Secaucus Real Estate Today - July/August 2016 by Authoritative Content, LLC.

8 CONSIDERATIONS FOR FINDING A GREAT MORTGAGE

SECAUCUS JULY/AUGUST 2016

REAL ESTATE TODAY

A 7-Part Guide To Making Your FIRST OFFER

8 GOLDEN RULES

ABOUT PROPERTY

L I E N S

7 WAYS TO SECURE A

DOWN payment YOUR 6-PART GUIDE TO MAKING AN

OFFER FOR A HOME

7 PRINCIPLES OF

locating

AND BUYING

pre-foreclosure

A 7-PART GUIDE TO NEGOTIATING YOUR HOMEâ&#x20AC;&#x2122;S SALE SEC AUCUS REAL ESTATE TODAY | July / August 2016

contents

05 06 09

Publisher’s and Editor’s Letter

13 17 20

7 Ways To Secure A Down Payment

25 30 2

6 For Sale By Owner Mistakes You Should Avoid There are many mistakes that homeowners make when they conduct for sale by owner home sales. Be careful that you avoid making them by reading this important information.

7 Answers To Your Questions About Loan Modification If you have been wondering if loan modification may be right for you, listen up! Many homeowners that are having financial difficulty are turning to loan modification.

For many home buyers, a down payment is an extremely important part of the equation. Learn many different strategies to use to obtain a down payment for your new home.

8 Tips For Surviving Closing Costs Closing costs may not be cheap, but let’s face it, they are a part of the process. Learn what to expect in terms of closing costs and who is responsible for paying them.

An 8-Part Overview Of Avoiding Predatory Lending If you are having a hard time paying your monthly mortgage, you may be a victim of predatory lending. Learn how to spot errors and learn whether a lawyer can help you.

6 Tips For Finding And Screening Tenants If you shall be renting out a property, you should screen your potential tenants. Learn how to create and use application forms to screen any tenants you are considering.

7 Principles Of Locating And Buying Pre-Foreclosures If you are in the market for a new house, consider buying a preforeclosure property. Buying a pre-foreclosure is a great way to get an excellent deal on your new home.

SEC AUCU S REAL ESTATE TODAY | July / August 2016

contents 8 Considerations For Finding A Great Mortgage Obtaining the right mortgage with the best repayment terms is the key to successfully paying off your home. Be sure to learn as much as you can about your mortgage now.

A 7-Part Guide To Making Your First Offer Selling a home is a complex process from start to finish. This information explains what you should consider when you receive your first offer on the home you’re selling.

An 8-Step Guide To Buying Foreclosures For Profit Have you thought about purchasing a foreclosure to try to make a profit on it? If so, you should know that it may be difficult to make money on a foreclosure property.

6 Tips For Finding Competent Inspectors You always have to be careful when calling for “professional”

help. Often at times, the only goal of a so-called “professional” will be to make cash off what you unnecessarily spent.

7 Questions And Answers On Home Loans And Appraisals If you are purchasing a home, you probably need to start thinking about appraisals and home loans. Learn more about these important aspects of buying a home starting now.

8 Golden Rules About Property Liens There are many different types of liens. It is possible there may be a lien against your home or liens on a home you are considering buying. Learn more about liens today.

A 7-Part Guide To Negotiating Your Home’s Sale These tips for home sellers will show you how to recognize certain situations in the process. This includes dealing with multiple offers and conflicts of interests.

Your 6-Part Guide To Making An Offer For A Home The process of making your offer on a home has become more complicated of late. This guide will show you how to show the seller that you’re indeed serious.

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SEC AUCUS REAL ESTATE TODAY | July / August 2016

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PUBLISHER’S FOREWORD

SECAUCUS REAL ESTATE TODAY

Welcome to the fourth issue of Secaucus Real Estate Today! I hope you are all in good health and spirits as we continue down the road into summertime. It feels like just yesterday I was addressing you all regarding the beginning of a bright and promising new year; the time really does fly by.

Issue 4 JULY-AUGUST 2016

Editor

Sandra O’Connor Writer

Daniel Pratt Head of Creatives Nyvia Ross

Graphic Designer Kerwin Wepee

Digital Property Managers Maharlika Matutinao Layla Anaya

Digital Property Assistants

For the sports fans, I’d like to congratulate the Cleveland Cavaliers on their championship victory in the NBA finals. For those who don’t follow the NBA, Cleveland previously had not won a major professional championship since 1964 as a city, when the Cleveland Browns won the NFL championship game. After a drought of over 50 years, it’s amazing to see how sports continue to unite entire cities. Here at Secaucus Real Estate Today, the team’s been very busy continuing to create guides and provide tips essential to your efforts in buying and selling homes. As always, our goal is to improve the content we provide for our readers and introduce new topics. From the more typical processes of Real Estate to the more unusual and perhaps difficult situations, we touch many areas in an effort to aid a wide variety of visitors like you. Our editor, Sandra O’Connor, as well as her assistant, Danny Pratt, will take you through the specifics of what makes this issue special. I wish you all the best of luck, and I look forward to greeting you in our next issue! Regards,

Kenan Ross KENAN ROSS CEO Authoritative Content

LETTER FROM THE EDITOR

Krystine Sitjar Warren Nietes

Welcome to Secaucus Real Estate Today! This is our fourth issue and I’d like to personally thank all of you who have been on board with us from the beginning. I’d also like to introduce my assistant, Danny Pratt. Without further adieu, here is what’s new!

Online Presence: Facebook Google+ Twitter Tumblr Pinterest

For advertising concerns please contact KJ Ross at kjross@authoritativecontentllc.com Secaucus Real Estate Today’s magazine content cannot be copied or reproduced in any form without the written permission of the publishers. Secaucus Real Estate Today’s editors and publishers shall not be held liable for any unsolicited materials. All prices and specifications published in this magazine are subject to change by manufacturers, agency and retailers.

For our July/August release, we cover topics pertaining to both prospective buyers and sellers, as well as landlords eager to learn about the tenancy process. For buyers, being a first-timer can be a tricky situation. How your first home turns out for you can affect your financial status for years to come, and influence your future dealings in major ways, so we cover the things you absolutely must know. These include making your first offer, surviving closing costs, securing a down payment, and finding a great mortgage. For sellers, we talk about avoiding common mistakes made during the For Sale By Owner process, negotiating your sale from strong and weak positions, and competent inspection. When it comes to Real Estate, the same basic concepts apply no matter the deal, so it’s important to have an understanding of the process from top to bottom. With Secaucus Real Estate Today, you’ll put yourself in a position to capitalize on a great Real Estate transaction, regardless of what side you’re playing. For even the more tricky situations such as dealing with predatory lending and purchasing foreclosures, we’ve got you covered with knowledgeable tips and guides. As always, thanks for reading and I hope to see you in the next issue! Best Regards,

Sandra O’Connor

SANDRA O’CONNOR Editor Secaucus Real Estate Today Magazine SEC AUCUS REAL ESTATE TODAY | July / August 2016

6 FOR SALE BY OWNER MISTAKES YOU SHOULD AVOID by Sandra Oâ&#x20AC;&#x2122;Connor

While a For Sale By Owner sale may sound like a good idea, you need to know what you are getting into before you attempt to sell your home on your own.

re you wondering whether or not it it possible to sell your home yourself? The answer is yes. However, it may not be advisable to do so if you do not have the necessary knowledge and experience to do so. Here are a few mistakes you need to avoid if you wish to have a For Sale By Owner and sell your home yourself. 6

When the time comes for home-owners to sell their houses, many people elect to work without the aid of a real estate agent. This can be for a variety of reasons, but the biggest one is often to save money on the commission that you would be paying your agent; which is often 5-6 percent of your homeâ&#x20AC;&#x2122;s total value. While many people have seen great success

SEC AUCU S REAL ESTATE TODAY | July / August 2016

Closing costs may not be cheap, but let’s face it, they are a part of the process. Learn what to expect for closing costs and who is expected to pay them. CLICK HERE TO READ ON PAGE 17

selling their homes on their own, there are some definite risks to this method, which will be elaborated on below. ASKING FOR THE WRONG PRICE Buyers aren’t going to take any interest in your property if you’ve priced it too high. Buyers being guided by agents who know property values will avoid your home, and you will miss out as it sits on the market. Alternatively, if you don’t ask for enough on your house, you could end up selling yourself short on thousands of dollars because you don’t know what the market value is. You might even end up losing more money than you would have if you’d just hired an agent.

NOT PREPARING YOUR HOME PROPERLY More than likely, you’ve lived in your house for a long time. This familiarity means you may not notice (or be bothered by) the little things that could turn off a prospective buyer,

such as miscellaneous clutter or cracked walls, or paint that needs to be redone. A real estate agent would bring a fresh pair of eyes into the situation, and allow you to have a heads up on things that could potentially lower your chance of being able to sell your home to a buyer. They will also have helpful advice on what you can do to spruce up your home. MARKETING TROUBLES Most people who are trying to sale their home start off by using only a simple For Sale sign, as well as a classified ad. This could mean that it takes a very long time for buyers to come calling. With the help of a real estate agent, however, you can have access to the Multiple Listing Service (MLS) and more. But if you’re determined to work by yourself, you’re probably going to need to research how you can use the Internet to market your home. One of the most important parts of the home selling process is actually getting the word out about your house.

SEC AUCUS REAL ESTATE TODAY | July / August 2016

A LACK OF EXPERIENCE An experienced real estate agent will be able to tell the difference between a buyer with an intention to purchase and one who is just wasting your time. Your lack of experience may not allow you that kind of knowledge. Additionally, if you’re not an experienced negotiator, or are unaware of negotiating tactics, you could end up losing money to your buyer when talking over your asking price. If you lose your temper during the discussion or appear to be greedy, buyers will more than likely leave you alone.

LEGAL TROUBLE While it would be a victory to successfully sell your house without the aid of a real estate agent, none of that would matter if the buyer sued you once the sale was closed. There are certain local, state, and federal disclosures when it comes to property that can really come back to bite you if you skip them, even if you didn’t know about them. You’ll need a real estate lawyer who can work with you to put together a disclosure statement and sales contract that meets all the requirements

of your area. If you’re not using a real estate agent, you should have a lawyer review any and all contracts before they are signed. NOT CLOSING THE SALE PROPERLY It would be a terrible thing for you to watch the deal you’ve worked so hard to attain fall apart in escrow. Do you know how to open an escrow, get a preliminary title report, have property inspections ordered, deal with contingency removals, and make a payoff demand for your mortgage? With a For Sale By Owner sale, you are in charge of getting all of these things done, rather than a real estate agent. Once you have a signed contract, there is still a lot of work for you to do.

A For Sale By Owner may sound like a very good idea, but is it? Now that you know all of these mistakes that you could potentially make when attempting to sell your home on your own, you know that there are really two choices. Either you obtain the necessary knowledge to close a great deal on your own, or you enlist the assistance of a professional.

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SEC AUCU S REAL ESTATE TODAY | July / August 2016

7 ANSWERS TO YOUR QUESTIONS ABOUT LOAN MODIFICATION by Sandra O’Connor

Have you wondered if loan modification is the right choice for you? Many homeowners who experience financial difficulty are turning to loan modification. WHAT IS THE GOAL OF LOAN MODIFICATION? In modifying your loan, the aim of your lender is for you to pay the entire mortgage amount back someday and to make the highest possible monthly payments in the meantime. You would rather keep all your payments as small as possible, with your ideal being to pay next to nothing. You will both have to compromise and an acceptable resolution should not only allow your lender to make some profit and reduce loss but also allow you to continue living in the home, without feeling like a slave to your mortgage. Remember, both sides will have their own ideas of fairness when it comes to modifying a loan.

WHAT DO LENDERS CONSIDER A ‘FAIR’ DEAL? Often, many people will think that re-amortizing their mortgage at a rate of 3% interest is the the fair way to lower the balance on the value of their property. The lender will see a fair deal differently though. The lender will often

f you are experiencing financial hardship or are having a difficult time keeping up with your monthly mortgage payments, loan modification may be the answer. Many homeowners are turning to loan modification as a way to prevent future foreclosure. The following information will help you to decide whether loan modification is the right choice for you, right now.

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Selling a home is a complex process from start to finish.This information explains what you should consider when you have received an offer on your home. CLICK HERE TO READ ON PAGE 38

think that capitalizing penalties, fees and deficiencies, then dropping the interest rate to 4 percent for about three years (following that up with market rate based incremental increases) is whatâ&#x20AC;&#x2122;s fair. However, fairness will usually lie somewhere in the middle of these 2 extremes. Luckily the U.S. Treasury Department has rules for deciding what is equitable and going to result in an affordable monthly mortgage payment. WHAT DOES AN AFFORDABLE MONTHLY PAYMENT LOOK LIKE? On www.makinghomeaffordable.gov, a person can view exactly what an affordable monthly payment should look like, according to the federal government. The website uses 31% as the baseline for what a fair payment should be on a mortgage loan. In order to figure out what the federal government considers fair for your home, visit the following site. Loans that are owned by Fannie Mae/Freddie Mac and loans owned by certain participating lenders,

are all loans that fall within the MHA program; this also includes FHA and VA loans. However, what is fair is determined by the Treasury Department, using an affordability Debt to Income ratio. The goal is to get an affordable house payment for homeowners. A loan modification must meet certain criteria. For example, the front end debt to income ratio must be 31 percent or less and the mortgage payment including all the extras like taxes and insurance cannot exceed 31 percent of your monthly gross income. Additionally, the back end debt to income ratio has to be 55 percent or less.

WHEN IS DEBT COUNSELING A GOOD IDEA? The total for all of the payments made in the month including mortgage debt, credit cards, car payments and others should be less than 55 percent of the gross monthly reported income. Debt counseling may become necessary if that is the case. There are MHA

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programs that owner-occupied homes can follow. MHA plans help homeowners get to a 31-percent DTI ratio by reducing the mortgage interest rate in order to get a lower opening DTI. The Treasury works to match additional reductions in monthly payments with the lender to work down to the 31-percent frontend DTI required. In order to get to this target, a lender can lower their interest, extend the length of the term and make a reduction to the principal balance in that exact order. SHOULD I CONSIDER REQUESTING AN EXTENSION TO THE TERM? The plan asks for a lender to look at a possible way to reduce the interest rate. If that wonâ&#x20AC;&#x2122;t work in making the payment affordable, the next step is to look at an extension to the term. If reducing the interest rate and increasing the term donâ&#x20AC;&#x2122;t provide the solution, a principal reduction may be appropriate. The plan provides a way for lenders to deviate from the guidelines in order to make the loan more affordable and provide some borrower relief. As long as the lender and the borrower are able to put something together that falls within the 31 percent front end debt to income ratio. The next challenge to be met is keeping the back end debt to income ratio at 55 percent or less.

DO I NEED TO WORK WITH A HUDAPPROVED CREDIT COUNSELOR? Homeowners, whose back-end DTI ratio is greater than fifty-five percent, must sign a letter agreeing to work with a U.S. Department of House and Urban Development (HUD)-approved credit counselor. Once they meet with HUD, any changes that are made will not take any effect until after the homeowners have shown a signed statement that they will be getting credit counseling. This may not apply to all services, lenders and investors and the guidelines set forth by the MHA may change at any time. Fairness is determined differently for lenders through the MHA. The MHA will require all program participants (lenders) to apply the net present value test to every single mortgage loan that may be on imminent default and/or is at the very least 60 days past due as judged by the Mortgage Bankers Association delinquency calculation.

WHAT IS CONTAINED WITHIN THE NPV TEST? Included in the NPV test is a series of complex formulas that look at cure rate, property value, liquidation value, REO stigma discount (stigma value attached to repossessed homes), selling costs, re-default rate, marketing time and depreciation. Whether a mortgage passes the test is adjudged by an

SEC AUCUS REAL ESTATE TODAY | July / August 2016

NPV tool (provided by The Treasury) that allows lenders to put information into the system and determine whether it passes. Basically, a lender who participates in this MHA program is only required to do a mortgage modification if the NPV tests shows that it will cost them less to modify than to foreclose. While a lender has the option to modify a mortgage even if it fails the test, the only time they are required to is if it passes this test.

Now you are ready to start thinking about loan modification realistically. While the process of obtaining loan modification can be quite involved and while you may encounter some hurdles along the way, in the end it will all be worth it if you are able to stay in your home and stave off foreclosure. So donâ&#x20AC;&#x2122;t just sit there overwhelmed with home loan expenses you cannot handle. Instead, try to obtain a loan modification, starting today.

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SEC AUCU S REAL ESTATE TODAY | July / August 2016

7 WAYS TO SECURE A DOWN PAYMENT For many home buyers, a down payment is an extremely important part of the equation. Learn several strategies for obtaining a down payment for a new home. by Danny Pratt

If you are trying to purchase a new home, the first step may be to secure your down payment. If you do not just have it lying around or stashed in your bank account, you may need to be creative in order to come up with the money. The following advice will help you to start thinking about the various strategies you can use in order to obtain your down payment so you can purchase your new home.

CONSIDER LIQUIDATING SOME ASSETS Many people have assets that they donâ&#x20AC;&#x2122;t consider liquidating into down payment dollars. If you have a car, stocks, or artwork that you can sell, you should consider it. However, you need to sell it in the proper manner by documenting the sale and selling only items that are appraisable assets. What

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It is possible there may be a lien against your home or liens on a home you are considering buying. Learn more about many different types of liens today. CLICK HERE TO READ ON PAGE 53

is an appraisable asset? Anything that can be independently valued by an expert in the field (always a third party). Car dealerships do this all of the time when they assess according to a blue book. Question is, do you have an expensive item like a watch or family heirloom? To ascertain the value, have the jewelry appraised by a gemologist.

or people save for their down payment when buying their home. It shows that these people are making money and able to save and will have a better chance of paying off whatever loan they get. Lenders will find you a risk if you are borrowing from another source. It will affect your collateral and your debt ratios. It will also effect your equity in the property.

YOU CAN ALSO BORROW AND USE ASSETS FOR COLLATERAL You can sell the piece for down payment funds. You can also pledge the money from a stock or investment account, in effect borrowing the money for the payment. The assets are not sold, you just borrow the money and use the assets as collateral. If it is unable to be quantified, the lender may not approve it as a down payment. You must be able to prove the down payment to use it for the loan. Lenders want to see a person

YOU CAN USE A 401(K) TO PAY DOWN PAYMENT COSTS People cannot take cash from their credit cards for a down payment on a home. Retirement accounts like a 401(k) plan are allowable by lenders as a way to pay down payment costs, given they can see the terms of repayment and seem acceptable. Often, a lender will want to be sure the loan repayment wonâ&#x20AC;&#x2122;t keep you from paying back your other debts including your mortgage payment. Another plus is that even if you have a 401(k)

SEC AUCU S REAL ESTATE TODAY | July / August 2016

GIFT REQUIREMENT LAWS HAVE loan as well as your monthly payment, the BEEN UPDATED RECENTLY lender won’t view that new payment as a part of New updates to gift requirement your debt ratio. Get in touch with your human resources department and let them know laws permit only churches, government and of your plans to borrow from your 401(k) to immediate family members and labor unions to contribute cash for closing costs and down purchase a house. payments. These funds have regulations you IF YOU WISH TO USE A 401(K), START should know the requirements of so that your closing is smooth. Gifts also need a notarized EARLY! It’s imperative that you get this ball statement from the donor stating the money is rolling early on. It can take weeks, or even a gift, not a loan to be used to buy the house. longer for the money to show up. There is a Lenders want proof of the form in addition to process to getting the money out of your 401(k). the paperwork on the gift funds. You actually have to apply to get the money and WHAT HAPPENS WHEN YOU RECEIVE some companies, although few, will not let you A DOWN PAYMENT GIFT? borrow from your retirement. Keep copies of all If your parents are sending you your paperwork. A lender is going to want to see that you actually have received that 401(k) $10,000, lenders require a gift affidavit, at times money and it’s available to use. Check if it’s a photocopy of the check or transfer and proof okay for you to borrow against your retirement of the deposit that shows the money being put plan before you get started. Any of your family into your account. Despite the fact that you’re members can provide you with money for down receiving a gift, the average loan requires that payment funds. These are called gift funds and you have some extra money available after the deal is sealed. Cash reserves usually want they are a great deal. you to have 5 percent of the sale price of the

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home of your own cash along with the gift, despite whether you use your own money. If you purchase a $75,000 house the lender will want to ensure $3,750 of your own money in an account even if you get a gift of $7,500 from your parents. Having your own 5 percent of the cash is forgiven if your gift is 20 percent or more of the cost of the home. That is a bargain. Your down payment can come from a gift with no mortgage insurance or secondary financing and no verification by the lender that you have supplied 5% your own cash. THERE ARE ORGANIZATIONS THAT MAY BE ABLE TO HELP YOU You can find organizations whose function is to assist borrowers with their down payments. A lot of these organizations are notfor-profits whose mission is to assist first time home buyers. Many times you have to be a first time home buyer to qualify for their assistance. These programs can lend you money for your down payment and closing costs or even provide

it to you as a gift. A good starting point when searching for a DPAP in the area is by asking your mortgage lender. The organizations may be sponsored by the state, the county or local municipalities and their sole function is to assist home buyers. There are also DPAPs that are not government agencies, but have not-forprofit status. Many of these types of DPAPs have been shut down due to IRS rulings. Use caution because the IRS may view a non-governmental DPAP as an illegal entity. Now you know several strategies that you can use to secure your down payment for your new home. Keep in mind that if you are having an extremely difficult time obtaining your down payment, you may wish to wait a bit before purchasing a home. That is because you should be in a decent position financially before you purchase a home to ensure that you will be able to pay for it. Best of luck obtaining your down payment and purchasing your new home!

SEC AUCU S REAL ESTATE TODAY | July / August 2016

8 TIPS FOR SURVIVING CLOSING COSTS by Danny Pratt

Closing costs may not be cheap, but let’s face it, they are a part of the process. Learn what to expect for closing costs and who is expected to pay them.

f you are currently purchasing a home, you should be sure to anticipate paying closing costs. Closing costs can be a substantial amount, especially after you take all of the various charges and fees into account. Learn how closing costs work with the following information.

CLOSING COSTS CAN BE EXPENSIVE You’re just going to have to bite the bullet and pay closing costs. Many people you’ve never encountered are involved with your home purchase, and they’ll all ask for money to pay for what they’ve done for you. These are usually one time payments. The total amount for closing will vary according to where you live, but they’re usually around 3 percent of the total loan, but more than this if you’re giving points (origination fees) to the lender. The fees that go to the agent aren’t counted in the good faith estimate the borrower gets. There could also

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For many home buyers, a down payment is an extremely important part of the equation. Learn several strategies for obtaining a down payment for a new home. CLICK HERE TO READ ON PAGE 13

be required inspections like for termites or radon, but these differ in various states. WHERE ALL THE FEES COME FROM Many businesses are involved with your account, so non-lenders as well as lenders charge, with the lender fees charged at the start of a loan offsetting the initial costs that come with the processing of a new loan. A new mortgage can generate profit for lenders in three fundamental ways. One is collecting fees at the loan’s start and this is the only way for a mortgage broker to make money. If everyone is charging a $200 fee to apply, that’s probably what you’re going to pay. The second is when the interest payments come in and the third is when the loan is sold to another lender.

WHY LENDERS CHARGE FEES There are expenses with finding a mortgage and funding the work it takes to process a request, which is why lenders charge fees. Also, there may be no profit until

after the new loan is a year old because of the initial costs to them. Of course, the lender is getting the interest payments, but there are salaries to be paid as well as rent, taxes and standard business costs. Lenders may try to offset these costs with the additional fees and you’re only able to save on those fees that are negotiable. There are some that are non-negotiable because of company policy and others that are set by various levels of government so they are “required” as opposed to “non-required” fees. HOW YOUR CLOSING COSTS WILL BE DETERMINED Find out how the closing costs will be determined prior to trying to negotiate with a lender or broker. Some of the fees collected by the loan officer are mandated by the company while others are optional. To take an example, loan officers inform the clients what the rate of interest would be and how much would the processing and administration fee be. The processing fee, in this case, is optional; the

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loan officer can either do without it or charge any amount according to his/her convenience. But the loan officer has no discretionary powers over the administration fee, which is determined by the company. WHAT HAPPENS IF A LOAN OFFICER DOESN’T COLLECT THE FEE If the loan officer fails to collect the required fee, it would be deducted from his/ her salary by the company. The lender might like to get a $300 processing charge but it can be conceded to the borrower should the loan officer decide to do that. He or she has that kind of discretion, so you want to catch them on a generous day because it comes from their pay. There are some fees that only the lender or broker can modify or waive.

LOAN OFFICERS MAY CHOOSE TO WAIVE CERTAIN FEES In theory, the loan officer can waive any fee in the good faith estimate. Are you hoping that the lender pays for your attorney, appraisal and settlements costs? You can certainly try to get them to, but you don’t want to get your hopes up. A loan officer can’t waive too many of these fees or they’ll end up with no money for themselves. Look at a typical case with a loan amount of $150,000; an origination cost of one percent and an appraisal, underwriting and processing fee that come out to $300 each.

DO NOT BE SHY TO ASK YOUR LOAN OFFICER TO WAIVE FEES This will bring the total to $2400.

Your loan officer will earn about half the amount. If your loan officer has agreed to pay the appraisal cost and not charge the $300 processing fee, then the $600 will be taken from their commission check. Since you’ve made it this far, you can ask for the loan officer to also deduct the cost for underwriting and inspection costs which could lower the commission to $200 rather than $1200. It isn’t possible for a loan officer to work like this, or if they can, it won’t be for long. YOU MAY ENCOUNTER OPPOSITION, BUT IT IS WORTH TRYING Often times, they will probably tell you ‘no’. But give yourself credit for trying. During the refinance process, you can find discounts for a re-issued title policy and if your lender requires a survey, you may be able to use the old one rather than going through the expense of getting a new one. When purchasing a home, you may have no chance at getting a reduced fee for your title or lawyer expenses. The sales contract explains who will hold your loan, where it will be and where your title insurance will come from.

Now you know why closing costs can add up to such a hefty amount. You can, however, try to bring down closing costs by having some fees waived, but you have to ask. Congratulations on your new home and good luck bringing the closing costs down to a more affordable level.

SEC AUCUS REAL ESTATE TODAY | July / August 2016

AN 8-PART OVERVIEW OF AVOIDING PREDATORY LENDING by Danny Pratt

If you are having a hard time paying your monthly mortgage, you may be a victim of predatory lending. Learn how to spot evidence of predatory lending now. 20

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As you already know, selling a home in a weak and strong market are two very different processes. CLICK HERE TO READ ON PAGE 58

ome lenders can make it difficult when you are attempting to modify your loan. However, it is important that you are well versed in your rights regarding loan modification so that you can respond to a lender who is giving you problems. The following information explains how a lawyer may be able to help you and how to spot predatory lending to see whether you are a victim. BE SURE YOUR LENDER KNOWS YOUR RIGHTS If you’re in a situation where your lender doesn’t want to work with you on modifying your loan, you might want to remind them of the consumer laws in this area. You sometimes can get a hesitant lender to work with if you know what rights you have with regard to borrowing. There are regulations that protect both the lender and borrower and allow for civil litigation. In some cases, an individual borrower won’t be able to sue and only the government will be able to do so. Buying a home is expensive; therefore, many

buyers borrow a substantial sum of money for the purchase. To obtain a loan modification or negotiation, using a previous TILA, HOEPA or RESPA violation on your lender or loan originator’s record can be a useful strategy.

LEGAL ACTION DOES NOT TYPICALLY YIELD LARGE SETTLEMENTS If, instead, you choose to pursue legal action because of the violation, do not anticipate a large settlement sum. Unless you are a lawyer, always seek legal counsel when filing a lawsuit. Given the fact that there is a considerable amount of money at stake, there have been disclosure laws put into place that will make sure a borrower fully understands what they are doing before they sign any documentation. If your lender in any way does not honor the disclosures and you are able to prove it, your lender could possibly be responsible to rewrite your mortgage and in some cases pay damages. If you find your lender being uncooperative or non-responsive, or if you think your lender isn’t giving you the proper disclosure and

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documentation, you may have an avenue for legal action. You need to talk to a lawyer who specializes in real estate to explore what your next step should be. WHAT HAPPENS IF YOUR LENDER MISSED A DISCLOSURE? Unfortunately, a missed disclosure on the part of the lender is considered to not be enough in most cases to win a judgment in court. If a lender has a habit of this type of bad business practice, your state’s attorney general office may file suit but this will have no effect on your case. You can argue that since they didn’t disclose all important matters, you were unable to fully understand the loan you undertook. One way to convince the lender to grant a loan modification is to argue that you were not disclosed on all key matters at the time of the signing of the original contract.

THERE ARE MANY DIFFERENT TYPES OF MORTGAGES The mortgage is the product that a loan issuer sells, just like other retailers sell merchandise. There are a long list of different types of loans, amounting to over 400 that lenders offer, including reverse mortgages, amortization products and adjustable and fixed terms. The offerings of these mortgage

products will change depending on the overall housing market. Although the last debacle in the mortgage industry has resulted in the removal of some of its dicier products, such things go in a cycle and it’s quite possible we’ll see those again. Any time that a lender gives you a product recommendation, they’re legally obligated to inform you of each of its components in a way that’s easy to comprehend. Getting those details makes it possible for you to compare such products and totally comprehend your intended purchase.

HOW IS YOUR MONTHLY PAYMENT CALCULATED? Loan terms and the cost for financing are what creates the amount of your monthly payment of the loan. The interest rate is a percentage of the base loan amount. A lender, during the advertisement of the loan will need to give consumers the APR. APR can come in either fixed-percentage or adjustable forms. Term defines the amount of time allowed to pay the loan back in full if all of the payments are made as scheduled. All fees included in the original loan have to be included in the new loan.

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WHAT ARE ‘JUNK FEES’? Be aware of junk fees that lenders will add to pad their future profits from your new agreement. They sometimes add fees for services that others in the industry do not charge. The lender can have junk fees but it needs to be stated prior to making the formal loan contract. This needs to be stated before the closing with any HUD-1 forms and is called a Good Faith Estimate. Shopping around for lenders is a very important step in the loan or refinancing process. Not only will you be granted varying interest rates, but you will be able to compare and contrast each lender’s fees. You may notice that one lender has more junk fees padding their profits. These will stand out on any good faith estimates obtained while shopping.

COMPARE GOOD FAITH ESTIMATES If you don’t have multiple GFE’s from your original purchase to compare, you can contact a mortgage broker or even a real estate attorney to help guide you. If, on the other hand, you are seeking refinancing to get yourself out of a financial hard spot, don’t waste time getting multiple estimates. There are several questions that you will need to ask. Firstly, to obtain the quote requested will I need to pay any application or upfront fees? Secondly, if I do not close the loan are any of the fees completely or partially refundable? Adjustable-rate mortgages (ARMs) have caused many problems for borrowers in the past. Many lenders were aggressively arguing for the benefits of ARMs without discussing the consequences to unknowing borrowers.

BE WARY OF LOW INTRODUCTORY RATES THAT RISE QUICKLY One of the main tactics used was the guarantee of low introductory rates to entice the borrower into taking the loan. Because of adjustments to interest rates, a selection of homeowners with ARMs saw their average monthly payment jump considerably over a relatively short period. ARMs adjust up or down. During the hardest part of the mortgage collapse, rates and payments for many homeowners dropped significantly. Even with that, the increase from the initial teaser rate (example 3.75 percent) 6 to 7 percent proved to be too much for homeowners to

handle. You also cannot rely on rates staying at a low percentage. If your rate seems fairly stable now through your ARM, it still may be a good idea to look at a fixed-rate mortgage opportunity. As you can see, there is a lot to think about regarding a loan. If you fear that you have been the victim of a predatory lending scheme, it may be well worth your time to speak with a lawyer. While you may not end up with a hefty settlement as a result of a lawsuit, you may be able to obtain loan modification more easily if you secure a judgment against a lender. Or perhaps your lender will cave to the pressure and give you what you are asking for without you ever having to step foot into a courtroom. Whatever you do, if you feel you are a victim of predatory lending, do something!

SEC AUCUS REAL ESTATE TODAY | July / August 2016

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If you shall be renting out a property, you should screen potential tenants. Learn how to use application forms to screen any tenants you are considering.

f you are planning to rent out a property, you really should screen your tenants. Screening tenants can save you a great deal of trouble in the long run. Learn how to screen tenants using applications and the importance of obtaining an authorization from potential tenants before screening them. TENANT SCREENING ISN’T DIFFICULT Tenant screening isn’t as dangerous as it might seem. You decide on how you’ll decide on a tenant, excluding factors that are discriminatory because they’re based on religion or race or various other things. After you’re sure about that, you can say for instance that you don’t want pets and exclude anyone who wants to bring in a pet. You’re excluding because of your own rule and not because of the tenant him or herself. So don’t be afraid; if you’re following the law, you don’t have to rent to just anybody. It’s important to treat every tenant applicant identically so you can’t request one to fill out the application

Finding an inspector for your house is pretty easy, but finding the right inspector for you and your buyer is a bit harder. CLICK HERE TO READ ON PAGE 45

but another not to. Get your rental rules down in writing and give out a copy to everybody who inquires, so that you have proof of treating them all the same. The application that you give to everyone should ask for their whole name, address, phone and social security number. WHAT YOU SHOULD FIND OUT ABOUT POTENTIAL TENANTS You want to find out how long they’ve lived at their present address and names and addresses of other landlords they’ve had. You want that same information for the current employer along with credit references and how much the applicant earns. It’s a good idea to ask any future tenant to provide a few references that could reinforce their claim to be a good tenant. If the case is that waterbeds are not allowed in your rental property, you

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should make that very clear to the potential tenant. It’s necessary for this potential renter to have proof of their identity and proof of employment. As a landlord, your best bet is to require a copy of a photo ID and a few recent pay stubs. HAVE THE POTENTIAL TENANT SIGN AN AUTHORIZATION Also you need to ask for an authorization to give you the information. When the applicant signs this authorization, credit references and employers will allow you to access this information. Usually, most references and employers won’t give out information if they don’t have a copy of the release. Employers probably won’t say an applicant works there if they don’t have a copy of the release first. Typically, credit references and employers will accept a release by fax. When you become a new tenant, you need to be prepared for the application process. Applications should be printed and professional.

4 26

DO NOT PREPARE YOUR OWN APPLICATION Preparing your own application or

printing it from the Internet is not a good idea. Your best step would be to acquire an application from a real estate attorney, which then they can help you go over the application process, which is usually one to two pages long. Any other questions relating to your application and move should be presented by your attorney to be part of the application process to avoid any surprises with your landlord. You may like to ask different question to the prospective tenants, but some of the things you want to ask may be considered discriminatory by the law. So, to avoid unpleasant situations in the future, include only those questions which are permitted by the law. SPEAK TO AN ATTORNEY BEFORE CREATING AN APPLICATION FORM Consult an attorney before you print your application form. Once the application form and the questions thereon are approved by a qualified attorney, you will have nothing to worry about. Insist on every tenant to fill up the application form. It will also be a good idea to provide the tenants with a copy each of your terms and conditions of tenancy. It’s wise to ask a lawyer to go over the rules you’ve

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made to ensure that you’re complying with the law. Have every potential adult tenant fill out the tenancy application. Those that sign it should be those who’ll sign the lease. You want to know everything you can about them. With some luck, you can file this data away and never need it again. BE SURE YOU TAKE AN APPLICATION FROM POTENTIAL TENANTS It is always better to take an application from the tenant. The personal information the tenant provides on the application form will be of immense help to you sometimes. For example, if your tenant is a bachelor and is seriously injured in an accident and is not able to talk, you need to contact some of the tenant’s relatives or friends. The only place where you can expect to get contact numbers is the application form. By printing the application’s forms, you will not lose because in most places, the landlord is allowed to take an application fee from the tenant. An application fee is paid by the possible tenant to the person that owns the property so that the owner can do a background check of the possible tenant prior to the lease being signed.

SHOULD YOU CHARGE APPLICATION FEES? Application fees should not be more than the expense of the screening, which might involve criminal background screening, credit report history and history of renting of the possible tenant. Criminal background checks are able to be obtained on the web. The application fee should be $25 if that is how much it costs for the screening. Basic and prudent costs are what must be paid for a credit screen, criminal history screen, or other record screenings that are of the like. You shouldn’t try to profit from the costs of applications. The goal is to cover your costs.

Now you are ready to start screening your potential tenants. Remember that while the process may not be fun for either of you, it is a great idea. By screening your tenants, you can ensure that you only rent to responsible individuals who truly intend on paying rent.

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7 PRINCIPLES OF LOCATING AND BUYING PRE-FORECLOSURES by Danny Pratt

If you are in the market for a new house, consider buying a pre-foreclosure property. Buying a pre-foreclosure is one way to get a good deal on a new home.

f you are thinking about buying a pre-foreclosure property, you need to know as much as you can about the foreclosure process. The following information will teach you how the foreclosure process works and how to obtain all of the information you need. You can use this information to help you to determine whether you should be making an offer on the pre-foreclosure property you are considering purchasing.

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Have you thought about buying a foreclosure to try to make a profit on it? If so, you should know that it may be difficult to make money on a foreclosure. CLICK HERE TO READ ON PAGE 41

HOW YOU CAN FIND PREFORECLOSURE PROPERTIES Look for properties that are in the first stages of foreclosure. At this point, the property owners are going to be very fired up about selling the property before it goes to the auction block. Unlike an auction property, this option will give you an opportunity to inspect the inside of the home. You get a good idea of what youâ&#x20AC;&#x2122;re getting yourself into. You arenâ&#x20AC;&#x2122;t going to have a clue about the condition inside of the property unless you are the winning bidder.

WHEN PROPERTY OWNERS RECEIVE DEFAULT NOTICES When a property owner has defaulted on the loan, they will often get a notice that the property is in pre-foreclosure and will

remain in that status until the day it is up on the auction block. A default notice will be given to the property owner with the auction details. Generally, this happens three months afterward. You may think that the best way to buy the property at the cheapest price is to wait for auction. But if it is a judicial foreclosure, it is going to take a long time to complete the whole process, and you have to wait for quite a long time. If you can buy the property before it is sold at a public auction, you will be in a better position. Negotiate with the property owner and sometimes the owner will be willing to sell the property at whatever price you offer.

NOBODY WANTS TO DEAL WITH FORECLOSURE People normally try to avoid

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foreclosure of their properties because there is a certain degree of stigma attached to foreclosure, and it also affects their credit rating very badly. Having a foreclosure on your record wonâ&#x20AC;&#x2122;t prevent you from getting future financing, but it will stick you with fewer options and an outrageous interest rate. Auctions donâ&#x20AC;&#x2122;t allow you the luxury of assessing the conditions inside a property. People that are in the midst of having their home auctioned off are not usually in the mood to give potential bidders a grand tour. You need to do your homework before you purchase pre-foreclosures. You should enjoy research and notice every detail.

HOW YOU CAN FIND PREFORECLOSURES The instructions for purchasing preforeclosures are to locate property owners who are behind in payments or in foreclosure. Write letters to get in touch with homeowners you have found. Calling people out of the blue or making phone calls are not effective. Once people have gotten to pre-foreclosure, it is a fact that they are exhausted with answering the phone and door due to the beating they get from collections representatives. They are not going to give their financial records to someone that just drops in. 32

DO YOUR RESEARCH BEFORE YOU COMMIT TO BUY Check both the loan and court records so you have information as to liens and terms for paying them off, thereby wiping the debt on the property. Do a full inspection. After you have gotten all of the necessary financial information regarding outstanding loans and liens against the property, and doing a careful inspection so that repairs can be estimated into your decision, you have to figure out what price you are willing to offer the property owner. Taking the market value into consideration, you can meet with the property owner and discuss price options. Try to make an agreement with the foreclosing lender and also all subordinate lien holders. Get a shortsale package together. Make an offer to buy. Have a property closing. This is only one kind of pre-foreclosure property.

SEARCH THE INTERNET FOR PREFORECLOSURES Also, you can use the same procedure and look on the Internet for different kinds of documents that will give information about any property that is facing foreclosure. For instance, keyswords can be: default notice; foreclosure notice; auction; tax liens; or something else that would offer details about

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Have you thought about buying a foreclosure to try to make a profit on it? If so, you should know that it may be difficult to make money on a foreclosure. CLICK HERE TO READ ON PAGE 41

financial problems that can lead to a possible foreclosure. Some bankruptcies and tax liens don’t result in foreclosure, so when you look with these codes, make certain you consider other filings for potential foreclosure when you are trying to find the properties you want. When you search the counties, you will find a document list as well as the codes you need for searching. CHECK THE NEWSPAPER FOR PREFORECLOSURE PROPERTY ADS Also you can look at a newspaper to see pre-foreclosure property ads. While you’ll find good leads from this, chances are they will come much later down the road. Searching online weekly gives you an edge against others hunting for foreclosure properties. You’ll find them within weeks of the process initiation. You’ll have the benefit of more time to make contact with the homeowner. Initial contact should always be by mail. Keep in mind that at this point in the process, home owners are feeling very burnt out by the pestering of creditors coming after them. It may be wise to avoid knocking at their door asking questions,

and write them a letter about any proposition you would have for them. Mention some of the drawbacks of having their property go up for auction and that you would like to discuss with them some other options that could end up being more favorable for all parties involved. It would be a good choice to include in the letter that it may possibly be too late to save the property from the auction process. That is something you could discuss, if they are willing. You are now ready to start looking for pre-foreclosures. Keep in mind that many Americans are currently facing foreclosure, so don’t simply jump on the first deal you come across, as a better deal may be out there. Remember also that you are actually doing the owners of pre-foreclosures a favor by purchasing their property before it is foreclosed. So it is not only you that gets a great deal when you buy a pre-foreclosure. Best of luck!

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8 CONSIDERATIONS FOR FINDING A GREAT MORTGAGE by Sandra O’Connor

Obtaining the right mortgage and the right terms is the key to successfully paying off your home. Be sure to learn as much as you can about your mortgage.

here is a lot you should take into consideration when you are shopping for a mortgage. Instead of just taking the first deal you encounter, shop around so that you can obtain the best deal with the best terms. The following information will teach you what to consider when you are looking for a great mortgage.

WHERE TO FIND YOUR LENDER’S OBLIGATIONS The obligations of a lender in a mortgage is found in the mortgage paperwork. When you signed all of those documents in the loan, there were countless documents that you had to sign and they were carefully attended to for a reason. If there was any problem, usually an entire page and sometimes an

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If you are in the market for a new house, consider buying a pre-foreclosure property. Buying a preforeclosure is one way to get a good deal on a new home. CLICK HERE TO READ ON PAGE 30

entire set of documents would be reprinted. Over and over you signed your name and the reason for this is simple: if you made a mistake the mortgage could be canceled by the home owner in a bankruptcy proceeding or any other legal matter which involves title. Because of this, it is worthwhile to ensure that someone meticulously overlooks your paper work- either you or the lender should have copies. LENDERS ARE CAREFUL TO BE ACCURATE Lenders are more aware than the customer that accuracy is key and these usually are double checked through provisions that will cover the lender if there are errors or omissions in the documents (these provisions will still hold the debtor liable). However, there are inconclusive results as to how liable these provisions would leave the debtor or lender in the event of a foreclosure. Regulation Z, regarding the truth in lending documentation you are required to receive under RESPA (Real

Estate Settlement Procedures Act), could bring about a hurdle. CHALLENGING THE PAPERWORK CAN BE DIFFICULT If you never received the paper work, or you received incorrect paperwork, you could challenge the mortgage one day down the road. However, challenging the paperwork is not often the easy path. A lender will do whatever it takes to deny your claim, which almost assuredly means litigation. Regardless, if error was made, then the debtor could use this as a way to stop the foreclosure of their home. Also, if using one of the traditional institutional lenders to help refinance your mortgage, then a private lender is also an option. Do not forget if you do any refinancing, you may have enough money to pay off your mortgage and stop the foreclosure process before you lose the time of the redemption period.

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If you are in the market for a new house, consider buying a pre-foreclosure property. Buying a preforeclosure is one way to get a good deal on a new home. CLICK HERE TO READ ON PAGE 30

WHAT ARE PRIVATE LENDERS? Private lenders are just that, private. They are entities and people that offer the financing you need for a price. The interest rate is generally higher and given they want higher loan-to-value ratios, you may not be able to benefit from their services. There are however some lenders that will look at your assets in relation to the loan. This could result in an increased loan amount. Something to keep in mind is that private lenders have the ability to structure a loan that will be in line with your needs.

HOW CAN A PRIVATE LENDER STRUCTURE A LOAN? For example, they can offer reduced payments during the first 3 to 5 years of the loan or they could agree that you will not have to make any payments at all for few years and then make a balloon payment to pay the loan in full. In that case, you would probably have to

sell the property or refinance. In any event, it’s worth it to see if a private lender can offer you some relief. You should look for someone in your state and make sure they are licensed to make loans in your state. A lender’s perspective. A borrower who faces one foreclosure might have other foreclosures. If you expect to purchase another home later on, make a serious effort to fix your mortgage credit. YOU SHOULD PAY OFF YOUR MORTGAGE IN FULL Do all you can to finish paying your mortgage. Free yourself from the debt. Don’t try to fool the lender. All mortgage applications request information about foreclosure. Currently, many also need you to say if you have a deed instead of foreclosure. (If you tell lies on this application, your credit report still gives information about foreclosure. But if it can’t be found on your report and you qualify for the loan, if you default later and someone

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finds out if you are not telling the truth on your application, there might be illegal civil and/or criminal charges.) HOW TO AVOID IMPENDING FORECLOSURE There may be a chance you can avoid foreclosure. It’s possible to do so, but you may need to sell something of value, like a car or boat, or something cherished by you, to raise money for your mortgage payments. It probably wont be easy and you should become more involved with your lender. If you did not obtain your mortgage as part of the purchase price and you walk, the lender could go to court and obtain a deficiency judgment against you.

FORECLOSURE IS NOT INEVITABLE Foreclosure isn’t a nice thing to deal with and can be unpleasant. Things can turn around if you hold on long enough. A sellers biggest expense can be the real estate agent’s commission. Those run around 4 to 6 percent these days, depending on the area. Sellers can avoid this by selling on their own. For example, a home that sells for about $200,000 dollars, you are giving the

agent around $8,000 to $12,000 dollars. There probably isn’t a seller out there who wouldn’t like to avoid this. There is definitely a lot to consider as you obtain home financing. By taking the right steps now to ensure that you obtain a great mortgage you can greatly reduce your chance of having your home foreclosed. That way you can stay in your home for many years to come and can one day pay your home off in full.

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www.Agnes4RealEstate.com 37 SEC AUCUS REAL ESTATE TODAY | July / August 2016

A 7-PART GUIDE TO MAKING YOUR FIRST OFFER by Danny Pratt

Selling a home is a complex process from start to finish.This information explains what you should consider when you have received an offer on your home.

f you are selling your home, you should realize that the asking price may not match the offer you receive. Should you accept your first offer? Maybe, maybe not. You need to carefully examine any contingency clauses and think about the offer in terms of your actual yield. The following guide will help you to start thinking about whether you should accept an offer you receive. BE PREPARED FOR YOUR FIRST OFFER You probably will already have a general idea of what you want and if you’re not going to get it, the offer will seem pretty poor. Normally though, an offer is neither great, nor is it terrible. It falls somewhere in between with positive and negative points. This means you need to look deeper in order to see if the better points are in your favor. It won’t be easy deciding if you should take an offer or not. Buyers will often times give things in exchange for asking for things you may not be willing to let go of. For instance, you might get your price from one buyer but the terms will include difficult things like a mortgage over the long term that you need to carry back for a low rate of interest, and it becomes your decision.

SOME OFFERS COME WITH CERTAIN TERMS You decide if it’s worth accepting these terms so you get your price. Or you might need to vacate within a month, even

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There are more ways than plainly putting money down to show a seller that you’re serious about buying a home. Here’s how to make a smart offer. CLICK HERE TO READ ON PAGE 62

though the children are in school and you need three months. But the prospective buyers need to move into the area and absolutely will not compromise on this. You will find that all parties involved will flex a little in one direction or the other. Will you get enough funds to be able to live in a rental and then move to your home later on? Certain routine contingency clauses related to financing are available as a part of the framework wherein the buyers select them using a check box for implementation. The documents have these clauses written on the back where the buyer has to put his initials. CONTINGENCY CLAUSES CONSIDERED You must be very alert while dealing with contingency clauses. Many times, the seller may misinterpret the contingency clauses as they are not a part of the offer form but are simply written in. Be certain that you have followed all insinuations of the contingency clauses before confirming acceptance or rejection. If you need to, it is okay to hold off on making a decision about the offer until you’ve had a chance to discuss

it with your lawyer. A buyer will purchase depending on how the sale translates, as soon as they can vacate their current home. This is weak as far as offers go, because it means your home sale is dependent on the sale of another. The buyers will purchase based on if they will be able to get new financing. CONTINGENCY CLAUSES CAN BE EXTREMELY IMPORTANT It is smart to be sure you see the new pre-approval letter to be sure they are qualified. Contingency based on financing is fairly common. Contingencies may be acceptable or unacceptable, depending on your personal needs and preferences. It would be reasonable for buyers to make an offer contingent on whether they can move into the house within a specific time frame. It would also be reasonable for buyers to approve all disclosures and to have a professional inspection done. Usually, the inspection is done within a few weeks. Contingency clauses can provide an “out” for buyers and sometimes sellers as well. A serious offer will not have a ridiculous contingency clause.

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WHAT TYPES OF CONTINGENCIES ARE INAPPROPRIATE? “Uncle Todd’s cow must deliver her calf prior to purchase” is one example of an inappropriate contingency. Contingency clauses should be limited as much as possible. More motivated and knowledgeable buyers will put fewer contingency clauses into an agreement. They are often an indication of the buyer’s state of mind: the more reservations a buyer has, the more numerous and stringent the contingency clauses will be. You should take a systematic approach to contingency clauses by looking at each one separately and asking yourself three questions. Does the contingency seem within reason? The purchase happening once finance is available is very reasonable. Making it okay for Uncle Todd to come down and look the house over in the next few months is not. Will the contingency actually negate the value of the offer?

IT IS WITHIN YOUR RIGHTS TO MAKE A COUNTER OFFER Buyers will offer cash given final approval of the property 24 hours prior to close. This isn’t a deal since the buyer can walk away from the property at any time, given it is their right. Am I able to handle that contingency, or should I set a limit? You could put a time limitation on the contingency, like one week. Or ask that it be completely taken

off the table. But that means you’re making a counter offer, which might not be acceptable to the buyers. REMEMBER, AN OFFER IS JUST AN OFFER The offer to buy is just an offer and you do not have to accept. It’s not binding until you sign it. But you can’t accept and counter at the same time and any change, even the smallest, in essence turns down the offer. You’re writing a separate counter offer, which is submitted to the buyers for them to accept or reject. If you feel you aren’t comfortable with the standing contingency or it is unreasonable or negates the remainder of the offer, you have to do something. Keep in mind, though, that what you do might turn away an offer that can’t ever be made again. If the buyers don’t like the counter offer, then they do not have to accept it. They can just walk away.

At this point, you are ready to start thinking seriously about any offer you receive on your home. Even if the offer is lower than your asking price, it may be a good offer. Just be careful to read any attached contingency clauses carefully so that you do not end up with terms you are not willing to deal with. Best of luck finding a great offer on your home!

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AN 8-STEP GUIDE TO BUYING FORECLOSURES FOR PROFIT by Danny Pratt

Have you thought about buying a foreclosure to try to make a profit on it? If so, you should know that it may be difficult to make money on a foreclosure. homeowners will forgo repairs when strapped for cash and so the house will dip into disrepair. A smart investor should look into finding stable and reliable contractors, people who are efficient in their work but wonâ&#x20AC;&#x2122;t steal you blind. This can be more daunting than investigating the home but is a necessity to make it appetizing for the prospective buyer. What your property looks like from the street is vital, so be sure your landscaping is neat and you have a freshly painted exterior. Once the property has closed, you need to get ready to roll up your sleeves and work, so budget and plan accordingly.

any people think about purchasing a foreclosure property in order to flip it for a profit. However, this dream may be more difficult than the actual reality. You may need to make considerable upgrades to a home in order to make it sellable and these may require a great deal of time and money. Ensure you know the process involved before you commit to buy a foreclosure to sell for profit by reading the following information. DETERMINE IF THIS IS A GOOD IDEA Buying foreclosures for profit may seem like a great idea, but contrary to the dream, it can require a lot more work to get a profit in a fast turnaround. Many previous tenants and

HIRE A CONTRACTOR TO COMPLETE THE WORK If you canâ&#x20AC;&#x2122;t get the work needed done on your own, hire a good contractor. Keep an eye on the work being done, so it is up to the quality you expect. Set a schedule that your contractor can agree on and make sure the estimated date of completion is on your contract. When working with contractors, you should always make sure the length of

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Obtaining the right mortgage and the right terms is the key to successfully paying off your home. Be sure to learn as much as you can about your mortgage. CLICK HERE TO READ ON PAGE 34

the project is defined in the contract and that there are penalties specified for late delivery. At times, providing a bonus for early completion is warranted. In order to make sure that you get quality contractors, you should speak with people that you trust, such as family and friends, for referrals. AVOID HIRING A SCAM ARTIST But make sure that your contractor is licensed and insured and make sure that your contract specifies the price and details of the work to be completed are documented in writing. There are a lot of scam artists that will agree to do the work you need, but either won’t finish it on time, or possibly at all. You can get around this kind of problem by making sure you’re hiring only licensed and insured contractors. If they aren’t insured and if someone gets injured in your home, you could be the responsible party for some hefty medical bills. Find a licensed and insured contractor. Be sure you view their license, worker’s compensation certificates, general liability insurance and automobile insurance.

MAKE SURE THE WORK DESIRED IS IN THE WRITTEN ESTIMATE To ensure the work you want done is contained in the estimate, it is important to have a written estimate. The estimate should contain specific descriptions of the work to be completed, along with a work schedule for beginning and finishing the work. Ensure any materials needed are described in detail in the order for the work. Make sure the order describes who is suppose to get the building permits if they are needed. Usually, it is the licensed contractor’s responsibility to get the permits.

WHAT ELSE SHOULD BE WITHIN THE WRITTEN ESTIMATE? The written estimate should give breakdown of the costs and a schedule of payments to be made. For example if you are required to pay 50% at the beginning and 50% when the job is done, this should be set forth in writing. The written estimate should also disclose any applicable warranties as to workmanship and materials. Any time that work is done on your home and you do not pay the contractor in full, he can record a mechanic’s lien against the real

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property. All parties involved in a project should sign a waiver and release of lien when they receive their final payment. If the thought of managing your own project is daunting, you can use a tool such as Work CD, available through Home Depot, to help. It will clearly organize the building materials required and includes estimating tools to help you put real numbers to your project. It is linked to the stores, so you can even work up an estimate and generate an order for the supplies needed which can be sent directly to your local store. CONSIDER WORKING ON THE ‘CURB APPEAL’ FIRST One suggestion in renovations is to do the work on the outside of the property first as this will increase the curb appeal and be more inviting to potential buyers. The walk and driveway will need to be pressure washed, along with the home’s exterior. That could show you extra places that need work, like replacement of some of the home’s construction materials. After the dirt is gone, you can see if you really need a paint job too. After the exterior is taken care of, you can put up your For Sale sign and start to generate interest, but wait a bit if there’s so much work to do on the interior that it needs a few weeks or months to get ready.

WHAT IF A CALLER EXPRESSES INTEREST BEFORE YOU’RE READY TO SHOW? If you get a caller expressing interest before the house is ready to show, you may only have a short period to hold them off, so don’t put

your For Sale signs out until you’re absolutely ready to show your property. Scent can drive a buyer away, so be sure you don’t have any odd odors floating through your home when you’re ready to show your property. Neutron Industries produces a fantastic odor eliminator known as NI-712 Orange Odor Eliminator. This product can even make a skunk odor disappear. NI-712 gets rid of smells like smoke from cigarettes or cigars, rotting food, pet odors and those that come from bodily functions. Call 888 712 7127 and ask Neutron Industries about their prices and how to get more information.

CHOOSE LIGHT AND NEUTRAL PAINT SHADES When you’re painting, select light, neutral shades. Look in your area to see how the nicest homes are painted and choose something that fits in. With regard to the interior, white or off white is usually the wisest choice because it looks fresh and is simple for a buyer to paint another color if desired. Use a good, flat latex and make sure to do the trim and doors with a semi-gloss enamel for a bit of shine. Now you can see how much work may be involved in flipping a foreclosure property for profit. If you’re willing to invest the time and money into such a project, you should definitely take all the money you spend into consideration as you create your asking price. You may very well be able to make a profit by purchasing a foreclosure and selling it, but it is important that you consider the information above before committing to it.

SEC AUCUS REAL ESTATE TODAY | July / August 2016

2016

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COMPETENT INSPECTORS by Sandra O’Connor

Follow Us: Finding an inspector for your house is pretty easy, but finding the right inspector for you and your buyer is a bit harder. Inspecting The Inspectors

any of the “professionals” calling themselves inspectors don’t actually have any of the training necessary to claim such a title. To make this problem worse, very few states regulate the certification of home inspectors, and the ones that do don’t always do a thorough job. Just about anyone with the proper tools can claim to be a house inspector anywhere in the United States. AVOIDING PHONY CORRECTIVES Beware of contractors who claim that they will inspect your house and then repair the issues they’ve found. Many home-owners who are not knowledgeable in construction can be lured into padding the pockets of their inspectors by paying for problems that the inspector exaggerates or outright makes up. To avoid this, you should hire someone who is solely an inspector, and

While a for sale by owner sale may sound like a good idea, you need to know what you are getting into before you attempt to sell your home on your own. CLICK HERE TO READ ON PAGE 6

does not perform repairs. These will be the people with no motive to direct you to have unnecessary work done. FINDING A PROPERTY INSPECTOR It’s usually pretty simple to find a house inspector. The Yellow Pages usually has them under “Building Inspection Services” or “Home Inspection Services.” It’s also a good idea to ask any friends or business partners who have recently bought or sold houses if they have any recommendations. If you’ve got a real estate agent on your side, they should be able to come up with a list of reputable inspectors within the area. The more well-known an inspector is, the more a buyer will trust that your home has been properly taken care of.

LET BUYERS HAVE THEIR INSPECTIONS While you should always let a potential buyer review your inspection report prior to making an offer, you should also encourage them to have their own inspection of your home performed. It’s possible that even if your inspector is highly reputable that they still might have missed something, and it would be better to discover any potential problems still luring before the sale was closed, because once that happens, it’s possible for you to be sued. The last thing you want is a buyer claiming that you misled them with an inaccurate inspection report.

INTERVIEWING YOUR INSPECTOR You need to put in a little work in order to find the right inspector. Firstly, you’ll need to interview any inspector

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you are considering hiring, as there are some important questions you should have the answers to before you consider trusting them. Are they a full-time, professional property inspector? The only answer you should accept here is “yes.” Find out how many houses they inspect every year. An active professional will see between 100 and 300 annually. Ask about their certifications and licenses, as well as the range of their pre-marketing inspections (make sure that the entire home’s major structures are covered, from foundation to roof), and ask them how long these inspections take. A thorough one will take between three and four hours. INSPECTORS TO AVOID When interviewing your inspector, ask them whether there will be a cost estimate for their price on the corrective work. This is a trick question, as good inspectors only inspect; they don’t switch to the role of repairman (or woman) after the inspection is over. If you receive an answer of “yes” to this, find an inspector whose job is to only inspect,

nothing else. Avoid inspectors with sample reports that are written in language too complicated to understand, contractors who won’t give you references (or have dissatisfied customers), and those who have only been in the business for a short amount of time. ATTEND YOUR INSPECTION More than likely, you will not be permitted to sit in on any inspection your potential buyer has done. This is what makes it important that you and your agent are present during your pre-marketing inspection. It is one thing to read a report on the defects within your home, but it is something completely different to actually see the issues with your own eyes, hear the inspector’s commentary, and understand why certain repairs are priced the way that they are. After your inspection, see if you can obtain an extra consultation for an explanation of the report to buyers. While there will probably be an extra price to pay for this, it will be worth it if it allows you to bargain for a lower corrective work credit.

SEC AUCUS REAL ESTATE TODAY | July / August 2016

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7 QUESTIONS AND ANSWERS ON HOME LOANS AND APPRAISALS by Danny Pratt

If you are purchasing a home, you probably need to start thinking about appraisals and home loans. Learn about these key aspects of home buying right now.

re you preparing to purchase a home? If so, you should know that there is much to think about. The following is information regarding appraisals and home loans. Reading this information will help you to decide whether you are financially prepared to purchase a new home. HOW MUCH DO APPRAISALS COST? A traditional appraisal cost is usually $300. Occasionally the approvals return with lowered appraisal obligations due to the appearance of AUS applications. There are five different appraisals. The appraisal costing $300 includes interior and exterior photographs. An only outside appraisal with photos costs $250. The appraisal costing $100 is considered a ‘drive by’. You can get an automated valuation model, also known as AVM, that costs under $100. This is an electronic method of scanning public information for current home sales in the property area in order to get an estimated value. If you get an appraisal waiver you don’t need to get the actual appraisal.

WHAT TYPE OF APPRAISAL DO YOU NEED? Who and what determines the kind of appraisal you will need to have? The AUS determines what is needed. In case you have no money for a down payment, with average credit you will definitely need the full appraisal required. But if you have good credit and have at least 20% down, you may be able to get by

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If you shall be renting out a property, you should screen potential tenants. Learn how to use application forms to screen any tenants you are considering. CLICK HERE TO READ ON PAGE 25

with the limited appraisal and save yourself some cash. The only way that an appraisal can be waived is by the issuance of waiver by the Automated Underwriting System and this will depend upon things like credit, amount of equity, your income and your assets. The credit report you get through AUS will also reduce your costs. Previously, a credit report for a residential mortgage cost $70 or more and would take 3 to 5 days to come back. HOW HAS AUTOMATED UNDERWRITING CHANGED THINGS? Now, due to automated underwriting, the system can generate its own report that goes to the lender who is using the AUS to reach a determination on a loan. Inquire if the lender has to have a RMCR and $70, or if an AUS credit report will suffice. Using the same title agency, you can receive discounts when refinancing. This is also called a reissue of a title report, costing a lot less than complete title insurance. This has to be asked about. Just because there is a lower policy premium does not mean you will automatically get it and not the more costly full title policy. Depending on

what state you live in, one company provides a variety of services related to title insurance. WHAT DO TITLE INSURANCE COMPANIES DO? They can research the title, provide insurance, complete insurance and record the docs. It is not required that they provide all your services, but they will often offer a package deal cheaper than al a carte services. The paperwork is numbered in six parts. Numbers for the section are 800, 900, 100, 1100, 1200 and 1300. 800 will be any items that can be paid in connection with the loan or lender fees that can include any appraisal cost, credit reports and fees for origination. 900 Items will need to be paid in advance as per your lender. These would include any hazard insurance coverage, interest on the loan and additional premiums.

WHAT DOES EACH NUMBER MEAN? There should be 1000 Reserves deposited to your lender along with escrow or impound accounts. In this example, take 1100 as being fees for title costs, attorney

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and settlement work performed. 1200 are Government recording and transfer costs. 1300 will be for all other costs that would include things like survey costs or inspections for pests. Since lenders are the responsible party to give this estimate, they will normally know the cost for their applicable fees, but will not be as certain when it comes to third party charges. Loan officers, for the most part, should be able to give you a pretty accurate quote. You will first need to recognize fees that count and fees that will not. The items listed in the 900 and 1000 sections are paid in advance. WHAT OTHER CHARGES ARE TO BE EXPECTED? These are charges such as property taxes and home insurance that do not change no matter the lender. They are fees paid depending on your personal obligations. These charges are estimated by the lenders and should not be considered when considering closing costs. You should ignore third party charges, as the lender that you select doesn’t have any impact on title insurance, attorney charges, or tax rates. There may be some controlled business arrangements available if you choose to bundle these services together; not a rule, an exception. Compare fees only in the 800 section. It can work great for you,

if used right. Some loan officers don’t know how to calculate the APR and that could be a problem. HOW CAN YOU GET BURNED? You can get burned in a couple of ways. Check the numbers, make sure that your loan agent has done the math correctly. Another thing to watch is the APR. To get this right, one needs to have a comparison of two carbon copy loans from non-related lenders. The importance of APR may be underexaggerated by a loan agent that doesn’t want to put the work in, or one that isn’t getting you the best APR rate they can. It has been said by some loan clients that APR is viewed as a randomly calculated number that has no real purpose and little effect on a loan. Come on now, we weren’t born last night.

At the end of the day, you need to think about the big picture before you buy a home. There are many expenses to consider; it is not just the price you offer. So use the information above to decide whether you are in a good position financially before you decide to purchase a new home. While it may be irritating to wait, especially if you’ve found your dream home, waiting may be the best choice if you are not sure you can afford all of the above expenses right now.

SEC AUCU S REAL ESTATE TODAY | July / August 2016

8 GOLDEN RULES

ABOUT PROPERTY LIENS by Danny Pratt

It is possible there may be a lien against your home or liens on a home you are considering buying. Learn more about many different types of liens today. find multiple liens in need of clearing before closing. This will explain the many liens you may come across and how they come to be held against the intended property. A statutory lien is one where a creditor can obtain security interest in your assets in order to pay a debt by state and in some instances, federal law. UNDERSTAND COMMON FORMS OF LIENS The two most common forms of a statutory lien are a mechanicâ&#x20AC;&#x2122;s lien and also a tax lien. If the property you intend to purchase is one where a statutory lien is in place, the lien holder will need to be paid in full at time of closing. This should help in determining how much you offer on the property and what the homeowner will get from the property. When a homeowner is losing money on a property, most likely they will need to have a certain amount of money to pay the lien for the property closing. There is an invalid statutory lien if the documents are not sent to the right government office, a procedure called perfected.

hether you are a current homeowner or a prospective homeowner, you should learn about liens as soon as you can. A lien needs to be dealt with before it becomes a bigger problem. The following information will explain much about various types of liens so that you can understand what they are and how they work. UNDERSTAND THE CAUSES OF LIENS You may end up with a lien against your property, or find that the land you intend to purchase has one or several liens against it. You need an understanding of what the cause of those liens were in the first place and how to get them cleared. If you buy a foreclosure property, donâ&#x20AC;&#x2122;t be shocked to

SEC AUCUS REAL ESTATE TODAY | July / August 2016

Have you wondered if loan modification is the right choice for you? Many homeowners who experience financial difficulty are turning to loan modification. CLICK HERE TO READ ON PAGE 9

KNOW HOW LONG ONE HAS TO FILE A MECHANIC’S LIEN Typically, someone has 30 to 90 days to file a mechanic’s lien after finishing the work and one year is the limit. There is a two to three limit for tax lien filing after the due date. When there is no payment, there can be a foreclosure of the property and sale of it for the tax money a person owes. If the property has an equitable lien, the homeowner can keep their property although they owe a debt. A debtor can’t use a lien to pay for a debt with a foreclosure. It may be an express or implied equitable lien.

KNOW WHAT AN EXPRESS EQUITABLE LIEN IS The express equitable lien is a written document. For instance, you can purchase a big screen TV and write a personal check and put “express” on the sales contract, but if the check bounces, the person that owns the store can take a lien on your property. This is a secure

transaction lien. The court has to declare an implied equitable lien and this depends on the parties conduct and dealings. The debtor still owns the property regardless of whether it is an express or implied equitable lien; however, the owner of the property needs approval from the debtor before removing or changing the property. If you are thinking about purchasing a property with an equitable lien, you should make sure the lien has been paid before you buy the property. A lien is a claim on a property due to an unpaid debt. BE FAMILIAR WITH THE DIFFERENT KINDS OF LIENS There are different kinds of liens which can include the following: a mechanic’s lien or a tax lien. In these cases, a lien would be placed on the property because the owner of the property did not pay taxes or a mechanic bill. Other types of liens include a trust deed, an attachment or a lis pendens. These liens are all a type of specific lien; liens can also

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be a general lien. This type of lien affects all property owned by a particular person. These liens include judgment liens, federal income tax liens and state income tax liens. A general lien will affect most of a debtor’s possessions. Specific liens will only affect the property or goods that created the debt. KNOW WHAT TYPE OF PROFESSIONALS USE GENERAL LIENS? Business professionals like lawyers and accountants are apt to make use of a general lien, which means keeping someone’s documents and such till they have received payment. A banker could keep stocks and bonds, too, until payment is made of everything that is due. Retail stores that sell goods for customers on commission are allowed to hold onto all of the goods until the owner has paid the entire balance due. The store also is allowed to sell what is left on hand in order to pay for the general lien, but will need to provide the owner with record of sale, and if there is additional profit as a result, they must return that to the owner. General liens are not used as commonly as a specific lien.

UNDERSTAND WHAT REAL PROPERTY TAX LIENS ARE Homeowners can have a real property tax lien levied against their property by their city or county government if they do not pay their property taxes. The lien amount will be based on whatever past due taxes amount to, with interest and any penalties. If the lien

remains unpaid for 2 or more years after the taxes roll past due, city or county tax collectors can foreclose on the tax lien and sell the property at a tax deed sale. A county clerk can advertise a tax deed sale listing the properties that will be coming available over the next month before the sale date. Many counties have their tax deed sales one to two times per month. BE FAMILIAR WITH FEDERAL TAX LIENS The IRS can put a federal tax lien on the property if back taxes are owed. It has to first file a notice of the lien at the county or state office in which the property is found. This is the kind of procedure that the IRS can engage in to collect past due taxes. The IRS has no obligation to inform a property owner that there is a federal tax lien on their property. It’s all perfectly legal for the IRS to do this and they can keep it as quiet as they want to. Generally these liens are filed a few years after the taxes are past due. The lien can stay valid for ten years then they cease to be relevant. The IRS does have a year after a lien expires to refile the lien.

At this point, you have a basic understanding of liens. If you aren’t sure if there is a lien against your property or a property you are considering purchasing, speak to an attorney or a real estate professional as soon as you can to see whether there is, in fact, a lien. That way, you can take care of any liens that are in existence before they become a bigger problem for you.

SEC AUCUS REAL ESTATE TODAY | July / August 2016

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A 7-PART GUIDE TO NEGOTIATING YOUR HOME’S SALE As you already know, selling a home in a weak and strong market are two very different processes. by Sandra O’Connor 58

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uyers who are motivated to finding their perfect home tend to rush from one property to another in search of perfection. In a strong market though, there is pressure to make an offer before that potentially perfect home is snatched up by another buyer. In a down market, however, there is time for them to shop around, as multiple offers are much less likely than they are in seller’s markets. This means that you need to know how to not only price your home well, but also to negotiate with a buyer who is hesitant about (or outright rejecting) your asking price. DEALING WITH MULTIPLE OFFERS When a property has been overpriced, or if the market is just slow, offers trickle in slowly, and even then, buyers and their agents are paranoid. Postponing your response to an offer without an explanation is one of the fastest ways to get a potential buyer worried, even if the reason is for something as simple as running the buyer past your lawyer. They might start to worry that you are “shopping” their offer, or letting other potential buyers know their terms and offer price in order to get someone to bid higher. While this isn’t illegal behavior, it definitely isn’t respectable. Every buyer has the right to their privacy, which

If you are having a hard time paying your monthly mortgage, you may be a victim of predatory lending. Learn how to spot evidence of predatory lending now. CLICK HERE TO READ ON PAGE 20

includes having their negotiations be discreet. If you know you’re going to be receiving multiple offers, have a plan of action before you put your home on the market. DELAYING OFFERS ETHICALLY While shopping offers is bad, there isn’t anything negative about giving potential buyers advance notice that you will begin accepting offers at a specific time in order to increase the amount of exposure you can get for your property. It’s important to time this waiting period carefully, as waiting too long could cause potential buyers to withdraw their offers, and not waiting long enough could leave your home with not enough exposure. Bear in mind that with this tactic, some people may not currently be in town, and others may not offer because they cannot present right away. Others may avoid a situation involving multiple offers for fear of overpaying in a bid war.

SEC AUCUS REAL ESTATE TODAY | July / August 2016

If you are having a hard time paying your monthly mortgage, you may be a victim of predatory lending. Learn how to spot evidence of predatory lending now. CLICK HERE TO READ ON PAGE 20

SETTING PRESENTATION GUIDELINES In order to keep things organized, you should set ground rules for both yourself and your presenters. Presentations will be first come, first serve, in the order of who announced their offer. It helps here to have a list of names and the dates their offers came in. Let your buyers know you will not be accepting offers before the designated period of time for presentations, and that they (or their agent) will be presenting straight to you (and your agent). You should also tell potential buyers ahead of time that you will either be counter-offering or accepting the best offer you receive, so that they come to the table with the best offer they have.

PICKING THE BEST OFFER It doesn’t matter whether you have two or a dozen offers: when it comes to selecting the right one, making the decision can be hard. Price isn’t the only thing to consider here, as a contract that has

contingencies everywhere could fall through in a week flat. You don’t want to pit your bidders against each other, however, and you definitely don’t want to set them up in a bidding war. Remember, if you decide to counter an offer, don’t counter more than one. You could end up engaged in a contract with more than one person to sell your home; a devastating mistake indeed. CONFLICTS OF INTEREST Avoid a situation in which your agent is also representing one of the people presenting an offer on your house. This agent has a conflict of interest, as there is no way for them to help you get the best value for your home while simultaneously helping the buyer to keep as much money in their pockets as possible. Real estate firms usually have policies for handling dual agency, but if your agent practices alone, that is a situation you will definitely want to get out of.

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NEGOTIATING FROM WEAK POSITIONS The real estate market could leave you in a position where you’ve been approached with absolutely no offers. In this case, you might be stuck taking what all you can get. However, if you’re in a flourishing market and not getting offers, chances are that your price is a little too high, or that there’s something wrong with your home. This awkward position could lead to you receiving a very low offer on your house, also known as a lowball offer. These offers are stunningly low prices that come from either someone who doesn’t know the market well, or who is hoping that you don’t. Pass on them.

RECOGNIZING REAL BUYERS As a seller, you should value your time spent negotiating with a potential buyer. If you spend time negotiating with a buyer who’s not serious about buying your house, a serious buyer could be entering talks with the seller down the block. Make sure that you know your buyer means business. Real buyers should be creditworthy, realistic, motivated, cooperative, and have a time frame that they need to work in (don’t reveal your timeline however, as they could use it to bully you).

Selling a home in a strong and a weak market are two entirely different things. Whereas a strong market leaves you negotiating your deals from a position of strength, a weak market could leave you feeling a little desperate. But while you may end up having to lower your price somewhat, you should never cave completely to a buyer’s wishes just so that you can sell. There are measures you can take to increase your home’s appeal. Remember, no matter the market, any house can be sold.

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YOUR 6-PART GUIDE TO MAKING AN OFFER FOR A HOME by Sandra O’Connor

There are more ways than plainly putting money down to show a seller that you’re serious about buying a home. Here’s how to make a smart offer.

hen you find a house that appeals to you, meets your needs for a home, and is within an affordable price range for your personal financial situation, the time has finally come for you to make an offer. Your seller may already be in the middle of negotiating deals with several people, or you could be their only offer at that moment in time. Whatever the case, the type of market that your region is in will determine how easy it is to negotiate your price: in a buyer’s market, you’ll be able to try and keep your price low, while a seller’s market might see you having to increase your price just to be able to get the house.

SEC AUCU S REAL ESTATE TODAY | July / August 2016

If you are purchasing a home, you probably need to start thinking about appraisals and home loans. Learn about these key aspects of home buying right now. CLICK HERE TO READ ON PAGE 63

THE NEGOTIATION PROCESS The process of talking over a price for a house is one of offer and acceptance. All sellers start out with an asking price, which is a combination of what the seller feels like the property is worth, as well as a percentage increase that is often based on closing costs and real estate fees. The potential buyer can either opt to pay the seller’s asking price, or they can make a different offer. Their offer needs to appeal to the seller in order for the deal to go through.

DECIDING ON YOUR OFFER Before you pose your offer to the seller, you’ll need to know what the rest of the housing market in your region looks like. The best way to do this is to examine the local market and look at the prices of homes similar to the one you want. A great person to help you with this would be a real estate agent. In order to get the seller to accept your offer, you’re going to want to keep from going too low, as those offers tend to offend sellers. But if you make too high of an offer, you could end up spending extra money for no reason. The idea is to settle on an offer that leaves you with money still in your pocket and the seller as though they’ve gotten a good deal. When making your

offer, you should take into account the seller’s individual situation, the condition of the home, the financing terms, the prices that other homes are selling for in that neighborhood, and how long the home has been on the market.

MAKING COMPARISONS It’s not a good idea to use tax values as a way to determine how much a property should be worth, as many of those values are based on sales that occurred years ago, on home prices that are now outdated. A good way to determine whether your offer is near the mark is to take a look at what other homes recently sold in your area went for. Things to compare are how large the home is, its total lot size, the property’s age, the amount of bedrooms and bathrooms it has, the size of its garage (if it has one at all), the condition of the bathrooms and kitchen, and any other amenities that might come along with the property, like a patio, fireplace, or pool. The reason that these comparisons are made is because a home very similar to your seller’s might have gone for $50,000 less just a few months ago. In that case, that comparison would allow you to know that you have room to drive your seller’s price down.

SEC AUCUS REAL ESTATE TODAY | July / August 2016

EVALUATING YOUR OFFER There are resources available to help you with determining whether your offer is appropriate. One of them is House Value, at www.housevalues.com, where you can use one of the Internet’s many home value estimators for free. You can also use data from appraisers and tax collectors by searching online (typing phrases like “tax collector” or “tax appraiser” into Google are good ways to start). You can also enlist the help of a real estate agent in deciding on your offer. However, it’s advised that you trust your own instincts above a real estate agent’s, as they may be trying to usher you into a quick sale so that they can get their hands on their commission.

RECEIVING A COUNTEROFFER A counteroffer is a response that a seller might make to your offer. This is a part of the negotiation process, and often isn’t limited to just money. For example, there could be a fixture within the home that you would like the seller to leave behind, like the microwave. The seller could agree, but on the condition that your offer be increased to compensate.

Some deals between sellers and buyers involve several counteroffers; in other instances, buyers will take the initial offer. However, there are cases where deals fall through entirely due to both parties being incapable of coming to an agreement. PROVIDING EARNEST MONEY When you say you are interested in buying a home, a seller wants to have proof that you are serious. This is provided in the form of a deposit, known as “earnest money,” and received by either the seller, their real estate agent, or a lawyer. In the case that your deal falls through, unless the offer or binder expressed that the money was refundable, it is unlikely that you will get it back. If you cannot be approved for a mortgage, a contingency clause may have been included that will allow your money to be returned to you. Typically, earnest money is 1% to 2% of your offer. In the case where the market is particularly hot, a larger amount of earnest money can be a great strategy for holding a seller’s attention.

SEC AUCU S REAL ESTATE TODAY | July / August 2016

Town Of Secaucus New Jersey

Event & Meeting Calendar July 2016 SUNDAY 26

MONDAY 27

TUESDAY 28

WEDNESDAY 29

Caucus Meeting 5:00 pm - 6:00 pm Mayor & Council Meeting 7:00 pm - 9:00 pm

Senior Yankee Game vs Rangers 10:00 am - 4:00 pm

POSTPONED: 4th of July Celebration 4:00 pm - 10:00 pm

Green Summer Speakers 7:00 pm - 8:00 pm

Summer Concert Series - Beginnings 7:00 pm - 9:00 pm

Independence Day

Alcoholic Beverage Control Board Meeting 7:00 pm - 9:00 pm

Movies in the Park 8:30 pm - 10:30 pm

Green Summer Speakers 7:00 pm - 8:00 pm

Board of Adjustment Meeting 7:00 pm - 9:00 pm

Movies in the Park 8:30 pm - 10:30 pm

Planning Board Meeting 7:00 pm - 9:00 pm

Tot Day Swim Club 11:00 am - 1:00 pm

Kids Pool Night 7:00 pm - 9:00 pm

New York Spectacular Rockettes 5:30 pm - 11:00 pm

Movies in the Park 8:30 pm - 10:30 pm

Green Summer Speakers 7:00 pm - 8:00 pm

Summer Concert Series - British Invasion 7:00 pm - 9:00 pm

Summer Concert Series - Jimmy Sturr 7:00 pm - 9:00 pm

28 Housing Authority Meeting 7:00 pm - 9:00 pm

Caucus Meeting 5:00 pm - 6:00 pm Mayor & Council Meeting 7:00 pm - 9:00 pm Movies in the Park 8:30 pm - 10:30 pm

SATURDAY 2

Senior Yankee Game VS Orioles 10:00 am - 4:00 pm

Riverkeeper Boat Ride 9:00 am - 11:00 am

24 / 31

FRIDAY 1

Municipal Utilities Authority Meeting 7:00 pm - 9:00 pm

THURSDAY 30

Green Summer Speakers 7:00 pm - 8:00 pm

Teen Pool Night 7:00 pm - 9:00 pm

Summer Concert Series - All American Variety Show 7:00 pm - 9:00 pm

Town Of Secaucus New Jersey

Event & Meeting Calendar August 2016 SUNDAY 31

MONDAY 1

Municipal Utilities Authority Meeting 7:00 pm - 9:00 pm

TUESDAY 2

Board of Adjustment Meeting 7:00 pm - 9:00 pm

Movies in the Park 8:30 pm - 10:30 pm

Tot Day Swim Club 11:00 am - 1:00 pm

Summer Concert Series - Neil & The Diamonds 7:00 pm - 9:00 pm

Board of Health Meeting 7:00 pm - 9:00 pm

Movies in the Park 8:30 pm - 10:30 pm

Senior Yankee Game VS Blue Jays 10:00 am - 4:00 pm

Kids Pool Night 7:00 pm - 9:00 pm

SATURDAY 6

Movies in the Park 8:30 pm - 10:30 pm

Summer Concert Series - AM Gold 7:00 pm - 9:00 pm

Summer Concert Series - Cameos 7:00 pm - 9:00 pm

Mayor & Council Meeting 7:00 pm - 9:00 pm

FRIDAY 5

National Night Out

Caucus Meeting 5:00 pm - 6:00 pm

THURSDAY 4

Summer Concert Series Showstoppers 7:00 pm - 9:00 pm

Alcoholic Beverage Control Board Meeting 7:00 pm - 9:00 pm

Planning Board Meeting 7:00 pm - 9:00 pm

WEDNESDAY 3

Movies in the Park 8:30 pm - 10:30 pm

Back to School Family Pool Night 7:00 pm - 9:00 pm

Movies at Xchange 8:00 pm - 10:00 pm

TUNE IN FOR OUR

NEXT ISSUE! The September / October edition of Secaucus Real Estate Today Magazine will be available this summer for free!

• 8 ANSWERS TO YOUR QUESTIONS ABOUT CONSTRUCTION LOANS AND MORTGAGES • 7 PRINCIPLES FOR SURVIVING FOR SALE BY OWNER HOME SALES • A 5-PART INTRODUCTION TO REVERSE MORTGAGES FOR RETIREMENT • 8 TIPS TO HELP YOU CONQUER YOUR HOME BUYING FEARS • A 9-PART OVERVIEW OF COMMON MISTAKES BY POTENTIAL HOME OWNERS • A 6-STEP CHECKLIST TO READ BEFORE BUYING YOUR FIRST HOME • 8 FREQUENTLY ASKED QUESTIONS ON CREDIT SCORES AND HOME LOANS

SECAUCUS

SEC AUCUS REAL ESTATE TODAY | July / August 2016

REAL ESTATE TODAY