You see the foreclosure notices in the local paper and you hear they conduct these auctions “at the courthouse steps”. The courthouse isn’t the first place on your list of places you want to be.
Well, it’s actually a place brimming with opportunity for Northern Virginia real estate investors. Just take a look at how many people faithfully show up day in and day out hoping to snatch up a property.
Here are four things (this is certainly not all-encompassing) to consider before joining in the great poker game that is bidding at foreclosure auctions:
Decide what your goals are. Are you looking for a long or a short term investment? Long term will mean having your money tied up for longer and a smaller, but steady stream of income (renting the property). Short term will mean a larger lump sum back with a quicker recovery of your investment and profits (selling the property).
Do your research before and after getting involved. These transactions involve a significant amount of risk. I highly recommend getting a “lay of the land” before you ever participate. Go as a spectator a few times – see how the bidding process typically unfolds, see how various people operate, who bids on what. And once you are “in the game”, extensive research is required for each property you are considering buying. How much is the property worth? Are there any title issues that could impact me? Has the roof caved in on the house? I can’t stress enough, the importance of having good, reliable information before you bid on a property.
Get your team in place. Some team members you will need are a REALTOR, title company, insurance agent, and a licensed contractor for repairs and/or renovations.
Get your money ready. If you’ve won the bidding on a particular property, a minimum deposit, usually around $15,000-$20,000 will be required immediately. From there, (typically) you will be required to close within 15 days. That means getting your cash and/or financing lined up quick. Keep in mind there are significant monetary penalties if you do not close on time.
Buying properties at auction can be a very lucrative investment. I advise you to seek the services of an experienced real estate team when engaging in any form of real estate investment. Please feel free to contact me anytime to see how I can help you invest in Northern Virginia real estate at 703-403-0536 / patrick@patrickduffyrealtor.com.
Stay tuned for future posts with tips on foreclosure auctions and real estate investing.
Last November, when Congress approved an extension on the first-time homebuyer tax credit, potential homebuyers who missed the original deadline were excited. It was another chance to buy a Woodbridge home for sale and receive an often badly needed $8,000 on their tax return.
Real estate agents were excited as well, because the tax credit extension expanded to include “upgrade” buyers – those who wanted to replace their current home with a bigger one. The possibility of selling a home was higher than it’d been in a while. However, expansion to include upgrade buyers wasn’t the only change.
If you’re hoping to buy a Woodbridge home for sale and take advantage of the tax credit before the new 2010 deadlines, here are a few things to keep in mind:
Two dates are crucial. You must sign a contract before April 30. The closings must be complete by June 30. One of the best ways to make sure things go smoothly is to get pre-approved for a mortgage before you go home shopping. Pre-approval tells you, as well as the seller, exactly how much home you can afford. This way, you don’t waste your time or the seller’s.
Negotiate without emotion. Potential buyers have lost the home of their dreams because they became competitive. If you’re negotiating for closing costs, housing price or anything else, make sure that your requests are reasonable. Don’t change something “just because.”
Taxes must be mailed in. Due to people trying to scam the system, you won’t be able to file your taxes electronically; you’ll have to mail them in. Make sure you’re using the right forms, and, if you need your tax refund by a specific time, you might want to file early.
Documentation is truly priceless. Again, thanks to scammers, buyers will have to include a signed mortgage statement, proof of residency and a driver’s license with their taxes.
You still have until April 30 to sign a contract on a Woodbridge home for sale to get the tax credit. Today’s real estate market is beneficial for buyers. Put it to work for you!
If you’d like to take advantage of the homebuyer tax credit, I can help. Call me right away at 703-403-0536 or email me at patrick@patrickduffyrealtor.com so we can beat the deadlines.
A bankruptcy may stop a foreclosure and allow a homeowner to reorganize his debt and keep his property. The reality however is that most of the time this is not the case and the bankruptcy only stalls the foreclosure. If the homeowner is not able to make the payments after bankruptcy the house will foreclose anyway.
The other major drawback to bankruptcy is that it makes it very difficult for the homeowner to sell his property once he enters the process. It makes it near impossible to negotiate a short sale. The only possibility is if the trustee of the bankruptcy agrees to release the property from the proceedings and allow it to be sold.
Certified Distressed Property Institute, LLC, 2008
A Deed-in Lieu (DIL) of Foreclosure is sometimes referred to as a “friendly foreclosure” since the homeowner essentially gives the Deed back to the bank. Because this may prevent the bank from go through lengthy (and costly) foreclosure proceedings, they will sometimes forego their right to a deficiency judgment. The bank agrees to take the Deed back in exchange for the property and the homeowner and back part ways with no further recourse.
This solution often only works when there is only one bank holding a note on the property and there are no significant junior liens on the property. If the homeowner has equity, this is usually not a good route to take. Why forfeit your right to that hard earned equity?
As with other foreclosure alternatives, the bank will only accept a DIL if you cannot make your mortgage payments. Also like the other alternatives, it is often less damaging to your credit than a foreclosure. Keep in mind, the bank will not present this as an option to you because this has to be done by you voluntarily. To maximize your chances of your lender accepting a DIL, do not wait too long – approaching them one week before the home is to be auctioned will often not work.
If you or someone you know is falling behind on their mortgage, please call me at 703-403-0536 or email me at patrick@patrickduffyrealtor.com. I’m here to help!
A Loan Modification is a change to one or more of the terms of a loan. For example, this could take the form of a lower interest rate, as in going from 7.5% to 5.5%. Or, it could involve extending the term of the loan, as in going from a 30 year term to a 40 year term. Whatever the case may be, the goal is to reduce the mortgage payment to one that the homeowner can manage and allow them to maintain ownership of their home. In many cases, the lender seeks to reduce the mortgage payment to 31% of the homeowner’s before tax income. For example, if you are making $5,000 each month – the terms of your loan would be modified so that your mortgage payment does not exceed $1,550 each month.
To obtain a Loan Modification, the homeowner must exhibit a verifiable hardship that makes it impossible for them to make the payments on the current terms of their mortgage. The hardship could be one or more of many things such as job loss, illness, death, payment increase due to interest rate adjustment, etc. Much like when the homeowner applied for their mortgage, they will apply for the modification and supply the lender with needed documentation to substantiate their case for the need of a loan modification.
Once initially approved, the lender will place the homeowner on a trial modification (trials periods can range from 3-6 months) in which the homeowner will have their payment reduced and will have to exhibit that they will be able to make the payment. After the successful completion of the trial period the modification will be fully reviewed and either granted or denied.
This was a brief overview of what a Loan Modification is and the process involved. If you would like to pursue a Loan Modification, I urge you to do some research. As always, I am here to help you with alternatives to foreclosure at phone: 703-403-0536 or email: patrick@patrickduffyrealtor.com.
Links:
Forum with over 20,ooo members, sharing their loan modification stories (successes and failures) – http://www.loansafe.org
Our second foreclosure alternative to look at is forbearance (or repayment plan). Think of forbearance as reinstatement on a payment plan rather than in one lump sum. Much like the reinstatement we looked at yesterday this is a good option for homeowners experiencing a temporary hardship and the homeowner will be required to pay their lender what they are owed.
In some cases the lender will tack the missed payment and fees onto the end of the scheduled loan amortization, however it is much more likely to be given a period of time in which to pay the delinquencies. Forbearance will often require income documentation from the homeowner showing that they have the wherewithal to comply with the terms of the repayment plan.
Forbearance Example
Homeowner misses four payments on a $2000 per month mortgage and the foreclosure process has been started.
Reinstatement Amount
4 months @ $2000/mo.
$8,000
Late Fees
$400
Legal Fees
$1,600
Processing Fees
$300
Total Reinstatement
$10,300
The lender allows payments to be broken up over the next 12 months:
Total Reinstatement
$10,300
Reinstatement Pmt 12 mo.
$858
Current Payment
$2,000
Monthly Repayment
$858
Total Monthly Pmt
$2,858
Once the homeowner completes the 12th repayment, the mortgage would go back to its original amount.
NOTE: a mortgage will not be fully reinstated until the payments are made in full. If the homeowner misses just one payment along the way, they can end up in the same stage of the foreclosure process they were in prior to the forbearance plan.
In my first of a series of posts on foreclosure avoidance options, we will look at the quickest way to “get back in the good graces” of your lender – reinstatement. Unfortunately due to the homeowner’s hardship situation, it is often difficult to pursue this route. However, if the reason you have missed payments is temporary, this option allows you to reinstate your mortgage all the way up until the bank sale.
To have your mortgage reinstated, you quite simply have to pay the lender what they’re owed to bring you current. In order to due this, you will contact your lender and request the amount needed in the form of a reinstatement letter. Keep in mind this letter often is time sensitive, usually requiring the full amount in one payment within 3o days.
Once reinstated, go ahead and keep making those payments.
Reinstatement Example
Homeowner misses four payments on a $2000 per month mortgage and the foreclosure process has been started.
Reinstatement Amount
4 months @ $2000/mo.
$8,000
Late Fees
$400
Legal Fees
$1,600
Processing Fees
$300
Total Reinstatement
$10,300
As you can see, this option will often require a sizable lump sum payment. Due to the difficulty of coming up with that payment, other options may need to be explored – which will be covered in the coming days. The next foreclosure avoidance option in my series of posts will be Forbearance.
In a previous post, I provided a list of alternatives to foreclosure with a brief description of what they are. In the coming days, I will provide a closer look at each of the alternatives. Following is the list of options that we’ll delve into.
Reinstatement
Forbearance or Repayment Plan
Mortgage Loan Modification
Deed in Lieu of Foreclosure
Bankruptcy
Service Members Civil Relief Act
Sell the Property
Short Sale
Please visit my blog over the coming days to read more about these alternatives. As a Certified Distressed Property Expert, I am trained to handle this most difficult of situations, homeowners facing foreclosure. You are not alone and I am here to help you. In the meantime, feel free to call or email me anytime at 703-403-0536 / patrick@patrickduffyrealtor.com. A wealth of foreclosure resources can also be found at www.NorthernVaShortSaleHelp.com.
Selling a home is complicated and full of legal issues that anyone considering selling “by owner” needs to be aware of. However, two of the most important things you need to know in order to be successful as a FSBO (for sale by owner) home seller have nothing to do with legal issues.
Maximize Exposure
It takes more than just sticking a “for sale” sign in the front yard to get the right people to see your home. It is very unlikely that you will sell your Woodbridge home to a neighbor, or anyone in the neighborhood just driving by. It can happen, but that group is very limited. For sale signs help, but they don’t usually sell the home on their own.
It’s important to advertise in as many places and as many ways as possible including on the internet, in homes magazines and in the local MLS (Multiple Listing Service).
Know Your Buyer
The next thing that is complicated for an individual selling their own Woodbridge home is knowing which buyers are looking in earnest, which are just being nosey, and which have the ability to actual make good on an offer.
Along with exposure this is one of the biggest reasons FSBO sellers often end up turning to a good real estate agent. They have the ability to make sure buyers who come to view your home are ready, willing and most of all able to make a purchase.
If you would like more tips on selling your home “by owner,” subscribe to this blog. It’s free, fast and easy.
