Monthly Archives: April 2016

Worth the Risk Of Real EstateThat You Should Know It

Many home buyers and real estate investors have been prompted by steadily increasing interest rates to be more aggressive in their hunt for bargain homes. Competition for the best priced and most attractive homes has only increased in most real estate markets and because of that intensity, foreclosures are drawing more and more interest from prospective home buyers and investors.

While foreclosures certainly offer some financial benefits, there are also risks involved, as you might expect. Not every foreclosure is the same and while the interest in them is growing, you need to be aware of what to look for when evaluating whether or not a foreclosure opportunist is right for you. Here are some things to look for.

Pre-Foreclosures
Pre-foreclosure properties can offer an attractive investment or home purchase opportunity to those willing to work for it. There exists a period of time in between when a home owner is notified that their loan is in default and when the bank actually seizes the home to put it on the market to recoup expenses. During that period of time, it is possible to purchase the home and satisfy financing requirements on it.

There are two negatives at play when going the pre-foreclosure rate and both discourage a majority of the potential investors that contemplate the pre-foreclosure route. One is the extremely brief period of time available to complete a deal. The period of time is regulated by individual states and usually consists of a couple months.

The other discouraging aspect is the necessity to deal with a home owner that is probably embarrassed by the foreclosure and may not even be aware that such information is made public. Knocking on a door or picking up a phone to contact someone that may not even be aware of pre-foreclosure purchases can be a difficult thing to do.

The Risky World Of Auctions
The best advice for those pondering auctions as a way to get in on foreclosed property is to simple not get involved at all. The risks are immense when dealing with a bank-run auction as you will most likely not have seen the house, have no way to protect yourself against title problems should they exist and must pay in cash.

That collection of traits discourages most investors and rightfully so. There is simply too much uncertainty when dealing with auctions to know for sure that the low sticker price is necessarily worth the hassle of going through title clean up issues and scraping together the cash for a purchase.

Foreclosed Homes
As the final step on a bank’s path of foreclosure, the home is put up for sale on the real estate market, though often for at least close to its market value. Because a home has traveled through a variety of steps and banks are in no hurry to lose money on any loan, savings are often slim on foreclosed properties that make it to this step.

Real Estate Aboout Pre Qualified and Pre Approved

It is becoming more and more common amongst potential home buyers to pursue the most efficient route possible to a brand new home. Instead of going through the process of scouting out a neighborhood or collecting flyers, intelligent buyers are instead making a lender their first stop. Instead of spending hours on the wrong home, getting the sale price first is becoming a much more popular and simpler way to pursue a home.

Indeed, getting a financial frame of reference for your home search first can greatly cut down on the amount of time you spend looking through ads and walking through properties with a real estate agent. These are often the most time consuming parts of a home search and by simplifying them at least somewhat, you can spend more time on homes better suited for your financial situation.

However, there has been some misconception over the difference between getting pre-qualified for a particular amount and getting pre-approved for a particular purchase price. These two terms mean very different things and as a seller is looking over your offer, each term conveys something different and has a very different impact on that offer.

What Is Pre-Qualification?
In both processes, a lender will take down your financial information and provide you a rough estimate of what you can afford to pay for a home. A pre-qualification exercise can be seen as more of a rough draft of what you might be able to afford. While a lender will ask for your financial information, the lender will not typically go through the process of verifying your information or doing more research into your financial viability.

If you tout that you have been pre-qualified for a particular amount, it is certainly better than not having any idea of what you can afford. However, it says nothing about your actual ability to get a loan for that amount and instead says that you could probably get a loan for that amount. If a seller sees that you are pre-qualified for an amount approximating the sale price of the property, that does communicate some amount of credibility but not the credibility pre-approval suggests.

What Is Pre-Approval?
In contrast to pre-qualification, pre-approval is given to a potential buyer by a lender that has done significant homework into your financial history and has agreed to loan you the amount you have been pre-approved for. This carries much more weight than pre-qualification and communicates very clearly that your finances are in order and you are in prime position to buy a property that falls within range of the pre-approved figure.

When a seller sees that you have been pre-approved for the amount of the sale price, that seller takes your offer as a much more credible prospect than a contract that does not have pre-approval attached. Not only can pre-approval save you time during the search for a home, it can save you time when you eventually find that property. Pre-approval saves the time typically taken to secure financing after an offer is made and can often deliver a home to a potential buyer quicker.

How to grow the real estate

unduhan-6There are times when the growth of the real estate industry has drawn the nervous energy of local or national media expecting a downfall after a period of prolonged growth. There are some serious flaws in the logic behind expecting a burst in the real estate bubble nationally and during any period of prolonged growth, you as a real estate investor should not panic in the expectation that a market fall will ruin your investment.

Of course, there are exceptions to every rule and there are times when a very localized market depression (such as the downturn of an area neighborhood) can profoundly affect a real estate investment. Extrapolating things like that into a national concern, however, ignores the fact that there really is no national real estate market.

The overall picture of the real estate market that the media uses to describe economic indicators is really made up of thousands of small real estate markets. Any time that a market is spread over that great of an expense, the chances of every tiny market failing at the same time are extremely slim. That is indeed what would be necessary for a national real estate market crash, making such an eventuality extremely unlikely.

To call something a “crash” takes an extreme drop off over a short period of time, something that would be difficult to accomplish in any real estate market. Pieces of information like population growth, new construction statistics and other economic measures can forecast a general trend for any real estate market well in advance.

Certainly, real estate markets will downturn from time to time, but no downturn happens in such a short period of time so as to trap investment money. Generally speaking, you can always get out if the writing is on the wall and that fact separates real estate markets from something like the stock market that can crash more easily.

The nature of real estate investment also provides some insulation behind any kind of dip in the real estate market. For those holding properties over a long period of time as investment opportunities, if a dip does happen in the local real estate market, the long term nature of your investment dictates that you will hold it long enough to see an upturn in the market. Real estate markets rarely stay down for over a decade and for a long term investment, that storm can certainly be weathered.

For short term flips, often the atmosphere of the local real estate market will not have time to change by the time you are looking to sell off your investment project. Fixer-upper properties and the like will often take a few months when the arrival of a market depression can take at least that long to show up.

Early economic indicators will tell you what the market may be like in a few months time and that is certainly something to look at when getting involved in a short-term investment. Simply put, by the time a market depression could affect your short-term investment, you’ll probably have sold it off.