Real Estate
The 700 Billion Dollar Solution, U.S taxpayers request help
Preface:
Special thanks to Gabe Houston for his proposed “SOLUTIONS” document on the subject. After months of encouragement, Mr. Houston has memorialized our collaborative thoughts and conversations to paper. The proposed SOLUTION is a response to a letter sent from Leo W. Gerard of the United Steel Workers Union to Treasury Secretary Paulsen, dated October 28, 2008. In this letter Mr. Gerard clearly outlines the short comings of the actions taken by the Congress with the $700 billion dollar bail out.
This document provides an economically responsible and realistic solution that was ignored in the frenzy of the last actions of an exiting administration.
Mr. Houston and I have first hand knowledge of the banking sectors’ unwillingness to take losses and liquidate their non-performing assets. There have been an innumerable amount of investors standing in line offering to buy billions of non-performing REO assets from the banks holding the properties. These investors are simply seeking to assume the risk and gain any potential profit in converting non-performing assets into fully performing investments.
The greed of the banking sector prevailed as banks were unwilling to liquidate their REO holdings for relatively small realized losses. The banks refused offers by fund managers, portfolio managers and individual investors to purchase both individual properties as well as bulk REO portfolios at 50-75 cents on the dollar. The banks to date have refused to liquidate their losses at any amount below 80-95 cents on the dollar. Thus plunging the credit market into what the banks conveniently and erroneously label “liquidity problems”. Lack of liquidity implies there are no willing buyers for a willing seller. The current “lack of liquidity” in the housing market is simply a result of the banks unwillingness to sell their REO holdings to the market at current market prices. Today’s prices are deemed “too low” by the banks. Selling at the current bid price requires the banks to take a loss on their investment as a result of their poor and irresponsible investment underwriting. Instead of realizing these losses, the banks sought and received a governmental bailout on the backs of the U.S. taxpayer.
Down payment assistance program going going…
On October 1, 2008, the downpayment assistance program disappears.
This program combined with private lenders such as Ameridream, made it possible for people to add the down payment to their loan for a fee. Many buyers who qualified for a loan but did not have money to put down or closing costs, would take advantage of this program. It was one way to put buyers into homes and stimulate the market.
However, if people have no money to put down or enough for closing costs, isn’t this enabling a potential foreclosure? Getting into a mortgage they probably cannot afford and having no equity in it can lead to disaster. This, of course, is a generalization and does not apply to everyone.
First anyone with a pulse could get a loan. Now the guidelines are so stringent that qualified 800’s credit scores, 20% down buyers are not getting into their purchases because the underwriters are being too conservative. Appraising is a bigger joke now in Columbus, Ohio than ever.
Everything was over appraised and over valued. We know what happened there….
We are the second highest state for foreclosures….now ligitimate deals are falling apart because of appraisers going to the other end of the spectrum..either buyers have to put more down, sellers have to lower their price (even more) or the lenders raise the buyers’ rates because the LTV is not as great due to the “too low appraisal”
So if you want to “get the money” for your new home built in to your future mortgage..hurry up. Otherwise, you might just have to do it the old fashioned way…save for your purchase and qualify!!!!
Charlottesville Insurance Agent and Disaster Relief
Whether due to a family vacation or routine business travel, we all have times when we are away from our homes for an extended period of time. And, if you are like me, you probably leave a spare key with a trusted neighbor or family member so they can collect your mail, water your plants, or feed your pets.
And although the possibility is remote, an accidental loss from sources like a broken pipe may occur while you are away from home. Especially from water losses, it is extremely important that these issues are immediately addressed so that they do not get worse and cause even more damage.
By simply adding your insurance agent or insurance claims department phone number to your emergency phone list, will help in getting this matter started or even completed before you return from your vacation. Can you imagine coming home to find out that your neighbor not only watered your plants, but shut off the valve to your hot water heater, contacted your claims department, had ServiceMaster come in to start drying your floor and subfloor and you know this because a check for $4000 is sitting on your breakfast counter. Someone is getting more than a gift card to the Olive Garden.
Although the above is an extreme and would probably only work in the movies. The idea of having the correct information at your fingertips is what I am stressing. You can play the devil’s advocate, and say that a non resident member is making claims against your homeowners policy. And instead of giving that Olive Garden gift certificate you are slapping them with a lawsuit. But we all know that the trusted neighbor or family member will hopefully do the first step in shutting off the water and then call you. How many of us have our insurance agent on speed dial? Wouldn’t it be nice to get a call from the trusted neighbor, get the bad news, and then ask them for the number to the Matthew Taylor Insurance Agency on your emergency phone list?
Online Real Estate Auctions
After 14 years of working in the computer industry, I was naturally drawn to the concept of online auctions when I got involved in real estate. I’ve spent the last 3 years using online real estate auctions and have learned a lot.
I’ve found there is a lot of confusion on how they work or how to make them work. I will share answers to the most common questions I’ve been asked during the past 3 years.
Q) Will an Online Real Estate Auction force me to sell too low?
A) No, not if you structure it correctly. There are 3 main types of online auctions. If you use a Reserve Auction, you can set a hidden reserve price on the system and the auction will not be considered successful unless the reserve is met. If you use a Minimum Bid Auction, you don’t set a system reserve but you can state in your terms that the winning bid is subject to seller approval. The third type is an Absolute Auction, and this is the only type that could force you to sell it too low. Using this type of auction is not suggested, unless you are prepared to sell at a loss.
Q) Are online bids legally binding?
A) Yes, if the terms indicate they are and the online auction system has a trail to show the bid was made by the person. There are pages of legal information I can point you to on this, but I want to keep it short.
Q) What if the high bidder backs out?
A) There is no difference than having a signed sales contract on a property. You decide how much of an effort you want to take to pursue the person legally.
Q) How many properties have been sold through online auctions?
A) No one really knows. I know of many that I’ve sold personally, I’ve also know of many others that have been successful as well. The main thing to realize is the auction method of selling works well. The success, whether live or online all depends on how well the method is executed.
Q) What’s the secret to being successful with an online real estate auction?
A) Good information and Advertising. The online listing needs to contain thorough information about the property, terms that are easy to understand, pictures and a virtual tour, if possible. If the listing is put together well, the other key is to get the word out so people know about it. There are several good Internet advertising sites Free and paid that help along with yard signs, fliers, ads in local publications, etc.
Q) Aren’t auctions just for distressed properties that need a lot of work?
A) No, not anymore. I’m starting to see auctions for brand new properties from builders and banks that just need to get rid of them. Owners of any type of property, who are motivated, are turning to auctions for a solution.
Q) How long does an online real estate auction last?
A) Typically about 3 weeks. It depends on your marketing campaign and how many open houses you plan to do.
Q) Do I need a special license to do an online auction?
A) In every state, you need to be a licensed real estate agent. However, there is no requirement that I’ve come across that requires a special license.
Q) Aren’t online auctions just a fad that will go away when the market gets better?
A) I don’t think so. I think there are more auctions today than ever before because of the current market. However, I also think they provide a solution that is needed in any market, and sellers will find they are an excellent option for a property in high demand too. There are lots of examples on EBay of a unique item selling for some crazy amount. What owner or real estate agent wouldn’t want to watch hungry buyers fight it out online?
Q) How do auctions give you 3 opportunities to sell?
A) By holding an auction it’s not uncommon for someone to bring a written offer when the auction is announced to try and get it without competing with others. The second opportunity is when the auction ends with a winning bidder. The third opportunity is from follow-up with all interested buyers if it doesn’t bring a winning bid.
Q) What about non-U.S. buyers?
A) An online auction makes a property open to a worldwide audience. I was surprised the first time I saw a buyer from France win an auction. It demonstrated to me that online bidding is an effective way to get a property in front of a worldwide audience.
Q) Will an online auction work in my market?
A) It depends. If you are in an area where most people have high speed Internet access, than it will work. If you’re in an rural area where most people use dial-up and therefore aren’t on the Internet much, it will be much harder.
Q) Do I need a special contract or process to sell through an online auction?
A) No. An auction is simply getting you to agreement on price and terms with a buyer. The standard contract takes over from there, just like any other purchase agreement.
Thanks for Reading! I hope you learned something.
Tom Wood
Real Estate Auction Systems
Only 1 in 3 Homeowners Increase Their Insurance Coverage After Making Improvements
With heavy rains and tornados touching down in uncommon areas, there is no better time than now to review your homeowners insurance to make sure you have the coverage you need. While Americans spent more than $198 billion in
Are You Insured Or Do You Just Have Insurance? | Part 2
Priority #3: “Collapse” and “Earth Movement.”
Two other key perils, or “causes of loss” that are not covered under most homeowners policies are “An example of collapse would be an old barn collapsing from aging. You can’t get coverage for old structures collapsing. However, you may be able to find coverage for earth movement, such as a mud slide following a rainstorm. Often this coverage is available as part of an earthquake policy. Use Google to research these two coverages and their availability in your state.
Priority #4: Content coverage
Homeowner policies also cover your contents; generally at 50% of the value you’re insuring your dwelling for. Example, $200,000 coverage on your dwelling, comes with $100,000 coverage for your contents. But for many people, the standard amount of contents may not be adequate, such as if you have really nice furniture. So it is important you talk to your agent about a “home inventory booklet.” This way you can take inventory of your contents and possessions, and record it. But don’t keep that inventory in your home. What if you have a fire and the booklet burns? So keep it at your office or your friend’s home. Or you can visit www.iii.org and get their online inventory guide. Coverage on the dwelling may include specified water damage, but your contents may not be covered for water damage. Be sure to read your policy contract, and ask your agent to clarify coverages. Ask your agent about specific loss scenarios.
The cost of having an online company verses a local agent might be cost effective today, but insurance is for the unexpected. Ask yourself, how much you will be really saving if your home is not properly covered. Are you insured, or do you just have insurance?
Real Estate Auctions vs. Traditional Real Estate Sales - Which is Right for You? | Part 2
Is it a sales plan or marketing plan?
The typical sales plan for a Realtor is to market the property on the MLS and wait for offers. Ok to be fair, I am a Realtor as well, we do run ads in the print media but typically most buyers find homes online via the MLS sharing it’s listing data with major, consumer real estate websites or from Realtors sending clients MLs listing data directly. In a sense the MLS markets the property. As a Realtor this is automatic. As soon as I input your home in the MLS it is marketed on the major real estate
Are You Insured Or Do You Just Have Insurance? | Part 1
Part 1
Are You Insured Or Do You Just Have Insurance?
Thanks to technology today, a computer can now be carried around in your pants pocket. We are being more efficient than effective with this technology and in the insurance world we are being given more choices today than ever before.
Your Mortgage Crisis Does and Dont’s
Unfortunately this is an extremely difficult subject for homeowners. With the emotionals ties to the home and in many cases a strong moral convictions to abide by the rules; good people still find themselves
Real Estate Auctions vs. Traditional Real Estate Sales - Which Is Right For You? | Part 1
This is a great topic for home sellers as they do not really understand the auction method of sale as it pertains to real estate. So, is selling your home at auction a better way to go rather then listing it with a traditional real estate agent?
The answer is an emphatic yes.
The auction method of sale gives consumers many more options when it comes to selling their home. But before I speak to the advantages let’s clear up some of the misconceptions. The word auction does not always mean foreclosure or short-sale. The auction method of sale is absolutely not always for distressed situations. This method of sale and the psychology behind it generates a tremendous amount of curiosity and interest for home buyers. Just seeing the word Auction on a real estate sign or in the MLS get buyer’s energized. If the auction is marketed correctly and administered ethically by an Auctioneer, the community will recognize this means of sale as a positive and not a negative. Buyers will always want to preview auction properties before traditional real estate listings.
The auction buzz
So now you have the energy and a buzz around your property that is being sold at auction. What are the advantages? The first advantage is flexibility. If you list your home with an auction firm, make sure they are also licensed to carry out traditional real estate sales, too. If the home does not sell at auction then it can immediately come on the market in the traditional sense. This will give you a competitive advantage with respect to a sales strategy. Yes a sales strategy, more tools that can bring an actual signed sales contract in less than 30 days. By coupling the auction method to traditional real estate sales you have created the perfect situation to sell your home.
Foreclosure and Bank Owned Real Estate Auctions
Thought I would address this topic as the question comes up quite often. The general public is extremely curious about this topic. An auction if executed correctly and ethically is the best way to buy and sell a home in any market. Moreover, the auction method of sale is not only for foreclosures and distressed situations. This is important to know because auctions styles and protocols for consumers are very different depending on the homes circumstances. So as a buyer you need to be aware of what type of auction you are participating in.
Just because you see the word “auction” does not mean it is a foreclosure. I need to stress that. And as a matter of fact, buying a home on the court steps during an auction is extremely difficult.
Nonetheless, if you show up to buy a home on the court steps during a foreclosure auction you had better be prepared. Depending on the state the property is located and what is owed on the home, you had better do your due diligence or you may be purchasing a home while at the same time inheriting mortgage debt that puts you upside down right out of the gate. If the property is worth buying, then small and large investors will be bidding with all cash offers because they know the ROI on that property can be realized. So if you are the only person bidding, STOP!!! You may not have analyzed the property circumstance very well.
Make sure to read the terms and conditions clearly. Some auctions may require all cash bids or pending bank approvals. Some court auctions do not allow for bank financing. So for a traditional buyer you are stuck. Save yourself the anguish and clearly read the terms and conditions. The banks may not make it is easy to purchase a property because they would rather have the asset revert back to them so they can sell it traditionally with a Realtor as a bank owned home.
The last item I want to discuss is “pending bank approval.” I absolutely despise this. This is not an auction even though it is being marketed as an auction. You see the ads on TV. “5000 PROPERTIES BEING AUCTIONED” at some fancy hotel.. Read the terms and conditions. WHEN THE HAMMER FALLS THESE PROPERTIES ARE NOT REALLY SOLD. Some asset manager at a bank has to approve it and in nearly all cases they counter back with a higher number. Remember they have a cash deposit to hold you to the fire. Hopefully as auctions gain in popularity as they are now, state regulators will clean this up. It really gives the word “auction” a bad name.
Look for my next article as I discuss non-foreclosure auctions for buyers and sellers. This presents a wonderful situation for buyers and sellers. It is also gaining in popularity over using the traditional real estate agent. Is this sales plan right for you?
Google Aids Mortgage and Insurance Underwriters in Secrecy
Here is a bit of information I think that will be valuable to consumers who are looking for mortgage financing or are applying for new homeowners insurance. I bet you didn’t know that Google Maps “street view” may be playing a part in whether you are approved and or may increase your insurance premium.
This issue is similar to those applying for new jobs as well. The top HR departments and underwriters are Googling you. So don’t be surprised if you are declined for a job, mortgage financing, or insurance based on your internet search engine audit trail.
In real estate and finance this is becoming more and more apparent with the credit crunch. Underwriters are taking a deeper and deeper look at you and you collateral (your home) based on the images from Google Maps “street view.” If your appraiser misstates the quality or uniqueness of your home or you embellish the truth on an insurance application you may find difficulties getting financing or higher insurance premiums.
Savvy underwriters are seeing your home in high definition right from the front curb. They are not just seeing the overhead view. They even have the opportunity to drive up and down your streets and check out the neighborhood with stunning clarity via cyberspace.
It is becoming easier and easier to scrutinize new customers in secrecy. Keep that in mind if and when you decide to embellish the truth on a mortgage or insurance application.
Top 10 Stupid Mortgage Loan Officer Questions
I received this joke email and I thought I would share it. Although this is a joke email, these questions are asked by borrowers and loan officers on a daily basis. Moreover, some loan officers actually commit loan fraud by structuring deals with these bits of logic. Below are the “10 Stupid Questions” and reasons why
Columbus Housing Market Showing Signs of Stability
After a record low number of houses sold last month -approximately 1,500 out of 16,000 listed homes (NOT including FSBO’S)..ouch!But still, Columbus is considered one
Minneapolis Condo Hype. What Are the Facts.
“Over Built. Building like crazy. Who is going to buy them all? Too much inventory. Prices going down.” This is what I hear all the time from people I run across and I tell them that I’m a Realtor that focuses just in the Minneapolis condo and loft market.
I would like to address all the “So called Minneapolis Condo Hype” with the facts about the market. Now lets take these facts below and see if all the noise in the market is opportunity is knocking!
In the Downtown Journal which is the local Minneapolis newspaper that publishes a section called the “Condo Watch” in every issue. This pipeline has 44 projects in the pipeline which may to some seem like a lot and to some might not but the BUZZ in Minneapolis Real Estate is that this market is over built, to many condo project, etc…. The True reality is that out of the 44 listed projects 17 of them aren’t even built or there is fabulously no momentum in being built. 21 out of the 44 are projects that I can bring a buyer in and they can move in with in 120 or sooner. But the big message that I want to get across is that out of the 21 in the pipeline there are 9 projects that have less than 10 units remaining. So in roughly the 3rd quarter of 2008 all of them should be closed out. Which that will leave roughly 12 projects left for buyers to choose from! Yes new projects will pop up here and there but this is also great for the re-sale market that has been hurt that last few years!
Downtown Minneapolis has still been a very active market compared to the rest of Minneapolis.
- Closed sales are up 105% YTD form 07 to 08
- Percent of Original List Received: YTD for 01 96.2% / 99.1% +3.0%
- Condo Inventory: Feb 07 543 units and Feb 08 502 -7.6%
- Average Days on Market: 210 days
- Average sales Price: $293,440 4th highest in the city
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your solution to the crisis is incredible keep it up! 
As requested. Here are the Phone Numbers.. Let me know how they work out.
30+ days late:
800-799-9250
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