Dean Graziosi’s Real Estate Investment Academy

<!– /* Font Definitions */ @font-face {font-family:”Cambria Math”; panose-1:2 4 5 3 5 4 6 3 2 4; mso-font-charset:1; mso-generic-font-family:roman; mso-font-format:other; mso-font-pitch:variable; mso-font-signature:0 0 0 0 0 0;} @font-face {font-family:Verdana; panose-1:2 11 6 4 3 5 4 4 2 4; mso-font-charset:0; mso-generic-font-family:swiss; mso-font-pitch:variable; mso-font-signature:-1593833729 1073750107 16 0 415 0;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-unhide:no; mso-style-qformat:yes; mso-style-parent:”"; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:”Times New Roman”,”serif”; mso-fareast-font-family:”Times New Roman”;} h1 {mso-style-unhide:no; mso-style-qformat:yes; mso-style-link:”Heading 1 Char”; mso-style-next:Normal; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; page-break-after:avoid; mso-outline-level:1; font-size:11.0pt; mso-bidi-font-size:12.0pt; font-family:”Verdana”,”sans-serif”; mso-font-kerning:0pt;} span.Heading1Char {mso-style-name:”Heading 1 Char”; mso-style-unhide:no; mso-style-locked:yes; mso-style-link:”Heading 1″; mso-ansi-font-size:11.0pt; mso-bidi-font-size:12.0pt; font-family:”Verdana”,”sans-serif”; mso-ascii-font-family:Verdana; mso-hansi-font-family:Verdana; font-weight:bold;} .MsoChpDefault {mso-style-type:export-only; mso-default-props:yes; font-size:10.0pt; mso-ansi-font-size:10.0pt; mso-bidi-font-size:10.0pt;} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.25in 1.0in 1.25in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.Section1 {page:Section1;} –>

On June 24^th, Fannie Mae released a stern message with strong ramifications for borrowers who default on Fannie Mae mortgages. The announcement marks a shift from what has previously been a loose laissez-faire policy to a new, comprehensive collection policy. The new policy is strict and is the direct result of the willingness of homeowners to walk away from their mortgage obligations.

With many unemployed homeowners and with many mortgages that exceed appraised values of the homes, a high percentage of Americans are intentionally defaulting on their mortgages and forcing lenders to foreclose. This practice has cost Fannie Mae billions of dollars.

In the announcement Fannie Mae stated, “Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure.”

“Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments.”

The bottom line is that Fannie Mae will now take action to try to collect money lost as a result of walk-away borrowers. The seven-year restriction is severe as the majority of housing loans in the U.S. are backed by Fannie Mae. Previously, homeowners who defaulted could apply for Fannie Mae backed mortgages within three years. Those days are now gone.

The moves by the country’s largest insurer of mortgages is designed to bring underwater homeowners together with lenders to either arrive at loan modifications or in the alternative short sales. Foreclosure is the least desired alternative.

To help the modification process, The Obama Administration has committed billions of dollars in loan reductions and incentive programs for both homeowners and lenders. Originally, lenders were not supportive of modifications because they did not want to accept the losses. What these lenders soon discovered is that the cost of foreclosures far outweighed the relatively minor losses incurred by modifications.

Add Bookmark

<!– /* Font Definitions */ @font-face {font-family:Wingdings; panose-1:5 0 0 0 0 0 0 0 0 0; mso-font-charset:2; mso-generic-font-family:auto; mso-font-pitch:variable; mso-font-signature:0 268435456 0 0 -2147483648 0;} @font-face {font-family:”Cambria Math”; panose-1:2 4 5 3 5 4 6 3 2 4; mso-font-charset:1; mso-generic-font-family:roman; mso-font-format:other; mso-font-pitch:variable; mso-font-signature:0 0 0 0 0 0;} @font-face {font-family:Verdana; panose-1:2 11 6 4 3 5 4 4 2 4; mso-font-charset:0; mso-generic-font-family:swiss; mso-font-pitch:variable; mso-font-signature:-1593833729 1073750107 16 0 415 0;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-unhide:no; mso-style-qformat:yes; mso-style-parent:”"; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:”Times New Roman”,”serif”; mso-fareast-font-family:”Times New Roman”;} h1 {mso-style-unhide:no; mso-style-qformat:yes; mso-style-link:”Heading 1 Char”; mso-style-next:Normal; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; page-break-after:avoid; mso-outline-level:1; font-size:11.0pt; mso-bidi-font-size:12.0pt; font-family:”Verdana”,”sans-serif”; mso-font-kerning:0pt;} p.MsoBodyText, li.MsoBodyText, div.MsoBodyText {mso-style-noshow:yes; mso-style-unhide:no; mso-style-link:”Body Text Char”; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; mso-bidi-font-size:12.0pt; font-family:”Verdana”,”sans-serif”; mso-fareast-font-family:”Times New Roman”; mso-bidi-font-family:”Times New Roman”;} span.Heading1Char {mso-style-name:”Heading 1 Char”; mso-style-unhide:no; mso-style-locked:yes; mso-style-link:”Heading 1″; mso-ansi-font-size:11.0pt; mso-bidi-font-size:12.0pt; font-family:”Verdana”,”sans-serif”; mso-ascii-font-family:Verdana; mso-hansi-font-family:Verdana; font-weight:bold;} span.BodyTextChar {mso-style-name:”Body Text Char”; mso-style-noshow:yes; mso-style-unhide:no; mso-style-locked:yes; mso-style-link:”Body Text”; mso-ansi-font-size:11.0pt; mso-bidi-font-size:12.0pt; font-family:”Verdana”,”sans-serif”; mso-ascii-font-family:Verdana; mso-hansi-font-family:Verdana;} .MsoChpDefault {mso-style-type:export-only; mso-default-props:yes; font-size:10.0pt; mso-ansi-font-size:10.0pt; mso-bidi-font-size:10.0pt;} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.25in 1.0in 1.25in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.Section1 {page:Section1;} /* List Definitions */ @list l0 {mso-list-id:55275773; mso-list-type:hybrid; mso-list-template-ids:1766504880 -1489760742 67698691 67698693 67698689 67698691 67698693 67698689 67698691 67698693;} @list l0:level1 {mso-level-start-at:0; mso-level-number-format:bullet; mso-level-text:; mso-level-tab-stop:1.0in; mso-level-number-position:left; margin-left:1.0in; text-indent:-.5in; font-family:Symbol; mso-fareast-font-family:”Times New Roman”; mso-bidi-font-family:”Times New Roman”;} ol {margin-bottom:0in;} ul {margin-bottom:0in;} –> The Obama Administration and its housing recovery team were taken to task in a recent Congressional hearing. At issue is the $75 billion housing stimulus fund that is designed to help 4 million homeowners avoid foreclosure. At the core of the rescue package is the Treasury’s loan modification program.

In November, the number of troubled homeowners in trial modification programs rose to 697,026 from the 650,994 October level. Amazingly, only 31,382 homeowners have been converted to long-term loan modifications. At the same time, the number of failed trial programs now stands at 30,650.

Failure occur for three primary reasons:

· Failure to sustain timely payments during the trial period

· Failure to submit all necessary paperwork

· Failure to qualify as having insufficient income

These tendencies underscore an alarming fact that homeowners who are underwater are unwilling to continue to pay for properties whose debt surpasses the value. There is a strong tendency to walk away and begin to rent in another area. This drives home prices lower.

Congress is pressuring the Administration to help more homeowners. Phyllis Caldwell of Treasury’s Homeownership Preservation Office explained, “Our focus now is on working with servicers, borrowers and organizations to get as many of those eligible homeowners as possible into permanent modifications.”

The administration has been leaning on lenders to engage troubled homeowners, but the country’s biggest mortgage lenders like Bank of America and Citigroup have chosen to ramp up their foreclosure efforts. Treasury is now launching an all out campaign to intervene. Utilizing forceful oversight of loan services’ modification programs, the government expects modifications to significantly increase in the upcoming months.

Treasury is even sending out advisers to assist borrowers with completing paperwork. The current long-term conversion arte is just 4%. The Treasury would like to see 40% increases in the next tow or three months. If the goal is accomplished, there should be a very positive effect on housing prices.

Add Bookmark

<!– /* Font Definitions */ @font-face {font-family:”Cambria Math”; panose-1:2 4 5 3 5 4 6 3 2 4; mso-font-charset:1; mso-generic-font-family:roman; mso-font-format:other; mso-font-pitch:variable; mso-font-signature:0 0 0 0 0 0;} @font-face {font-family:Verdana; panose-1:2 11 6 4 3 5 4 4 2 4; mso-font-charset:0; mso-generic-font-family:swiss; mso-font-pitch:variable; mso-font-signature:-1593833729 1073750107 16 0 415 0;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-unhide:no; mso-style-qformat:yes; mso-style-parent:”"; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:”Times New Roman”,”serif”; mso-fareast-font-family:”Times New Roman”;} h1 {mso-style-unhide:no; mso-style-qformat:yes; mso-style-link:”Heading 1 Char”; mso-style-next:Normal; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; page-break-after:avoid; mso-outline-level:1; font-size:11.0pt; mso-bidi-font-size:12.0pt; font-family:”Verdana”,”sans-serif”; mso-font-kerning:0pt;} p.MsoBodyText, li.MsoBodyText, div.MsoBodyText {mso-style-noshow:yes; mso-style-unhide:no; mso-style-link:”Body Text Char”; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; mso-bidi-font-size:12.0pt; font-family:”Verdana”,”sans-serif”; mso-fareast-font-family:”Times New Roman”; mso-bidi-font-family:”Times New Roman”;} span.Heading1Char {mso-style-name:”Heading 1 Char”; mso-style-unhide:no; mso-style-locked:yes; mso-style-link:”Heading 1″; mso-ansi-font-size:11.0pt; mso-bidi-font-size:12.0pt; font-family:”Verdana”,”sans-serif”; mso-ascii-font-family:Verdana; mso-hansi-font-family:Verdana; font-weight:bold;} span.BodyTextChar {mso-style-name:”Body Text Char”; mso-style-noshow:yes; mso-style-unhide:no; mso-style-locked:yes; mso-style-link:”Body Text”; mso-ansi-font-size:11.0pt; mso-bidi-font-size:12.0pt; font-family:”Verdana”,”sans-serif”; mso-ascii-font-family:Verdana; mso-hansi-font-family:Verdana;} .MsoChpDefault {mso-style-type:export-only; mso-default-props:yes; font-size:10.0pt; mso-ansi-font-size:10.0pt; mso-bidi-font-size:10.0pt;} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.25in 1.0in 1.25in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.Section1 {page:Section1;} –> On December 1, the Treasury Department released a long awaited short sale program. Timothy Geithner explained that the program is designed to bring buyers, sellers, bankers and borrowers together in a faster short sale process. The short sale program only applies to loans created prior to January 1, 2009, that are for a primary residence and that do not exceed $729,750. Under the plan, secondary lenders can only receive as much as $3,000.

The new program significantly reduces the paperwork, as the documentation for application is exactly what is used for the loan modification application. Too often short sales are lost because of delays by both the seller and the lender.

The program becomes active on April 5, 2010. Unfortunately many of the active listings today will not be affected, but government moves at it’s own pace. From the investor’s perspective, the enactment delay provides time to locate and research possible properties.

In addition to reducing the paperwork, lenders will need to approve the short sale price before then property is listed. This is a big step forward. Mortgage companies will receive $1000 to help defer the new administrative costs. Now, when buyers consider a short sale, they know the property is good to go.

The largest mortgage bank in the country is Bank of America, which absorbed the troubled Countrywide last year. BOA has hired 3500 new workers and upgraded their computer systems to become more efficient in processing short sales, foreclosures and REOs. The bank has 12 call centers and services 14 million loans. They have more than their share of troubled assets.

The tricky part of the short sale process is often the secondary loans. The Treasury Department estimates that approximately 50% of troubled homeowners have second loans. While $3000 is not much, it is better than nothing, which could well happen in foreclosure.

Add Bookmark

<!– /* Font Definitions */ @font-face {font-family:Wingdings; panose-1:5 0 0 0 0 0 0 0 0 0; mso-font-charset:2; mso-generic-font-family:auto; mso-font-pitch:variable; mso-font-signature:0 268435456 0 0 -2147483648 0;} @font-face {font-family:”Cambria Math”; panose-1:2 4 5 3 5 4 6 3 2 4; mso-font-charset:1; mso-generic-font-family:roman; mso-font-format:other; mso-font-pitch:variable; mso-font-signature:0 0 0 0 0 0;} @font-face {font-family:Verdana; panose-1:2 11 6 4 3 5 4 4 2 4; mso-font-charset:0; mso-generic-font-family:swiss; mso-font-pitch:variable; mso-font-signature:-1593833729 1073750107 16 0 415 0;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-unhide:no; mso-style-qformat:yes; mso-style-parent:”"; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:”Times New Roman”,”serif”; mso-fareast-font-family:”Times New Roman”;} p.MsoBodyText, li.MsoBodyText, div.MsoBodyText {mso-style-noshow:yes; mso-style-unhide:no; mso-style-link:”Body Text Char”; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; mso-bidi-font-size:12.0pt; font-family:”Verdana”,”sans-serif”; mso-fareast-font-family:”Times New Roman”; mso-bidi-font-family:”Times New Roman”;} span.BodyTextChar {mso-style-name:”Body Text Char”; mso-style-noshow:yes; mso-style-unhide:no; mso-style-locked:yes; mso-style-link:”Body Text”; mso-ansi-font-size:11.0pt; mso-bidi-font-size:12.0pt; font-family:”Verdana”,”sans-serif”; mso-ascii-font-family:Verdana; mso-hansi-font-family:Verdana;} .MsoChpDefault {mso-style-type:export-only; mso-default-props:yes; font-size:10.0pt; mso-ansi-font-size:10.0pt; mso-bidi-font-size:10.0pt;} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.25in 1.0in 1.25in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.Section1 {page:Section1;} /* List Definitions */ @list l0 {mso-list-id:2017539605; mso-list-type:hybrid; mso-list-template-ids:-1286174848 1885523918 67698691 67698693 67698689 67698691 67698693 67698689 67698691 67698693;} @list l0:level1 {mso-level-start-at:0; mso-level-number-format:bullet; mso-level-text:; mso-level-tab-stop:1.0in; mso-level-number-position:left; margin-left:1.0in; text-indent:-.5in; font-family:Symbol; mso-fareast-font-family:”Times New Roman”; mso-bidi-font-family:”Times New Roman”;} ol {margin-bottom:0in;} ul {margin-bottom:0in;} –> In short sales, experience counts. If the seller does not have a willing mortgage holder or and/or an experienced real estate agent, the road to a successful short sale can be tricky. The buyer’s experienced agent may be able to overcome a certain amount of inexperience on the seller’s side but at some pint the experienced agent needs to take charge.

The fact is that some real estate agents are not short sale savvy. To complicate matters further, the seller may not fully understand the process or repercussions. An experienced real estate agent can intercede and walk the inexperienced agent and the seller through the paces.

Certain short sales may not be acceptable to the lender. Meanwhile, some situations exist where a short sale might be considered even if the seller is not in default. The first step the buyer’s real estate agent needs to take is to gather facts that are a matter of public record.

The agent should gather the following information from public and real estate records:

* The property owners

· All lenders

· The mortgage amounts

· Tax records

· Zoning

· Plot plans

· Copy of deed

· All listing information

· Historical record of subject property

The experienced real estate agent can accurately assess the property and the seller’s ability to negotiate a short sale. If there exists more than one mortgage holder, the process can be slightly more complicated. However, an experienced agent can assist in building a case for the second lien holder. Often times, the agent can receive authorization from the seller to submit a short sale plan to the lenders. Unfortunately, some agents do not do this prior to listing a property as short sale.

In early 2009, with excessive short sale transactions went pending, many of the transactions failed to close because agents and sellers had not laid a proper foundation. With short sales now dominating a large sector of the marketplace, agents have gained experience, but the buyer should not underestimate the value of an experienced agent. That agent can fast become a real profit center.

Add Bookmark

Negotiating is an art form.  We admire real estate investors who understand the art of negotiating.  What we admire is their ability to cut through the distractions and get to the heart of the matter.

Negotiating is about compromising.  Negotiating is often about taking a different view of the transaction and pulling smaller pieces together in a presentable, agreeable form.

There are certain conditions that increase the ability of negotiating real estate transactions.  There are also factors that can eliminate the possibility before the negotiations begin.  It is easy to negotiate when there is no price differential.  That is not really a negotiation.  Instead, it is ironing out the details.

The financial ability to perform makes negotiations easier.  The ability to perform can get a lower offer accepted just as the inability to perform or the inability to document the ability to perform can put a deal to sleep in no time.  If you are prepared to make an offer, you should be prepared to document and demonstrate your ability to perform.  With this commitment in hand, you are assured a captive audience.

Other factors that can make or break deals are closing dates, deposit amounts, contingency dates, contingency substance, non-real property attachments and stated conditions.  Each of these contract items will need to be addressed and each of these items has caused deals to be made and deals to fall apart.

The investor with a plan is prepared to follow the plan and to unemotionally negotiate these items.  Bending on some of these items can lead to smooth sailing on more important thresholds.  The real estate investor has clear vision of the transaction and has identified the critical components.  Place other contingencies in lesser tiers and be prepared to give a little to gain a lot.  That is often what negotiating is all about; giving a little to gain a lot.

Add Bookmark

The Obama administration brought about the loan modification program in order to help sinking homeowners. It’s designed to help homeowners come back to the normal repayment schedule with a limited period of help. This was an attempt to stop foreclosures and short sales for most part.

The program involves modifying the terms of the payment of the mortgage in such a way that it becomes more affordable. These programs act by extending the term of the loan, by reducing the rate of interest charged, changes in the type of loan and reduction in the outstanding balance. The period of help will end on January 31st 2012.

Individuals who wish to refinance, and are not being offered any new option by the banks, should definitely look at the loan modification program. Most of the time, banks or lenders aren’t keen on refinancing a delinquent or defaulting account. There are simple means by which you can prove your eligibility for this program and these criteria include:

·    Documented evidence of hardship or change in financial situation,
·    Delinquency for more than 90 days,
·    The premise should be the primary residence of the applicant,
·    Shouldn’t have purposely defaulted to get into the loan modification program

Some of the loan modification programs available are:
·    White House – Treasury Loan Modification program
·    IndyMac Federal Bank Loan Modification Program
·    Federal Housing Finance Agency Loan Modification Program
·    Other private programs are from
o    Citigroup
o    J P Morgan Chase
o    Bank of America

The advantages of this program are profound:
·    It avoids foreclosure and short sale
·    Reduces the interest rates therefore the monthly commitment reduces
·    It is a private arrangement between the lender and borrower
·    Lower impact on the credit score than foreclosure of the borrower
·    Borrower is able to stay in the house while availing the program

The disadvantages include:
·    Getting the proof of difficult financials may be quite heady
·    Only those with a mortgage amounting to 105 percent or less of home value would get the assistance.
·    Hits the credit score or FICO score of the individual
·    Some might deliberately miss payments
·    Worthy borrowers are not getting the assistance

Add Bookmark

The story gaining attention is that the foreclosure rates have dipped nationally by 3 percent in the month of October. However, the current rate of foreclosure is almost 20 percent more than what existed in the last year around the same time. During the month of October, there were as many as 332,292 notices of foreclosure, with banks taking over the ownership and defaults.

Now, for the third consecutive month, the foreclosure rates have been declining. This is a welcome signal for the real estate market and should boost the sentiments of the buyer.

The drop in foreclosure rates may also be due to the banks holding back foreclosure proceedings on properties. This is largely because of the rising default levels, increases in loan modification programs and sudden increases in foreclosure numbers leading to overwhelmed operations. California, Florida, Illinois and Michigan made up 52 percent of the total national number of notices for foreclosure.

In addition, to the foreclosure news, October saw first time homebuyers pushing the home sales numbers by contributing 45 percent of all sales made. This was also the result of the tax credit offer expiry on November, which is now pushed back to the June 2010.

The October month also saw home trends go upwards. Buying trends solidified in November with the interest rates going down further to 4.91 percent this Thursday, for the 30-year fixed term loan. A survey reveals that borrowers with credit who can make a down payment of 20 percent could pick up a debt amount not exceeding $417,000. Any value higher than this would be categorized as jumbo loan and the rates will increase.

A look at the applications for mortgage also shows that the numbers were up by 3.2 percent from the first week of November. However, on finer inspection it is disclosed that the refinancing made up 71.5 percent of the loans applied for this week. Overall, the refinance loan application rose by 11.3 percent while the loan for purchase actually went down by 11.7 percent.

Add Bookmark

The mortgage industry has undergone regulatory reform. The recession took a heavy toll on the creative lending practices. Subprime lending and exotic subprime mortgage products are a thing of the past. Here are some of the reforms that have been implemented by the Mortgage Reform Act of 2009 and subsequent legislation.

· More documentation – The low documentation loans and no documentation loans that characterized the subprime lending practices are no longer permissible. Today’s mortgage applications require more paperwork than ever before. Lenders must substantiate and verify all income and debt. Borrowers should expect to provide lenders with pay stubs, bank statements, retirement account information, income tax returns and brokerage accounts and debt statements.

· Refinancing delays – The banking industry, like many recession industries, has undergone massive layoffs. Requests for refinancing can now take up to 60 days to process.

· New appraisal practices – The new Home Valuation Code of Conduct has overhauled the appraisal profession. The new code discourages contact between real estate sales people and appraisers. Only lenders can work directly with appraisers and even that practice is diminishing. Most appraisers are retained through the use of an independent third party. These changes have led to some confusion but Realtors have asked Congress to suspend the new rules.

· Credit evaluation – In the past a Fair Isaac Company (FICO) score of 740 would entitle the borrower to lower interest rates. The new favored credit standard is 760. If your credit score is 760, you may want to consider refinancing.

· More Truth in Lending – As of July 2009, lenders must disclose earlier in the application process how much a loan will actually cost. The purpose of this early disclosure is to allow the prospective borrower more time to consider the mortgage offer. After the borrower receives the new disclosure, the borrower has even days to confirm the selection.

· Longer Closing Dates – It now takes more time to close mortgages. Part of delay is caused by the extended decision time and part of the delay is caused by the simple fact that foreclosure departments are busier than lending departments.

The most aggressive mortgage lender is now the FHA. More than 60% of mortgages issued by the FHA in 2009 have been issued to first time homebuyers. The Federal Housing Administration has lowered their down payment requirement to 3.5% and has increased the acceptable debt to income ratios.

Add Bookmark

When investing in a down real estate market, the investor must understand the local real estate market and what is happening with the local economy. Like any market, real estate values and opportunities are the direct byproduct of supply and demand.

Information about local economic supply and demand can come from several sources. Real estate agencies are usually willing to provide abundant information about pricing trends, available listings, sales and foreclosure activity and interest rates and various local lending products.

The challenge for the investor is to absorb these facts while configuring the impact of local economic trends like employment, projected economic development initiatives and the availability of real estate investment tax credits. In today’s real estate market, investors cannot expect the quick turnover. Today’s investors buy and hold.

In the buy and hold strategy, local economic projects and predictions are the name of the game. Communities that have business recruiting programs and tax benefits to attract new businesses can yield big long-term returns for housing markets.

Investors will also benefit from familiarity with local transportation initiatives. With many stimulus infrastructure funds assigned to community projects, the composition of communities can change rapidly and along with those changes, property values can change also.

Investors can attend planning board meetings, attend town meetings and meet with local officials to determine the direction communities are headed. Many times the key to the success of the investment can receive a boost from local economic development projects that may increase housing demand.

With today’s 24 hour news and many of the financial networks focusing on the real estate market, knowing the national statistics and sales trends are helpful. However, the government is desperately attempting to help clear the shadow inventory. Investors should always be aware of administration initiatives and new loan programs. Market conditions are likely to continue in transition until the end of 2010.

Add Bookmark

A house has just gone on the market. This house is the exact size you want, has all the features and amenities you desire, and…what luck! It’s listed at almost half the going market rate for that kind of house.

You call a real estate agent or local Realtor to get information about the property; you’re told it’s fairly new and in excellent condition. Everything seems absolutely perfect… until you see the house and discover that your flowerbeds may only have shade-loving plants by virtue of the large industrial complex next door blocking out all the sunlight. While this may be a bit of an over-dramatization, many people have purchased their dream homes, only to find that the neighborhood is the polar opposite of what they’d envisioned.

Especially if you’re purchasing a house sight unseen, it’s exceedingly important to do some neighborhood research. Check out the kind of businesses nearby, how much traffic flows through the area, what kind of noise levels to expect, and so on. The condition of neighboring houses can affect the value of your property, so this should also be considered, especially if you’re looking for an investment property. Homes in attractive, well-kept neighborhoods with low crime rates and limited traffic are often the most desired on the open market.

Next, if you have children you should thoroughly research the nearby schools. Determine which school district the potential new home falls into and then find out everything you can about the schools from your child’s grade level on through high school. Meet with the principal and a guidance counselor from the school your child will be attending to address concerns about academic performance, extracurricular activities and so on. It’s also a good idea to look up the school in the state and national performance rankings.

What are the crime rates in your new neighborhood? Especially if you’re single or have small children, this can be a very important deciding factor. If you have pets, it’s good to know what kinds of areas are available to exercise them, as well as how many other pet owners are in the area. Parks, bike paths, proximity to shopping and health care facilities – these are all likely to be factors in making the decision to buy in a given neighborhood.

Add Bookmark