Having had the opportunity to work with many sellers in dire straits, I can understand the potential of a foreclosure can be one of the most stressful times in a person's life. Harassing phone calls come multiple times throughout each day and demands become more and more bold. If a seller is unable to renegotiate their mortgage, the prospect of trying to get now, what they paid for their house in the last five is a near impossible task. It would feel easier just to pack up and walk out then to try and find a solution because for most people, it appears as though there are none.
A foreclosure will ruin your credit which will affect:
Where you live -- In moving from a house to an apartment, landlords often pull credit before offering a lease agreement. Going from a house to a smaller apartment is a hard pill to swallow, having to move into an area where the landlord isn't concerned with a credit score could be a nightmare.
Where you work -- While applying for a new job, employers often pull credit as well which might prevent potential candidates from being able to qualify.
What you drive -- If/when buying a new car, both the loan rate and the insurance premium are affected by credit score.
The simple act of getting a new cell phone contract can be denied by bad credit.
All of these issues will directly affect stability and quality of life. Explore the options, lenders don't want to foreclose. If renegotiation is an option, talk with a loan workout group who can offer all the details of a short sale (when the lien holder accepts less than what is owed in order to sell the property) possibility.
Need to know what your house is worth or if the local market has stabilized? Find out here.
When I first got in the business a little over six years ago, it was hard (but not impossible) to find an insurance company who would insure a home with knob-and-tube wiring. Well now, it's really hard to find that same coverage. Since I've been licensed, I've seen that same change in coverage concerning fuses vs. breakers. You can find the coverage, but now it's becoming less and less available. The change that I am starting to see now, is one that scares me quite a bit more than the other two. The issue--insurance companies not providing insurance on investment properties without a "lead-free" certificate. Now I am aware of the dangers of lead based paint, but eliminating coverage on homes with lead based paint is going to alienate a large portion of multi-family homes nationwide. We are seeing a huge influx in foreclosed multifamily homes in this area, if coverage can't be obtained, does the bank let them go at yard sale prices or do they let them fall into disrepair, stay as a non-performing asset and devalue an entire neighborhood? Abatement isn't cheap, so check with your insurance agency before you put that next investment under contract.
If you found this article helpful, check out this other potential nightmare when buying foreclosed property.
Having represented dozens of buyers purchasing short-sale and foreclosed properties and having the opportunity to review more than a hundred purchase and sale addendums offered by banks (take a look at my earlier blogs: Bank Trick #1, Bank Trick #2, Bank Trick #3, Bank Trick #4) I thought I had seen it all.
The newest issue of concern when buying foreclosures and purchasing a foreclosed property actually has nothing to do with the bank you're buying it from as much as it does dealing with the code enforcement department of the town the property is located in. For properties (single family/multi family) where the electrical service provider (ie. PSNH-Public Service of New Hampshire) has removed the electrical meter from the side of the home, THE NEW OWNER MUST BRING THE WIRING SYSTEM UP TO CODE before the town will re-issue a certificate of occupancy. This can be a very expensive cost to a buyer so make sure you check with the town before entering into a contract which might have a $3,000-$7,500 hidden "cost" after closing.
Buyers-make sure you are using an agent who has been through the process of representing a buyer purchasing a foreclosed property before. These transactions require a different skill set and an unprepared/uneducated agent can cost you money in the long run. As always, I'm always happy to answer any questions concerning this or other matters regarding real estate.
A large portion of my business in 2008 came from representing first time home buyers and investors purchasing both short-sale and foreclosed property. Up until recently banks were pretty firm on their prices until they were ready to make another price reduction. I've seen banks hold on to properties for nine additional months only to sell them for what our initial offer was. The one things which has rung true in this area for almost all banks was no seller concessions on the purchase price, but recently, some banks not only will help if it's needed with closing costs, they're advertising 3%-5% seller concessions for OWNER OCCUPIED buyers. The banks are at a saturation point where they need to unload these properties and with an estimated 40% increase in foreclosures in 09', they're getting more aggressive with pricing, commissions, and incentives. I understand that this may be a regional phenomena, so for those agents around the country, what are your experiences?
Those who know me know I like working on projects around the house, inside and out. Those who know me really well, know I love saving money on those projects. The habitat for humanity organization recently opened the Re-Store in Dover NH. When I first heard of the idea, I thought "this place is going to be full of junk people don't want". When I actually stepped foot inside Re-Store, I could not believe the bargains they had on all sorts of construction materials both donated from companies like Home Depot and Lowe's, to salvaged items from remodels in perfectly good shape. From flooring to kitchen cabinets to closet organizers, this place may not have it all, but it's got enough for the D.I.Y. homeowner, landlord, or contractor (as a matter of fact, the day I went, it was being raided by several contractors buying up CHEAP items to put in their projects). The Re-store's stock turns quickly so, what you see today might not be there tomorrow so you should visit often. In my years as a home-owner, land-lord, and Real Estate Agent, I've seen my fair share of waste, so it's not hard for me to get behind a project that just makes sense. Although the "What's my Carbon Footprint" movement is still in it's infancy, I have started to grasp just how much impact we have as individuals and anytime we can reduce, recycle & re-use as a community we can infinitely multiply our efforts.
I am attending a Timber Framing Home Planning Event this Saturday in Manchester. If you are unfamiliar with "Green" building, this is a great way to see some of the cutting edge construction techniques being used. Timber frame homes help with your impact on the earth and reduce your carbon footprint so if you're interested in this sort of thing make sure you register (or if you just want to peek at some of the most beautifully constructed homes) at Riverbend Timber Framing, here's is the itinerary for the day:
HOME PLANNING SEMINAR
Best Western Executive Court Inn & Conference Center Manchester, New Hampshire
Saturday, November 15, 2008
ITINERARY:
12:30-1:00 Welcome; Sign in
1:00 - 1:45 "Green Home Design", Jeremy Bonin AIA NCARB LEED AP,
2:45 - 3:15 "Financing Your New Green Home", Wayne Barrows, 1st Metropolitan Mortgage
3:15 - 3:45 "Solar Energy Systems", Jay Lowrie, Sea Solar Store
3:45 - 4:00 Group Questions & Answers
Best Western Executive Inn & Conference Center
13500 S. Willow Street, Manchester, NH 03103
Traveling on Interstate 93 north or south, take Exit 5. The Best Western Executive Court Inn & Conference Center is 3 miles north on Route 28.
Traveling on Interstate 293 take Exit 1. The Best Western Executive Court Inn & Conference Center is 2½ miles south on South Willow Street.
From airport: Exit terminal to Perimeter Road and turn right. Follow to end. Then take a sharp right onto Route 28 south (South Willow Street). The Best Western Executive Court Inn & Conference Center is 1 mile on the left.
This is the most difficult market the real estate industry has seen in almost the last 20 years. Families who made an investment in their homes are now finding that for verying reasons not only are they unable to pay their mortgage, but they aren't even able to sell their homes for what they owe. Whether it's the common theme of an increased mortgage payment or other reasons like relocation or divorce, some families feeling like there is no other choice, just pack their bags and walk away from their home and let it be foreclosed on. This dibilitating choice ruins a persons credit by about 300 points and also prevent the ability to buy another home for at least 4 years. Most people aren't aware that there are other options, and a mortgage company won't bother to educate their clients about them. Short sales are becoming a wide spread option for most home owners in this exact situation and talking to a company who specializes in these is your best option. I have directed clients in the past to call Tom Girard from The Loan Workout Group and they have found a huge deal of success. Take the time to educate yourself on the options and don't hesitate to call me if you have any questions. This problem is a widespread issue nationwide and has plagued hundreds of thousands of people throughout the country, so I understand the issues and there isn't any reason for embarrasement. Many agents haven't educated themselves on the process yet and without the experience, won't be able to sell your house even if they get an offer you and the bank would be willing to accept.
I am a member of the R.E.Expert network, endorsed by the Real Estate Advocate. If you would like more information either as a buyer or seller, please don't hesitate to contact me, I would be more than happy to help and earn your business.
I was in shock when I read this most recent addition to a contract with a bank addendum because it essentially gave the bank carte-blanche over the P&S.
Article 15.TheSeller reserves the right to terminate the Contract for any reason in its sole discretion. Should the Seller terminate this contract, the Seller's sole liability to the Buyer will be to return the Buyer's deposit, at which time the Contract and all addendums thereto shall cease and terminate and Seller and Buyer shall have no further obligations, liabilities, or responsibilities to one another.
In the dozens of addendums I've had the opportunity to review, this is the first time I've seen this. It was easy for me to find this in the 5 page addendum the bank sent over, but it might not have been in the 22 page addendums I have seen in the past. This becomes another issue of disclosure to your buyer. If you have not fully disclosed this issue to your buyer, and the bank actually does back out, the buyer could have already paid for (and you are now responsible for): dewinterization of the property, a home inspection, a septic inspection, a water test, radon air/water test, lead paint test, pest inspection, site survey, and an appraisal-all of which could come up to a few thousand dollars. This is a huge risk for all parties involved on the buyers end, so with proper disclosure by the SELLING AGENT it will be up to the buyer to decide if they want to enter into a contract with this clause.
I have had the opportunity to review dozens of bank addendums, I know the "tricks" they hide in the contract. If you are a buyer, please, please, please make sure you are working with an agent who is familiar with both Short-sales and Foreclosures as they require a different skill set than an ordinary transaction.
With the current economy the way it is right now and foreclosures rolling into the market in waves, I'm sure many of my fellow agents have seen this clause already, but buyers may not have. The importance being, make sure you disclose the following clause to your buyers and the lender they are working with so all parties understand the timetable they are bound by.
Article 10. (Which can vary) Buyer(s) may take possession after the final closing papers are signed by the Seller and the Contract is funded. Possession to the property may not be taken before the occurrence of both transactions stated previously. Any violation will be considered a breach of contract. If the closing does not take place on the originally scheduled close by date due to a Buyer(s) delay, Buyer(s) shall pay a fee of $100.00 per diem to Seller until the closing is completed.
If you have not disclosed this to your buyers, your commission could be at risk. Make sure you set the expections of the contract to both the Buyer AND THE LENDER. If you're working with a lender who you have not used before, make sure they understand that if they drop the ball on their end, they should be the one to foot the bill.
I have had the opportunity to review dozens of bank addendums, I know the "tricks" they hide in the contract. If you are a buyer, please, please, please make sure you are working with an agent who is familiar with both Short-sales and Foreclosures as they require a different skill set than an ordinary transaction.
With the massive influx of both short-sale and foreclosure inventory on the market, title insurance is needed more than ever. I sold a 3yr old foreclosed home back at Christmas to some really good friends of mine. A 3 bedroom 3 bathroom cape with 1 car garage under and finished basement on 3/4 acre at the phenomenal price of $175,000. They were truly exited, as was I for them.
They called me on Friday to tell me they received a DEMAND FOR PAYMENT IN FULL FROM THEIR MORTGAGE COMPANY because the town had notified the mortgage company that improvements were made to the home without a permit which is a violation of the terms of their mortgage. The problem is, "the improvement" the town was speaking of was the finished basement which had been finished prior to the foreclosure, it had nothing to do with the current owners. (An amusing aside: the copy of letter from the town which was provided by the bank was dated 11/07/07, which was 2 weeks before our initial offer on the property. The bank had essentially provided us with the evidence they knew about the problem before we had even viewed the property).
The short end of it is, my buyers are fine and their title insurance is stepping in to take care of the matter, but what would have happened without title insurance or that letter? I always promote insurance for exactly what it is, insurance and as I stated before, with the massive influx of both short-sale and foreclosure inventory on the market, title insurance is needed more than ever.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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