REO, what’s that?

REO stands for Real Estate Owned. This, in general, is a property that has been foreclosed on by a lender and is now for sale by the lender to recapture its’ money. Why would one consider buying a property like this? Since the lender has already foreclosed on the property it is now in their inventory. They want to get it off their inventory quickly because it is not making them any money. For that reason they will discount the price to sell it quicker. What are the disadvantages? You are buying the property with no guarantee of condition other than your ability to inspect it. The lender will generally not pay any closing costs (taxes and transfer fees) so the buyer will have to pay these. You will also need to show proof of funds to have your offer accepted. So what’s the advantages? You can still negotiate on price. Their asking price is just that, an asking price but you will most likely be bidding against other buyers. You can close quickly. Lenders want the property off of their inventory as soon as possible. In most cases the property is already vacant and is in AS-IS condition. What you see is what you get as far as condition, but you should still get an inspection. You will know if you have to put more money into it or not.

I just recently completed a REO purchase for a buyer. They bought a 1 bedroom condo for under $40,000. It was in decent condition and they paid cash and closed in 2 weeks. They are going to put some money into to it to do some updating and then plan on renting it out. They are first time investors but they got a great deal!

In my opinion this type of purchase is better than a short sale or property in foreclosure. It’s quicker and cleaner although the paperwork is still a little excessive.

Buying a foreclosed property

Those foresclosure prices look pretty good don’t they. Well remember you get what you pay for. I am going through one right now with a buyer. The seller (Fannie Mae) and the buyer agreed on price and a quick closing date. The property is in decent shape but not updated at all. Here’s the problem. It’s the day before the closing and the buyer has a deadline of noon to order the wire transfer in order to close tomorrow. It’s 11:30 and here I sit in front of the computer writing this blog and checking my email every 10 or 15 minutes. We have received no closing statement or amount to transfer. Looks like this one might not make it tomorrow. The buyer is frustrated because I have estimated their closing costs but I have no solid info from the title company to give them the bottom line. Granted they are not experienced real estate investors but they should be able to see the terms of closing in a reasonable time frame before the closing. If you’re thinking of buying a foreslosure, or god forbid a short sale, have a thick skin and some extra cash on hand to cover the surpises on the closing statement. Okay got to go check email again. See ya’.

Wallpaper removal for remodel

Dreading that remodelling job because you are going to have to get rid of that old wallpaper? Scrape, scrape, scrape, ugh! Here’s a tip to get that stuff off the wall. Mix one quarter cup of liquid fabric softener to one gallon of really hot water. Make about five gallons.  Score the wallpaper. You can get a tool at any hardware store for this. Apply with a paint roller and wait about 10 minutes (this varies) then starting scraping with a putty knife or something similar (nothing sharp). Reapply as necessary. Once the paper is off make sure you back and get all the residual glue. Try a squeegee for this part. I had an owner that just did this and it worked great! If you’ve got any methods that haved worked for you, pass them along. I’ve heard that equal parts of hot water and white vinegar also works.

Too hot for you? Lower that electric bill.

Okay it’s the end of July in Florida and it’s been your typical hot summer. Wondering how you can save a little bit extra on the power bill each month this time of year? Here’s a couple of ideas I have implemented at my home. Last summer I installed some window film on my living room windows. They face west and get direct sun in the afternoon so the terrazo floor and the rest of the room heats up. The thermostat also just happens to be on the opposite wall. When the electric bill came in for next couple of months it was $30 to $40 less than the previous year. The film cost around $40 so I think it was a good trade off in the long run. This year I have also been setting the thermostat up 2 degrees higher during the day and then reducing it in the evening. I don’t know how much that’s going to help yet but it has to help some. Got any ideas you’d like to share? Let me know I’ll pass them along.

Got bees?

I just took over a rental property a couple of weeks ago and found we have a bee infestation problem in a wall on the outside of the building. I went to a do it yourself pest store and the guy sold me some spray and said it would work. Well I haven’t much luck, so I thought I’d search the internet to see what kind of extermination techniques would work. First the were plenty of ads saying you can’t do it yourself, call them! They also said that once you get rid of the bees you have to open up the walls and get rid of the honey or it will attract bugs and other bees. Then I found a message thread that was absolutely hilarious and also very effective. 

Since my bees are in the wall I don’t think this method will quite work. Anyway I called my local pest company I use and they are sending a guy out tomorrow and he’ll take care of it for $150. No, we are not tearing open walls either. Beeeautiful!

Check it out at

PS – sorry about some of the language but I didn’t write it.

The Bee story

Market Snapshot #8

 

 

 

 

 

(May ‘08 to June ‘09)

Sales volume has continued to increase to a level of 3 years ago. Inventory continues to decline slowly. There are still a lot of cash transactions occurring (46%).

 

 

 

 

 

 

Median selling prices have continued to increase for both condos and homes. Condos are rebounding quicker.

Statistics compiled from local MLS data

 

Those pesky appraisers

One often overlooked part the sales process by both buyers and sellers is the importance of the appraisal. The appraisal amount will reflect on how much the lender is willing to provide the buyer on a particular property. Now a couple of years ago lenders were quite generous in how much and how often they would lend on a deal. Sometimes it was more than 100% of the value of the property. Well, now all that’s gone as it should be. One of the things lenders were doing was, they wanted an appraisal that would just make the deal work so they could loan the money. This resulted in inflated appraisals. To help keep this from happening, back in January congress enacted new laws to protect the consumer against bad lending practices. Lenders (and real estate agents) are no longer allowed to have direct influence on the appraiser so no undue pressure is applied. This was a good idea but the implementation has had an over reactive effect. Appraisals across the board are now coming in low and effectively killing deals. Even though the buyer and seller agree on price and terms the lenders won’t approve the loans based on the low apprasials. Congress is now working on putting a hold on the laws for 18 months until the implementaion issues can be worked out. For more information search the web for Home Valuation Code of Conduct.

Hurricane season begins

June is the beginning of another hurricane season here in Florida. Luckily it has been fairly quiet here on the west coast the last couple of years. I thought I’d share with you some pictures of my last house and what hurricane Charley did to it. Charley entered Florida on the south west coast in August 2004 and then went north east across the state. My house was on the east side of Orlando, a good 2 1/2 hour drive from the west coast. The storm came though in the middle of the night with winds in excess of 106 mile per hour after travelling that distance over land. The Orlando area had heavy damage in many areas with a lot of large downed trees. Here are the pictures of my house.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The shingles were blown off the roof down to the plywood which then let the water leak into the second floor ceiling which came down. Water and drywall don’t mix well. The screen room over the pool had one end blown out and the top half was bent over about 30 degrees. So it goes. It took about 8 months and $18,000 to repair the damage. After that I decided to move back to the west coast area where I had lived almost 25 years earlier. I figure it this way, if you can get hit by a hurricane in the middle of the state I may as well move back to the beach. That’s what living in Florida it supposed to be about isn’t it?

Craig’s List

Looking to rent but don’t know where to look? I don’t know if you’ve noticed but the newspaper doesn’t have a lot of ads anymore for real estate and rentals. So where is everybody advertising? There has been a major shit to the internet for advertising properties. One of the best sites that works for me is Craig’s List (tampa.craigslist.org). You can post an ad for FREE and it will will last for 45 days. I replace my ads every two weeks so they stay closer to the top of the current listings. I have had calls on my ads within an hour of putting it Craig’s List. That’s pretty powerful! You can also search for other things on Craig’s List. Jobs, electronics, furnishings, etc and you get to deal with someone local. So if you want to buy something you can look at it first. Check out my good friend and web site Craig’s List.

 

P.S. – I also put my properties for sale there as well with a link to my web site so they can get more information.

Market Snapshot for May

Market Snapshot

 (March ‘08 to April ‘09)

 

 

 

 

 

 

 

 

 

Sales volume continues to grow as buyers pick up properties at lower prices. 48% of all sales in April were cash transactions.

 

 

 

 

 

 

 

 

 

Median selling prices increased in April for homes but were lower for condos.