Monday, September 30, 2013

REOs: a Primer

I found this useful article authored by Pam Maglione. IN case you've been out of the country for the past 6 years, "REO" stands for "Real Estate-Owned", taken from the balance sheet statements of a bank.

Looking for a great real estate investment? Why not take a closer look at REOs? A prevalent term in real estate, REOs are considered sought-after properties by realty investors and independent home buyers who wish to get the most value out of their hard-earned money. When thinking of expanding your investment nest egg or when looking for a home to buy, it is imperative that you know what you are getting into before signing that deed. Stay on this page, if you want to know more about REO, its benefits, and where to easily find them.

What is REO All About?

In actuality, REOs are properties which have been foreclosed and turned over to banks or financial entities after it fails to be sold in a short sale. Properties usually include single or multi-family abodes, farms, commercial spaces, and vacant lands and buildings. Most foreclosed homes have attached creditor and tax liens, and sometimes, in need of substantial repair. Through REO arrangement, these attachments can be “cleaned” by the bank or financial institution to make the property more saleable. When repairs needed are substantial, banks usually sell these properties “as is” making it a favorite among prolific do-it-yourselfers looking for money-saving investments. Take note also that banks and lenders sometimes refer to REOs as “bank-owned” properties or simply “available properties” on their website.

Benefits of Buying REOs

Property buyers are predominantly interested in the money they can save from buying a Real Estate Owned property. If you care to check the current real estate market, it is understandable that most REOs are priced or listed sitting just within 10% below current market value. This, however, depends largely on the condition of the property and the amount of repair needed to make it usable and functional. If it is a private home, a buyer would want an REO that is livable and requires less expense on repair. This is no problem though to a home buyer who have great capabilities on DIY as buying it “as is” from a bank or lender can definitely stretch the value of his dollar.

As mentioned, REOs have free title liens and all other claims such as those from HOA, delinquent taxes, and mechanics. It is also generally vacant or unoccupied. This is usually pre-arranged by its previous bank or financial institution owner to increase its marketing and selling power. Think about buying a property with a clean title and no hassles on evicting a previous owner. This gives you enough advantage on not experiencing expensive and time-consuming legal predicaments later on.

Best Places to Find REOs

Predominantly, REOs can be found on bank and various mortgage lender websites. Lucky for those who have contacts, they can easily get good deals from insider information. Today, however, these financial institutions often sell their REOs in bulk or have these properties marketed by real estate brokers with standalone listings on their site. You can check out multiple listings on the net and make use of these sites with their easy-search mechanism. Some sites allow you to filter your search according to location, price range, property type, square footage, and sometimes, number of bedrooms and baths. This somehow saves you time and effort in finding the best property to invest upon. If buying REOs is an entirely new endeavor, working with an REO specialist can be of great help in locating the perfect property for you at a much reasonable price.

I am deeply involved in the REO Market. I've bought and sold countless REO's since the 1980s. I have a web page, REOs- Pennies On the Dollar where you may find the latest in properties I have available for sale.Or you can call me and I'll provide you with current info on REOs in your neighborhood.

Friday, June 28, 2013

Staging your home for sale? Yeah, it's still important-kind of

Well, we're in high selling season again, and we're in the perfect spot for a home seller as well. It's a sellers market, with several groups of Investment Trusts (REITS) from both the United States and abroad (think China and Singapore) bidding full price all cash or homes, and then there are individuals like yourselves trying to compete with this with traditional loans and a budget that is slowly eroding more by the day.

Homes are literally selling before the sign goes up, because after a recession you have a pent up demand. In this case , because of the credit markets, no one bought , or more importantly , BUILT, for six years. So demand has exceeded supply. Classic market economics.

Now what? Well, with the new dynamic, your home gets listed and twelve to fifteen cash buyers look it over without ever seeing it. It has to fit parameters of theirs that involve the dollar amount for "neutralizing" the decor to facilitate renting. beiges, Navajo White, that kind of stuff.

That is where savvy staging comes in. You want a place that looks as neutral and contemporary as possible because chances are it's going to sell based on it's internet photos. So in this sense, a good stager doesn't hurt. It might even catch the eye of an all cash buyer.


Wednesday, April 3, 2013

Tips for Gen X and Gen Y Home Buyers

BRENDON DESIMONE recently penned a great article about Gen X and Y buyers and I'm sharing it here:

According to a recent survey, people who belong to the Generation X and Generation Y demographics haven’t been deterred by the housing market downturn at all. A Better Homes and Gardens Real Estate survey found that 75 percent of Gen X and Y respondents believe owning a home is a key indicator of success; 69 percent said the recent housing downturn made them more knowledgeable about homeownership than their parents were at their age. And it turns out that Gen X-ers and Y-ers are more motivated than some older generations give them credit for. The survey revealed that Gen X-ers and Gen Y-ers are willing to take second jobs (40 percent said they would) or move in with their parents (23 percent) in order to buy into the American Dream of owning a home.

The real estate market during the past five years was certainly scary, especially for younger and less experienced home buyers. And so, a lot of people in Gen X and Gen Y sat on the sidelines. But the market has definitely bounced back, and many believe that now is a great time to buy. You just have to be savvy about it. Here are five tips to help Gen X-ers and Gen Y-ers buy into the American Dream.

Have a five-year plan

Unlike the boom years, don’t assume a home purchased today will appreciate in value within five years. If you’re unsure about your five-year plans, it’s better to rent.

Use technology creatively

It’s well-documented that Gen X-ers and Gen Y-ers start their home search online. Real estate listings sites, mortgage calculators and valuation tools such as Zillow’s Zestimate® home value are typically places a buyer starts. But, once you’re in the market, there are tons of online resources. Less obvious tools, such as Google Street View, can help, too. It once helped a client realize that the home she wanted to buy in San Francisco’s Hayes Valley neighborhood may not be as safe as she thought. Google Street View revealed that there were previously bars on the windows of the ground-floor apartment.

Beware of information overload

Using the Internet and apps, home buyers today have an unprecedented amount of data available. Sometimes, however, it’s too much and can cause the buyer to shoot themselves in the foot. For example, a buyer might learn that the seller stands to make a 10 percent profit in a short amount of time. Even though the profit is in line with current market values, that information might cause the buyer to make a low offer and kick themselves a month later for missing out on a great house.

Don’t assume you don’t need a real estate agent

Because so much information is online, many Gen X-ers and Gen Y-ers might think they can buy a home on their own. However, the role of the agent is no longer about finding the listings. It’s about presenting the offer and getting it accepted, getting through inspections and getting the deal done. A real estate transaction can go 50 different ways now. A good agent will steer a buyer on the right path. A savvy agent will know the ins and outs of any local market better than an uninformed buyer with a full-time job and family. It’s their business to be in the know, and it’s what they do all day long. Experienced agents will have a strong network in the local market that can give you the added edge. Good agents like to work with other good agents. Finally, keep in mind that a listing agent might not even consider working with an unrepresented buyer.

Look for opportunities to increase the home’s value

Baby boomers and preceding generations could more or less count on staying in their homes for many years and, in turn, their homes’ steady increase in value over time. After the market downturn, however, that’s not the case. Because they’re so mobile, Gen X-ers and Gen Y-ers in particular should steer clear of buying the best home on the best block. Instead, look for ways to add value. Look at homes that don’t show well, are marketed poorly or are outdated. Don’t be afraid of doing light remodeling or making smart improvements that will add value. If you have to sell your home sooner than you’d planned, you’re covered.

I will only add this is sage advice for ANY generation. Get an agent. LISTEN to them. You aren't in the Real Estate business. THEY ARE. If you want to get a home in this competitive market, you need to be micro-tuned in to the neighborhood dynamics. Make Sure your Realtor knows the market. Ask for advice on how to be totally prepared to offer. At most you have four or five days. Good luck!

Thursday, February 21, 2013

Must-Ask Neighborhood questions

We all are susceptible to the romance of a home; everything looks real rosy at first, especially if you decide this home is "the one". However, crime is a reality in even the best of neighborhoods. Once in a very hot gated community where I lived a resident was involved with organized crime to support his lifestyle. He ran afoul of them and ended up the victim of a mob hit. This crime was unusual , yes, because it was committed by professionals who had to negotiate very high security measures in place. But they still got him. I mention this because there's a certain percentage of the population that would refuse to live in that home, no matter how good a deal it was, or how hot the community is. I wonder if the current residents even know about that home's sordid past. I doubt it. So make sure to take it upon yourself to find out about crime in the neighborhood where your dream home is located.

From Trulia's Tara Nelson :The list of question every buyer asks about the various properties during a house hunt is relatively predictable. How many bedrooms does it have? Baths? Square footage? What are the HOA dues? What’s the school district?

Then, we get more specific, personalizing the questions based on our own vision, aesthetics and lifestyle needs: Can that wall be moved? Is there space for Grandma’s dining room table? Is there a shady spot for an orchid house in the backyard?

When it comes to crime, most of us simply don’t ask any questions at all, as (a) agents might be prohibited from doing much beyond pointing us to law enforcement sources, and (b) we tend to assume most neighborhoods are either ‘good’ or ‘bad,’ low-crime or not. The truth is never so black and white. Fortunately, technology has made it easy-peasy for us to get a deeper, more nuanced, and more usable understanding of the crime that takes place in our neighborhood-to-be, which in turn allows us to make smarter decisions about which home we buy and how we live in it, once we buy it, than we could have even ten years ago.

The key to tapping into this nuanced crime information is asking the right questions. Here’s a short list of the right questions to ask about crime before you buy a home.

1. Do any offenders live nearby? In most states, Megan’s Law and similar provisions mandate that certain individuals with histories of criminal convictions must register their home addresses with local authorities, who in turn are required to make this information available to the public. Google “your city, your state Megan’s Law registry" to find sites where you can type in an address (like the address of the home you’re considering buying) and find a list of registered sex offenders in the area. Many of these sites will also offer you a map showing your address and the relative locations of the homes of the registered offenders.

The reality is that every neighborhood - even very upscale areas - has someone living in it who has committed a crime in the past, so don’t completely freak out if you happen to find someone in your neighborhood-to-be with a history of sex offenses. The utility of this information is that it empowers you and your children to recognize these dangers and to take care to avoid hazardous situations. That said, if you happen to have young children and notice that the Megan’s Law map has a halfway house with a dozen registered sex offenders living right next door to your target home, that information might change your decision about whether that property is the right one for you.

There is also power in following the path of the information you are given on these registry sites. Many will surface information like what the registrants’ crimes were, when they happened, the registrants’ photos and more useful intelligence. This information can help you evaluate the degree to which you should be concerned before you buy.

2. Was the home a drug lab? You think your home’s former owner’s food or pet smells are toxic? That’s nothing compared to the truly unpleasant and health-impairing effects some have experienced after buying a home that turned out to have been a methamphetamine lab in a former life. If the sellers know this about a home, they should certainly disclose it. Unfortunately, many of these homes end up sold by banks as foreclosures, or by estates, trusts, landlords or other corporate owners who don’t know the home’s past - or don’t have a legal obligation to disclose it.

Get the answer to this question to the best of your ability via this two-step process: (a) talk with the neighbors - they often will reveal whether the house had a shady past, then (b) search the federal Drug Enforcement Association’s Clandestine Laboratory Registry, here:

3. What sorts of crimes happen in the area. Where and when do they happen? Crime happens virtually everywhere. But the details of crime patterns vary widely in various neighborhoods. One side of town might be plagued with an overall low crime rate, but the crime that does happen tends to be violent crime after dark. While another neighborhood across town might have lots of car break-ins during the day while people are at work, but not much going on after residents get back home - and not much violent crime at all.

This sort of information can be highly useful to a buyer-to-be, as it can help you make decisions not just about whether or not to buy, but also about whether to park your car outside (or not), whether to get an alarm and where in a given neighborhood you might prefer your home to be (e.g., interior cul-de-sac vs. thoroughfare in the same area).

Trulia Crime Maps offer precisely this sort of nuanced information, allowing you to view your town and neighborhood’s crime rate in heat map format showing the relative violent and non-violent crimes that have taken place recently in different parts of town. It also provides information on crime trends, in terms of the frequency of criminal activity taking place at various hours of the day, and the most dangerous intersections in your town or area. offers another angle on nuanced crime data, breaking down crime types with easy-to-scan icons and providing data for communities all over the country.

4. What anti-crime features does - or can - the home have? Review your disclosures and talk with the sellers (through your agent, of course) about what anti-crime features the home currently has. This will allow you to prepare for any upgrades, downgrades or changes you’ll want to make. For example, if a home has security bars that were installed 3 decades ago, you might want to have them brought up to code with a fire release bar, or removed altogether. Or, perhaps the sellers currently have the home wired for an alarm that can be armed, disarmed and video monitored remotely - if you want to continue that service, you’ll need to get that information and make the account change when you take over the other utilities and home services.

On the other hand, the home might not have any anti-crime features. So, if there is a particular alarm or monitoring system you like, it is smart to check in with that provider before close of escrow to find out whether they can provide services to the new address and, if so, what it will cost and take to equip the home and start service up at closing.

5. What does the neighborhood do to fight crime - and how can I help? Neighborhoods across the country fight and prevent crime the grassroots way, by maintaining strong connections between the home owners and neighbors who all have in common the desire to live and raise their families in a safe, secure, thriving place. Don’t hesitate to ask your home’s seller and/or any neighbors you talk to about whether there are any neighborhood associations, neighborhood watch groups, email lists, social networks, regular meetings, block parties or other community connections in which you can actively participate.

Tuesday, February 19, 2013


CNBC Takes note of the REITs ( Real Estate Investment Trusts) currently buying up all the single family homes available,spiking prices via demand: By: Diana Olick CNBC Real Estate Reporter Three years ago Aaron Edelheit was working out of his living room, buying foreclosed properties, and putting them up for rent. Today he is CEO of The American Home Real Estate Investment Trust, one of the first REITs investing only in single family rental homes.

"We think the foreclosure crisis has allowed a couple of firms such as ours to get size and scale to start institutionalizing a very large market," said Edelheit.

The single family rental market was large even before the housing crash, with sixteen million homes designated as rentals in 2010, according to the U.S. Census. Add to that at least five million foreclosures, many of which will become investor-owned rentals, and the enormous scale is apparent. "By some accounts, $6-9 billion has been raised or committed, suggesting potential acquisitions of 40,000-90,000 properties," according to Jade Rahmani, an analyst at KBW, who pointed out that this amounts to around 15 percent of unsold bank-owned, so-called REO (real estate owned), homes. "We expect the REO-to-rental market to experience robust growth over the next 12-24 months, potentially emerging as an institutional asset class." To see that growth, look no further than Edelheit's brand new Atlanta office space, where he now employs 150 workers full-time and hundreds more part-time. His REIT owns close to 2000 properties in Georgia, North Carolina and Florida, and they are buying more every day.

"We outgrew the last space as soon as we had moved in," said Edelheit as he weaves through a maze of desks, followed by his panting dog Frankie, to get to his office. There he shows off his stand-up computer work station that he fabricated out of a small shelf from Ikea. Many of his mostly-young employees stand as well, as they search for homes to buy, rent, market, and manage. The energy is palpable. "In terms of risk and reward, I feel that this is a generational opportunity," Edelheit noted. Two similar REITs, Silver Bay Realty Trust and Altisource Residential just went public in December 2012. Analysts at KBW estimate cash returns on investments in REOs are in the 5-7 percent range, while total returns could reach 15-20 percent. ----------------------------------------------------------------------------------------------------------- What this means to you as a homebuyer: Yes the landscape has changed again. Your competition is an all cash buyer without emotion. You need to make yourself as strong a profile as possible,and be prepared for overbidding. This is not a bubble. It's what happens when big dollars chase too few assets.

Wednesday, July 4, 2012

I'm Underwater

I think in this day many homeowners are like me, and bear in mind I'm a professional. I'm underwater on my home. I'm sure many feel a sense of betrayal because we bought in to the bank's presentation of the time. The idea was that things would continue to go up. Not up at a crazy rate of speed like the 2005-2007 period, but moderately, always up. I knew that my experience with real estate cycles indicated that there would be periods of downward valuations. So I was prudent. I always left a 30% cushion. Except this time, that didn't help. While I knew that the economy guided home prices, I never imagined the once prudent world of banking would go so nuts that it would crater our national economy in a perfect storm of failed bets, exported jobs, and outright thievery that came from "Free Market deregulation". But they did. Greed is a powerful motivator, and often we do things we know are crazy because of it. I know what to do, and what YOU should do: keep making your payments . If we can hold on another year or two, things will even out. They always do. But at the moment most Baby Boomers feel betrayed by the banks. Their main savings vehicle has been looted. Same with their parents. The estates of Boomers parents are often in the same situation. Parents pass away and leave a home underwater. Now what?
Steve McLinden of offers up a few answers:

Must heirs repay father's underwater loan?

By Steve McLinden •

Q: Dear Real Estate Adviser,
My father passed away with a conventional mortgage loan on his home -- a home worth far less than what he owed. The estate won't have enough to pay the difference. What should we do to get the house out from under the estate? Would the family become liable for this debt?
-- Diane M.

A: Dear Diane M., So sorry to hear about your father. It's always an enormous challenge juggling estate matters during a time of bereavement, and my heart goes out to you.
Unfortunately, you can't extricate the house from the estate at this point. However, the good news is you and any other heirs will have no liability for it, unless a family member or members co-signed the mortgage, which would oblige them to pay the original creditor. But as you correctly pointed out, your father's creditors would likely then pursue satisfaction of the note from the estate.
I am curious if you're still paying the mortgage loan. If so, there's probably no reason to do so, unless a family member wants to assume the loan. Not all lenders allow assumptions by family members following the death of original mortgagors, but many do, especially in this still-soft resale market in which tons of foreclosure inventory still sits on the books. If the mortgage is assumed, make sure the proper paperwork is filed immediately, and the death notice is presented to the lender.
Unless other arrangements are made, the lender will foreclose on the house if loan payments stop. As noted earlier, heirs have no legal obligation to pay off a house left to them in a will. Hence, the house would then become the lender's problem. The bank would then sell the house, probably at a loss, in which case the lender may enter a deficiency judgment against your father's estate -- a judgment that would, as you surmised, eat up any remaining estate assets and render the estate insolvent.
Your other option, and I don't think it's a very good one if the house is upside-down, is to try to sell it. If you do go that route for whatever reason, lenders typically give heirs a three-month period to sell the house, a period that's renewable for three months at a time, up to a year. During this span, lenders would want to see evidence that the house is being marketed. By the way, if a family member does want to keep the place, the loan could be refinanced by that party to settle your father's mortgage.
You'd best check with your father's lender to determine its policies and your options. You might want to at least consult with an estate or probate attorney, especially if additional challenges or complications arise.