Didn’t Someone Tell You We Are in a Recession?

We are all aware that the economy has taken a nosedive over the past couple of years. Businesses are closing their doors, employees are being downsized, and the current market value of houses has been consistently dropping. Although, the recession is damaging the current market, it does offer a plus side to the real estate investor.

Buying real estate during a recession allows buyers to thrive during a recession. They have the opportunity to make substantial financial growth. Falling prices and less activity in the current market can benefit the buyer in many ways. A recession typically lasts for about two years so investors should think about not just how low the prices will go, but also how much they can invest until it is over.

Upon deciding to invest, you should consider a variety of factors. Realize if each house in question is functional to your particular needs. Buying because you fear the recession will end is not wise. The current market should not sway your judgment in this way. But since prices are typically down by three to five percent, buying does offer many advantages.

Buyers stand to pay less for homes, usually five percent of more, during time of distress. In addition, sellers are often more anxious and motivated to sell just for the shear fact that they do not want their houses on the market for too long.

Before investing in a down market, it is critical that you research the comparable housing prices in the area, remodeling records for the home, and any financial situations attached to the home. Websites such as zillow.com or trulia.com are excellent resources for gather such information. The general location and overall condition of the house should also be taken into account.

Timing is everything if you plan to capitalize on the falling prices of houses and property. If you are a seller and you wish to move to a more expensive home, now is the time to buy. The longer you wait, the lower the value of your currently owned home will go. Savings to you on a new house are also available as it is being sold for less. Interest rates are also much lower and are gradually increasing, which is another reason to buy now.

Borrowing cheap is another benefit. Interest rates are very low, and even though banks may not be lending to risky buyers, investors with good credit are welcomed. Foreclosures, Short Sales, and Real Estate Owned (REOs) properties are an excellent way to potentially profit from an investment during a distressed economy.

When a notice of default has been filed in public records because the owner has stopped making payments on the mortgage, and a lender has given notice that the house will be sold at public auction if the payments are not made current, the house becomes foreclosed upon. If payments are not made and the house goes to public auction, a buyer can usually purchase the house for the amount of money remaining on the loan.

There is substantial profit to be made by only paying the amount owed on the mortgage and the owner’s equity can be picked up for free. One thing to consider though, when going the foreclosure route is that a house being sold at auction is not just a steal. Due diligence and thorough inspection of the house should be done prior to any bidding on any home.

Short Sales or Pre-foreclosures are also an option. These are homes that are in foreclosure but before the property goes to public auction. The lender must agree to accept an offer less than the amount owed on the property. Since the lender agrees to take less money in order to avoid foreclosure, the transaction is better for the investor. REOs are similar to Short Sales, but the lender already owns the house due to foreclosure proceedings. The house has been auctioned publically and did not receive a bid. This offers a benefit to the investor because the lender will usually sell for less than what is owed on the mortgage.

This is the best way to buy because the seller is no longer involved in the transaction. The deal is made between the lender, the seller, and the agents that represent them. At times the agents are not even necessary.

Overpriced homes are another investment opportunity to consider. An inflated price is the number one reason a house does not sell. A home that has been previously overlooked because is has been overpriced, has been on the market for a long period of time, and has not sold because of its price, should be revisited. A motivated seller could lower the price in a hot seller’s market where there are many buyers and less inventory.

Offering the seller a sizable earnest money deposit or “Good Faith Deposit,” which is a portion of the down payment attached to the purchase agreement, and a list of prices for other homes is the area could also encourage a price reduction. Offering a “Good Faith Deposit” can also offer less risk to the seller because most contain provisions that give this initial deposit to the seller if the buyer backs out of the deal without cause. The money is usually held in a trust until of the necessary negotiations have been made and contracts have been signed.

Finding real estate to invest in can be easier said than done. Don’t wait for these homes to show up in traditional real estate listing services. Look for information on bank websites and county loan offices that know of foreclosures. You can also ask local real estate agents that are familiar with the area. Realtors can also offer insight on overpriced homes.

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Buying Beats Renting in 80 Percent of U.S. Cities

Thanks to falling home prices and rising rents, would-be home buyers have the upper hand this house-hunting season. In nearly 4 out of 5 major U.S. cities, it’s now cheaper to buy a home than to rent. That’s up from 72 percent of cities last quarter, based on the Rent vs. Buy Index released by online real estate resource Trulia.

“With home prices nearing a double-dip and more foreclosures expected to flood the housing market over the next two years, the decision between renting and buying a home across most of the country has clearly moved in favor of buying,” said Ken Shuman, head of communications at Trulia, in a press release. “As we head into the summer buying season, those looking to buy a home should be encouraged by improvements in the market and feel optimistic about their chances of finding an affordable home, much more so than in previous years.”

Areas with the most affordable housing market conditions tend to be cities hardest hit by the foreclosure crisis, including Las Vegas, Phoenix, and Miami. Meanwhile, those with more affordable rental markets included New York City, Los Angeles, and Seattle. Omaha, San Jose, and Detroit had some of the largest quarter-over-quarter jumps in favor of homeownership.

Despite the overwhelming data supporting home buying this season, experts emphasize that above all, the real estate market is local. “This metric is a good baseline for the rent versus buy decision, but it doesn’t capture everything,” says Jonathan Miller, president of New York City-based Miller Samuel Real Estate Appraisers. “Locally, it may be cheaper to buy then rent, but that doesn’t speak to your investment. In other words, how many years before I can ‘get above water,’ or see a return?”

The time factor is one of many stumbling blocks preventing house hunters from making the jump from window shoppers to homeowners, Miller says. During the housing boom, homeowners were virtually guaranteed to make money or at least break even on their home sales, regardless of the period they owned the home.

In today’s market, experts see home prices appreciating much slower, therefore home owners will have to make a longer commitment to their housing investments than in previous years. “The future upside is much farther down the road,” he says. “You’re looking at five, maybe 10 years out of this sort of rocky bottom.”

Until consumers regain confidence in the housing market and economy, Miller and others expect the rental market will continue to benefit from apprehensive house hunters. “There’s been some erosion in attitudes toward homeownership,” says Eric Belsky, managing director of the Joint Center for Housing Studies at Harvard University. “There’s two parts to the home buying decision: the will and the way.”

Belsky says the spike in home prices and increased housing market activity following the first-time home buyer tax credit in 2010 demonstrates pent-up demand, but that the market isn’t currently providing enough incentive for house hunters to make a move.

“The ‘way’ right now is really being blocked by the underwriting standards being applied to loans,” he says. Even if some of the slack in the market tightens, the rebound won’t be as strong as it would otherwise have been, Belsky says, primarily because many would-be home buyers won’t be able to qualify for a loan with favorable terms.

Despite the numerous obstacles for prospective home buyers, experts remain confident that improving employment and economic data will breathe life into the housing market this spring and summer. More Americans signed contracts to buy homes in March, according to the National Association of Realtors’ pending homes sales index–up 5.1 percent–a signal that could mean more house hunters are snapping up bargains. “We’re sort of in that in-between phase,” says Heather Fernandez, vice president of marketing at Trulia. “People aren’t running out to buy that dream house yet because they’re not that confident.

But we’re starting to see consumer confidence shift, people are more interested in home buying, rental rates are still high, and therefore, just based on the numbers, increasingly homeownership is becoming more affordable across the U.S.” – Meg Handley.

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Finding a Notary When You Need Documents Right Away

When time is of the essence in regards to a real estate investing business transaction, it is good to know the quickest avenues to take in order to locate the necessary information and connect with the necessary individual to be a part of the business transaction.  Finding a notary public when you need documents done right away can propose quite a dilemma if you do not have one that you already refer to.

By definition, a notary is an officer who can administer oaths and statutory declarations, verify and prove signatures, and witness and authenticate documents.  They are probably the only impartial entity within the mortgage lending process. Finding a notary that is reputable and trustworthy and is also efficient and expedient can be quite challenging, especially for the investors who are not yet familiar with the real estate investment process.

When a deal has been negotiated and documents need to be completed and signed promptly, how does an investor locate a notary public, if he/she does not know where to find one?  One way to find a notary is as easy as clicking a button.

Thanks to the massive information that is readily available on the internet, finding whoever or whatever you need is not as difficult a task as it once was.  Navigating the information super highway allows you access any information you may need.

In regards to finding a Notary, by visiting Notarypublic.com, you can view the national directory of notary publics.  This directory offers local and nationwide mobile notary signing services to lenders, brokers, and title and escrow companies.  The National registry of Notaries is another organization that provides useful information as well.

The National Notary Association (NNA) is professional notary resource that can be utilized.  The education and support they provide to United States Notaries is substantial to their role of protecting the public.  This organization was established in 1957 and is the leading authority on the office of the American Notary.

In addition to presenting updates on the current United States Notary laws, it also advocates over 4.8 million notaries nationwide.  The NNA includes high-demand professional programs and services and encourages consumer protection, just legislation, and technical initiatives.

Online closing, also known as eNotarization is a relatively new process that is greatly gaining notoriety in the real estate market.  Technological advancements have made it possible to receive notarization almost immediately.  Electronic notarization is a safe and secure procedure that is fast and effective.  A notary initially meets with a borrower at the borrower’s convenience in order to review the documents for the loan.

These documents can either be viewed on the website of the lending company or on the laptop of the Notary.  Upon the completion of the review, the borrower electronically signs the documents in the presence of the notary.  The notary then electronically notarizes the documents and they are transmitted to the lending company immediately.

Electronic notarization also offers the benefit of less risk involved in the transaction.  Because of its growing popularity among investors, the demand for digitally based transactions is increasing.  For this reason, both in the government and in the private sector, more action has been taken in regards to new laws, requirements, and programs to protect them against fraudulent or unethical practices and predatory lenders.

Trusted Enrollment Agent (TEA) program is being established in some states in order to protect important and sensitive information and also to identify and verify the authenticity of digital credentials.  This program is being developed jointly with government contractors, medical professionals, real estate investors, and the NNA.

Another element of protection is the Electronic Notary Signature (ENS) that the NNA utilizes.  The ENS makes electronically notarized documents tamper evident.  In some states, such as Florida, Notaries are required to have a unique signature that is solely under their control, has the ability be verified and associated with a document, and can also show any changes or alterations that may have been made after the original document had been signed.  This digital age offers real estate investors the ability complete transactions in a more direct, time efficient, and safe manner.

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Growing Foreclosure Pipeline To Further Erode Housing Prices

The mounting shadow inventory will cause further erosion for years to come for US housing prices, which are already suffering from depressed demand. Delays in servicing distressed properties are adding to a cumulative supply of unsold homes that is 3 times the normal level.

Shadow inventory continues to climb, and there is now an eight-months supply of these homes, according to CoreLogic (CLGX: 18.52 +0.49%).

The data analytics firm said the number of homes seriously delinquent, in foreclosure or REO and not on multiple listing services rose to 2.1 million units as of August, up from 1.9 million, or a five-month supply, a year earlier.

“The weak demand for housing is significantly increasing the risk of further price declines in the housing market,” CoreLogic chief economist Mark Fleming said. “This is being exacerbated by a significant and growing shadow inventory that is likely to persist for some time due to the highly extended time-to-liquidation that servicers are currently experiencing.”

The visible inventory of new and existing homes through August remained flat with the year ago at 4.2 million units and is now at 15 months of supply, CoreLogic said. But the increased shadow inventory boosted the total supply of unsold homes by 3% to 6.3 million or 23 months from 6.1 million or 17 months.

“Although it can vary and it depends on the market and real estate cycle, typically a reading of six to seven months is considered normal so the current total months’ supply is roughly three times the normal rate,” according to CoreLogic.

The company said Florida, California and Michigan continue to have the highest ratio of delinquent properties to sales, and Texas, “which largely bypassed the housing boom and subsequent bust,” has the lowest distressed supply.

Earlier in November, Altos Research said the impact of shadow inventory looms large on the housing market. The firm reported steep declines in housing prices in the areas hit hardest by the bubble burst of three years ago, while Amherst Securities said default rates rose for the first time this year in October.

In September, Standard & Poor’s said shadow inventory represents one-third of the nonagency residential mortgage-backed securities market and will negatively pressure housing prices until the backlog clears in more than three years’ time. Analysts expect it to take 40 months to work through the inventory of mortgages.

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How to Make Money from Investing in Foreclosures

Foreclosures work differently from state to state, but the basics are pretty standard: When a homeowner starts missing mortgage payments, the bank gives notice to the homeowner and to the local government that the loan is delinquent. After a time, the bank is allowed to commence a repossession process that can result in the house being auctioned off to the highest bidder.

The process can take weeks or months to play out; anywhere along the way, a homeowner retains the power make good with the bank. Frequently, homeowners in trouble with the banks are willing to sell their homes to private buyers at a discount to market value in order to preserve what little equity they have left.

Let’s backtrack just a little bit in order to examine what happens just before a property goes to foreclosure: Whenever someone purchases a house, the normally obtain a mortgage with a small down payment for the price the house. The mortgage is secured by the property, and if the buyer defaults or is unable to pay-back the loan, the bank (or lender) has the right to foreclose and take ownership of the house. At this point, most banks sell the house to recover their loan principle. Banks do not like doing this because it costs them money and they are not equipped to really sell houses.

This means that the savvy real estate investor can take advantage of the foreclosure proceedings by closing a deal at the stage before which is called pre-foreclosure.

Pre-foreclosure is the period of time just before the bank repossesses the house in question. During this period, the bank is filing the required paperwork to become the lawful owner of the house. Each state has its own laws regarding foreclosure, and the pre-foreclosure period can be as short as 21 days in Texas, to as long as 3 months in California. At the end of the pre-foreclosure period, the house may go up on auction at the “courthouse steps,” where many investors go looking for a good valued investment property.

To invest in a pre-foreclosure property, investors must get the property before the public auction or the bank actually takes title to the house. This point is the perfect time to negotiate with the homeowner, and structuring a lucrative deal without having to compete with other investors. Without having to bid against other investors, pre-foreclosure specialists are often able to acquire properties far below market prices.

There are techniques, tips and workarounds which I cover in my courses and my workshops and which every real estate investor really needs to know. At this stage though it is sufficient to point out that the successful real estate investor is good at making a rapid assessment of a deal’s value and then getting and getting out in the shortest possible time with the greatest amount of money.

It really is that simple, if you know how.

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