Qualification and Designation

Not all real estate sales agents are Realtors. A Realtor is member of the NAR (National Association of Realtors) and agrees to abide by its strict code of ethics. Additionally, he may hold designations such as CRS (Certified Residential Specialist); ABR (Accredited Buyer’s Representative); GRI (Graduate, Realtors Institute); and SRES (Seniors Real Estate Specialist).

While both real estate agents and Realtors are licensed to conduct real estate transactions, there is no guarantee that all Realtors are morally and ethically better than unaffiliated independent real estate agents. Becoming a Realtor, however, shows a certain amount of commitment towards the profession and on-going education.

Experience and Track Record

Experience counts. A good real estate agent or Realtor should have been in business for a number of years, and it is important that the agent you pick knows the neighborhood you are interested in. He needs to know about schools and businesses in the area, recent sales, upcoming projects, current listings, etc. He will need to select homes that meet your needs. If you are selling your home, he will need to find buyers who are looking for a home similar to yours. Your options, as a seller or a buyer, will improve if your agent has good reputation because his inventory will more likely increase over time.

Ask the agent to provide you a list of homes sold or bought in the last year within the area of town in which he does business. This will give you an idea about the price range of homes in which he normally lists or sells and his overall experience and success as a real estate agent.

Commitment

Ask them up front about their current availability to attend to your needs. A full-time real estate agent is your best bet. If you select a part-time agent, make sure you set time expectations up front and determine the specific hours and days he will be available to you. A busy or part-time agent may not have time to accommodate your needs, which may lead to unreturned phone calls and/or late appointments resulting in unnecessary delays.

Hiring an agent from a big company has its advantages as there is a good chance someone is always there to answer the phone. Big realty companies have large advertising budgets and may market your property more aggressively. It is not as important which company brand you choose, but which agent you choose. You may have to interview a lot of them before you find an agent that is a good fit for you.

References

Buying or selling a house involves a lot of money, so trustworthiness is one of the essential qualities to look for in a real estate agent. An agent may be qualified and experienced, but it does not mean that he enjoys a good reputation among his customers. So ask for references and perform a quick online search to see what feedback comes up.  Researching the references will also give you an idea of how good they are in negotiating offers and ensuring that your interests are protected in the real estate transaction.

A good agent should always put your best interests ahead of their profit. He should show you as many properties ad you would like to see and allow you enough time to decide. Many agents will try to convince you to make your decision fast or push you to purchase their listings. So it is important to find an agent that is honest and does not shy away from hard work.

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Allowing Habitat to have the “first look” could help stop the trend of the almost domino effect foreclosures have on a neighborhood. Stephen Seidel, senior director global programs for Habitat for Humanity International, recognizes that the organization will have a wider impact on communities, “The ability to purchase foreclosed houses before they hit the open market positions Habitat to make a bigger impact in communities hardest hit by the foreclosure crisis.”

Bank of America, Chase, Citi, Fannie Mae, Freddie Mac, GMAC, and Wells Fargo are just some of the lenders whose REO lists are being made available to NSP grantees. Says Seidel, “We are excited for the opportunity to help rebuild communities which have been negatively impacted by the foreclosure crisis, while assisting people in need of affordable housing.”

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Of course, flipping houses is not that simple, though it does follow a  pattern: purchase a home for low-cost, renovate it and sell it at a profit, then buy the next home, renovate and sell that, and so on. There are some caveats of course, and it’s not just about buying and repainting a house. There’s so much more to flipping houses, and you should think carefully before you jump in.

Funding

As the old saying goes, you have to spend money, to make money. If you have enough money to buy a property outright, then good for you. Otherwise, you’ll either have to find investors or take on a loan from the bank. Either has its pros and cons – other investors mean having to share the profit, while taking on a loan will mean needing to cough up the downpayment (and monthly mortgage) on your own. There are government grants out there available to homeowners, but they greatly discourage these to be used for flipping or investing. Know more on Bank owned houses for sale.

Research

Do you know which neighborhoods are up-and-coming, that is, those with home values which a low enough so you can afford it, yet soon to rise by the time you’re ready to sell? It’s possible you can get a property that’s inexpensive, but might be located in a bad neighborhood – no one will want to buy it, no matter how beautiful it is. Do research on the neighborhood, as well as the house itself. Often, bank-owned properties (REO homes) are a good investment – these can be found in all types of neighborhoods and the owners are often eager to get rid of them. You can check out auctions or real estate agents specializing in foreclosed homes.

When choosing a property, inspect the home and make sure the repairs to be made are cosmetic only, not structural. Sometimes, paying a good surveyor to inspect the home is a good investment, especially if you want to avoid money pits.

DIY As Much As Possible

If you have some skill in making more than basic repairs or painting, such as fixing plumbing fixtures or electrical wiring, then you can save on the costs of hiring someone to do it for you. It’s easy to learn painting and hammering a nail, so try doing everything yourself. Sometimes, all you need is a new carpet, new lighting fixtures and scrubbing off the dirt to increase the vale of a home. If you must hire someone else, make sure your subcontractor is licensed, bonded and insured. Try to get a recommendation from someone you know, and once you’ve built a relationship with a subcontractor, you’ll find that the process becomes much easier.

Once you have your property ready and fixed up, you’ll then have to start selling the house (or perhaps you’ve already started to.) In Part 2, we’ll tackle how you can best sell your home, and how to close the deal on your property.
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Depending on how you define the shadow inventory, the estimated number of homes that category varies widely between two million and eight million homes. This year, around five and a half million homes are expected to be sold in the U.S., of which around one-third are being sold under conditions of some kind of financial distress such as bank foreclosure properties, short sales, or sellers letting their homes go at a serious loss just because they need to get out from under them. The higher estimates of the shadow inventory include bank owned foreclosures that haven’t hit the market yet as well as homes that have already been declared delinquent and are in the process of moving into the foreclosure process, and homes that are more than two months behind in their mortgage payments. It’s really possible that around seven million homes are floating around out there in some kind of financial limbo, but not all of them will actually reach the market, and it’s likely that they won’t all hit the market at once. However, because of all the foreclosed homes, short sales, and underwater properties out there, it could be as long as 2013 before home values will begin to rise again, and the single family home market will actually begin to recover some of its former value. One thing that’s pretty certain, though, is that home values will probably never reach the exalted peaks that they hit three years ago. Know more on bank foreclosure listings.

One thing to consider about the shadow inventory problem is that these homes are not just more product that will drive down prices; foreclosed homes and short sales are usually in areas that are hard-hit economically and many of these homes have been seriously neglected, or at best have had routine maintenance to things like plumbing, electrical wiring, painting, deferred for far too long. These homes could have the effect of reducing home values and keeping them depressed for many years. That’s a scary prospect for anyone hoping to sell a home, condo, or apartment any time in the near future. Celia Chen, a housing analyst for Moody’s Economy.com thinks that as many as four and a half million homes may be out there in the shadow inventory, and that’s an entire year’s supply of homes. Right now it’s a dark time for homeowners or mortgage holders looking to sell their homes. The upside is that it’s a good time to buy, and the low prices may spur more activity in the country’s various real estate markets in the next few years.

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There are several potential problem spots you should check when you’re considering REO homes.  If you live in the area, you can check most of these yourself, but hiring a Home Inspector is preferable.  For just a few hundred dollars, they can do a thorough inspection and give you a detailed report on the condition of your REO home.  You may be pleasantly surprised to get a report stating that everything is up to code, water-tight, and in great shape.  It’s well worth the peace of mind you’ll gain to pay a small fee for the inspection.

If you get a less positive home inspection report, it can help you determine whether the house is right for you.  If you’re looking at foreclosed homes for sale in your area and the prices are well below market value, you may want to buy a house and fix any problems yourself or hire a contractor.  In many cases, the problems found by a home inspection can be readily fixed and you’ll still pay less than you would for a home for sale by the owners or through a standard real estate listing.  If the repairs needed are overwhelming, however, you can decide to walk away without bidding on the REO home you’ve been looking at.  Fortunately, there are currently thousands of foreclosed homes for sale, and the next one you look at may be the perfect one for you.

Trouble Spots for Home Inspections

There are a variety of signs there could be trouble in your home.  Knowing what to look for is the first step:

• Mold isn’t always visible to the naked eye, but it is difficult to get rid of, so be sure you look for mold in basements, any rooms that are damp or have had leaks in the past, and in the attic, where insulation can become moldy after a roof leak.  You can purchase mold testing kits that are easy to use at many home improvement stores.
• Gutters can protect a home or cause problems.  Make sure the gutters are large enough and properly installed so water doesn’t overflow and run under the roof or down the wall of the house, which will cause moisture problems in your basement or foundation.
• The location of plants is also crucial.  If plants are closer than 18 inches away from the outside walls, they could draw moisture into the walls.
• Drains that are noisy, making a chugging sound, are an indication of inadequate venting.  A plumber will need to correct this problem right away.
• The attic can be the location for a number of issues, including inadequate ventilation, trusses that are the wrong size or even missing, roof leaks, poor insulation, faulty wiring, or mice or birds that have taken up residence.

If you’re inspecting REO homes yourself, don’t be afraid to ask questions and point out areas that you feel are potential problems.  Get an estimate that shows what the needed repairs will cost, then decide if any of the REO homes you’re considering are worth the investment.  If your inspection hasn’t uncovered any major problems, you can rest easy knowing you’re getting a beautiful house that’s a definite bargain!

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Some people are simply ceasing to pay their mortgages and are fighting tooth and nail whichever institution holds the mortgage on their home, including hiring lawyers who file legal papers asking the mortgage holder to provide legal proof that do, indeed hold the mortgage. This tactic is proving very effective in forestalling foreclosure since most mortgages are sold by the original issuer to second parties. Another factor working in favor of those fighting home foreclosures by banks is the sheer volume of homes that have been foreclosed on. According to a recent article in The New York Times, more than 1.7 million American homes have had foreclosure proceedings initiated against them. The courts are completely buried in a backlog of foreclosed home cases, the mortgage holders’ collections departments are overwhelmed, and some Americans are taking full advantage of that situation by staying in homes they don’t pay for as long as they possibly can. If you’re facing the prospect of foreclosure, or have already had your home foreclosed upon, here is some food for thought: in 2008, your average homeowner who was delinquent on his or her mortgage had been delinquent for around 251 days before eviction. Right now, given the huge volume of delinquent mortgages, it takes mortgage holders around 438 days to evict you. That’s more than one year, ample time for almost anyone to build up their savings and make other living arrangements. Know more on bank foreclosure listings.

Ultimately, what created this situation was mortgage lenders’ greed, their predatory lending practices, and their inflexibility in dealing with generally honest, honorable homeowners who might have been hit with high medical costs, a personal disaster, or simply losing their jobs and being able to find another one that paid nearly as well. And while people playing the waiting game with their mortgage lenders in the hope of improving their cash flow will pay the price when they are finally the victims of bank foreclosures. Their credit will be ruined and they may be unable to obtain any credit in the future, or if they do, they’ll pay premium rates for any credit cards that they can obtain. Like any situation, there are advantages and benefits to playing this dangerous game. Since most people do need credit, you have to ask yourself: do the advantages outweigh the risks? For most sensible people, the answer is probably a resounding “No”.

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You should also talk to your insurance agent about coverage limitations.  Many people assume that if they have homeowner’s insurance, they are protected against any kind of disaster, no matter how way-out or unusual, that could affect their home.  In fact, most policies have several exclusions that can catch homeowners by surprise.

Flooding is one of the better known natural disasters that isn’t covered by a standard home policy.  Fortunately, you can purchase separate Flood Insurance that is backed by the federal government.  In fact, if you live in a high risk area, flood insurance is mandatory for all houses, including foreclosed homes, that have a mortgage through a federally funded or insured lending institution.  The For more information, you can visit www.floodsmart.gov.

Are you covered if your REO property is hit by a tornado?  What about an earthquake?  Surprisingly, most homeowners insurance will pay for tornado damage, but not earthquake damage.  Other weather related disasters not usually covered are mudslides and sinkholes.  You may not think that’s a big concern, but neither did the people in Guatemala affected by this sinkhole in April of 2010: http://www.businessinsider.com/giant-sinkhole-guatemala-city-large-2010-5.  Tornado and hurricane coverage, however, is usually included.  Talk to your insurance agent to find out which natural disasters aren’t covered and how you can insure your foreclosed home purchase against them.

Mine Subsidence is one of those terms you may never hear or have to worry about unless you buy privately sold or REO property in Pennsylvania or another state with lots of abandoned coal mines.  When these underground mines collapse, homes built on top of them often shift, collapse, or sustain damage to their foundations, making them unsafe for habitation.  If you have a home in a coal mining region, consider buying state funded mine subsidence insurance.

Surprisingly, in most cases you’re protected if a falling object lands on your house.  This means your policy will pay for repairs if a tree or even an airplane lands unexpectedly on your house, but it can protect against more unusual problems.  Falling satellites and meteorites are two unusual disasters you’re probably protected against with a standard policy.

There are plenty of other unusual disasters that could strike your home.  If you live in Hawaii it could be a volcanic eruption, while you may worry about damage from livestock or stray animals if you live in cattle country.  Don’t assume you’ve properly insured your foreclosed home until you review your homeowner’s policy carefully with your agent.  It’s better to know what isn’t covered and purchase additional coverage than find out when disaster strikes.

If you buy foreclosed homes that are in need of remodeling, you may be directly affected by the new federal guidelines for renovating homes that may contain lead paint.  On April 22, 2010 the latest federal rule concerning remodeling these homes became law.  Often referred to as the “Renovation, Repair and Painting Rule (RRP),” it clearly outlines specific guidelines for the proper handling of lead based paints.

The Renovation, Repair and Painting Rule is a lengthy, complex piece of legislation, but the basics are easily understood.  In an effort to protect consumers from the dangers of lead paint exposure, it requires EPA certification for any contractor or renovation firm that disturbs lead based paint during the course of remodeling.  The guidelines apply to any area of six square feet inside a home or 20 square feet on the exterior of a home.

Whether you purchase bank foreclosures in order to “flip them” or you’ve purchased an reo home for your own family, it’s important to make sure you understand the new regulations and abide by them when hiring anyone to do renovations to a house you’ve purchased.

Do All Foreclosed Homes Contain Lead Based Paint?

Determining whether a house you’re buying has lead based paint or not can be difficult to determine unless you know the age of the house.  The new rule applies only to homes that have lead-based paints, which were removed from the U.S. market in 1978.  If you do purchase any foreclosed homes that were built prior to 1978, the new rule could be significant if you plan on paying a remodeling company or contractor to do renovations, as the regulations only apply if the work is done an individual or company that is hired for that purpose.  If you do all of the remodeling work yourself, you don’t have to follow the guidelines, although you certainly should take all necessary precautions to minimize lead paint exposure for yourself and your family.

If you like, you can apply for an exemption from the rule if you believe the house is free of all lead paints.  You can contact the EPA for information on how to find a Certified Risk Assessor or Lead Inspector who can evaluate your property.

The National Association of Home Builders (NAHB) has an excellent summary of the rule and what it means on their website.  Be aware, however, that their summary says the rule only applies if to homes with pregnant women or children under the age of six, which is misleading.  This part of the rule drops off on July 6, 2010, so all home remodeling projects in houses with lead based paints will need to abide by the rules in less than a month.

When you’re hiring anyone to do renovations or repairs to pre-1978 bank foreclosures, be sure to ask the company or individual if they are EPA certified to properly dispose of lead based paints.  Also ask how many Certified Renovators they have in their employee and who will be doing the work on your property.  Although the new rules may seem restrictive, they are designed to protect the safety and health of everyone, including the new residents of older, foreclosed homes.

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1. Ask for recommendations from people you trust. If you naturally feel chemistry with someone then there is a good chance that you will also feel chemistry with the person’s other close contacts. For example, you may like your best friend’s realtor because you and your best friend have similar tastes when it comes to people. This isn’t always true, but it’s definitely a great first step.
2. Choose a realtor that communicates via a form that you prefer. If you’re an email person, choose a realtor that likes to use email. If you prefer talking on the phone, select a realtor that feels the same way. This makes communication in the relationship go a whole lot more smoothly.
3. See how the realtor responds to specific questions. It can seem like you have great chemistry with someone on the surface. However, when you get to know each other better, that chemistry can fizzle. Ask your potential realtor some tough questions to see if that chemistry remains. Ask about the realtor’s education, their experience with specific types of properties such as Arizona real estate owned properties or their knowledge about sales in your neighborhood.
4. Trust your gut instinct. How many times have you gone on a second date with someone even though something on the first date didn’t feel quite right? How many times did that second date turn out well? It’s rare because your gut instinct is usually good. That will also be true when choosing a realtor.
5. Confirm what your gut feels. After leaving a great first date, what is the first thing that you do? Many people in the modern world head to Google to see what they can find out about the person that they’ve just been out with. You may have had great chemistry but if you find out that they are on the Most Wanted list then you’ll know that the chemistry isn’t enough. Likewise, you want to double-check your instincts before choosing a realtor. Make sure the realtor is properly licensed, accredited with the BBB and has received good reviews. Also make sure they work in the area you need help with; great chemistry with a realtor who doesn’t know anything about reo homes won’t help you if that’s what you’re buying and selling.

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In a number of very desirable U.S. cities, such as Phoenix, Arizona, Las Vegas, Nevada, and Miami, Florida, the price-to-rent ratio is such that it really makes more sense to buy a home than rent it. You’ll come out ahead financially in the long run. If you don’t know what the price-to-rent ratio is, it works like this: real estate data providers like Trulia sift through the real estate statistics in the 50 largest U.S. cities to find out where the best deals are. What’s being compared is the average price of a 2-bedroom home, including all the various fees and things associated with closing costs, as well as the built-in cost of maintaining a home. This is compared with the average rental price for a 2-bedroom apartment, condo, townhouse, etc. Now, if the price-to-rent ratio is lower than 15, this means that it is cheaper to own a home than it is to rent a home or apartment.

The reason for the low price-to-rent ratios in some cities is pretty simple to understand. Places like Las Vegas, Phoenix, and Miami had red-hot real estate prices during the peak of the real estate bubble. The real estate crash of the last three years left many homeowners underwater and scrambling to unload homes that they could no longer afford because they had either bought more house than they needed, or were stuck with adjustable-rate mortgages that had interest rates that suddenly went sky-high. The end result was that many of the real estate markets that experienced high demand for housing in the previous decade now found themselves flooded with Arizona, Florida, and Nevada real estate owned properties, short sales, and abandoned properties, which had the effect of drastically driving down home prices in these markets. The more that home prices were driven down, the more homeowners were left with their homes “underwater,” that is worth less than they had paid for them, especially if the homes had been purchased at or near the peak of the real estate boom.

What this means to you is that if you are in the market for a home and live in one of the following real estate markets, then now is an excellent time to purchase a home, if you can the financing. The best markets to buy a home instead of renting are the following: Phoenix, AZ, Las Vegas, Nevada, Arlington, Texas, Fresno, California, Jacksonville, Florida, Miami, Florida, San Antonio, Texas, Mesa, Arizona, El Paso, Texas, and Minneapolis, Minnesota.

According to real estate values expert Pete Flint, the co-founder and Chief Operating Officer of the Trulia site: “Home sellers in these hard-hit areas are forced to lower their prices to compete with all the foreclosures on the market. As a result, these (formerly) unattainable markets are so affordable it makes better financial sense to buy than rent.” So, if you felt squeezed out of home ownership because of high prices several years ago, now is an excellent time to reassess the prospect of home ownership. After all, why should you pay rent or high condo fees when you can buy a foreclosed home, a short sale, or a bargain-priced home being sold by the owner?

Instead of sinking your income into rent (and rents are inching back up again because of supply and demand), you can become a proud, financially savvy homeowner who is building up equity in a home acquired at a bargain price. However, these great bargains aren’t available everywhere; geographic location is definitely part of the equation. For instance, reo properties in Texas, Florida, Arizona or California would be better deals than buying similar bank owned foreclosures in Colorado or Hawaii.

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