The $8000 tax credit is a nice perk for first-time homebuyers. In my opinion, new Buyers should look at it as a perk, not as an incentive, and especially not an incentive to buy a dump! Get back to basics, take a breath, and recognize the $8000 tax credit for what it is:
•1) Qualify for a home based on solid income, a certain level of confidence in job security, and ability to repay for years to come.
•2) Find a nice property that you don't have to sell for at least 5 years, better if you can keep it for 10 years or more, possibly as a rental later on.
•3) Don't let the pending deadline for free money lure you into a dump! First of all, market swings can wipe out that $8000 in a flash, even if you are buying a $150,000 property. Second of all, a dump doesn't need the market to help wipe out that $8000 of free money. A dump can do it all by itself.
If you're a first time home buyer, see my blog "Top 10 Ways to Know Your Buying A Dump."
In certain locations there is a shortage of inventory and a feeding frenzy among first-time Buyers trying to beat the clock. Meanwhile cash investors are snatching up the best properties causing first-timers to battle for scraps.
Yes, the $8000 tax credit is a nice perk. If you buy for all the right reasons, the credit is gravy. But buying a dog pile to get $8000 today and risk your future just makes no sense. Some times renting makes more sense. (OK now you can officially declare me the worst real estate salesperson ever.)
For all its encouragement and stimulus, the government doesn't even want you to buy a dump. Last I heard, they have not announced Cash-for-Clunkers Homes, and you don't want to be calling Marilyn Mock of the Foreclosure Angel Foundation in 2011.
Let the professional investors deal with risk. You too can be a pro some day if you make the right moves today. Also see Brian Brady's blog, Suspend the Practice Of Flesh Devouring: Let The First Time Home Buyer Tax Credit Expire
Without further adieu, here are the Top 10 Ways to Know You're Buying a Dump / Money Pit.
10) A thousand cards are on the kitchen counter. The listing agent says he's looking for offers, yet you notice a substantial pile of REALTOR cards on the kitchen counter. It looked good on paper, but nobody felt like doing anything after seeing the house. (Note to Seller: wake up and smell the business cards.)
9) It's a bank-owned property on the market for over 30 days (Substitute the appropriate "expiration" date for your market). Unless this property fell out of escrow with a Buyer who could not perform, beware. Bank-owned properties in many inventory-depleted markets do not last. Caveat: You can ask your agent investigate. If it fell out once because of the Buyer and not because of the property, you may have an opportunity to grab something others have passed up.
8) A $200,000 listing is on the market for over 30 days (Substitute the proper value threshold in your market). Cash is King and in any market, and cash buyer activity is red hot below $200,000 in my market. If you see a house under the threshold getting passed up by the Kings, it's a sign they smell something foul. Perfect segue to ...
7) You have to hold your nose to tour the property, or worse...
- Buyer hits an odor wall and can't go any further, does a 180 and bolts for the exit.
- REALTOR does the same. Now we're talking about a real estate professional whose nose has been around the block a few times.
- Contractor's eyes start to water. He has no olfactory abilities. His nose shut down years ago and now his eyes are complaining at this house.
6) The property is listed 30% below comps. Honey, it ain't comparable. It does not compare. It can't compete. It's screaming for a professional Buyer, so if you're not one, think again. If it's a single family house, you're looking at a sinkhole, parking lot, cracker box, meth lab, land lease, money pit, or animal shelter. If it's a condo, you're looking at an HOA with no reserves (money pit again), high delinquency, high number of rentals, or major lawsuit.
5) Three Lenders Have Told You No To This Property. Did you get a clue when the first one said "Sorry, I can't take your money?" The problem is they have to give you money to make their money, but the collateral isn't there. If your lender isn't interested in the property, you shouldn't be interested.
4) You're an FHA Buyer offering below list and you get accepted! (Has this actually ever happened?) This is one of those times when perverse logic, "If you like me so much, why would I possibly like you," actually makes sense. Sorry FHA Buyers, but if your agent hasn't told you it's rough out there, I'm here to tell you.
OK my list came up short. What can you add to the "Top 10 Ways to Know You're Buying a Dump." I've saved the top three spots for you, so add to the list and send to your Buyers, relatives, and friends.
America's Favorite Foreclosure Market Pastime: Complaining About Government.
At some time in life, many of us were told we have no business complaining about things in life that we don't know about, don't participate in, or don't help to make better.
I'm paraphrasing a few examples here ...
Obama has said it - "I can't do it alone. I need your help."
My former CEO said it "Bring me a problem, and bring me a solution."
My former boss said "Great point - you are in charge of fixing it."
My REO Masters Co-Founder Scott MacLaine said it "This is an organization where members don't join and expect success to happen, but have a hand in making a difference."
I'm down with this philosophy (i.e. in agreement) because it just makes sense. It's practical. But I'll let you in on a secret - The other day I did happen to fall off my high horse and complain. It all started in court, where I'm spending way too much time lately in this forclosure market.
In my role as an REO Broker, I am frequently asked to appear in court as a witness for the bank at unlawful detainer hearings. A few weeks ago, the defendant actually showed up. This couple pleaded to the judge about saving their home, doing a loan modification, whatever it took, they were committed. The judge had to explain, as delicately as he could, that it was too late and that the bank filed to gain possession of their property. He granted the couple 2 weeks to vacate. Within the two weeks, the couple managed to get a relative to get qualified to buy the house. The bank agreed to go into escrow, knowing full well the relative was purchasing the home to enable the former defaulted borrowers to stay in the house. If escrow closes, the occupants essentially will have been awarded the mother of all loan modifications since the new purchase price and interest rate are well below what they were when the couple purchased the home at its peak. And the big bonus - the occupants have not paid their mortgage for about a year!
Since the bank is the decision-maker, I happily facilitated all this. And then scratched my head and said ... What??? How do I get a deal like that???
OK forget about me - what about all the other people in need? What about my client who suffered a rare disease resulting in a bone marrow transplant and a short sale because there was no loan modification that could help?
I don't begrudge the couple fighting for their home. I don't know them. Maybe they are great people and this is Karma coming around to help. I may never know. But I am pretty certain that in this unprecedented real estate climate, the stories, the backgrounds, and the behavior behind those who have lost their homes are as diverse as one can imagine. Some truly needy are being swept away by the foreclosure market.
Can we really blame government or banking institutions for helping those less deserving, or foregoing those in real need? Maybe not if:
1) Policies are helping to solve the problem at large on a high level.
or
2) I'm not part of the solution.
Enter the Foreclosure Angel Foundation. This is not my idea so if am insinuating that I am part of the solution, well, let me disclose that I'm merely outsourcing my contribution to the solution by supporting Marilyn Mock, founder of the Foreclosure Angel Foundation. This is an amazing lady who has started a foundation to help the neediest of those in foreclosure. You may have heard the expression "Think Globally, Act Locally." That's how Marilyn got started. She saw a problem and jumped right in. Never complained to anyone on behalf of the victim, never complained about the cruelty of the world, just took decisive action.
I first saw her on Oprah (my wife made me watch it) and then when the founders of REO Masters announced the organization's support for Marilyn and the Foreclosure Angel Foundation, I was thrilled. The support will kick off with a fundraising event at the Five-Star Conference in Dallas later this month.
Complaining feels good. But being part of the solution feels even better.
REO Masters Executive Member REO Broker, MBA, e-Pro Maximize Exposure | Minimize Headaches No pressure, just expertise and results. Testimonials at KenLeeHomes.com
Buying and Selling residential real esate in the North Los Angeles County area.
REO (Bank-owned) - We also help banks and asset managment companies sell their inventory of foreclosed homes.
Short Sales - A short sale is when the mortgage holder agrees to accept a sale that will pay them back less than what is owed on the mortgage.
Valuations - we perform Broker Price Opinions in bunches for financial institutions who pay us for our expertise. We can tell you how much your home is worth better than those who only dabble in the field. And what about Zillow? - no comment.
Referring great agents nationwide, or providing tips on what you should look for in a real estate professional.
If you don't feel like being sold, nudged, persuaded, steered, or made to do something not in your best interest, consider that a client once told me of our team "I felt like we were hanging out with friends, not working with agents." See our testimonials for more insight on how we might fit your style.
We are both advisors and students of the practice of real estate. Having started as an investor, having formerly owned a real estate brokerage, having served clients from first time home buyers to financial institutions selling their foreclosed properties, we provide a wealth of knowledge. That knowledge is always refreshed to stay current, and we love sharing what we've learned.
Engage our team and you will engage a group of professionals who are passionate about real estate, ethics, and service.
Name: Lisa and George
Since this is not the first time we sold a home, we can truly say that you are the best. You really worked hard and you are sensitive to your customers' needs.
Name: Cliff and Sachiko
Ken was always professional, courteous and extremely competent. He took care to understand what we really wanted and guided us every step along the way. Deep down, we always had a respect and trust that he had our best interests at heart. He has bent over backwards to make sure we're satisfied. The arduous task of buying our ideal home was exciting and enjoyable with Ken.
Name: Todd & Stacie Keezer
The process of buying or selling a home can often be an intimidating and overwhelming experience. Thanks to your professionalism, couth, and attention to detail we were able to handle the stress of the process knowing we were in good hands. Your knowledge of the market as well as your direct honesty gave us comfort when difficult choices had to be made. Your support was steadfast, even when our decisions differed from your recommendations. We appreciate how readily you made yourself available to us when we had any issues or concerns and are grateful for all your efforts in selling our home.
Name: A. S., VP of Marketing
Ken sold our Valencia home in the spring of 2007 at the second highest price in our tract since these homes were built. Ours was the highest priced sale in 2006 and 2007 when the market had settled from it's peak in 2005. We were very satisfied with his full service and excellent results.
Name: Dr. H. Lin, E.R. Surgeon
We were excited about finding an investment property with good rental income and strong appreciation. While we had some areas in mind, Ken saved us considerable legwork by providing analytical support to key in on the best area. We found the right property and Ken ensured a smooth purchase by coordinating inspections, negotiating repairs, and securing the terms of a long-term rent back by the sellers.
Name: M. Freeman
Thanks Ken. You have been very helpful. We are pre-approved with a lender and are currently working with a friend who is an agent but, also doing research on our own. We are really excited. Thank you for taking the time to respond. We have asked many agents questions and you are the first to reply.
Name: Dr. Beck, Pediatrician
When I sold my home, it was my first sale and I was unsure how I would evaluate the first offer to come in. After Ken asked about my situation and my goals for the sale, we developed a listing strategy to maximize exposure in a short period of time. I was thrilled and surprised to receive six offers, allowing me to compare and select one that was $45,000 over the asking price! Ken was there to guide me through the marketing, disclosures, inspections, repairs and contracts, and we were able to close on time.
Name: Ray & Amy
Dear Ken,
Thank you so much for your help, and especially your patience. Absolutely we'll be a reference for you.
Name: Perri Zinberg
I appreciate both your help and your demeanor during this search. It's the latter that's getting you job ... You've been helpful, friendly and professional, without giving me that "feeding frenzy" feeling. Thanks so much.
Name: Jared & Shawna
With me being in my early twenties, newly wed, and busy with my day to day responsibilities at the hospital, Ken's upfront honest demeanor was a refreshing relief from the atrocious salesman tactics I'm use to dealing with. He was neither pushy nor confrontational and always took the time to keep a clear channel of communication between us and the other realtor. Lastly, Ken provided information that aided us in making informed decisions pertaining to what we realistically could afford and what was available on the market. Thank you Ken for all your hard work and long drives to the valley.
Name: Courtney & Cathy
Ken, You were THE BEST realtor. You made selling our two properties pain-free. The transactions were seamless. The extra attention you gave us was invaluable. You are our realtor for life. Thanks!
Name: Jen & Ho
Best of the Best
Ken Lee is hands down the best realtor with whom we have ever worked. Ken is a dedicated expert who constantly gave us 200% of his time and effort. He was always on the ball and consistently provided sound, informed consultations and advice that helped us achieve our objectives. Ken's deep knowledge and understanding of the market, negotiations and transaction processes made many options available to us. Over the past five years, we have used 3 other realtors who have unsuccessfully sold our house. With Ken's real estate expertise, we sold the house in no time and for much more than expected. You're the best Ken! Keep up the great work.
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
Powered by the ActiveRain Real Estate Network
© 2009 ActiveRain Corp. All Rights Reserved
