Being in the Kansas City area, the primary campaign has been on "hot and heavy" on both sides of the state line for a while.Â No matter your political affiliation, it is important that you get out and vote on Tuesday, August 3.
Interest rates are at an all-time low.Â You'd think that this would be great for the market.Â However, it seems many buyers are waiting in the wings for rates to go even lower.Â As strange as it sounds, would increasing interest rates put a sense of urgency in the marketplace and help to stimulate the market?
Feel free to visit my web site:Â http://TomSellsKC.com
.Â I have a number of residential and investment properties highlighted in the Kansas City metro area!
It's been a while since I've posted and in that time I have seen an interesting shift with foreclosures, at least from a buyer's perspective.Â
During late 2008 & early 2009, it seemed that there were bargains to be had, and they would hang around for at least a few weeks.Â This fall, buyers - be they owner-occupants or investors - appear to be more anxious to snap up theÂ foreclosures that are the greatest values (decent condition, well priced) almost as soon as they hit the market and for a price at or above the list price.
What are left are houses that either are priced above what the market will/should bear (and many banks are less inclined to negotiate early),Â are in terrible condition, or both.
My advice:Â keep your eyes open and be ready to move quickly.Â If you are an investor and the numbersÂ won't work, you may need to just move on, but you need toÂ make a decision quickly and know exactly how high you'll be willing to go before you make that first offer!Â
If you play in the foreclosure space, you often have to have the patience of Job.Â
During the negotiation process, it can take a long time to get the bank (or whatever the foreclosing entity is) to respond.Â If you are impatient, you can lose a good deal, but it does seem at time that the banks are holding off on a response just to see if something better comes along.
Pray you don't need to make changes.Â The process the banks use is very rigid; a change - particularly in lender or loan type - can send shockwaves that slow things to a crawl.Â Even getting amendments for minor changes can take forever.Â Have your ducks in a row before you go in...things will be much smoother in the long run!
As mentioned above, banks have their procedures.Â If you follow them - no matter how counterintuitive some may seem - things tend to move along okay.Â Just be sure you read the paperwork closely before you sign to ensure that you aren't getting into something that you had not bargained for.
Once again, I'd love to hear the experience of others in this space.Â Please add your comments!Â If you'd like to visit my web site, please click on www.TomSellsKC.com.Â
Unfortunately a lot of time has elapsed since my last entry, but as you might expect, I have been engaged in several foreclosure deals!
Negotiating with the foreclosing entityÂ will vary widely depending on who owns the property.
In my experience, HUD seems to price their homes well to begin with given their condition and the market.Â They also seem to be reasonable in their approach to reaching the final price on a property.Â Everything else is unusual (see my last post), but at least they seem to want to negotiate to a fair price for all involved.
Fannie and Freddy foreclosures - again in my experience - are the other end of the spectrum.Â The list price they have may or may not be reasonable.Â However, they really don't want to give much on price, no matter the condtion of the property,Â the market in that particular area, or the "quality" of the list price relative to either of these conditions.Â The term "blood from a turnip" comes to mind.
Banks span the spectrum.Â I have worked with banks that have been very willing to negotiate and come up with a reasonable and fair sale price.Â I have worked with others that are not nearly as flexible.Â It depends on what each bank's goals are on loss mitigation and property dispostion.Â If they are looking to recover as much money as possible, they'll not be willing to give much; if they want to get houses off their books, you may be able to get some deals.
The bottom line is that you have to do your homework, be able to present justification as to what is a reasonable offer, know your ultimate strategy, and be willing to walk away if it's not going to be a good deal.
Again, I'd encourage comments on the experience of others!Â Also, you can reach me by visiting my web site at www.TomSellsKC.com.
I'll start with praise.Â Unlike some of the other foreclosing institutions, HUD foreclosures are usually priced well as compared to the surrounding area, even when considering the work that will need to be done to get them to "market standard".Â They know they are not in the business of owning houses and try to make it attractive to potential buyers.Â In negotiation, they seem to be reasonable and willing to give a little to reach agreement.
The think you have to remember is that HUD stands for "Have Ur Duckinarow".Â The process of buying a HUD-owned property is very regimented and the process must be followed to a tee.Â Whether the buyer is going to be an owner-occupant or an investor, follow the process closely.Â A buyer agent should read the instructions and the manual very closely!
A special note of caution for investors.Â The EMD is non-refundable for any reason.Â Be sure you want the property before making a bid.Â If everyone signs on the dotted line, you have committed your money.Â Period.Â Even if you find that you can't get financing because of the condition of the house (such as when it won't appraise due to broken pipes), you lose your deposit.
That leads to some inconsistencies between policy and practice that you should know as well.Â Throughout the documents that are part of the sales package, HUD states time and time again that buyers should get an inspection.Â Yet, if there is something minor that prevents utilities from being turned on - a disconnected water pipe, for example - the buyer is prohibited from doing anything to the house that will permit utilites to be turned on for inspection.Â This would go as well for appraisals (hence the risk with conventional loans).Â Likewise, my experience has been that there are policy documents that state that investors for a HUD disposition can get an FHA 203(b) loan - with lots of requirements - but the asset managers and HUD staff don't seen to recognize that this is clearly stated as an option.Â They've even cited docuements that, with further digging, refute their point of view.
Please comment with any HUD experiences you may have had...I'm really curious as to whether this is commonplace or just me!
As I mentioned in my last blog, I have had the opporutnity over the past few months to look at a lot of lower-priced properties that have been foreclosed upon.Â I have even looked at a few that weren't quite as inexpensive.Â What I have come to learn is that you need to expect just about anything when you walk into one of these homes.
The one thing that you can be sure of is that they are vacant.Â That is true most of the time, butÂ sometimes you will find that people are living there even though they are not supposed to.Â And when they are not supposed to be there, they tend not to take very good care of the structure.Â Always announce your entry!
You must also be ready to find the property in poor condition.Â Unfortunately, most of the folks that have gone through foreclosure found themselves in a tight money position.Â As a result, maintenance was probably not the top of their list of priorities.Â Moving out, things can happen.Â Once vacant, who knows who's been in the house?Â I've been in houses with no plumbing, no fixures, no furnace or A/C, missing walls...you name it.
If you are thinking about buying a foreclosure, be sure to expect that work will be necessary.Â In virtually every case, the house will not be move-in ready.Â In many cases, you will need to put in thousands - or even tens of thousands - of dollars to make it into the house you really want to live in.Â Look for good bones; cosmetic items can always be taken care of!