms. Banks must hire an independent company to conduct a review of all foreclosures conducted between Jan. 1, 2009, and December 31, 2010.



Banks are also required to establish a process for providing financial remedies to homeowners that believe they have been improperly foreclosed on by the institutions.



For a long time, federal regulators had been accused and criticized for not doing anything about the unsafe lending practices that were responsible for the housing bubble and its lingering after effects. Many consumer groups have expressed their displeasure with the new agreements because they believe regulators have not gone far enough to correct the flawed foreclosure process.



These groups criticized the proposed agreements to be dilute and toothless. The main bone of contention is the fact that banks are free to come up with their own internally developed plans for correcting and fixing problems. Banks get 60 days to create their plans.



“While homeowners and communities continue to face breached contracts, obstruction and misrepresentations from servicers, the proposed consent orders provide no new directions or standards to the financial institutions subject to your supervision,” a coalition of advocates, including the National Consumer Law Center and the Center for Responsible Lending, wrote in a letter to the federal regulators. “Rather, the proposal permits the perpetrators of these abuses to design a plan to comply with existing laws and contracts. This is insufficient to halt the abuses.”