You get what you pay for

I read a not-so-interesting article yesterday regarding the purchase of a foreclosed property. The title was something along the lines of 'Foreclosure money pit ends up costing much more.' What a shocker (insert eye-roll here).

During a typical month as a real estate agent I visit with many buyers that are looking to purchase a foreclosed property for 'pennies on the dollar'. Some of these buyers think they will be purchasing a 'move-in ready home' or something they can flip for a 100% return on their investment with little or no effort/cost. Time for a 'realty' reality check.

Granted, there are foreclosed properties available that are 'move-in ready' but there are many more that are not. Equally, if you are thinking you are going to purchase a property that can be flipped for big bucks with just a 'Swiffer' and a can of 'Carpet Fresh', think again.

'You get what you pay for.' How true. Here is the secret to save you BIG headaches when purchasing a foreclosed property: SEE the existing property condition with your eyes wide open; UNDERSTAND what it will cost to bring the property up to condition; have the necessary RESOURCES to get the job done; JUMP when you find what you are looking for. (Look, I did an acronym! 'SURJ' - See, understand, resources, jump. OK, so it is not a great acronym. . . [ahem].)

Virtually all foreclosure properties are being sold 'as-is'. What that means is there is no warranty, there are no refunds. You bought it, you own it. The buck did not stop here, it stopped elsewhere - and it is not coming back. If there is a 'surprise' problem that needs to be addressed after the sale your only real option is to find a mirror and have a nice heart-to-heart talk with the new owner - you.

Please understand: There are many good values in the foreclosure market - and occasionally, there is a real steal. But if you are going to capitalize on such a deal you need to SURJ! Know what you are looking for and be positioned to act quickly when you find what you are looking for - because good deals do not wait around!

If you are the type of person that can't tolerate a little risk exposure, the foreclosure may not be for you. In that case there are probably better options - such as properties that are not being sold 'as-is'. I think it is worth noting when a foreclosed property is sold, the owner (often times a bank) requires the buyer(s) to accept and sign multiple documents that basically repeat the same statement over and over, "Mr./Mrs. Buyer(s), do you understand you are purchasing this property 'AS-IS'?" Hmmm. I wonder if they are trying to make a point?

Questions on foreclosed properties? Call me.

Jon Drews, Broker Associate with Century 21 Vista.

Visit my website at www.RealEstateFergusFalls.com to view foreclosed properties plus much, much more!

The ‘Short’ in Short Sales

Hi there! I just stumbled across in interesting article today and feel the need to share. The article relates to a very real risk for individuals that have been – or are considering – a short sale of their home. We’ll get to a brief summary of definitions and risks in just a moment but for those who wish to dive right into the CNN Money.com article, it can be viewed here: Mortgage lenders pursue homeowners even after foreclosure

Basically, a short sale is an arrangement – an agreement – between a homeowner and their lender. Let’s say a homeowner needs to sell their property and they have not been able to do so for an amount that would satisfy their mortgage balance on the property. That homeowner may be able to negotiate with the mortgage holder for the sale of the property at a price less than the mortgage. For most people in this situation this would appear to be the end of their problem: they sold their home and their mortgage has been satisfied. WRONG!

Please understand 'short sale' transactions are quite common these days and, when properly negotiated, can lend themselves very well in certain situations. There is nothing wrong with a properly negotiated short sale.

If you are thinking a ‘short sale’ type of arrangement is the right approach for your situation you absolutely must be talking to an attorney that deals with short sale transactions!

Here it is in a nutshell: There are two basic ‘commitments’ made by a homeowner when securing a mortgage. The first is the homeowner agreeing to offer the home as collateral for the loan. The second is a promise by the borrower to repay the mortgage. BOTH elements need to be addressed when negotiating a short sale. If a homeowner only addresses the first element and agrees with the mortgage holder to release the property as collateral so that it can be sold, there is still the second element that states the borrower agrees to repay the loan.

Some folks that have gone through the short sale process are getting a nasty surprise after the fact. Banks are contacting these people and informing them they still owe the difference in what the home ultimately sold for and the mortgage balance! Ouch.

Read the linked article from CNN Money.com for all the details. And, again, if you are considering a short sale be absolutely certain you do so with the assistance of a legal professional.

Until next time -

Jon Drews, Broker Associate with Century 21 Vista, Inc.

www.C21Vista.com

Is looking at homes a bit confusing?

I can help simplify the process! Yes, there are many factors to consider when preparing to buy or sell a property. This is why you need to seek the guidance of a professional.

Speaking of professionals, what type of credentials should a person seek out when considering the selection of a real estate sales agent to assist with the purchase or sale of your home? Great question! Here is my advice: Look for an agent that has earned the CRS (Certified Residential Specialist) designation. A CRS agent has committed to additional training and has demonstrated their ability to represent both home buyers and sellers at the highest level of professional care.

Here is another valuable tidbit: Fewer than 4% of all REALTORS go on to earn the CRS designation.

When it comes to buying and selling, is there anything more important than the purchase or sale of your own home? Life is tough enough - you owe yourself some peace of mind. Retain the services of a Certified Residential Specialist and know you are in good hands!

Jon Drews, Broker Associate with Century 21 Vista, Inc.
www.C21Vista.com

What are you waiting for?

Looking to buy a new home? Need more room, less room, or just different room? NOW is the time to make your move! The opportunity to purchase a new home has never been greater than it is right now! In fact, as one of my very good banker friends shared the other day: I am guessing we will never again see all the advantages home buyers have RIGHT NOW.

(Home Sellers: Are you paying attention? You MUST be part of this market right now. You need to be properly positioned and competitively marketed right now. Call me . . . right now!)

Just think about it. We have TAX CREDITS for First-time Home Buyers. We have TAX CREDITS for Existing Home Buyers. HISTORICALLY LOW INTEREST RATES will literally save home buyers thousands of dollars! And how about the current inventory of great, great properties – the time is NOW! Again, I ask: What are you waiting for!?!

These are exciting times – times of life-changing opportunities – for savvy and discerning buyers - and sellers. Will we ever again see all the advantages home buyers have right now? Think about it – but think about it QUICKLY as the clock is ticking. (You can see ‘the clock’ at my website: www.C21Vista.com)

A note to home buyers: Call me today – Let’s Get Moving!! Let’s take advantage of this amazing opportunity to BUY your home.

A note to home sellers: Call me today – Let’s Get Moving!! Let’s take advantage of this amazing opportunity to SELL your home.

Call me today: Jon Drews, Broker Associate with Century 21 Vista, Inc. (218) 770-3500

Get the Facts on the Extended Homebuyer Credit

In November 2009, the first-time homebuyer tax credit was expanded and extended. It could be the boost you’ve been waiting for to get you on the path to your new or next home. Here are some answers to questions and facts to consider.

First-time home buyers – 10% of the purchase price up to $8,000

This tax credit is available to buyers who have not owned a principal residence during the prior three year period, and enter into a contract to purchase a new primary residence on or before April 30, 2010.

Current home owners – 10% of the purchase price up to $6,500

This tax credit is available to current home owners who have lived in their principal residence for at least five consecutive years during the past eight years, and enter into a contract to purchase a new primary residence on or before April 30, 2010.

What is a Homebuyer Tax Credit?*

It is a reduction in what a taxpayer owes in income taxes. To qualify, the homebuyer must meet the annual income requirements and enter into a binding contract for a home purchase between November 7, 2009 and April 30, 2010, and close on the purchase by June 30, 2010.

What are the income requirements?

For single tax payers, the income limit is $125,000 for married taxpayers filing a joint return, the limit is $225,000. Consult your tax professional to determine your eligibility.

Does the tax credit need to be repaid?

No. This is not a loan, but a tax reduction, provided you live in the home for a minimum of three years. Military families are exempt from this stipulation.

Are there other allowances available?

Yes. For some FHA-insured mortgages, the tax credit may be used as a down payment to offset closing costs. To learn more about this and other details, talk to a CENTURY 21® Agent.

Are there any caps on the value of the home?

Yes. The tax credit is only applicable to homes that are purchased at $800,000 or less.

The extended tax credit program is designed to help make home buying possible for a wider number of buyers. CENTURY 21 Sales Professionals can help you understand how to take advantage of this temporary incentive. It’s important to also consult with a tax professional and a mortgage specialist. A CENTURY 21 Agent will guide you through the process.

To learn more, visit C21Vista.com or call 218.770.3500

Source: Unemployment Compensation Extension Act of 2009.
*Consult a tax professional to determine eligibility. To qualify, homebuyer must meet the annual income requirements and enter into a binding contract by April 30, 2010 and close on the purchase by June 30, 2010. CENTURY 21® is a registered trademark licensed to Century 21 Real Estate LLC. An Equal Opportunity Company. Equal Housing Opportunity. Each office is independently owned and operated.

Existing Home Owner $6500 Tax Credit!

Current home owners: Did you know you can receive a tax credit up to 10% of the purchase price when you purchase a new home! WOW!! ($6500 maximum credit.)

This tax credit is available to current home owners who have lived in their principal residence for at least five consecutive years during the past eight years, and enter into a contract to purchase a new primary residence on or before April 30, 2010.

First-time & Existing Home Buyer Tax Credit!!

Your opportunity is ticking away . . . to qualify for an $8000 tax credit (First-time Home Buyer) OR a $6500 tax credit for Existing Home Buyers!

I have the details. Call Now!

Jon Drews
Associate Broker
Century 21 Vista, Inc.
(218) 770 - 3500