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Rarely Discussed Tips for Buying that First House

Lots of solid information is available online that discusses items for first time home buyers such as choosing the right loan, working with a reputable lender, and arranging a proper budget. While those items are very important, there are some other items that don't get the same publicity but deserve great attention.

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Buyer Beware

It cannot be stressed enough: there is no such thing as a perfect home. One home that seems to have a great outside appearance may need significant work on the inside. Another home that is appealing both indoors and out could be located in a terrible neighborhood. Take some time to look over the home as closely as you can. Ask some friends or relatives to come by and inspect the place. If something looks wrong, consult with a professional inspector.

Don't Sign Something that is Unclear

Most people that are buying a home for the first time are not aware that there are LOTS of forms to sign. This does not mean you should sit at the closing and closely read every single word. Many of these items are simply legal documents designed to protect the borrower. However, it also does not mean you should be confused about the process. During the closing process, ask the closing agent or your lender questions about the paperwork that you are signing to be sure you understand everything.

Allow for Improvements and Vacations

Very few people buy a home and leave everything as it sits for the duration of their home ownership. Most people like to add variety by changing out the carpet, adding fresh paint and updating the appliances and light fixtures. All of these things take money, whether they are done now or 5 years from now. Don't pick a home that is at the edge of your affordability. Leave some room for making a few improvements as well as saving up for the occasional vacation.

Don't Buy With Just Your Heart

It is true that most people will live in a home for a number of years. For this reason, they need to be quite happy with the major features of the property. However, falling in love with a property that is over an hour away from your job will make your commute quite tough, and add misery to your life. It is important to find a home that makes you happy and is practical for your situation.

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photo credit: joelplutchak via photopin cc

Avoid Unpleasant Features

Just as some people fall in love with a home and buy it based on one or two features, some people loathe one or two features of an otherwise suitable place. It is a bad idea to try and put up with something that makes you unhappy for the sake of owning a home. For instance, some people despise yard work. Buying a lovely modern home, with modern appliances, and in a good area may sound great until you realize the yard is monstrous. All those hours spent mowing the lawn, trimming bushes, cleaning around walkways and other items may actually irritate some people to no end.

Related posts:

  1. Tips on Buying Your First Wisconsin Home Tips on Buying Your First WI Home Getting that first...
  2. Tips for Buying a Wisconsin Short Sale Tips for Buying Your First Short Sale A short sale...
  3. Bad Choices People Make When Buying a Home Bad Choices People Make When They Buy a Home All...
  4. Tips for Picking the Right Wisconsin Home Tips for Picking the Right Home Finding the home that...
  5. Tips for Purchasing a Foreclosure Tips for Purchasing a Foreclosure The housing slump that has...
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Many of you may not be aware that in this new year, the mortgage lending industry will begin to abide by some new rules / regulations / laws that will surely reduce the amount of mortgage loans given out.

The one rule that seems to sum up all of the new legislations is, lenders will be required to verify and inspect borrower's financial records. Granted, this doesn't sound like a bad rule at all, in fact, it's one I could get behind myself because it seems like it's nothing but common sense however, it's not what the industry has been practicing, even after the housing bubble burst. You see, many people who have the credit score, get the loan, with little to no actual "inspection" of their financial records or in other words with no real "inspection" of the consumers ability to pay back the loan.

As a Realtor, I see this lack of true underwriting every day when I meet the buyer's appraiser at the property for the appraisal. He walks in, walks around, takes some pictures, looks under some cabinets, spends about 30 minutes to an hour there, goes back to his truck, says "thanks" out the window...waves and drives off. A couple days later, I see a copy of the appraisal from the lender and to my surprise, it's exactly the same amount of the purchase price. HOW IS THIS POSSIBLE? This makes me mad each and every time I see it. Why.....well, it means the appraisal is a sham, a farce, a magic show. I have been doing property evaluations for banks for years now. NO, I am not an appraiser, I do Broker Purchase Opinions, similar to an appraisal but, not the same. None the less, I know that it's impossible...absolutely, undeniably, impossible for a property evaluator to appraise or provide an opinion of value that is exactly the amount of the purchase price. Why is this, you might be wondering...why would it be so impossible for that to happen? Because if I am providing an unbiased opinion, I wouldn't know what the purchase price was. In short, if the buyer has the credit...the fico score, many banks....all of them....could care less how much the buyer spends or how much the property is really worth because, the buyer is getting the property based on a number, not his true ability to pay back the loan. This happens because these banks are making so much money on the total number of loans they do, taking a hit on a few who can't pay back...well, not such a big deal, that was until 2007 - 2008, that is.

The housing bubble burst taught us all a lesson.......one that we should have learned from the banking crash of the 80's but, we ignored. Banks aren't doing a good job making sure the consumer can pay back the loan, they are doing a excellent job at making themselves money.

Make no mistake, I am not an advocate for more regulations, more laws, more government intrusion in our lives, I am explaining this so that consumers wake up. As friendly as your mortgage lender is, as much as he tells you he likes your shoes and ask your husband if he saw the game this weekend, he gets paid more if you borrow more. You are personally accountable for your decisions so, if you are a taxi cab driver, making $24,000.00 a year.....NO, YOU CAN'T AFFORD A INTERST ONLY LOAN OF $250.00 A MONTH AND IN 12 MONTHS YOU GET A BALOON PAYMENT OF $15,000.00. Have you ever had $15,000.00 in your checking account waiting to be spent? Seriously?

This new rule goes a bit further and says, lenders can't obligate consumers with more than 43% of the person's annual income in the loan. Yes....that means now we have a cap. If you are out there looking for a mortgage loan, you will not be able to get one that is more than 43% of your annual income. In my opinion, this goes a bit too far. Who is the government to tell consumers what they can or can't do? Sure....the government tells us everyday what we can and can't do but, should they be in the business of telling us what we can and can't borrow? I don't think so.

Ok...sure, we have some in our society who are uneducated, un-intelligent, just stupid and yes, they should be protected.......or should they? In many ways, protecting the idiots amongst us who go to a lender, tell the lender they want to buy that $250,000.00 and they think they can afford it on a part time job at McDonalds........then, if the bank is willing to do it.....part of me says, step back, let it happen and watch the situation teach. That's right, some of us just aren't going to learn without going through the fire ourselves. My point is, can you legislate good behavior...I don't think so.

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Like many Affiliate Brokers, at some point in our careers we determine it's time for us to go out on our own and do our own thing. Now, that time has come for myself however, I don't have the personal funds I need to start my own office. Like many others I need money. You can get money all kinds of different places however, banks seem to be the most obvious choice for most of us. In fact, I myself have seriously considered my local bank, the one I actually use for my personal money but, I am almost completely debt free and I really don't want to acquire additional debt through traditional means. Without saying it, yes.....I listen to a famous particular radio broadcaster who is known and preaches about living debt free and yes, I am trying to do just that however, I know that some debt is good. In this case, this is debt I can take on that will further my long term goals.

Now, with all that being said, let me just say, for those of you who do traditional lending...banks, etc.... I am not saying not to use you. In fact, I believe you have a valuable place in the market place and do good by lending dreamers like myself the funds we need to bring our plans into reality however, I just don't think that type of lending is a good fit for me.

So, my next option are Investors and let me tell you, I have found out in the past 2 months, not all Investors are created equal. I learned about debt partners, joint venture partners, equity partners, etc... and for a while, it all had my head spinning.....really spinning. Now however, I feel a little better and I can actually say, I think I know what I want. I think what I am looking for is a Self Directed IRA Investor who is prepared to invest in a LLC as a Debt Partner. Now, where do you find them, how do you connect with these people? That is the question.

Several IRA Custodians have reached out to me in the past couple weeks because many of my blogs have revolved around this idea. Truthfully, I really don't know why more of us, especially those of us in the REO industry aren't completely and utterly schooled in this type of investing and likewise, making it work for ourselves but, that is another blog for another time. None the less, these IRA custodians, due to heavy regulations, can't just come out and say, or do for that matter, "we want to invest in your company". So, how in the "h""e" double hockey sticks to you find these investors?

So, here is the goal. I need a Self Directed IRA Debt Partner Investor who wants to invest in a real estate brokerage focused on Traditional buying, selling and investing, distressed homeowners / REO / Short sales and the Self Directed Private Banking Concept. Anyone out there know of anyone? IF you do, please send them my way, I want to talk with them, I want to send them our business plan, I want to earn their investment. Granted, I don't need a lot, less than 50k so, even a "small time investor" would be cool.

If you don't know how to use your IRA to invest in a LLC, ask me. I can guide you to resources that will educate you, people who can offer you insight. If the only thing stopping you is that you don't know enough about it, don't let that stop you from picking up the phone and calling me because, I can help guide you.

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Foreclosure Listings
photo credit: BasicGov via photopin cc

Number of Foreclosures Showing Signs of Decreasing

The number of foreclosures in July 2012 is 10% lower than the amount from July 2011. Finally, it looks like the real estate market is making solid improvement. In fact, July 2012 is the 22nd month, in a row, to show a decline in foreclosure activity when compared to the same period from the previous year.

Overall, there is a 20%+ decrease in the annual number of homes being taken over by banks. The trends are taking place in at least 38 states as well as Washington, D.C.

As a whole, the nation is seeing that one home out of 686 homes is either in foreclosure or on the verge of repossession.

In comparison, Wisconsin shows one home out of 701 is facing foreclosure. Coupled with the news from last month that housing prices are on a steady rise; it does seem that the real estate market is getting back on the right track.

What does this mean for Buyers and Sellers?

In order to see how this is a good thing for both buyers and sellers, we have to look at the big picture. Fewer homes facing foreclosure would indicate that people who were out of work, or working at below average wages for their skill set, are now finding better paying jobs. The better jobs obviously are resulting in more money, aiding these families to get current on their bills. This would indicate the overall job market is improving. A better job market means more potential buyers that can purchase a home. That is great news for people who are in a position to sell a home.

The same type of facts has an impact on people looking to buy a home. An improving job market is good for those people that were out of work, fresh out of college or working at a job that was enough to pay the bills while they searched for a better option. More employment translates to more income, leading to more savings and an improved ability to pay for a mortgage.

What remains to be seen is the impact these improvements will have on the lending industry. One of the main problems that led to the real estate crash is the loose requirements that were in place allowing almost anybody access to a home mortgage. It is doubtful that mortgage lenders will return to those kinds of practices. However, it is a good assumption that lending rules will ease a bit in the coming months to help borrowers take advantage of the unprecedented rates that we have experienced for the last 3 years.

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Short Sales

Thanks for the short sale lead capture ideas. My husband & I are on track to complete 8 short sale sides this year, last year we did 4 sides.

ShortSales are definately a bear. However, one Seller told us that he loved us. That made us feel good.  He's had a bad time of it. Still we did not give up on him (like his parents, x wife, kids and previous employer). We invited him into our kitchen and just listened, numerous times. This sale is scheduled to close next week after being on the market 13 months, through 3 contracts and a foreclosure filing. 

 

Is it worth it?  Seems like everyone in this situation needs someone that they can trust.  The emotional toll taxes us. We ignore our house, our lawn, our needs, to be available for the lenders who wanted every form yesterday, perfectly uploaded; for the broker who still needs to make a profit on homes that are in inventory one to two years;  to remind the Buyers that a short sale isn't going to close before school starts or that being holed up in their parents basement while they wait on a short sale bargain, probably will not work out.

 

The jury is out. Currently we are working with a Seller who has received a foreclosure notice. Finally a Buyer came along who was willing to accept the property in it's present condition. He made his offer and waited.  2 months into the escrow the would be Buyer called to say that he was taking a trip into the desert mountains of New Mexico where he would get no phone reception.  He called again, before he climbed into the mountain, to see if there was any news and to tell us that he would be out of touch for 3 days. That afternoon the short sale lender emailed us and gave us 72 hours to respond to their counter offer.  After the Short Sale Buyer did not respond within the alloted 72 hours, the contract was cancelled and kicked out by the Short Sale Lender.  Hopefully the Buyer will submit another offer. Meanwhile, the Sellers wring their hands as the foreclosure timer continues to tick. How frustrating is that?

 

We are hoping that one day this rollar coaster real estate market will all be part of the past. But not likely very soon.  For now,  we are trying to enjoy the ride.

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Understanding Specific Requirements of Appraisal for FHA Loans in Wisconsin

The all-time low mortgage rates combined with affordable home prices have generated a huge growth in business for FHA mortgages. People considering their first home need to understand the specific appraisal requirements for FHA loans in Wisconsin.

FHA MortgagesBasics of FHA Appraisal

In a nutshell, an FHA appraisal is a conventional appraisal with additional requirements. The goal is to identify any potential repairs that would need to be completed within the next 24 months and have those items addressed before the loan is closed.

It is important to note that an appraiser does not review a home to the depth of a home inspector. A home inspection is still a good idea for a home, especially if it is 5+ years old.

FHA Appraisal Caveats

Only appraisers listed on the FHA approved roster are allowed to inspect homes and complete the evaluation. Before an appraiser is assigned to review a home a FHA case number will be assigned to the loan. The appraisal is valid for the next 90 days. The lender or borrower may change during that time period without the need for a new appraisal.

Any home that has undergone a conventional appraisal within the last 90 days will still need a FHA case number. In addition, the home must be re-inspected to verify FHA specific items. Here is a list of the items:

  • Confirm no existence of drainage or water damage
  • Ensure water pressure is adequate for the home without any leaks
  • Any exterior and interior lead-based paint must be inspected to identify peeling, chipping or cracking
  • Identify exterior access for each bedroom
  • Insure the minimum 18” egress and ingress from the lot line to the building
  • Test the heater to ensure proper working condition as well as air conditioner
  • Ensure electrical outlets are in every room and in working order
  • Test the fan/hood over the oven for proper working condition
  • Ensure screens are present on roof vents and no more than three layers of roof material
  • Determine that the electric box has at least 60 amp
  • Properly note existing wiring that is exposed as well as cover plates missing from electrical boxes
  • Do a brief inspection of crawl space and attic

Any issue found on the interior portion of the home needs to be either repaired or replaced. On the exterior part of the home any issue needs to be repaired or removed.

Specific Areas of Importance

Of the items mentioned above three seem to get the most attention; water problems or drainage issues, lead-based paint and the ingress/egress points. Concerning the ingress/egress points, common problems occur with homes that have a garage touching the lot line. This prevents the homeowner from accessing the exterior wall of the garage in order to paint. If this is the case the neighbor may be asked for an easement in order to grant the homeowner access.

Consultant Required for 203(k) mortgage

Buyers that are approved for a FHA 203(k) mortgage need to understand that the appraiser will be working with a consultant. The consultant must be approved by FHA. This individual will inspect the home and determine the necessary repairs and improvements and formulate an estimated cost. The appraiser will inspect the home and ensure that the consultant has properly identified all necessary repairs in order to conform to the FHA guidelines.

This communication is provided to you for informational purposes only and should not be relied upon by you. Rock Realty is not a mortgage lender and so you should contact a lender directly to learn more about its mortgage products and your eligibility for such products.
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Does BOA offer Cash 4 Keys?

I’ve had limited interaction with Bank of America. And what I have had has never been favorable.

I am aware of how Fannie handles posting of the KYO form and cash for keys documents.

I have a friend renting a local home, a letter came in the mail today stating that foreclosure proceedings have begun and will expect occupant to vacant the home prior to HUD taking the house over. (60 to 90 days)

Then the letter states that if HUD does not take it over there will be other options.

My question is will this tenant experience a knock on the door by an agent requesting cash for keys agreement?

Or if HUD does take the house over, will HUD offer a cash for keys?

Or will there be a cash for keys of any kind offered?

I thank you in advance.

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Mortgage Forgiveness is Currently Set to expire at end of 2012

One primary feature attracting many underwater homeowners to a short sale is the fact that the taxes are lowered thanks to a Mortgage Forgiveness Debt Relief Act of 2007 provision. However, that credit is set to go away at the end of the year 2012. This means that homeowners who have put off selling need to get busy.

Mortgage Forgiveness Debt Relief Act of 2007

Basics of the Rule

When foreclosures were the primary topic of almost every news broadcast, Congress stepped in and offered this one time transaction. Homeowners could sell their home, for less than the existing mortgage, if the lender agreed to the deal. The outstanding balance would normally be taxable as earned income to the homeowner. However, the Mortgage Forgiveness Act wiped out the taxes on any unpaid balance up to a whopping two million dollars. This act applies to short sales that occurred between 2007 and 2012.

New Area of Expertise for Real Estate Agents

Many real estate agents have chosen to specialize in certain areas. Some people prefer to work with commercial property, while others may focus their energy on single family homes. The past few years has seen a rise in the number of agents that zero in on the short sales, and for good reason. Many banks are not open to the idea of a short sale coming straight from the homeowner. But with an experienced real estate agent, the situation changes. Banks realize that these agents are quite familiar with the local area and can accurately predict a home’s true value. Using an experienced agent can help homeowners negotiate a fair sales price and remove themselves from the burden of a mortgage that is no longer feasible.

Possible Change before End of the Year

It is possible that Congress could move to extend the Mortgage Forgiveness expiration. After all, the home purchase credit initiated a couple of years ago was extended twice to encourage more people to buy homes. However, it is too early to tell if this particular act will be extended so it is better for most people to err on the side of caution and begin negotiating a sales price with their real estate agent and their lender.

Getting Everything in Order for a Short Sale

If you are considering a short sale of your home then you will need to get a bit of information together. First, you must contact your lender and ask them for a 30 day payoff on your mortgage. If you have more than one mortgage, or Home Equity Line of Credit (HELOC), then you will need a payoff amount for each loan. Once you have these figures you can call your real estate agent and ask for their professional opinion about the value of your home. The agent will be able to access sales of homes similar to yours in the surrounding area and provide you with an accurate value. Then, you will have a strong argument to present to the lender. The lender may ask that you have an actual home sale contract in hand before accepting your offer. But at least you will be on the track to selling the home once you have spoken to a real estate agent.

Original Email - Mortgage Forgiveness Act expiring soon

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WI Market Update

Here is today's market listings update for Active foreclosure single family homes located in Rock County Wisconsin. This information was pulled from the South Central Wisconsin MLS on 3/7/2012 at 8:30 A.M.

  • 59 total Foreclosure|Bank Owned|REO homes are currently listed in Rock County, WI
  • Low listing price: $10,000
  • High listing price: $369,900
  • Average listing price: $85,857
  • Median listing price: $60,000
  • Average days on the market: 63
Click here to see these Rock County Foreclosure Homes.
 

Of course these numbers change on a daily basis, so to obtain the most up to date information on current foreclosure/bank owned homes for sale, please contact us directly at 608-921-8536. We would be happy to customize the search further for you to find the home that is just right for you.

As an extra benefit to Rock Realty home buyers, we offer a 1% broker commission rebate after closing. This could mean $1,500 back on a home purchase of $150,000. We love to hear how these rebates help our clients. Some use them for home improvements, while others simply put it in savings for future needs. It is a great option that we are happy to offer. Contact us for further details and limitations.

At Rock Realty, we currently have great single family homes listed for sale in Rock County. Feel free to visit our listings page linked below:

Rock County Wisconsin Home Listings 

Additional Foreclosure|Bank Owned Home Purchase Information

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WI Market Update

Here is today's market listings update for Active foreclosure single family homes located in Dane County Wisconsin. This information was pulled from the South Central Wisconsin MLS on 3/7/2012 at 8:15 A.M.

  • 130 total Foreclosure|Bank Owned|REO homes are currently listed in Dane County, WI
  • Low listing price: $39,900
  • High listing price: $430,000
  • Average listing price: $169,812
  • Median listing price: $154,400
  • Average days on the market: 67
Click here to see these Dane County Foreclosure Homes.
 

Of course these numbers change on a daily basis, so to obtain the most up to date information on current foreclosure/bank owned homes for sale, please contact us directly at 608-921-8536. We would be happy to customize the search further for you to find the home that is just right for you.

As an extra benefit to Rock Realty home buyers, we offer a 1% broker commission rebate after closing. This could mean $1,500 back on a home purchase of $150,000. We love to hear how these rebates help our clients. Some use them for home improvements, while others simply put it in savings for future needs. It is a great option that we are happy to offer. Contact us for further details and limitations.

At Rock Realty, we currently have great single family homes listed for sale in Dane County. Feel free to visit our listings page linked below:

Dane County Wisconsin Home Listings 

Additional Foreclosure|Bank Owned Home Purchase Information

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Homebuyers Can Use a FHA Loan to Purchase Property from an Investor

FHA MortgagesFHA has been the most popular mortgage used by Wisconsin residents looking to purchase their first home. The relaxed credit standards lower down payment requirement and higher debt ratios has allowed many people to purchase a home through this type of loan. However, investors who were in the business of buying a home to simply turn around and sell it for a profit, called flipping, always steered clear of FHA borrowers. FHA had a rule stating a home could not be sold a second time within 90 days of its last purchase. But that has all changed.

Original Intent

The primary reason for this “anti-flipping” rule was discourage fraud on mortgages. However, as time marched on it became apparent that deserving FHA buyers were being denied a home. Many homes have been bought after foreclosure by investors and repaired to make them ready for resell. The FHA ruling prevented the investors from selling and the market has struggled.

Some Rules to Keep in Mind

Although the FHA administration has decided to lift this rule, there are still other guidelines that must be followed when dealing with one of these investment homes.

  • The seller of the home and buyer cannot have any type of pre-existing relationship. This could be as simple as a relative selling to a family member or as complex as a business owner selling to a partner or employee.
  • In the event that the new sales price is 20% or more than the price paid at acquisition by the investor the loan may be inspected more closely to ensure the value of the property was not artificially raised.

Keep in mind that the original rule was put in place to prevent fraud. In addition, the original rule only came in to effect when a home was bought by an investor and then resold within 90 days. If the investor waits beyond the 90 day window to sell the home most of these issues will not be present.

Protection against Future Fraud

Most lenders are well aware of the abuse that has taken place in the mortgage industry over the past few years and have stepped up their lending standards to catch fraud and illegal practices. Because of the heightened scrutiny, many high ranking managers among the top lenders do not feel that this change in FHA rules will lead to a sudden burst of bad loans. The tighter appraisal restrictions, along with the general awareness of potential problems, should allow banks and mortgage companies to move forward with new FHA loans without falling victim to a scam artist.

Original Post - Using an FHA Loan to purchase from an Investor

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Madison, WI Foreclosure Listings

WI Market Update

Here is today's market update for Active single family foreclosure and bank owned home MLS listings located in Madison Wisconsin. This information was pulled from the South Central Wisconsin MLS on 2/15/2012 at 10:45 A.M.

  • 42 total Foreclosure|REO|Bank-Owned home listings in Madison, WI
  • Low listing price: $58,000
  • High listing price: $340,000
  • Average listing price: $152,235
  • Median listing price: $149,500
  • Average days on the market: 57

There are some fantastic deals available right now! Of the 42 foreclosure listings in Madison, 21 of them are listed for under $150,000. These numbers change on a daily basis, so to obtain the most up to date information, please contact us directly at 877-774-7625 or email us at Info@RockRealtyWI.com. If you are looking to buy a discounted home in Madison Wisconsin, we would be happy to customize the search further for you to find the home that is just right for you.

As an extra benefit to Rock Realty home buyers, we offer a 1% broker commission rebate after closing. This could mean $2,000 back on a home purchase of $200,000. We love to hear how these rebates help our clients. Some use them for home improvements, while others simply put it in savings for future needs. It is a great option that we are happy to offer. Contact us for further details and limitations.

Original Post - Foreclosures in Madison Wisconsin

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Janesville, WI Foreclosure Listings

WI Market Update

Here is today's market update for Active foreclosure and bank owned home MLS listings located in Janesville Wisconsin. This information was pulled from the South Central Wisconsin MLS on 2/14/2012 at 2:50 P.M.

  • 26 total Foreclosure|REO|Bank-Owned home listings in Janesville, WI
  • Low listing price: $45,500
  • High listing price: $679,900
  • Average listing price: $118,167
  • Median listing price: $84,000
  • Average days on the market: 82

There are some fantastic deals available right now! Of the 26 foreclosure listings in Janesville, 19 of them are listed for under $100,000. These numbers change on a daily basis, so to obtain the most up to date information, please contact us directly at 877-774-7625 or email us at Info@RockRealtyWI.com. If you are looking to buy a discounted home in Janesville Wisconsin, we would be happy to customize the search further for you to find the home that is just right for you.

As an extra benefit to Rock Realty home buyers, we offer a 1% broker commission rebate after closing. This could mean $2,000 back on a home purchase of $200,000. We love to hear how these rebates help our clients. Some use them for home improvements, while others simply put it in savings for future needs. It is a great option that we are happy to offer. Contact us for further details and limitations.

Original Post - Foreclosure Listings - Janesville, WI

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Inflated BPO's Cause Problems for All

 

As a REO agent, we learn very quickly how important a good BPO is. Not only because we have to do them...along with MMR (Month Marketing Reports) but because our AMs rely on 3rd party BPOs to help them determine our list prices. Yes, you heard me correctly, I as the REO agent rarely get to list the property for the price I want. In fact, most to the time, I have to list the property at the 3rd party BPO price. So, I am trying to sell a property at a price I had no control over, my AM has no control over and yet we are held to that standard.

So, does this policy work......um, not really but sort of kind of. Figure that one out?

I understand that the 3rd party BPO prevents the AM and Realtor from fire selling the property but, guess what it also does, it prevents properties from selling. What....did I say that? Yes....oh hell yes I did. You see, some of these people doing these BPOs are working under the misconception that they have a chance to get the REO, if the price the property high. They think a high BPO suggested list price means the am looking at the BPO is going to give them a call and that AM is going to say....those two magic words, "You're hired!"

In reality, it sticks me with a list price, 10-50% above FMV because it's the AMPs policy to take the 3rd party BPO, add that to my BPO, average the two and add 5%...whiz, boom, bang, you got you a list price good buddy. SERIOUSLY!?!?!?

In fact, without naming names, without disclosing the address, I got a listing right now, it's 100% overpriced. Now, I am not saying that as a figure of speech or as an exaggeration to make a point, I literally do mean it's 100% over FMV (Fair Market Value). Now, here is the sad part...I know it's 100% over priced, my AM knows it's 100% over priced yet, neither one of us can do a damn thing about but ask for price reductions every 30 days while we both kill our stats.

So, here we are, 202 days later, it's now listed at $44,900.00 and yes, in 2 days I had 5 offers. MOF (Multiple Offer Forms) have been sent out and yes, it looks like we are going to have a deal.

Now, just a thought....but, it's a good thought, I promise. Why punish me and my AM? Why not ask yourself, "why didn't this property sell when it was listed at 95,000? We marketed this property no different than the others, in fact, we did much more.....multiple open houses, broker tours, neighborhood farm post card, email blast...etc, yet...not a single offer till we got down to $44,900.00.....maybe that's because the FMV is $44,900? Which is actually amazing considering my BPO...202 days ago suggested a list price of 49,900.

I am truly sorry to say but, I strongly feel the BPO and Appraisal industries are sham...truly a sham. Especially BPOs. Let's be clear, I understand why they are used, I understand what makes them important but, I don't believe it's any different than going down to my friend local psychic Esmeralda and asking her, how much should my house sale for.

Better yet, why don't we let AMs and Realtors determine value? I know, it's a novel idea..truly it is but, why the hell not try it, it might just work.

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Buying Foreclosures - How Foreclosures Work

Buying Foreclosures - How Foreclosures Work
What Is a Foreclosure and How to Profit From Foreclosures
By Elizabeth Weintraub, About.com Guide
.See More About:foreclosuresbuying short salesdistressed homesreal estate investors

Buyers should hire a real estate agent who specializes in foreclosures.
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Home buyers who want a good deal in real estate invariably think first about pursuing foreclosures. Buyers have this picture in their mind of a cute little house, surrounded by a white picket fence that is owned by a widowed mom who fell on hard times, but that scenario is generally far from reality.
Why Do Sellers Go Into Foreclosure?

Sellers stop making payments for a host of reasons. Few choose to go into foreclosure voluntarily. It's often an unpredictable result from one of the following:

•Laid-off, fired or quit job
•Inability to continue working due to medical conditions
•Excessive debt and mounting bill obligations
•Squabbles with co-owner, divorce
•Job transfer to another state
Negotiating Directly with Sellers in Foreclosure
Investors who specialize in buying foreclosures often prefer to purchase these homes before the foreclosure proceedings are final. Before approaching a seller in distress, consider:


1.Foreclosure proceedings vary from state to state. In states where mortgages are used, home owners can end up staying in the property for almost a year; whereas, in states where trust deeds are used, a seller has less than four months before the trustee's sale.

2.Almost every state provides for some period of redemption. This means the seller has an irrevocable right during a certain length of time to cure the default, including paying all foreclosure costs, back interest and missed principal payments, to regain control of the property. For more information, consult a real estate lawyer.

3.Many states also require that buyers give to sellers certain disclosures regarding equity purchases. Failure to provide those notices and to prepare offers on the required paperwork can result in fines, lawsuits or even revocation of sale.

4.Determine whether you're the type of person who can easily take advantage of a seller's misfortune under these circumstances and / or put a family out on the street. Oh, critics will argue it's just business and sellers deserve what they get, even if it's five cents on the dollar. Others will feign compassion and trick themselves into believing they are "helping" the home owners avoid further embarrassment, but deep inside yourself, you know that's not true.

 

http://baltimorelowpricedhomes.com/gold_distress.asp

 

www.baltimoremdforeclosures.com

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I love making the photos and slide shows and videos for listings.  Maybe THAT should be my whole career, hmmmmm...

 

So, I do not know how to make YouTube show my main info text screen shot, it always seems to show a thumbnail of some random shot in the middle of my video.  Anyone else dealt with this, any YouTube pros out there with advice?

 

here is a link to my video on YouTube, I could ALWAYS use more YouTube friends and subcribers too.

 

https://www.youtube.com/watch?v=ywpY3wSwLaM

 

One more thing, if you are a Realtor marketing today, do you have a YouTube account? ..... if not, go get one, it is FREE and such great exposure for listings and to push more traffic to your web sites.

 

Jessica

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Due to recent developments in the default real estate industry, we (as default professionals) have seen an explosion of real estate schools offering default courses in specific niches like, Short Sale, REO and Loan Modification.

Of course, I am sure we all can agree, a quality education can be expensive but, well worth it however, why would someone pay a premium for a quality education? For many of us, this question is mute simply because know the benefits of such an education.

The problem I see in the default industry with these real estate schools is that many of them are over promising, under delivering or plain negligent and in some cases, possibly even fraudulent with their claims. We know this to be the case due to the increased number of professionals adding their voice to the chorus of complaints, negative blogs and outright hostility towards many of these real estate schools.

So, if I was in the market looking for an education, what would I look for to make sure, I am getting a quality education. Below is my list of requirements any school would have to offer to get me to write them a check.

  1. Books: If I am going to pay for a class, I want more than just a handout or screen shots of the slide presentation, I want a book. I want a book because, this lets me know that someone within in the school’s organization sat down and committed his knowledge and experience to paper. This is important to me because it commits the writer and instructor to a process of improvement and refinement. To be more specific, when students have a book, they are likely to go through, read it, question it and pose those question to their instructors and get answers. This Q & A process allows the instructor to refine the material, make changes to improve the material and becomes the single authority the class is built around. A book is very important.
  2. Experienced Instructors: An experienced instructor is invaluable and very well worth their weight in gold. The experience of the instructor, coupled with the knowledgebase of an actual training manual / book, creates an environment where learning is maximized. Experienced instructors give the book and class a level of integrity that can’t be and shouldn’t be discounted. As a student, I expect that if I were to ask a question about a particular subject matter being taught in class, my instructor should be able to answer my question or, at the very least, have a resource from his experience to get that answer with no difficulty.
  3. Uncompromised Integrity: The days of testing a students’ knowledgebase with an open book test are gone! If I am going to pay good money for a course, I expect that when I am done and it’s time to test my retained knowledge that I can’t just go and grab my book, open it up and look up the answer. I have never understood the purpose of these types of test. As a student, I took the course not to just get the “certification or designation” but, to actually better myself and increase my knowledgebase and likewise, I expect to be tested in such a way that evaluates my level of retention honestly so I may strive for success. Too many times I have seen agents walk into a training class with computers, IPads, mobile devices and the such because, the class was secondary to whatever else was going on. The class expectation was lowered because they knew the test was open book and all they had to do was be a warm body in a seat for a couple of days. This isn’t a class I want to be a part of.
  4. Certification / Designation: If I spend the time, money and energy to truly learn and become a subject matter expert in my niche, I better get a designation or at least a certification. For many of you, this may not be important because, many of you carry certification and designations that came from open book test. I am looking for a certification or designation that isn’t achieved by just paying my $499.99 onetime fee and my annual $99.99. Give us a certification, designation that means something, that was something I worked hard for and people know I worked hard for.
  5. Open Doors: People go to Harvard or Stanford not simply because they are good schools but, because they also know that those names on a resume will open a door. In other words, students know that paying $100,000.00(+) for a education will pay off as a long term investment, 10 (+) fold. Too many real estate schools are charging premiums for education yet, not a single door is ever opened with that education. Granted, I am sure that the majority of the time, the student can hold a good portion of the blame, when it comes to not making their education work for themselves but, I have never met a poor Harvard graduate. My point is, students expect that if they are going to pay a premium, it better be returned in business. I don’t think this is too much to ask, hell….I would expect it myself if I were looking for a default course to take. The reason many of these real estate courses out there today don’t open doors is because, they aren’t built around traditional education philosophies and instead are nothing more than money grabbers who make empty promises but, what is worse, the industry knows it and therefore, they do not open doors.
  6. Mentoring: After I pay my premium, take my test, graduate the program, I want to know that I have a forum, a site, somewhere to go to find advice or provide advice to others who follow. Mentoring is key to a quality education because it’s a part of the process to open doors. People who have made it and can contribute a portion of their success to their education can then turn around and bring others up behind them through a quality mentoring program. Granted, I don’t necessarily need a one on one mentor but, at the very least, I need a library of sorts that I can go to, look things up, chat with other members and further my learning by staying on the cutting edge of what is happening real time in the real world.
  7. No Annual Fees: I shouldn’t have to continually pay for my education, certification or designation. A education isn’t a service, it’s a product and therefore, should be priced around the idea that I will only pay once. I don’t got to the grocery store, buy a box of Macaroni and Cheese and then pay for it every week so, why would I do that with an education, I wouldn’t! Annual fees are nothing more than a education provider to milk his current students out of their hard earned cash because that provider knows it’s harder to obtain new students than it is to simply get current students to agree to give you annual fees when they sign up for your course in the first place. Annual fees allows education providers to become stagnate and lazy and I don’t want to pay them.

My point is, these 7 bullets are my concerns about what is happening in the real estate education industry. If I can’t get a majority of these 7 items filled, I don’t buy the class. Sad to say, really because, why can’t we have a choice where we aren’t looking to purchase based on these 7 points so much we are looking at the actual quality of education.

REOPro is launching our certification, designation for short sales this year and let me assure you, every single one of these points will be met. Granted, it won’t be cheap and many people may see the REOPro Short Sale Designation as cost prohibitive however, I promise I won’t ever offer a educational course unless we can meet every single one of the points I mentioned above.
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Because the last prediction I wrote last week was such a success, I thought to myself, why don’t I blog a bit more about my predictions so, here it is.

I predict that 2011 may actually end up seeing the highest number of foreclosures in our nations recorded history.

Reason # 1: Lack of substantial job growth.

 I do believe that with the extension of the Bush tax cuts the Federal Government passed a couple weeks ago, our Government instilled some…….just some…..confidence in the business community to spur a very modest growth. You have to keep in mind, the extension of the Bush tax cuts was a tax hike prevention or, in other words, the business community is at a wash, one way or another. To elaborate a bit further, the business community had already been working under the cuts with no growth so, an extension of the cuts isn’t going to do much to grow the economy because, it really doesn’t change the underlying systemic fundamental problems. I am not saying that we should have allowed the tax cuts to expire because if that had happened, we would have made problems worse by raising taxes on everyone in a distressed, possibly depressed economy. I am for the cuts but, I don’t believe they are going to make that big of a difference because, the true problems are not addressed. The cuts were nothing more than a lesser of 2 evils.

Reason # 2: 5, 7 and 10 year ARMS (Adjustable Rate Mortgages) adjust in 2011.

During the height of the sub-prime mortgage bubble, we saw people getting  5, 7 and 10 year ARMS. Take 2011 and count back  5 years and you get 2006, the early days of the bubble build up, 7 years back you get 2004, when sub-prime lending was really breaking out of it’s shell and of course, 10 years back, 2001 when people hadn’t even heard of sub-prime lending. My point is, in 2011, 3 different types of very popular sub-prime, bubble building ARMS are going to reset, this is more resetting than we have every seen during this crisis. I can’t even imagine the carnage.

Reason # 3: Government Home Retentions Programs Prevent a Real Estate Bottom.

HAMP is the single greatest home retention failure of this Obama White House. 75% or more HAMP participants default out and end up in foreclosure however, what HAMP does do is buy these people time. In some cases a year or more. So, John Smith, homeowner is 3 months behind, applies for HAMP which takes an additional 2 months to get preliminary approval, John pays his preliminary discounted mortgage regularly for 5 months and then defaults off, 6 months for the bank to catch up with the default and file foreclosure paperwork and 3 months to foreclosure and evict, then 6 months before the home hits the market. Add it all up and you get 25 months or 2 years before a home hits the market from the time the homeowner defaults. So, look at it this way, Government has contributed 2 years worth of underlying inventory to an already 3-5 year inventory of distressed property simply because Government wants to save people’s homes in the name of reelection. This is bad no matter how you cut it.

Reason # 4: Energy Prices will Rise to un-precedent levels.

It was just 2 days ago that BP (British Petroleum) announced that they are re-working their 2011 budget with the premise that gas prices in the US will rise to $5.00 a gallon. Fuel cost effects every aspect of our daily lives. It’s not just how much you pay at the pump. It’s how much it cost the truck delivery man to deliver the goods to your local grocery store. Over 90% of the goods you buy at a grocery store get there from a truck and that truck can only get there when it fuels up its tanks. If that fuel increase goes up on that trucker we can expect to see prices for individual goods to increase as well. A absolute correlation between prices of goods and price of logistics is fact and this is a law of supply and demand that can’t be broken.

Reason # 5: Risk of inflation becomes a real concern in 2011.

Instead of speculating about inflation, 2011 will be the year we actually start talking about what percentage inflation will rise. Increased trade deficits, continual devaluing of the US Dollar, continual movement towards a green agenda and, high federal debt will move inflation up. This will be done in order to stem off a collapse of the dollar because of continual devaluation.

Reason # 6: Credit Tightening.

As a direct result of the foreclosure fall out that I predict will occur in 2011, we will see an increased credit tightening. Now, personally, I don’t see this as a bad thing, I am of the opinion, a home is not a right, it’s something you earn and if you can’t earn it, you don’t deserve it. None the less, since the Community Re-investment Act, this country has been on a drunken binge of “everyone deserves credit” and it had everything to do with our real estate bubble however, times are changing and banks are going to have no choice but to tighten credit standards so they can reduce their risk for losses. This will increase housing inventories and work towards a further across the board housing price drop but, it gets us closer to a bottom and the ability to rebuild.

Reason # 7: Unforeseen National Crisis.

It was once told to me that luck favors those who are prepared and bold. Unfortunately, this Country as a whole is not prepared and our threshold to make big bold global decisions has all but disappeared since the Obama administration has taken a apologetic, appeasement stance on the World stage. This has done nothing but embolden our enemies and provided safe havens in countries that are less than cooperative. I can’t predict an unforeseen national crisis but, I can imagine a “what if’ scenario and it’s not pretty. The best I can say here is that we should be preparing for the worse and hoping for the best but, that is most definitely not happening with most Americans, let along our Government.

In conclusion:

Any one of the above reason I listed is enough to truly hurt the housing industry. If you couple all of these things together in one hit, it stands to reason, can the housing recovery even take place in 2011. My opinion is no, a housing recover won’t take place in 2011 because if we were to resolve any one issue, we would still have 6 others threatening the recovery. In other words, the housing industry has too many uncertainties, Government influence and, was much more devastated by the Community Reinvestment Act and sub-prime lending than anyone wanted to really tell the American public. I hope for the best but, I have prepared for the worse.   

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Housing Predictions for 2011

Housing Predictions for 2011

Normally, I am not in the business of predicting trends, simply because I believe all real estate is local. However, due to the economic condition of the Country and World, I do believe 2011 will be a year that either makes or breaks the real estate industry in the next 3-5 years.

A Government divided:

It is my opinion that a divided Federal Government is a lesser of many other possible evils. As we learned from the first 2 years of the Obama White House, a Government who is unified under one party banner is a Government run amuck. The citizens of this great Nation saw laws pushed through that in a time of a divided Government wouldn’t of had a chance in their current form. To broaden the perspective a bit more, I see a divided Government as a check and balance on the party agendas and special interest groups. Granted, with the size of the Government we have now, we will always have corruption and back room deals but, it is fairly certain now, with debts at their current levels, our Country can’t continue with the size of Government we currently have. In other words, a small Federal Government means less spending, less debt and a better ability to route out corruption, prosecute offenders and return God given freedoms back to the citizens.

By now, you may be wondering what a divided Federal Government has to do with housing in 2011. I predict that as a part of posterity measures that will be introduced by Tea Part Republicans we will see a draw back if not a complete withdrawal of many of the current failed housing recovery programs. I don’t know exactly what the fall out of these programs will be but, I submit for your contemplation that, we will see an increase in foreclosure inventories. An increase in foreclosure inventories means further drop in prices and hopefully a bottoming out so that we can rebuild the industry.

Local Government Bankruptcies:

I really do believe that 2011 may be the year we see small local Governments fail and declare bankruptcy. We are see huge debts that are causing local Government to straddle the line of financial failure and continued debt spending. With continued public pressure and Federal Government spending cuts, many of these debt heavy local Government could find themselves with no options other than Bankruptcy. Local Government will cut all spending except for necessary public works, like utilities and law enforcement. As part of their local Government spending cuts, unions will find themselves in courts fighting tax payers for their pensions and services will suffer.

This scenario will directly impact housing because buyers will keep their money in their pockets due to the uncertainty that will be created. Housing prices will further drop, equity will be lost, foreclosure inventories will rise.

In conclusion:

For many of us, this sounds like a epic tale of the fall of a great nation in history however, for some of us, we are able to see the signs, read them and understand what they mean.

Granted, the future is never written in stone and we do live in a Country with the most resilient people in the World so, I am optimistic.

How can I be so optimistic you may ask, well………it’s because I know this Country has within it’s awesome foundation a faith in all that is good and therefore, an ability to make tough decisions that will put us back on the right track. In the meantime, it could be hard, it could get nasty, we may see our fellow man hurt and suffer but, we will unite, we will come together and re-learn what it means to be charitable, what it means to be close to family, what it means to look out for one another. I believe we are a divinely inspired Country and as these times turn our face back into the light of inspiration our minds will be centered on the greatness of God and the darkness of the future lights up and becomes much less daunting otherwise.

The catalyst for a man to make a permanent change is when he is on the edge of an abyss. The abyss seems to be coming more into view.

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Ohhhhh the Moratorium

Its been about 5 years since I started in this REO indurstry.  Progressively, the game has changed and things have become harder and harder to deal with on a small level.  I have 18 employees and 20 sales agents, so we get it all done here.  But now, during the same time every year, we have these 2-3 weeks of nothingness.  What I don't understand is why there is a moratorium?  Listen, I have a heart, and I understand people do fall onto bad times, but c'mon.  You took out a mortgage a few years ago, that you, your wife, your children, you parents, friends, etc all knew you couldn't afford.  But, it was the "american Dream" so you did it and never looked back, until you couldn't make a payment anymore!  IF you are a tenant of a foreclosed property, I truly feel for you, and I will do anything I can to help you out during these times.  I have tenants all the time who tell me they have been making their payments for 2 years and they cant understand how this happened.  You DESERVE CASH FOR KEYS.  

 

So now what, the banks out the 300k they gave you, your living in a house that you don't pay for, the bank is paying your taxes and utilities, and you cant even leave the house in good shape when you leave!  Show some pride and be amicable and get out when you stop paying!  There is no reason a bank should have to pay you a Cash for Keys of even a dollar!  You should just leave!  Lets think about this logically, I buy a car for 50,000.  I pay 5,000 up front and i'm left with a payment of about 1,000 a month.  If I stop paying for the car, does the car company come to my house and offer to give me THOUSANDS of dollars to give them the car back?  No, they hire a tow truck company, and come take the thing off my driveway!!

 

On top of all the ridiculousness of people living in houses that they cant afford, I am a born and bred New Yorker.  In this lovely state, we are referred to as an "Attorney State" and a "Landlord State".  So, on average, it takes about TWO YEARS, yes TWO YEARS, to get a foreclosure completed here.  So thats TWO YEARS of not making a payment to the bank, before they can even have the DEED for the property!!!  Then if I still don't want to leave, guess what?  I can usually stay another 1-3 years while the LANDLORD (The foreclosing bank) tried to EVICT me!!!  So in essence, I can live in a house, with NO EXPENSE, for 3-5 years!  Why on EARTH does it take this long?  And then, to top it all off, the banks are nice enough to stop "evicting" people during Thanksgiving, and this year between December 20th-January 3rd.  Now, although it seems like the "right thing to do", if the eviction of a homeowner happens to fall during that time, let them go live back home with their parents until they can afford to move out, OR use the past 3-5 years of mortgage, tax, utility payments that you have NOT made, and go rent a place you can ACTUALLY AFFORD!!!

 

I guess I would really just like to see the 7.5 million houses that are in the backlog (The gloomy shadow inventory) come to market.  Maybe we can actually stabalize the housing prices if we sell off the homes we need to in order for the market to correct itself.  :)

 

 

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