Top Ten Foreclosure Myths

     Bank foreclosures are making up more and more of the real estate market today.  Knowing the real deal about foreclosures and how they work can give you the confidence you need to seize today’s foreclosure opportunities.

 

     It has been reported by many financial experts that the current housing market holds more profits for savvy homebuyers then anytime within our lifetime.  They also are advising to jump in with both feet while you can. 

  

1)  All Pre-Foreclosures are Sold at Sheriff Sale

         Homeowners who become delinquent on their mortgage payments receive a “Notice of Mortgage Foreclosure” legal filing from their lender.  This notice states that the bank intends to foreclose on the property through sheriff sale.  This is called a Pre-Foreclosure.  You might even see these properties advertised in the newspaper or on websites.   Not all of these properties will be sold on the sheriff sale and the homeowners have many options to stop the foreclosure before it actually gets to the auction. 

 

2)  Owner’s are Desperate when they get a “Notice of Mortgage Foreclosure”

          Homeowners have more options today to fight a foreclosure than ever in the past.  Loan Modifications, Bankruptcy and Short Sales are holding off foreclosures longer and giving Homeowners multiple ways to work out the issues with their lenders. 

 

3)  Buying Direct from the Owner in Foreclosure is the Best Way to Buy   

          “Buyer Beware” definitely applies when negotiating with an owner in foreclosure.  By the time the bank files for foreclosure, the owner can be delinquent several months.  There can be multiple mortgages, liens, taxes, judgments and other debts that the owner “forgets” about.  It’s best not give any owner money directly and make sure how much they really owe first. 

 

4)   Buy direct from the Sheriff Sale and Get a Bargain  

          The experienced buyers at Sheriff Sales have done their homework first. The amount you pay at the Sheriff Sale might not include all of the debts you would be required to pay to own it.  There could be delinquent taxes, municipal liens or other mortgages against the property that would need to be paid in order for you to have clear title to the property.  Paying for a property search to make sure you are totally informed of any debts you may be responsible to pay is vital.

 

5)  The Sheriff’s Department Evicts the Occupants before the Sheriff Sale

          If you buy a property from the Sheriff Sale and people are still living there; like prior owners, renters or squatters, it now becomes your problem to evict them.  It’s now your property and your problem to get them out of your house.  You would be required to go through the formal eviction process to have the occupants removed from the property.

 

6)  The Sheriff’s Department will wait for You to Get a Mortgage

           When you have the winning bid at the Sheriff Sale on a property, you immediately are required to deposit 10% in cash, by money order or certified check payable to “Sheriff of Montgomery County.”  The full balance must be paid within 10 calendar days to the sheriff also in certified funds.  You will forfeit your 10% deposit if you fail to pay the full balance within the required timeframe.

7)  Banks Sell Foreclosures for the Balance Owed by the Prior Owner

             Once the Sheriff Sale is held, if there is no offer at or above the minimum amount, the property reverts back to the Bank who filed the foreclosure suit.  It now becomes a bank owned property, commonly referred to as an REO (Real Estate Owned).  Once the bank owns the property, it is their decision to determine the selling price.  The bank can ask more or less than the amount owed by the prior owner. 

 

8)  Buyer pays old Taxes & Municipal Liens on a Bank Owned Foreclosure

           After the Sheriff Sale and the bank owns the property, all of the debts of the prior owner become the responsibility of the bank as the new owner.   To resell the property, the bank must payoff all debts incurred by the prior owner and any current taxes or liens against the property until they resell the property.

 

9)  You can’t get Title Insurance on a Bank Foreclosed Property

         The bank is responsible to sell the property with Free and Clear title.  The title company will search and include all bills due by the bank to be paid at settlement.   The title company will obtain certification from the taxing and municipal authorities prior to settlement to verify the bills owed.  They will issue an Insured Title to guarantee you are not responsible for any prior debts owed on the property.

 

10) Buying a Bank Foreclosed Property is Always the Best Deal 

           After the sheriff sale and the bank officially owns the property, they have appraisers value it for their records.  The bank usually will try to compete with other properties on the market and gauge interest for a sale.  If the bank does not receive acceptable offers, they re-evaluate the price and drop slightly over and over again for a few months.  Banks usually will not consider an offer more than 10%  less than their current asking price.  After the property has been on the market several months, the bank sometimes will accept a really low offer to unload it.  Other properties on the market in competition with foreclosures; like estate sales, divorces, job transfers and motivated sellers sometimes are more flexible on price then bank foreclosure homes on the market.

 

Hope This Helps
Kathleen McKinney, REO Realtor
Real Estate Excel, Souderton

Eight Secrets for Bargain Seeking House Hunters

    

        Eight Secrets for 

Bargain Seeking House Hunters

 

          It's True, There's Tons of Bargains on the market today.  But, is it actually a Bargain for You?  What is one person's junk is another ones goldmine.  Houses are in the eye of the beholder and attracting the most Buyers is the name of the game. 

 

1)  Be Clear it’s a Bargain

      There’s a big difference between the asking price and the fair market value of a property.  Many buyers think any offer below the asking price it's a bargain.  Checking comparable sales is the way to see if it’s a true Bargain.  Comparable sales are properties of similar type, in the same geographic area and sold within the last 3 to 6 months.   

  

2)  What does a Bargain mean to You    
       Everyone looks at properties differently.  You need to be Clear on Your Personal Objectives when Buying a Home. Are you looking for the biggest home at the lowest price?  The lowest priced home in a particular neighborhood?  Maybe, a home in move-in condition for the price of a fixer upper.  A fixer upper with a nice profit margin?  Once you have a clear objective, you can focus to make sure it's a Bargain for you. 

 

3)  Regular sales might be a Better Bargain versus Bank Foreclosures or Short Sales

       Contrary to popular belief, individual home sellers have more leeway and sometimes more reasons to accept a lower offer than the bank foreclosure negotiators do.  There are guidelines banks use to sell foreclosed homes or accept short sale payoffs to try to get the best price possible.

 

     Individual home sellers might be in the process of divorce, being transferred, it’s an estate sale, or they just need the money.  Looking a little deeper into the motivation of the seller can help you tremendously. 

 

4)  Look for Sellers who have Demonstrated they are Flexible on Price

       Don't just look at the pictures, check out the descriptions for Clues.  New Lower Price, Best deal in the neighborhood, Owner Cannot make Repairs and Selling "As Is", Seller will help with closing costs, Estate sale, or even Bring all Offers, Must Sell and Seller Motivated are some Flexible Sellers. 

 

5)  Find Motivated Sellers by taking note of DOM (Days on Market)

      The amount of time a property has been on the market can be a real clue on the motivation to sell. If it’s only been on the market a few days, sellers are not likely to accept much less than the asking price. But, if the property has been on the market a few months, the sellers might say it’s time to sell.  

 

6)  Don’t Insult the Seller

       Some people think that the seller will be anxious to receive any offer, not so. Sellers don’t want to have their property on the market a week and be presented with an offer that’s substantially less than their asking price. 

 

       Sellers don’t like to negotiate back and forth 7 or 8 times or offers that have silly contingencies like a partner must approve the sale or next to nothing in earnest money deposit.  Many times a seller will take the stand to refuse to sell to someone who disrespects them or intends to steal their property.

  

7)  Make it a Win – Win Sale

      Try to gain as much information as possible. If you know what the most important issues for the seller, you can work with them and both sides Win.  Sellers put their properties on the market for a variety of reasons; downsizing, job change, looking for a bigger home, financial hardship or divorce are popular.  Most people have become emotionally attached to their home. If you can accomplish their goals along with your - everybody Wins. 

  

8)  Sell Yourself – Be Prepared to Buy

       The sellers, or banks selling foreclosures, may have multiple offers. If you can offer an assurance your offer will actually go to settlement, you have an advantage over the competition.  The last thing a seller wants is to wait 45 to 60 days only to be told the Buyer did not qualify for the mortgage.  Or, that the lender wants tons of repairs before the sale can be completed.

      Have a mortgage pre-approval letter ready or bank proof of funds to purchase makes your offer stand out.  If you want a “Bargain”, you need to “Sell Yourself” too.  The property belongs to the Seller and you want them to Accept your Offer.  If the Seller believes it will be a smooth and hassle free sale, they are more likely to accept you over the Competition.

 

Hope This Helps.

 

Kathleen McKinney, Realtor

Real Estate Excel, 134 N Main St, Souderton, PA 18964

Five Bad Home Improvement Ideas

 

  Five Bad Home Improvement Ideas

     When considering adding value to a house, you consistently hear that updated bathrooms and quality kitchens stand out the best.  It has been proven in actual home sales that improving the bathrooms and kitchen works to increase the value and are proven sale closers.  However, there are improvements that studies have shown do not return the bang for your buck.

     Here are Five Improvement Ideas that most times don’t increase value and may even make it harder to attract buyers for a sale.

1)  Over-the-Top Renovations
     Not all renovations will raise the value of a property.  Some people think because it’s bigger, it will be perceived as better by future homebuyers, and that is not the case.  Unless your home is located in a high value neighborhood, don't install a supersized steam shower or Italian marble custom vanities.  That kind of improvement doesn't typically do anything to increase the value of the average home.

     On the other hand, if you updated an old bathroom, you could see an increase of several thousand dollars to your home's bottom line.  It’s a good idea before planning improvements to look over local home listings to see what amenities are the standard in your area.  You can check out properties on my website www.kathymckinney.com.  The “Search Local Homes”  button will give you access to all of the properties currently on the market. 

     After you have viewed what’s standard in your area, then upgrade to meet the neighborhood and not exceed it.  It’s never profitable to be the “Best House on the Block.”

2)  Swimming Pools

  

     If you think installing a swimming pool in the backyard of your home will draw hoards of homebuyers clamoring to make offers, you'd be wrong.  Some may consider it a great feature, but usually homebuyers perceive it as a pain with all the maintenance it will require.  After maintenance, the second objection usually voiced by homebuyers is added liability.

     Homeowners have even paid to have their swimming pools buried to create more yard space.  If you shell out the expense to build one, don't expect your home's value to budge.  The only exception to adding a swimming pool is if you live in states where they are considered the norm, like Florida or California, but definitely not in Pennsylvania.

3)  Home Office Renovations
     Although a home office is often an amenity appreciated by those shopping for a home, today, it should be built with frugality in mind.  Overhauling an office with expensive built-in bookcases doesn't pay off when it's time to sell your home.  Also, it’s not a good idea to steal usable space from another living area to create a home office.  Instead, make sure the space can easily be converted back into a bedroom or other living space if needed.  

4)  Unique Features
     Home magazines are always coming up with creative ways to change the look of your living space.  Some are exotic and over the top.  Ever been tempted to paint a mural of the horses you owned as a kid in the living room, or a tribute to your favorite sports team in your family room or a peaceful Koi pond in your back yard? 

     Don't be tempted to incorporate these ideas into your own home, unless you don't plan on selling anytime soon. Homebuyers may not share your enthusiasm.  You want to attract as many buyers as possible, not just the few that might like your creativity.

5)  Roof Renovations
     If your roof needs repair, don't hesitate to have the work done.  It will be one less issue you'll have to deal with when selling your home.  However, if in your pursuit of roofing options you think replacing your roof with cedar shakes or clay tiles will increase the value, think again.  Although they have the ability to make your home stand out, they probably won't inspire homebuyers to pay more for them.  Before considering the expensive options, unless you have the money to burn, keep it similar to the neighborhood when preparing your home to be listed for sale.

Hope this Helps.

 

Kathleen McKinney, Realtor - REO Specialist

Real Estate Excel, Souderton

Office 215-723-5300 ext 6

Facebook "Montco Foreclosure Homes"

Website - www.kathymckinney.com

 

Are you a Flipper or a Holder ?

         There are two schools of thought when it comes to being a Real Estate Investor in today's Market.  Should I Flip it or Should I Hold it?  In today's real estate environment, lots of experienced Real Estate Investors are saying to actually do Both to maximize your profits.  

What is a Flipper?

     A Flipper is an investor who buys a property and is looking for a short term profit.  It can be that they buy it and then immediately sell for a profit to another investor.  Or, they do the rehab on the property and then sell it on the market to a Buyer looking for a nice home.

     The advantages to Flipping are quicker profits for the investor.  Cash flow is the main goal and the property is owned for a short period of time. 

     Having the most current sold comparables and a good understanding of rehab costs are key to keep the profit margin high.

     More recently, with the flood of bank foreclosures and other distress sale properties driving the appraised value of homes lower, Flips harder to accomplish.  When selling, the appraisal is the key and when appraisers use the bank foreclosures as comparables, the property might not appraise as high as originally estimated.  Being conservative choices with good resale values, and a little extra wiggle room just in case, is the key to Flipping in today's market.

What is a Holder?

     A Holder is a Real Estate Investor who buys with the intention of holding it for a long term.  Usually a minimum of a year and most investors much longer.  The property may be a rehab project or just carpet and paint touchup.  All of the bells and whistles to attract Buyers are not a big requirement for Renters.  When a Buyer puts the money into buying a home it's Theirs.  But with Renters, it's You property.  Competitive rent along with being functional and neat & clean are generally more important to renters. 

     Rental properties are generally more lower to mid price ranged to maximize the best cash flow monthly.  On a higher priced house, it's actually harder to get a good cash flow because of property taxes and competition.  It's cheaper to buy than to rent in today's market which affects the higher priced home rental market.

     Previously, multi family properties were good choices for Real Estate Investors, but today savvy investors are keeping their excellent cash flow and waiting for the real estate market to improve to make more money before selling.  There are multi family properties on the market but generally they are overpriced and don't cash flow or have not been maintained and need a ton of work making them not the optimum choice right now.

     Experienced Real Estate Investors are now focusing on single family homes, townhomes or condos in the low to mid price ranges to maximize positive cash flow and wait out the real estate market recovery.

So why are Experienced Real Estate Investors both Flipping and Holding?

     Here's an example:  Townhome is on the market with low monthly association fee.  It needs a little work, carpet and paint mainly, and priced low because of the softer real estate market.  You pick this property up for $150,000 versus the other townhomes which sold for $225,000 a couple of years ago.  You put in $15,000 in rehab costs and rent the property for $1,600 monthly.  Now compare your purchase to the homeowners who purchased two years ago.

    Other homeowners purchased for $225,000 with a $200,000 mortgage.  So they have to wait to sell for $200,000 , to not put money out of pocket.  Or, wait for the market to come back up to $225,000 to break even.   

    Versus  You  ...

     You purchased at $150,000, plus $15,000 rehab, so you have $165,000 into the property.   Your collecting rent every month that is paying the mortgage and other expenses and your collecting $350 positive cash flow.  You decide to sell when the market value is $200,000.  You cash out $35,000 !!!!!  Yes, there are costs to buy and also costs to sell, but you are collecting positive cash flow too.

     This is why Real Estate Investors today are using both the Flip and Hold Strategies in today's market.  Hold for a couple of years waiting for the market to rebound totally makes sense today.   And, some experts are saying the market has bottomed and started to rebound already with low interest rates continuing for Buyers.

     So savvy Real Estate Investors have a multiple strategy to maximize profits, Flip ones that will make a nice profit now for immediately income and Hold ones that will make a nice profit in a couple of years when the market rebounds to where you want to sell.

     The Best of Both Worlds.  But, be sure to Always have a Multiple Strategy today of being sure any property you buy will Produce a Positive Cash Flow if you must rent it for any reason.  Then you win either way and may have to hold a little longer than you expected, but are making money in the meantime while you are holding onto it.

     Hope this helps. 

Top Three Things Home Sellers Must Do in Today's Market

Top Three Things Home Sellers Must Do in Today's Market

Today's market is heating up.  Keeping your property at the top of the viewing list for buyers is the best way to sell your property quickly and for more money.

1)  Know the comparable properties to price yours right from the start.  Check current  market competition and properties sold within the last 3 to 6 months.  This helps you price your property right the first time.  If you overprice your property, buyers will avoid looking at it and move on to properties priced properly and you will sit on the market longer.  The longer a property sits on the market, the more buyers are wondering "what's wrong with it" which is not good.  Be strongly priced but not over priced is the trick to pricing.

     Comparable properties are ones that are similar in size (square footage), style (row, twin, single, condo etc), and amenities (bedrooms, baths, extra rooms, finished basement etc).  Getting comparable homes as close as possible  and in similar condition to yours give you a real understanding of how much you can ask for yours.

2)  Keep your personal feelings out of the sale.  Selling a house is a Business Decision and you should not take personally criticisms from potential buyers and agents.  Don't get upset when you get a Low Ball Offer, they are just being Cheap and it's not a reflection of your property.  They like it or they would not have offered at all.  Don't take it personal if agents don't show up with buyers when they are scheduled.  Of if they take forever to look at the house, the longer they are there the more likely you will get an offer.  Don't get upset if Buyers try to "Pick the Place Apart" with this is wrong or that is wrong.  Again, they are being Cheap, just stand your ground and  give them your bottom line and it's a "Take it or Leave it" and move on instead of feeding into the Drama. 

However, if you keep getting the same complaints from multiple Agents showing the property, then it is something you should definitely address.  Check with your agent and discuss the repeated complaint.  Some issues you can overcome and others are not fixable.  If you live on a busy street, you can't change it, but you purchased the house and someone else will like it too and buy it. 

3)  Pick the right agent to sell your house.  Not all agents are the same and some have a completely different perspective than you might on how they will market your home for sale.  Unfortunately, there are still agents who put a sign in the front lawn and a less than par description in the MLS and
"Hope".  These agents are also the ones that are constantly asking to "Drop the Price" to compensate for their lack of enthusiasm selling it.  You should ask the agent for a "Detailed Marketing Plan" that shows you Exactly How they Intend to Sell YOUR House.  You can choose how long a contract with an agent is to sell your house, it's not automatically 6 months or a year.  Having a "Meeting of the Minds" going into the Listing can help alleviate problems and heartache later. 

Also, be sure to check yourself on the Marketing of your property on Websites like Zillow or Trulia or Realtor.com.  If the agent is not putting all of their effort into Marketing YOUR property that you are expecting, then have a frank discussion and reference the Marketing Plan they described.  Remember this is a Business Transaction and it's not Personal.  The agent is getting paid to sell your house and you should be happy with their performance.

Hope This Helps.

Kathleen McKinney, Realtor
Real Estate Excel, Souderton, PA
Website:  www.kathymckinney.com
Facebook:  Montco Foreclosure Homes
Email:  reohomes@gmail.com

What is a Foreclosure Property ?

What is a Foreclosure Property?

     A foreclosure sale, or sheriff sale, is the final step in the legal process involving a default on real estate.  Most foreclosures are mortgage related and occur when the homeowner falls delinquent on their mortgage payments and cannot get back on track with the mortgage lender.   There are foreclosure sales that are brought as a result of delinquent taxes, municipal liens or even homeowners association dues, however, we will be focusing mostly on the mortgage lender foreclosed homes with this article.   

How does the Foreclosure Process Start?

     The foreclosure process starts when the mortgage lender files a lawsuit in the courthouse against the homeowners for non payment.  This is the first notice the homeowner receives that the property is being foreclosed upon.  The homeowner has all control over the property at this time and throughout the process until the actual sheriff sale takes place.  The homeowner can bring their payments current with the lender, work out payment arrangements with their lender, or consult an attorney for legal advice to stop the foreclosure process.  

What happens at the Sheriff Sale? 

     After the property has been through the pre-sheriff sale process and the homeowners have not worked out arrangements to postpone or stop the sheriff sale, the property is put up for auction by the Sheriff's Office.  The sheriff's office will read all properties up for sale just prior to the auction and the minimum amount required to purchase.  Each property will be auctioned and if no bidders sufficient enough to cover the minimum amount, it becomes the property of the lender who started the foreclosure proceedings.  If there is a successful bidder, immediately upon sale 10% is due in cash or certified check by the buyer and the balance is due within 10 days.  These are the terms in Montgomery County, PA. 

 What about the Debts of the Prior Owner?

     If a property is purchased at the Sheriff Sale directly, any debts that could be liened against the property may remain and be the responsibility of the new owner.  It is definitely advisable to research the debts you may be responsible to pay prior to bidding on any Sheriff Sale Auction.   Also, be aware that if the property is occupied by the former homeowner or renter, it is your responsibility as the new owner to evict them.

     If the property is returned back to the lender at the sheriff sale, they as the new owner are fully responsible to pay any remaining debts of the prior owner or to evict the prior homeowners.  When the lender puts the property up on the market, they can set whatever price they want to sell it. 

     When you as the new buyer purchase a bank foreclosed property, title insurance is imperative.  The title or abstract company will perform all of the research to be sure the bank has paid all of debts of the prior owner.  Through your payment of title insurance on the new purchase, the title company assumes the risk in case anything is missed and you are covered.

          Hope this Helps
          Kathleen McKinney, Realtor
          Real Estate Excel, Souderton
          Email - McKinney.Kathy@gmail.com
          Facebook - Montco Foreclosure Homes
          Website - www.kathymckinney.com