​There are investors and companies that send out postcards and letters telling people that they are looking to buy their home.  They pick their lists based on many different criteria.  Some target owners that are late on their mortgage.  Some target non-owner occupied homes.  Some target homes with owners over 65 years old.  Some target people going through a divorce.  Some target the obituaries.  Some target all of the above.

Obviously, these investors are not looking to pay market value for the property, and they are looking for the people that are the most likely to sell their home for pennies on the dollar.

What do I mean for ‘pennies on the dollar’?  The investor tries to get the home as cheaply as possible.  Many will start out at as low as 40 cents on the dollar of the homes current value in the homes current condition, and the cutoff is usually 70 cents on the dollar.  Please note that this is in current condition and not after repairs.

Many of these investors are hoping they can get your home under contract and then find someone who can actually buy it.  They don’t have the cash in the bank to purchase the property.  They will get the home under contract, then start calling everyone they can to see if someone wants to buy the contract before they ever even close on the property.  If they can’t find someone, then they can’t close and you are in a worse situation.

So, what to do if you are in a desperate situation and see working with an investor as the only, or most convenient way out?

#1) Call a real estate agent.  (This is not as self-serving as it seems)  Pretty much all real estate agents are going to be willing to sit with you and give you an idea of what the home is worth.  It will be a free service.  Try to find someone who knows your area.  (Side note, if you don’t know who to call, call me and I will find someone in your area)  Why don’t they charge?  If you decide to list the property, the hope is that you will call them to do so.  This gives you an idea of what the home will sell for and how long it will take to sell the home if they were to list it.  This keeps you from selling for a discount unknowingly. 

In my former life as an appraiser I had the opportunity to do an appraisal for an older lady who had bought her home for $70K nearly 30 years prior.  It was one of the hottest areas in Atlanta.  I asked her what she thought it would be worth.  She said, probably at least a 100k by now.  It was worth over 700k.  (Well, she wasn’t wrong, it was at least 100k)  She nearly fainted when I told her.

#2) If you decide to move forward with the investor:  Remember, this is a negotiation.  Yes, the investor may play hard ball and threaten to walk away.  Do not be intimidated.  Also, don’t be scared to walk away yourself.

#3) Insist on receiving proof of funds showing that the investor has the cash to purchase your home.  This should be a letter from their banker stating that they have at least the amount of the purchase price and all closing costs available in liquid assets at time of the contract.  Make sure you call the bank to verify that this is correct.  A letter without verification could easily be fraudulent.  A deal with any investor should be one that is quick and easy.  You are trading price for convenience.  You are, essentially, selling your home to a business, the same way one sells jewelry to a pawn shop.  Part of that convenience is making sure there is no loan to obtained, no last minute detail that can derail the transaction.

#4) Read the contract carefully and make sure you understand it.  Many contracts will have a due diligence period.  This allows the other side to pull out for any reason at all.  Push to have an inspection period instead of a due diligence period.  Look to have this period as short as possible.  Best case scenario is 7 days or less.  Do not accept any inspection period or due diligence period over 21 days. 

#5) Make sure the investor has skin in the game.  In Georgia, we call this earnest money.  The sticky part here is that the attorney that will be closing the transaction will likely be working for the investor.  So, insist that whoever is holding the earnest money issues a signed statement that is part of the contract stating that they will handle and disperse the earnest money as required by the contract.  Also, earnest money should be significant in these cases.  Ask for 10% earnest money to be held by the attorney in the event of a breach.    

#6) Stipulate in the contract that the investor cannot flip the contract to another party prior to closing without specific written permission from you. 

#7) Be prepared for the offer price to be reduced after the inspection.  Unfortunately, one of the games investors play is to come to an agreement at one price, then negotiate for a reduction of the price after the inspection.  It happens with listed properties too.  Inspectors are looking to lock the property up and then negotiate the price. 

#8) Stipulate in writing that the contract cannot be flipped or sold prior to close. Most important of all:  Don’t ever sell your property by letting someone take over payments.  It will not absolve you of the financial obligation.  So, if he/she doesn’t make the payments on time, your credit takes a hit.  If the home is foreclosed on, the foreclosure is on you.  Even if they make every payment on time for the next 30 years, that payment will be counted against you on your credit report.  It will limit your ability to buy another home or any other expensive item until it is paid off. 

In many cases an investor and distressed home seller can come to an agreement that is a win-win.  I am not here to bash all investors.  I am here to give a word of caution to unsuspecting home owners.

The key is for the distressed seller to be informed and not to operate out of ignorance.  Make sure you fully understand every implication of the agreement.  If there is anything you don’t understand, reach out to a professional.  (Preferably an attorney.)  Do not take the investor’s verbal word for anything that is not in writing.  (This should be standard practice for ALL contracts, not just ones that are offered by investors)

As always, if you have any further questions, don’t hesitate to
contact me directly.  I am happy to answer any questions you may have.  My number is 678-992-3817.

As I was driving into the office today, I heard a national mortgage company advertising lender paid mortgage insurance, and I thought about how misleading the ad was to the public.

So, here is an overview of mortgage insurance.

What is mortgage insurance?  Basically, mortgage insurance protects the lender if you default on your loan.  It is not home owner's insurance in any way, and really offers the home owner no protection at all.  For a conventional loan, it is not required if you are putting down 20%.  For an FHA loan, the MI is always required.  And, for conventional loans, it is actually Private Mortgage Insurance, which is why it is abbreviated as PMI.  For FHA and USDA, it is just MI.  

PMI and MI can vary in terms of cost due to the following factors:  Loan type, Loan Amount, LTV, and credit score.  

PMI can be removed after a minimum of two years if the loan to value hits 78%.  That can happen from additional principle payments or appreciation.  Either way, you will likely have to have an appraisal from the banks approved list of appraisers.  In fact, they will most likely order the appraisal themselves.  You will also have had to have on time payments for at least 24 months.  

One hitch with FHA loans is that the MI cannot be removed.....ever.  This is a recent change, that is often misunderstood.

So, what's with lender paid PMI?  The lender makes the interest rate higher to pay for the PMI.  It will usually result in a lower payment versus a payment with normal PMI.  The hitch comes in that your rate will be locked in higher.  So, if you were to keep the loan for the full 30 years, you would actually pay more than if you had PMI that could be removed.  

The point is that the lender isn't paying it for you out of the goodness of their heart.  You pay a higher rate.  It may be worth it.  You may be able to afford a larger, nicer, more expensive home with lender paid MI.  But, just know going into it that there are pluses and minuses to this loan product.

If you have questions, don't hesitate to call me at 678-992-3817.  If you have feedback, please leave it below!

And, as always,  "Make the Wise Move".

Obviously, as Real Estate professionals, one of the most frequent questions we get asked is:  How are the schools?  Surprisingly, we aren't allowed to discuss the quality, or competence of the schools.   I know this sounds absurd, but it is true.  In some ways, this is good.  Everyone's standards differ and what is a good school to me, may not meet your criteria of a good school.  I encourage all of my clients to do their own homework.

First and foremost, unlike a decade ago, there is an abundance of information about schools on the internet.  Here are a list of websites that can help with your initial search.
'

Great Schools

This is great first step.  You can search for any school district that you are considering to see how it ranks.  It will rank schools on a numerical scale from 1-10.

School Digger

This website begins to give you a little deeper statistical analysis of how the schools rank.

Niche Rankings

This is a yearly ranking by Niche.  This is based on several different statistics as well as reviews from students.

U.S. News ranking of High Schools in Georgia.

And, finally, this is a ranking is by U.S News.  This is based on four key metrics listed on the website.



What next?


All children and all parents are not the same.  So, a great school for one student and parent may not be a great fit for another.  Pay attention to things like student-teacher ratios, or whether a school offers a specific program that engages something that you child loves.  Some schools have video, photography, or broadcasting classes.  The key is to find the school that is right for your child.

If you are seriously considering a home, head to the neighborhood when school lets out, and talk to some of the parents.  Head to the school and talk with the principle and ask for a tour.  Walking through the school will give you a first hand look at what your child will see everyday.  

And, finally, remember, that regardless of the schools ranking, the success of your particular student can be directly influenced by your involvement, and your student's hard work.

Please feel free to reach out to me with any suggestions or feedback that you may have.

Thinking about selling your home?  Call us!  Click here for 5 reasons to sell before Winter! 

By Keith Loria

Our military personnel do a great deal for our country, and one of the ways the government thanks them for their service is with the VA loan program, which allows both past and current military personnel a better option for financing. 

Originally established in 1944 as part of the Servicemen’s Readjustment Act, a VA loan is available for any individual who has served in active duty in any branch of the U.S. military for a minimum of 90 days, and it has helped millions of people and their families purchase a home. 

In addition to servicemen and servicewoman, non-active duty personnel, such as individuals in the Army Reserves or National Guard, may apply for a VA-backed mortgage, provided they have completed six years of service. The spouses of deceased or missing military members are also eligible if they have not remarried.

The major advantage of a VA loan is that it doesn’t require a down payment. It also doesn’t have private mortgage insurance. It does require the borrower to pay a one-time funding fee on their purchase, which can be paid up front or financed into the total cost of the loan. The funding fee for regular military members is 2.15 percent of the loan. Reservists pay a fee of 2.40 percent.

According to recent figures by the Department of Veteran’s Affairs, more people took advantage of the program in 2013 than ever before, with close to 630,000 VA loans given out. This was mostly due to historically low interest rates.

Still, many veterans, especially those discharged years ago, often don’t realize that such a benefit exists. That’s why the Department of Veteran’s Affairs has increased its efforts to let veterans know about the VA loan program, and all the benefits it offers. 

To qualify, borrowers must show enough monthly income after paying personal debts and housing costs to meet “residual income” levels set by the department. A VA loan must be for a primary residence and the limits on the amount someone can get are based on area median home prices. The 2014 limits range from $417,500 to $1,094,625.

One other important note: borrowers who received a dishonorable discharge from any military branch are not eligible.

To learn more about the VA loan program, contact our office today.

Reprinted with permission from RISMedia. ©2014. All rights reserved.

Edited 10/01/2013- I was dead wrong yesterday.  


Well, no matter which side of the isle you are on, the government shutdown could affect you.   As far as Real Estate transactions go.... this is a big deal.

President Obama said specifically that "Federal loans for rural communities, small business owners, families buying a home will be frozen,"  


Yesterday, I went into each of the loan products and what the impact would be.  Well, if you aren't already in process, there will be significant delays regardless of the loan product.


Mortgage companies use a system to verify SSN's and another system to verify tax returns/income.  These systems are obviously run by the IRS.  And, these systems are currently shut down.


Until the government is started back up, cash offers should carry even more weight than normal.

One of the most asked questions I ever get.  

So, a while back, I started a series about what makes a good agent.  There are obviously two sides to a deal.  The agent that represents the buyer, known as a buyers agent or the selling agent.  Then, there is the agent that represents the seller, known as a listing agent.   

I wrote about some of the general things that makes a good agent with the part I of this series.  Then, I posted what makes a good buyer's agent.  Now, we will talk about what makes a good listing agent.

#1) Knowledge- I started to try to list out everything that a good agent should know.  And, well, it was a long list.  Here are the five major things that jumped out at me.  

Property value- You don't want to ask too much and have the listing go stale, and you also don't want to under price your home and leave money on the table.  (of course, in this market under priced homes are quickly bid up..so, believe it or not, it is even better to under price your home right now than to over price it)

Marketing-  How to get the most eyes on your property.  Yes, the listing services are a great start.  It is more than just that.  It is having a great website that ranks highly on Google.   It is featuring them on Zillow, Trulia and Realtor.com.  It is about getting them on Craigslist, Facebook, and Backpage.  Basically, everywhere you can get them.  Some agents feel it is a waste of time to run Craigslist and Backpage ads.  But, the first time homebuyer often starts there because they are comfortable with that sight.  They have looked for things there already.  Most people try the familiar first.  

Loan products and lenders- Why does this matter?  The seller isn't getting a loan.  The seller isn't buying the house.  Why should the listing agent care?  Well, there are many different loan programs out there.  And, so many things depend on the type of loan.  The listing agent should know the different types of loans and what the implications are.  The two biggest factors that change with loan types are time to get done and repairs required.  Some loan programs will require you to fix certain things.  So, you may be looking at two similar offers and decide based on price alone.  Only, one loan type may cost you thousands in repairs that the other would not have.   Oh, and of course, if the listing agent knows the loan types, then they can help you navigate those waters more smoothly and get the house closed on time.

Common negotiating strategies-  So many people think that the only thing that matters is price.  But, this couldn't be further from the truth.  Some buyers' agents actually overbid to get the house under contract, only to then negotiate the price during due diligence.  Some look to have ridiculous contingency periods that protect them long after what is reasonable and well into the realm of abusive.  Some overbid, knowing that the appraisal will knock it down.  Other than perhaps the first one, these are not 'improper'.  They are just strategies.  There are more, especially when you get into different types of sale.  Many negotiations are like chess matches.  The good agents see the board from many different angles.    

Contracts-  We use standardized forms.  However, so many agents have misconceptions about parts of the form.  It's as if we don't need to read and understand them, because it is a 'standard' contract.  And, due to this complacency, many agents put their clients in jeopardy by an improperly completed field.

#2) Communication-  This is one of the most common complaints I hear.  This is key.  Not only to the seller, but also to other agents.  I know how frustrating it can be calling a listing agent to show a home and not hearing back for days.  Or, calling with a question so that I can submit an offer and hearing nothing.  And, of course, communicating with the seller to let them know what is going on and what you are doing to get their house sold.

#3) Willingness to invest time, money and resources-  Listing agents are only paid if they sell the home.  Due to this, some are unwilling to invest the proper amount of time or, more importantly, money to getting the listing marketed correctly.  The shortcuts that they take will help their wallet, but it certainly doesn't help your home sell or sell for as much as possible. 

#4)  Knowing our own limitations-  I do not stage homes, nor do I take the photos that go on all my marketing.  I hire a certified staging specialist and a professional photographer.  Does this increase my expenses and decrease my bottom line?  Yes.  I could easily walk around and give you mediocre staging advice.  But, I know that homes sell better when staged.  And, I know that those photographs are what represents your home to millions of people.   This is so very important, especially in upper price ranges.  It isn't just about getting your home sold.  It is about getting the most for your home in the shortest amount of time.

#5)  Counsel-  Your agent is your advocate.  And, they should be willing to go to bat for you at all times.  That should never change.  They represent you in this transaction.  However, they should also be able to put things in perspective.  The other party may not be in the right.  However, it may cost you more in the long run to be right, than to let the other party have their way.  The agent has to be able to frame those conversations.  

Like I said at the beginning, there is a lot that goes into being a great listing agent.  It would be hard to pick the most important.  I supposed it would be integrity.  A person who has integrity would work on the rest because they would know how important each of these is.  

What do you think the most important attributes are?