How To Recognize Foreclosures in the MLS

When you are looking at homes in the MLS (either from the MarketWatch books or your custom MLS search), there are several clues that can help you to identify that a property is a foreclosure.

• Anytime a property says AS-IS in the description – the odds are 95% or better that the home is a foreclosure. 
• Ocwen.com is a foreclosure management site for VA foreclosures and other smaller banks.  Anytime you see a comment mentioning Ocwen.com – you will know it is a foreclosure and most likely a VA foreclosure.
• HUD homes will often have verbiage in the description that say bid deadline is ______, or they will say “brokers may receive up to a 5% commission”, or sometimes they will say “HUD property 492-xxxxxxx”.  SouthwestAlliance.com is their management site – so you might even see a reference sending you to the southwestalliance.com.
• The phrase, “Special Addendums Required” or something to that effect will either indicate a foreclosure or sometimes a relocation company.
• One other phrase to watch for is “Short Sale”.  This is not a foreclosure…yet.  What it means is the seller is going to ask the bank to take a loss on the sale of their home.  The seller still owns the home, but at the price they need to sell it for – they will owe money at closing.  Instead of them owing money – they ask the bank to take a short sale (a loss).

We have lots of experience in dealing with foreclosures and will consult with you on the best strategy for negotiating on each home.

Four Important Questions to Ask Your Mortgage lender Before You Sign Any of Their Documents

1. Do you have a variety of loan programs to fit my cash flow and expected length of ownership needs?

If you are going to live in your new home for less than five years, you may want to consider an adjustable rate mortgage or “ARM”.  With an ARM your payments will go up according to the terms of the loan.  Most people aren’t aware that with a standard 30-year mortgage they’ll be paying 2.5 times the amount of the mortgage in payments.  If you are going to live in your new home for over five years, a traditional fixed-rate mortgage may be a better deal.

2. Do you offer written mortgage pre-approvals, not just pre-qualifications?

A “pre-qualification” is usually a lender’s opinion of your eligibility for a loan.  If you ask to be pre-approved, the lender will actually submit your job and credit history to an underwriter and get a conditional approval for a loan and a loan commitment.  The advantage of having a pre-approval is that it will make your offer to buy a home stronger and it will usually allow you to close the deal faster.

3. Do you have the ability to handle difficult credit history?

Many lenders will only work with you if you have perfect credit, and if a problem comes up, they won’t help you.  Lenders look at your credit history to figure out how much they will lend you and how much they will charge you to lend it.  Before you make an offer on a home, make sure your lender has reviewed and received approval for you and your specific credit history.

4. Is the rate that you quoted me the rate I will get at closing?

Many lenders advertise their rates in the paper and in homes magazines.  These are what are called “Teaser Rates” in the industry.  The name says it all.  Lenders will lock in points for 45-60 days.  If the interest rates are dropping, the lender will work quickly to close the locked-in rate.  After they’ve got you committed to using them, many lenders then tell you what the “real” rate will be.  By this time it’s too late for you to do anything about it.

How Do Sellers Price Their Homes & How Much Should I Offer?

We’re often asked “How much under the listing price should we offer?”  This is an excellent question.  The answer is difficult.  There are 4 basic ways that sellers price their homes.

1. Ridiculously Overpriced! These seller have listened to a real estate sales person over-inflate the value of their home in an effort to obtain a listing.  There is a natural tendency on the part of sellers to list with the real estate consultant who gives them the highest promise.  Some real estate agents give the seller a high”value” in an effort to obtain the listing.  The homes can be 10-20% overpriced.  These sellers may need a “dose of reality” for a few months before they begin to realize that their home is way overpriced as compared to others in the area.  The longer an overpriced home is for sale, the more likely we can get the seller to face reality and sell at a fair price.
2. A Little Overpriced…Perhaps 75% of all homes for sale are priced in this range.  Theses sellers fall into 2 categories   Those that feel their home is worth every penny of their asking price.  Those that want to leave a little “negotiating” room.  These homes can be 4-10% overpriced.
3. Priced At Fair Market Value…  These sellers have carefully and realistically studied other homes for sale.  They have priced their homes very competitively.  These homes usually sell within 4 weeks at or very near the listed price.  In an active market, timing is everything.  In the good old days, you might have the luxury of viewing a home several times – even dragging your relatives to see it… before you actually made an offer.  “He/she who hesitates is lost” aptly explains buyers who dally to make a buying decision today.
4. Priced Below Fair Market Value… These homes are priced below value.  Perhaps their real estate sales person recommended too low of a price.  These homes usually sell within 7-10 days, at or above the listed price.  There are usually competing offers in this situation, and you may need to make your first offer your best offer.

What is the FREE Home Buyer Workshop?

Buying a home is a complex process: Title insurance…inspecitons…negotiations…financing.  To help ensure that your home purchase is porfitable and problem free, we have teamed up with By Referral Mortgage to sponsor a home buyer’s class to teach you the secrets of successful home buying. 

The class is presented in an information-packed 2 hour format, and held at the offices of DFW Real Estate Center (in our education room).  Whether you presently own a home, or this is your first time, you’ll learn new tips and strategies for getting the best buy and the best loan.

At the class, you’ll learn:

• How much home can I afford?
• What government programs do I qualify for?
• How many zero down home loan programs do I qualify for?
• What are closing costs?
• How do mortgages work?
• What programs do I qualify for that will pay my closing costs for me?
• How can I get the seller to pay for my closing costs?
• Do I qualify for a low interest rate government loan?
• Is my credit good enough?
• Can I see my credit report?
• What is the best way to find the right home?
• How do I buy a foreclosure or HUD repo?
• What is involved in the escrow process?
• What should I be aware of in the inspection?
• What should I do if I am thinking about a new home instead of pre-existing?

You may be able to buy more home than you think.  Just by making two small changes, you could buy $10,000 more home without increasing your payment.  This means you can have that extra bedroom or a two-car garage just by knowing secrets that few buyers know!

At the class you’ll get answers to all your questions.  Uncertainty will be cleared away and replaced with practical down to earth knowledge that you can use now.  From getting started to getting moved in, you’ll learn how to navigate the entire home buying and borrowing process.

There is no cost for this class, nor are you under any obligation to any instructor as a result of attending.  You may bring a guest – but you must pre-register.  Class size is limited, so register early.  In order to register, click here: Free Home Buyer Workshop Signup.

To see the schedule of classes, click here: Workshop Schedule

I’m The One Buying A Home – Just Who Are All These Other People?

Many people are involved in the home buying process.  These professionals have based their careers on helping you find and purchase the home of your dreams.  But do you really know just what they do for you?

1. Real Estate Consultant

The first person that you’ll probably become involved with when you begin your search for a home is the Real Estate Consultant.  This term includes real estate agents, sales persons, brokers, Realtors, Listing agents and Buyer agents, all of whom must be licensed to serve you.  The agents and sales persons work for a broker.  Those licensed to sell may represent either buyers or sellers.  However, the listing agents typically represent only sellers, and buyer’s agents represent only the buyers – so as to avoid potential conflicts of interest.  Only those that are members of the National Association of Realtors may use the designation “Realtor”

2. Lender

The person that you work with to get your loan is generically called a Lender.  This person may also be a mortgage loan officer, banker, or broker.  The job of the lender is to take your application for a loan, and verify your income, employment and credit history.

3. Attorney

There may be several Attorneys involved in the purchase of a home, one for the seller, one for you, the buyer, and one for the title insurance company.  The role of YOUR attorney is to make sure that you avoid any pitfalls in your purchase contract.

4. Title Company

The Title Company can act as the escrow agent (and hold your deposit), examines the title, insures the title, and issues a title report – verifying that you can become the rightful owner of the property.

5. Appraiser

The Appraiser, who is usually state-certified, is frequently involved in the pricing of the home, before you even begin your search.  They examine the appearance, condition, size and quality of the home – then estimate the home’s value based on other sales in the neighborhood or area. 

6. Surveyor

The Surveyor checks the boundaries of the property to ensure that the home is ONLY on its property – and the ONLY home on its property.

7. Home Inspector

The Home Inspector checks the working condition of electrical, mechanical, structural, and plumbing systems in the home.

8. Pest Control Operator

Lenders require that you have the home checked for wood-destroying-pests – termites and ants are the typical villains.  These professionals poke around the attic, basement, walls, and grounds to ensure that these pests aren’t squatters in your dream home.

Here’s A Quick Way to Figure Out How Much House You Can Afford

The stock answer given to this question is – if you rent and have cash for a down payment, you can purchase a home.  But what if you don’t rent?  Then here’s the simplified version of what a mortgage broker woud do with you.

Step One: (Annual Salary / 12)

What is your gross monthly income from all sources?  If your annual salary is $75,000, divide this by 12 and you’ll see that your monthly income is $6,250.

Step Two: (Monthly salary x percent you want to spend)

Brokers and financial planners will recommend that you spend anywhere between 29% and 45% of your monthly income on household expenses.  We’re going to use 36%.  $6,250 x .36 = $2,250.

Step Three: (Calculate your debt)

Add up your current monthly debt.  This includes things like a car loan, insurance, school loans, credit cards, child support, and any other personal debt you may have.  All of this added together gives you your total debt.  Just a guess, but lets say that these add up to $750 a month.

Step Four: (Amount you want to spend – total debt)

Now, take that total debt and subtract it from the amount that you were willing to spend per month to get to your maximum monthly payment. $2,250 – $750 = $1,500.

Step Five: (Monthly payment x12)

Multiply that house payment by 12 months, and you have $18,000 to spend each year.

Step Six: (Annual payment / interest rate)

Divide this annual amount by the current interest rate (I’m using 10% because it’s a nice round number, and a good average).  So, $18,000/.10 leaves you with $180,000 available for a mortgage!

Step Seven (Mortgage + down payment)

Now, take the amount that you have calculated that you can afford to pay for a mortgage, add the amount of cash that you have on hand to make a down payment, and you get your purchase price!  So, using the current example: The mortgage was $180,000 plus you have $20,000 on hand for a down payment, then you can afford to purchase a home for $200,000.

Now, did that REALLY seem like algebra to you?

Although this is a quick and easy estimate, you should work with a mortgage lender so that you know EXACTLY how much you can afford.

How Long Will It Take To Buy A Home?

Many factors can affect the answer to this question, so let’s first look at the general rule of thumb and then account for the other influences.

1. About the fastest way to purchase a home is with cash.  The length of time to complete a cash transaction is realistically two weeks.  It can be pushed quicker – but we have to wait on the title search to be completed and documents prepared.  So if you are buying a home with cash – we will normally put two weeks as the quickest close date.
2. If you are financing the home and have good credit (A paper loan), then we normally will put a 30 day close.  It can be pushed through in 21 days if you have already gotten pretty far in the approval process before we locate the home. 
3. If you are financing with a manual underwrite (exceptions to the loan, sub prime), we normally have taken you pretty far on the approval process before even starting to look at properties.  These loans still are safest to put at a 30 day closing, to account for any last minute conditions given by the underwriter.
4. If you are using a grant program or bond money program – 45 to 60 days is the better answer.  45 is a bare minimum and it is safer to expect 60.  However, many sellers are not happy with the thought of a 60 day closing, so we will often put down 45 and then really push hard for the grant program to finish their work.  The issue we encounter is that the grant people are giving free money – they hold all the cards, and service is not at the top of their list.  We can only push so much before our packet ends up on the bottom of the stack…
5. HUD foreclosure – maximum days to close 45.
6. Other foreclosure – all bets are off.  Often times the negotiation will take several weeks.  Once the contract is negotiated though, the times stated in 1-3 are applicable.

There are some factors that can influence these estimates: 

• A cloud on title – if we run into issues getting clear title to the property (usually a result of death or divorce), it could slow down the closing
• Delay in verification of rent and verification of employment.  These two items can sometimes cause real headaches if the verifying party is unresponsive
• Change in program guidelines.  It doesn’t happen too often, but occasionally this will occur and impact the processing of the loan
• Backlog at the grant money office

When we sit down and negotiate a contract with you – we will discuss the most likely timing and request a closing date with the seller that is obtainable based on all of the factors.

How Are Real Estate Consultants Paid?

This is a question that is universal in the minds of buyers!  Many have a vague idea that real estate consultants are paid on commission, but do not fully understand what that means.  So let me break it down a little more. 

We work on a contingency basis.  That means that we put in the up front time, energy, experience, expertise, and cost to serve you.  This service comes in many forms:

• Our Free Home Buyer Workshop,
• Saturday Tour of Homes,
• Your Custom Home Buyer Portal,
• The Buyer Planning and Strategy Session
• MarketWatch Booklets,
• Exclusive Buyers Agency Relationship,
• Consulting With You – Asking Insightful Questions and Presenting Strategic Options,
• Powerfully Negotiating For You and
• Organizing All of the Details of Your Transaction

We do not get paid until you actually purchase and close on a home with us.  The payment is made by the seller out of his proceeds at closing.    We work hard to deliver outstanding, cutting edge service to you.  In return we count on both your loyalty to our services as well as your not keeping us a secret. 

Our system is completely developed with you in mind – you as a person – with hopes and dreams, and needs and fears. The purpose of our business is to make you so outrageously happy with our services that you will gladly refer at least two people to us during the process!  We look forward to helping you find your dream home.

What IS a Referral…

A referral is sending someone you care about to someone you respect.

Let’s break that sentence down further and really get to the root of this matter.

SOMEONE you care about.

Who is the next person you know who is wanting to buy or sell a home?  Maybe a family member, an extended family member, a co-worker or someone else from work, maybe it is someone from your civic organization or your church, what about a neighbor, a parent on your child’s soccer team, or a person from the gym.  They could be someone from your spouse’s job, or a parent of one of your children’s friend, or even a teacher up at the school.  Who is the next person you know who might need our help?

Someone you CARE about.

In this market, Realtors come and go.  Almost everyone has a friend or an uncle who “tried” the business and didn’t do much.  Almost everyone also has a friend’s wife or cousin who just got into the business…or is doing it part time.  AND everyone has heard the horror stories of their friends’ experiences in purchasing a home.  This is a hard business – if you are going to do it right.  The people that go into real estate part time, or after they retire, or because they plan to make lots of money, often do not have the systems in place or even the overall business plan developed to really understand the full process from the client’s point of view.  They are looking at it entirely from the point of view…”I want to make some money – they need a house – how hard can this be?”  This haphazard way of starting into the business is the root of many of the horror stories that are circulating.  These “try it and see” Realtors run their businesses like taxi cabs…how fast can they get you out of the cab and go find someone else.  So when you are about someone, you do not want them experiencing the unreliable taxi – or the horror stories that others have had.  You want to save then from potential frustration and heartache.  When you care about someone, you want them to experience the home buying process from a limousine.

Someone you RESPECT

Respect is about knowledge, service and going the extra mile.  We work hard to earn your trust and deliver beyond your expectations so that you will respect us and want to send your friends and family members to us to help.  Respect is knowing that your “someone” will get the same caring, consistent service that you received.  And respect is being confident that the needs of your friend, family member or co-worker will be heard and addressed.  When you send someone you care about to us, we are really working for two clients.  Most importantly we are working for you.  It is imperative for us to do a good job with your referral so that you will continue to send clients to us.  Secondly we are working very hard for them so that one day they will also be comfortable sending someone they care about to us.

If you have someone you would like to refer to us, have them call our Referral Hotline at (888) 323-8807 ext 2 to listen to a free recorded message about our company.  Also, please give us a call so we can discuss the best way to approach them.  (817) 664-0700 ext. 228

Ways To Raise Your Credit Score

Since everything to do with financing your home revolves around your credit score, it is a good idea to do whatever you can to have the best score possible by the time you purchase. 

There are several things that you can do to help your score:

1. If you do not have any open credit, you need to reestablish some.  The way to do this is to get three lines of positive credit working on your credit report.  Secured credit cards are one way to do this.  Regardless of if you do a secured credit card, or other type revolving account, make sure that the company reports to the credit bureaus and also, make sure that you keep your balance less than 30% of the available credit.  Then pay these accounts on time – NO EXCEPTIONS.  The reason to keep the balance less than 30% of the credit line is to get the maximum amount of points for the account.  If you go above 50% you actually start losing points.  The optimum is less than 30%.  Another quick way to add positive credit to your record is to have someone add you as an authorized user to their credit card account.  You would not get a card – or spend on the account in any way.  However, your social security number would be added to the account and at the next reporting cycle, their good credit history on that card is added to your report.  Keep in mind the information about balance to available credit (do not add a maxed out card to your account).  Also remember to add only a card with a positive history – you do not need to feel the affects of someone else’s 30 day lates!
2. If you have open credit – you need to make sure it is optimized.  Make sure that all accounts that report to credit bureaus are paid on time – NO EXCEPTIONS.  Second, work on getting the account balances below 30% (see item 1).  If your balances are really high, then first get all below 50% to stop the negative impact of the account.  Then, work towards the 30% for the highest impact.
3. Do not dispute or pay off items – unless we tell you to.  Often times, disputing a collection or paying off a collection will drop your score.  Once a collection has become a hit to your credit it is often better for your score in the short run (while you are trying to get a mortgage) to leave it alone.  After you get your home and you want to make good on past debts or dispute them – go for it.  Your score may drop a while, but the timing will be better for making the repair.