Kat Vallish Lake Spivey/Henry Co Georgia Real Estate

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For the past year and a half all except for one of my transactions has been REO. I have learned a lot from listing agents and other experts regarding how REO sellers view offers. I also review the contracts of other agents in or office as the Contract Compliance Manager.

What most agents do not seem to realize is that you can still ask for repairs or replacements on an REO property. When a REO listing says no repairs they are generally talked about the fact that they are not going to replace the flooring or cabinets. Don't ask them to paint. BUT they will make repairs or replace items involving the major systems or structure of the home. They are especially generous with owner occupants.

So today I reviewed about 7 contracts and noone asked for anything, except for stuff they had already been given a right to do in the contract. Such as, "All parties agree buyer shall have a right to inspect the property".

Here are some things I commonly ask for and obtain for my buyer 9 out of 10 times.

A one year Termite Bond (worth $500 - $900)

A one year Home Warranty

A new compressor if the old one is missing, which it usually is. I also ask that the HVAC is in good working condition.

I always recommend that my buyers get a good home inspection before the due dilligence period has ended. They usually do this asap after verbal acceptance. When the home inspection reveals some serious problems, and the buyer wants to continue with the transaction, but no at the agreed upon price, I put together an amendment to address concerns. In this amendment I state the item or items that have been revealed that cause the buyers to re-access the value of the home such as stair well that is bowing indicating structural issues or in the case of a termite inspection, a wall or walls that are eaten up with termites. Other examples might a slipping foundation or cracks in the foundation. I always add a stipulation at the bottom that if the seller does not agree to the reduced price, the Purchase and Sales Agreement or Contract will terminate. That always gets their attention.

What has your experience been with REOs?

That is what I think a lot of us have been doing in this market, is just sitting there with our lemons and muttering things like, what am I supposed to do with this. Miss Guilty over here is speaking from experience. We have been having our lemon parties with whoever or whomever will join us.

So what can we make out of these lemons that we have been tossed? In July, I bought a box of lemons at the farmers market and took a bag of 1/2 dozen lemons to my past and current clients along with a recipe for lemonade. People laughed when I gave them their bags of lemons. It was fun and I got to talk to people about what was really going on with them and how they were effected by the current real estate market. It also helped me stop blaming myself for something I had no conrol over.

I have also been making "lemon" calls otherwise known as lead generation at least 3 mornings a week to people whose homes did not sell, but might like to get them sold. Well those calls feel a little sour, or at least my stomach does before I start dialing. Then I start thinking about how these people need my help in making lemonade for them.

So what are we waiting for? Let's start sqeezing some lemons. Let's get those homes sold so we can go out there and help more people get their homes sold. Let's show the world, or at least our little part of it, that we can be successful no matter what life hands us.

I would love to hear your lemonade "success" stories.

Kat

People have been asking me this question and I have been asking this question in turn quite a bit lately. I don't know about you, but I would like to see that $30,000 not depreciate one cent more.

All the projections are different depending upon who is talking. Some say we have hit bottom and some say we have a ways to go yet.

I don't know how much of an effect this will have on appraisals, but owner occupant buyers are often paying a little more than asking price in order to get in on HUD/FHA $100 down program. Of course this changes the $100 down to $100 down plus whatever amount they went over the as-is or FHA appraisal.

My non HUD buyers are still wanting to offer much lower than the asking price, but what I am seeing is that sellers are often pricing the houses in line with the market, so that they are already a really good deal. This is making buyers a little more reluctant to offer much less than the asking price.

What is happening in your market? Are your listings selling closer to asking price than they have been in the past year? Are your buyers making offers any closer to the seller's asking price than in the past year?

Once we do figure out that the market has hit bottom, it will be on its way up. That will be a relief.

This week I must have gotten a dozen phone calls from people who wanted to purchase a home by entering into a Lease Purchase. Half of these individuals had no idea what a lease purchase is. The other half have messed up their credit a bit and just cannot buy a house outright at the moment.

So lets examine the pros and cons of entering into a Lease Purchase.

Bad news first. When you enter into a Lease Purchase you are agreeing on the purchase price. With the market continues to decline. You may be agreeing to pay more for a house than it will be worth in a year. There are ways to protect you (more on that later). Another con, if you miss a payment, you loose your deposit, which is usually about 4 times the amount of your monthly payment. Also, unlike a straight lease, you are responsible for all the maintenance on the house while you area in the lease portion of the lease purchase. And last but not least, you discover after living in the house for 3 months, that this house is a dog. You have spent thousands of dollars fixing things that are broken and you feel like you have been ripped off. At this point, why should you even consider entering into a Lease Purchase.

For starters. Once you have picked out a home, you don't have to move again. Or if you are tired of renting and just don't quite have the money to purchase a home right now. Home prices are at a all time low. Others who favor a lease purchase are those who's credit score is just a little too low to get a loan. So you find your favorite Realtor and she finds you a great home where the seller's are willing to sell the house via Lease Purchase. If you Realtor knows what he or she is doing, you will talk to a lender to get an assessment of your current credit condition and to asses how long it will be before you can go through with the purchase. If things look promising you will get together with your favorite Realtor and to draw up the agreements. There will be two documents the Lease for Lease Purchase and the Lease Purchase itself. There you will fill in all the details. These details should include special stipulations that protect you in case the house does not appraise for the agreed price and other items you would like to address. Such as the seller being responsible for maintenance during the Lease term if that is important to you.

Call your favorite realtor, Kat Vallish, to find your next home.

P. S. - If you know someone who is having trouble making their mortgage payments, give me a call at 678-468-7561

If you are a realtor writing a Lease Purchase agreement and would like to know more about writing special stipulations that protect your client, email me at katvallish@kw.com. If any of you have special stips you would like to share, please feel free.