No! The Bank Doesn’t Want Your House!

Writen by John Nazareno

When faced with the threat of foreclosure it is very easy to assume that your bank or lender simply wants to foreclose on your home and it isn’t worth the fight to keep the home. This defeatist attitude will not help you keep your home, and the reality is that the bank does not want you to think like this! The bank really doesn’t want your home, and a bank never wants to foreclose. Ever. Having this information can help people that are in the process of being foreclosed on develop the right attitude and keep their homes instead of losing the homes that they have worked so hard for.

The fact of the matter is that foreclosures are a pain in the side of banking or financial institutions. They do not want to mess with the court proceedings, with the auctions, and with the local laws in your state or county. They simply want the money that they lent you when you purchased the home, paid in full with interest. If they foreclose on the home they aren’t getting that. Sure, they are getting the home back, but that is not what they set out to do. Foreclosure costs the bank money and they aren’t in the business of spending money, they are in the business of making money. So, if you work with your bank you can stop foreclosure a good deal of the time because they are just as adverse to the process as homeowners are. The bank will often work to keep the home with the owner harder than the owner is willing to work to keep their home.

While many of us feel contempt toward the bank while going through a foreclosure or when we are threatened with foreclosure, this needn’t be the attitude. Your bank wants to work with you to arrange for repayment, so start taking their calls and responding to their mailings. In the long run both you and the bank will be better off. The bank is so willing to work with most people that fall behind on their mortgages that they will often allow them to repay their debts before making current payments, they’ll help owners refinance so that they can more easily afford their monthly mortgage payments, and they’ll even waive late fees that can add up and make the situation even more overwhelming for those trying to get on top of their debts.

Most of us don’t think about it, but foreclosure isn’t good for the bank, either. It takes time to foreclose on a house, and during this time the bank will not be making any money off the money that was borrowed from them by the buyer of the home. The home will be sitting, sometimes empty and uncared for and the bank will often have to repair the home to make it suitable for sale or to keep up with deed restrictions. All of this costs the bank money that they did not intend to spend on your home.

Even when the foreclosure process comes to an end, the losing of money is not over for the bank. Many foreclosed homes are sold at auction, and while most of us assume that the bank makes back all of their money at auction, they often do not. The first buyer is usually required to pay the difference, but this is a debt that will commonly go unpaid for years because the foreclosed on owner simply cannot afford to pay back the money. So, the bank is still short the money that should have been paid on the principal, not to mention the interest that would have been paid over 13 or 30 years for the original mortgage.

Many people that are about to be foreclosed on will file for chapter seven bankruptcy. While this provides the owner with the respite that is needed from over due bills and collection agencies, this is not what the bank wants you to do. In a chapter seven bankruptcy all of the debt is usually taken away, meaning that the owner will be allowed to keep the home, but the unpaid debts will never be paid. The bank is expected to just deal with the loss and go on. This is another reason that a bank or lender will usually try really hard to work with the owing party, because they would rather wait for the money than not get it at all.

As you can see, the bank simply wants their money. They don’t like to foreclose on homes because it means that they won’t be getting their money right now, and they certainly won’t be getting the interest on the money that was borrowed from them, that they were planning on. Working with individuals that owe money gives the bank a better chance of recovering the funds that they are owed than taking a house.

It is important for people to realize that the bank simply does not want your home. They want to work with you so that you can keep you home and they can get their money that is due to them, with interest. Because the bank is watching out for themselves and they want their money, this gives the individual in debt quite a bit of wiggle room to work out payment arrangements and keep the foreclosure process from going any further. With this knowledge you can change your attitude toward the bank or lender and pick up the phone and respond to mailings so that you can get the situation straightened out. If you make a reasonable attempt to pay off the debt you will realize that the owner actually has the upper hand because the bank is willing to avoid foreclosure just as much or more than the owner! Foreclosure simply costs everyone too much time and money, and this does not just apply to the owner, it applies to the bank as well!

Visit http://www.theforeclosuresinfo.com for more information on foreclosures.

How To Know If A House Sold In Your Neighbourhood

Writen by Jennifer Walker

How to know a house sold in your neighbourhood? There is one easy way to find out, ask your local realtor. A realtor has in their database all the information of active, sold and expired listings. We can search specific dates, streets, and features for any type of property that is residential.

Keeping an eye on the solds in an area will keep you abreast of the real current real estate market. If you are planning on selling your home this type of information is crucial. Most vendors that I meet already have a price in their mind of what they want to sell their home for. They usually base it on what they have seen active on the market. This information might help you understand that when you do put your property on the market, where you stand, it doesn’t however give you a good indication of what someone is willing to pay for your home.

Understanding the ratio of active and sold can make you more money when it comes time to selling your home. What I mean by this is that statistics show that if your property is overpriced when you first list it, you will miss the high time of your selling bubble and your home will stay on the market longer and end up selling for less then if you listed it at the beginning at a comparable price.

Ask you realtor for a comparable list of homes sold in your neighbourhood before you make up your mind of how much you want to sell your home for.

www.montreal realestate.ca

Real Estate Marketing Online An Agent’s Guide to Success

Writen by Brandon Cornett

Each year, more and more consumers go online to look for homes and search for real estate agents. Smart real estate marketers know this, so they venture online themselves, with a personal marketing website.

But simply having a website is not enough. You must have an effective website one that moves the visitor toward that all important goal of contacting you.

The First (and Only) Law of Web Marketing:
Seems everyone these days has an unsupported opinion about what does or doesn’t work in web marketing. But the only thing these people can say for certain is what has or hasn’t worked for them.

A tactic that fails miserably on one website could succeed wildly on another site. There is testing, and then there’s conjecture … the key is to know the difference.

You never know if something will work until you try it.

Marketing to the Info Savvy
To understand real estate marketing online, you first have to understand how consumers have evolved over recent years. Consumers have become increasingly skilled at using the Internet as a research tool. The glut of information we face on a daily basis has led to a nation of “info savvy” individuals.

In short, the problem of information overload has yielded the solution of information savvy. As a result, new skill sets have emerged.

Skills of the “Info Savvy” Web User:

• Able to quickly judge the value of a website
• Able to recognize and assess the information “hot spots” of a website
• Able to skim and scan web pages with brutal efficiency
• Able to read selectively while ignoring suspected advertising spots

Don’t Underestimate Your Readers
Read enough articles on web writing and you’ll hear the phrase “short attention span” used to describe web readers. Nothing could be further from the truth. A short attention span implies some kind of mental deficiency, a handicap of sorts.

On the contrary, the average web reader is anything but handicapped. They don’t suffer from short attention spans they enjoy heightened powers of selectiveness.

They don’t scan pages because they’re averse to reading they scan pages because they know there’s a lot of bad websites out there, and they’ve developed the tools to screen them with great efficiency.

So if you want your website to engage the reader, and ideally evoke a response, you must first get the reader to stop. You must use words, images or a combination of the two to tell the reader, “Hey, you’ve found something worth your while. Slow down for a minute!”

If your website fails in this regard, it fails entirely.

On a personal marketing website, the obvious goal is to motivate or persuade the reader. To channel them toward the desired goal. And speaking of “channels,” it’s about time for an acronym.

SECTO: Stop … Engage … Channel … Tell … Offer.

Keep SECTO in mind when building (or having built) your personal marketing website, especially on those pages where you’re trying to evoke a response.

SECTO:

• Stop the reader (perhaps with your headline, imagery, or a combination of the two).
• Engage the reader with relevant content that delivers on the headline’s promise.
• Channel the reader toward the specific action you want them to take.
• Tell the reader how to take that action.
• Offer the reader an incentive or reward for taking that action.

Statistics show that 77 percent of buyers use the Internet at some point during their home search. With numbers like that, your mission is clear you must have a website to stay competitive.

The question is, what have you done to make your website more effective than the websites of all your competitors?

Brandon Cornett has worked as a writer and advertising manager within the direct mail industry. He now dedicates his time to helping agents and brokers improve their real estate marketing programs. His website guide and his free newsletter are both available at: http://www.ArmingYourFarming.com.

What Do Home Buyers Really Want?

Writen by Andrew Webber

While every homebuyer is different, there are some common themes among those that are looking for a new home. Every buyer wants a quality home that they will be proud to live in and won’t fall apart within months or even years. Most homebuyers are focusing not only on quantity in the way of square footage, but also quality, as that is what gives a home its worth.

Common Desires

There are some basic things that homebuyers are looking for when they look at a home. Some of the most common are centralized air conditioning, a walk in closet in the master bedroom, a bedroom on the main floor if the home is two or more stories, a patio for entertainment, as well as an oversized garage that will fit multiple cars as well as provide some storage space.

Even these common desires are not straightforward. An air conditioning unit that is 25 years old cannot provide centralized air; most buyers want an efficient central air conditioning unit. A patio needs to truly be an outdoor living space that has had some thought and planning associated with it. And the bedroom on the main floor needs to be big enough for either a master bedroom or a good sized guest room for either guests or even an aging relative that needs care.

Rooms that Get Noticed

One room that is important to buyers in today’s market is the living room. Most buyers are giving up the formal living room and family room split and simply want one, big open floor plan that will allow them to entertain company as well as lounge around and watch movies on a Saturday afternoon. Informal spaces such as this are in because they are more functional.

Another room that will get noticed is the bathroom. Not only do buyers want more than one bathroom, they want them to come fully loaded! Luxury items such as soaking tubs, garden tubs, pricey fixtures, and quality tiling always go over well in the bathroom. Pedestal sinks, claw foot tubs, and a separate shower and tub are also very popular in the bathroom right now and are what most buyers are going for.

The kitchen is also another room that will get more than a once over when a buyer comes in. Stainless steel appliances, high quality wood cabinets, marble or granite counters, kitchen islands, and quality flooring will all go a long way toward selling a home. Buyers see the kitchen as an entertainment area, so if things are in order and are updated a home will likely sell much sooner than if it is not. If the dining area also blends well with the kitchen, this is even better!

The Homes Target Audience

Age really does affect what a home buyer wants in a home. Most realtors will report that those that are less than age 44 usually want a home that is in the suburbs or a subdivision. The home will sell well if it is located near schools, parks, and playgrounds. For buyers over age 45, homes that are one story, less than 10 years old, and on a flat lot with items such as sprinkler systems will appeal to them. Location really is important to home buyers as homes in certain areas may contain features that are important to some buyers but not so important to others.

First time home buyers are also likely to overlook items like pricey fixtures, walk in closets, granite counters, or oversized garages. Typically it is the first time buy that will have a shorter list of must haves, because they are just getting into the market and may be on a stricter budget or just not have a whole lot of experience with offered features. Repeat home buyers will be more likely to have a list of must haves, so a home that is well finished and has all of the items described above will likely appeal to a repeat home buyer.

The type of upgrades one has made to their home or is willing to make to their home will decide who the home will generally appeal to. Of course, home buyers all have their own preferences about what makes a home worth buying, but studies have been done and the general consensus is that older home buyers have a longer list of must haves and items in a home that are very important to them, such as a bedroom on the main floor.

As you can see, homebuyer’s want a little of everything, and the specific needs and wants vary widely from buyer to buyer. Generally, a home that is well cared for and offers some modern or updated features will attract many home buyers and if located in the right area, will sell relatively quickly.

Andrew owns a website that provides useful strategies on buying and selling a home. You can visit his website at: http://www.buy and sell house fast.com/ for more information.

The Way We Were Investors Struggle With High Prices and Low Cash Flow

Writen by Donna Robinson

Summary: Over the past 5 years, retail housing values have risen 80% while investors are paying 300% more for investment properties. This is leading to more foreclosures among investors who are buying without carefully considering how purchase decisions affect exit strategy.

Recently I spent some time researching selling prices of investment real estate in Atlanta, GA between the year 2000 and the present time, February of 2006.

What I found was very interesting. I pulled old files representing deals that took place more than 5 years ago. At that time investment properties were selling for an average of around $20,000 for a 2 bedroom 1 bath property in decent, (almost liveable), condition.

In 2000 a 3 bedroom 1 bath SFR in liveable condition sold for around $30,000 in an average neighborhood. We paid as little as $5,000 for a house with some fire damage and as much as $53,000 for a 1000 sq ft brick house in an excellent neighborhood, with a true ARV of $250,000!

5 years ago, an average gross profit spread on a deal was around $100,000. It was relatively easy as a seller, to make $10K to $15K cash profit on a quick cash sale to another investor, and still leave that investor as much as $100,000 in gross profit spread. In short, there was plenty of profit to go around. Mind you, we were using legitimate, conservative appraised values from independent appraisers.

But today, in early 2006, these kinds of real margins are much tougher to achieve. The present market is filled with buyers who lack a good understanding of the issues that affect profitability. As a result, many are buying properties at prices that are just too high to make the deal work.

In fact, my research indicates that retail housing prices houses sold to owner occupants have gone up nationwide an average of 60% to 80% over the past five years.

At the same time, in Atlanta, selling prices to investors have gone up some THREE HUNDRED PERCENT! The phenomenon of so many investors selling to so many other investor buyers has created an artificial market in areas heavy with investor activity. The data I had close at hand was for the Atlanta market, but my readers from around the country tell me that this is also true in many other markets.

What this means is investors buying today are paying the highest prices ever recorded for Real Estate Investment Property with no guarantee that these properties will go up in value, or cash flow enough to justify their purchase prices.

After reviewing 25 years of real estate market data, I personally believe that we are at the very peak of the current real estate market cycle and will soon see more evidence of a downward trend in property prices and the resulting effect that this will have on appraised values.

It calls to mind a mental picture of a kid swinging on a swing set. As you swing forward you reach a moment when you become virtually still as the swing reaches its peak, pauses just momentarily, and then begins its descent to the backward part of the swinging motion.

I believe we may be at that momentary pause in the cycle before the market starts to swing the other way. In the first quarter of 2006, we seem to be enjoying the pinnacle of a long and exciting swing upward.

But just as the forces of gravity act upon that swing, cause it to pause, and then return where it came from, there are forces at work in the real estate markets that could act like gravity to pull real estate values downward from their present peak highs.

Some of these “forces of gravity” could be rising interest rates, rising foreclosure rates, slowing investor activity, and unforeseen events like another devastating hurricane or a major terror attack.

I would caution investors at this point to be extremely mindful of the fundamentals when buying any investment property.

I am very concerned about the number of investors who have gotten into the market over the past two years and are finding themselves in foreclosure on one or more properties.

While the general media outlets are reporting that houses are still selling well, the fact of the matter is that more investors than ever are finding their cash flows squeezed or their properties are not selling.

This is leading to a very high foreclosure rate in the investment property community.

While the National Association of Realtors may downplay slowing sales as a small percentage of their overall market, the fact remains that there are no specific reporting mechanisms for investor sales. Mass media reports can be misleading for investors.

It is very difficult for the average investor to get any kind of accurate information that shows what’s actually happening in the investment property market both for sales to buyers or property cash flow data.

While there are always good deals available in any market, you have to pick and choose carefully.

I caution you to be especially careful about analyzing your deals and doing your due diligence before you commit yourself to anything. At the present time it is very important to be conservative when evaluating investment property deals.

With investor buy prices, property taxes and insurance at all time highs, there is much more risk in the present real estate market.

But, dark real estate clouds always have a silver lining for those who understand where their cash flow and profitability are in a given deal. The market forces at work now will eventually force prices to more reasonable levels.

I would expect that eventually we will see prices drop as much as 40% in the most over invested areas. As activity slows, or interest rates rise, more creative seller financing will begin to develop. Investors who are patient and wait for the best opportunities may have to wait a while longer, but in this case patience will definitely be a virtue. ***

Donna Robinson is a real estate consultant in Atlanta, GA. Her clients range from successful investment companies, to beginning investors. Get her free newsletter, listen to her teleconferences, and read more of her articles on her website: http://www.RealEstateInvestorUniversity.com

Use LLC for Real Estate Investments

Writen by John Huddleston

It is generally best not to have your corporation purchase real estate. If your company is a C corporation, your company will pay tax when the building is sold. In order to get those profits in your hands, you will have to pay yourself a dividend. This dividend is taxed again. So you are paying taxes twice on the gain from the building sale.

If the building generates a tax loss, which many buildings do because of depreciation, this tax loss will offset your corporate income. Corporate income, however, is sometimes taxed at lower rates than individual rates. Therefore, the tax benefit from the building would be less when held in a C corporation.

If the building generates a tax gain, this gain will be taxed as part of corporate profits and taxed again as a dividend when the cash is distributed to the owners. Often, real estate will generate more cash than taxable income. In C corporation form, getting that cash to the owners will involve extra income tax that would not be paid if held individually.

The same principals apply to contributing your rental property to your corporation. You will be taxed twice when you finally sell the property. Any tax benefit provided by the property may be less when corporate rates are less. Taxable income from the property will be taxed twice.

The analysis is different if you have an S corporation rather than a C corporation. However, it is still not a good idea to own real estate in your S corporation. If you change your mind in the future and you want to pull your real estate out of the S corporation, you will immediately subject yourself to tax based on the fair market value of the property. For example, suppose you want to contribute the property to a partnership to develop the property or for other reasons. You will not be able to get the property out of the S Corporation without paying income tax. Additionally, you may not want to subject such a large appreciating asset to potential liabilities that can arise in your corporation.

Buying the building personally is also not a good idea. Your personal assets would then be at risk to satisfy any potential liability that arises from operation of the building. For this reason, many people use a limited liability company to own real estate. You should still have liability insurance. Make sure to discuss liability issues with your attorney.

In addition to liability protection, a limited liability company (LLC) provides maximum flexibility and maximum tax savings for ownership of business or rental real estate.

Tax accountant John Huddleston has a law degree and masters in tax law from the University of Washington School of Law. He has been a guest tax expert on the radio. He advises small businesses in the Seattle Bellevue Kent Everett area on various tax issues. His firm, Huddleston tax accountants, also provides tax preparation service, quickbooks consulting and general accounting and bookkeeping service. Seattle Bellevue tax accountant John Huddleston is a frequent publisher of tax saving ideas.

Why Invest In Property?

Writen by Alan Forsyth

Why property, some people ask when looking for an investment. Well, as far as I am concerned, property investment is, and always has been, the most powerful type of investment for building wealth. It has been said that over 90% of the world’s millionaires got there by owning property. The reason property is such a powerful way to build wealth is due to one key concept: leverage.

Once I realised this, I didn’t look back. Now if you are an experienced investor this may be obvious, but for the benefit of those who haven’t seen the light, let me explain … Leverage is your ability to magnify your returns by using other peoples’ money (in this case, it’s usually the bank’s money).

To give a clear example, say you have

How Demographic Data Influences Real Estate Investment Decisions

Writen by David Leonhardt

Demographic trends influence almost every aspect of life, from business planning to provision of healthcare, from education to style. Age, income, ethnicity, gender, mobility, employment and other demographic factors determine the shape of our society.

Real estate is no less affected by the ebbs and flows of demographic trends, particularly income, aging, family situations and employment.

For commercial real estate investors, the stakes are particularly high. Investing in commercial real estate, for example requires the ability to forecast where there will be a growing population, and/or where the population’s average income will be increasing.

In fact, commercial property investment requires a deeper understanding of demographic data; it is not just the population trends that need to be considered, but the demographics of the competition. And even those cannot follow a set formula.

For instance, an entrepreneur looking to set up a new car dealership needs to consider where established dealerships are located and set up shop nearby. Car buyers wanting to compare similar models need to visit several dealerships, so they need to be close to one another.

On the other hand, an entrepreneur looking to set up a new hardware store, should look for an area underserved by the competition or where new residential developments will be opening up. Hardware shoppers can compare brands of similar tools within the same store, so ease of access takes on a greater importance.

Speaking of ease of access, traffic patterns can also make a difference, especially near busy intersections. The demographics of traffic can add to the complexity of making a commercial real estate investment.

Understanding where to invest in retail properties is one of the main reasons that demographic mapping is such a popular service,” explains Wendy Cobrda of Catosphere demographic data reports. “To visually see the movement of people and their spending dollars helps businesses ’see’ where they should open their next store.”

Consider also a real estate broker, whose livelihood depends on people changing homes. Economic mobility is a key determinant in the future of his business, as is the economic health of the region.

“I look to see how fast the economy is growing here in Bend, and how many jobs are likely to be created as a result, to determine the resources my business will need over the next five years,” says Oregon, real estate broker Terry Denoux.

Development planning relies even more on demographic data to determine priorities. The average age of the population is a major factor in the type of housing that will be required over the next couple decades.

“A young population in an area will require more single family homes with multiple bedrooms and plenty of space for children to run,” explains Wendy Cobrda. “On the other hand, an aging population will need more hospitals, more medical clinics, more housing that requires minimal maintenance.”

Demographic data plays a role in vacation rental real estate, too. “Do you buy vacation rental properties, or do you sell the ones you have now?” asks Steve Curtis, owner of http://www.fabvillas.com , a vacation rentals lisiting site. “Well, that depends on how much disposable income people have for vacations and, more importantly, on the age of the population. A younger person is more likely to backpack through Europe, and stay at a hostel. An older person in more interested in comfort and privacy, which is what vacation rental properties offer.”

It also depends on where populations are growing more, as well as where the affluence is growing. If an economic boom is happening in England and France, but not in the USA and Canada, a vacation rental in Spain might prove more useful than on the Gulf Coast of Texas.

“Business planning is just a shot in the dark without solid market data,” explains Ms. Cobrda. “Demographic data reports and maps help businesses project market activity into the future, helping to avoid such catastrophes as building stores with no customers or storing a few million dollars of inventory that nobody wants.”

Given the high ticket price of real estate, whether residential, commercial or vacation rentals, demographic reports and market segmentation data are even more important.

David Leonhardt is a Canadian freelance writer. He wrote this article for Catosphere, a US demographic data reports company and for Go Bend, an Oregon real estate brokerage.

Stigmatized Properties: Disclosure of Latent Defects

Writen by Luigi Frascati

Latent defects are those hidden or concealed defects that would not be discovered in the course of a reasonable inspection. Latent defects are the opposite of patent defects, which by definition are defects plainly visible or that can be discovered in the course of a reasonable inspection. In real estate, although misrepresentation normally requires a statement to be made to the Buyer silence can also result in some liability on the part of the Seller.

Prior to entering into a Contract to sell real estate the Seller is required to disclose to the Buyer any latent defects the Seller is aware of. Failure to disclose will not affect the consent of the parties, but will have similar consequences as misrepresentation.

Technically speaking, latent defects are facts that :

1) are unknown to the Buyer and are so crucial to the enjoyment and value of the property that the Buyer might not have entered into the Contract had he known they existed and 2) cannot be discovered upon reasonable inspection of the property.

An example of a latent defect in one case was the presence of an underground water culvert which was not apparent from a normal inspection of the land and which the Seller was aware of and failed to disclose. If the Seller does not disclose the existence of a latent defect, the Buyer can rescind the Contract and/or recover damages. Other more typical examples of latent defects are the existence of urea formaldehyde foam insulation or asbestos insulation in a property offered for sale. However, the Seller will not be held liable for failing to disclose a latent defect he was unaware of unless a reasonable person would have been aware of it.

Some latent defects are out of the ordinary but must still be disclosed if known to the Seller. For instance, properties rumored to be haunted are one such example, as is a property previously used as a site for a marijuana grow operation. In one recent court case, a luxury condominium where someone had committed suicide was held as a property with a latent defect that the Seller had a duty to disclose to the Buyer. These are known as ’stigmatized properties’ because they are associated with a ’stigma’ , an unusual, distressing event or circumstance such as murder, suicide or criminal activity. These properties may be worth less or could be hard to resell because prospective Buyers might not consider them. As such, the market for stigmatized properties is drastically reduced and so is their value.

Luigi Frascati

Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real Estate Chronicle at http://wwwrealestatechronicle.blogspot.com where you can find the full collection of his articles. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton Centre Realty in Burnaby, BC.