Know the Dynamics of Pricing When Shopping for Short Sales

If you are currently in the market to purchase a property, you can sometimes get a good deal if you buy a short sale property. However, as I learned a long time ago in basic economics 101, there are no free lunches. If you see a short sale property listed for sale at a price that is too good to be true, it probably is. For those of you who have been thinking about purchasing a short sale, I am going to give you some things to keep in mind when deciding whether or not to move forward with your purchase. Before that though, I am going to talk a little bit about what a short sale is and how they work. In a short sale, a homeowner negotiates a payoff amount with his or her lender to save the distressed property from foreclosure. The payoff amount the homeowner negotiates with the lender in a short sale is less than what the homeowner owes on the loan. A lender will usually agree to do a short sale because it saves the institution a considerable amount of time and expense associated with foreclosing on a property. As part of the short sale, the lender has to approve any offer that a buyer makes on the property. So how does the owner’s lender decide whether or not to accept an offer on a property? Once an offer is received, the lender will pay a third party broker, who is not involved with the transaction, to come look at the property, evaluate comparable properties, and give an estimate of value for the property. If the offer received is equal to or greater than the value the third-party broker assigned to the property, the owner’s lender will generally approve the offer. A lender generally won’t tell the homeowner, or any other party involved with the transaction, what price they will take for the property until they receive an offer and the offer is reviewed. This means that the listing agent must do his or her best job at determining the fair market value of the property and list the property for sale at that price in hopes that the lender will accept an offer at or near that price. Even if you make a full price offer on a short sale, there is no guaranty that your offer will be accepted. If the listing price can be supported by recent sales of comparable homes in the vicinity though, there should not be a problem with the lender accepting an offer that comes in at or near the listing price. However, sometimes short sale properties are not appropriately priced. I’ve seen real estate agents list short sale properties for outrageously cheap prices that are well below market value. This means that the property does not have any comparable sales to back up the listing price. If this situation occurs and someone makes an offer on the property at or below the already very cheap list price, the lender will usually reject the offer because it isn’t supported by comparable sales. When this happens, the buyer and everyone involved with the transaction ends of wasting a lot of time and effort. It can be as much as 90 days or longer before the seller’s lender responds to an offer on a short sale, so buyer’s can also miss other opportunities while waiting on the lender to respond to the offer. So as a buyer, if your offer is rejected by the lender, you’ve just wasted 90 days or however long it took for the lender to respond to your offer, and you still don’t have a home. This situation can usually be prevented. Before you make an offer on a short sale property, approach the listing agent or your own real estate agent, and ask them to provide you with at least 3 comparable sales from the same area or neighborhood that have sold within the last 6 months. Properties that have sold within the last 3 months would be even better. Also ask the agents to provide you with at least 3 comparable properties for sale in the same area or neighborhood. If the price that the property you are interested in buying is well below those of the comparable properties, the lender probably won’t approve an offer for that price it is listed at. This is because the list price is below market value, and the lender will assume they can get more money for the property. At this point it would be a good idea to ask the listing agent if the lender has pre-approved a short sale at the low price they have the property listed for. If they have, ask to see a copy of the approval letter from the lender to prove it. If the lender has not approved the short sale at the list price, you should probably make an offer that is supported by recent sales and comparable properties for sale, or you should move on and find another property. Otherwise, you are probably just wasting your time and effort.

Tips for selling your home in a competitive selling environment.

In today's real estate market, prospective homebuyers have a large selection of homes to choose from. There are plenty of great deals out there on houses...especially with all of the foreclosure and short sale properties on the market. These short sale and foreclosure properties usually sell at a discount as well. With foreclosure properties , the banks that own these properties will sell the property for cheap because they want to get rid of their forclosed properties as soon as possible so they won't have to continue paying the holding costs associated with owning the property. With short sale properties, the banks will sell the properties at a discount to ensure they sell the property so they don't have to pay the expenses of foreclosing on the property. So what this means to Joe Homeowner is that there are a lot of properties out there for sale, and a lot of the properties for sale are priced really cheap. This means if Joe Homeowner wants to sell his property and get top dollar for it in our current market, he is going to have to take steps to make his property stand out above the rest.


Today I am going to offer some advice and give some specific tips that will help you sell your property quicker and get more for your home. Here they are...I hope these tips help.

1) Price your home correctly!!!- There is a good reason I put this tip as number 1, and there is a good reason I put three exclamation points after it...it's because this is the single most important thing you can do to successfully sell your home. When trying to find out how much your home is worth, contact an experienced and knowledgeable REALTOR who is familiar with the local real estate market and who preferably has experience at dealing with properties in or near the area where your property is located. The REALTOR should be able to provide you with information on comparable properties that you will be able to look at to help you determine your property's value.

The value you of your home is determined by what prospective buyers are currently willing to pay for homes simalar to your own. Property values change over time, and there are many factors that influence what people are willing to pay for properties at a given time. However, the best way to find out what your home is worth is to look at what people have recently paid for simalar properties in the same area ( Sold Comps) and also to look at what other simalar properties in the same area are currently listed for sale at (Active comps). I would suggest looking at 3-5 good sold comps and 3-5 good active comps. When looking at sold comps, it's preferable to look at properties that have sold in the last 3 months. The furthest back you should go is 6 months. Sold comps will provide you a good indication of what someone will pay for your property.

While looking at recent sold comps is very important, it's also very important to look at active comps as well. Active comps are in essence the properties that you will be competing against for buyers, so it's important to know what competing properties are selling for. In a declining market like we are in right now, it's very important to look at active comps. For example, if the best and most recent sold comp you have for your property suggests a value of $270,000 for your property, but you have two other properties in the same neighborhood that are simalar to yours that are currently listed for sale at $250,000, it is not very likely that a buyer is going to pay $270,000 for your property when they can go down the street and get a simalar property for $20,000 less...capeesh??

Pricing your property right from the start is very important. Don't try to overprice your property at first with the intention of lowering it later. THIS WILL HURT YOUR CHANCES OF SELLING THE PROPERTY QUICKLY AND WILL CAUSE YOU TO SELL THE PROPERTY FOR LESS MONEY BY THE TIME YOU ACTUALLY SELL THE PROPERTY!!! There has been a lot of research done that shows when people price their house right in the beginning, they end up selling their home for more money, and they sell their home quicker. Here's the science behind this fact.

The first 3-5 weeks is the time period when you have the most people looking at your property. The property is new on the market so everybody wants to check it out. After that 3-5 week window is over, less and less people are looking at your home. If you have your property priced correctly during that 3-5 week window of time, there is a greater chance that one of those many prospective buyers will actually be interested in making an offer on your property. That is why properties that are properly priced from the start usually sell quickly.

If you overprice your property in the early stages of putting it on the market, those many prospective buyers that are looking at your home are going to write off your home as just another over priced property, and they will go buy the properly priced property down the street. Two months later, when you finally decide that you need to reduce the price of your home, you now don't have as many people looking at your home. This means that it is going to take longer to find a buyer. Also, if you are in a declining market, the price you need to list it at for sale now is probably lower than the price that you should have listed it for sale two months ago....and so begins the price reductions, or as I like to call it "Chasing the market." Now you might have to keep chasing the market (lowering the price of your home) until you finally entice someone to buy your home. This process could take a long time, and you could end up losing a lot of money. If you would have just priced the property correctly from the beginning, you would have received more money and sold the property quicker, and than that's where I get to tell you "I told you so." I'm just kidding. I won't say that to you... i'll just be thinking that.

Moral of the story, price your home right from the start and it will sell for more money, and it will sell quicker. Get an experienced and knowledgable REALTOR to help you analyze quality recent sold comps and similar actively listed comps. If you really want to get fancy and ensure you have a good estimate of the value of your home, you can have an appraisal done on your home by a liscensed property appraiser. This will cost you about $400-$500, but it will ensure that you know the true value of your home.

2) Curb Appeal-The outside of your home is the first thing that people see when they pull up to view your home. If prospective buyers are unhappy with the appearance of the outside of your home when they first pull up to view it, it's going to get them in a negative frame of mind so that when they go inside your home, they will probably be pointing out all of the faults they see instead of focusing on the positive features of your home. Think of the outside of your home and the curb appeal that your home portrays as your chance to make a good first impression on prospective buyers. You always want to make a good first impression! Below are some specific tips.

• Keep your lawn mowed, your trees and bushes trimmed, keep your yard raked, and pull up and remove any weeds and/or dead plants
• Clean off your roof and clean out and repair your gutters if need be.
• Spruce up your front door by slapping on a fresh coat of paint or repairing any rotten, damaged door seals and thresholds. If need be, think about replacing your door. A new door is one of the top items for recovering it's value when you sell your home.
• Pressure wash the siding of your home, any sidewalks, porches, pool areas, ect... that might need pressure washing.
• Clean or replace any damaged light fixtures.
• Keep all porches and sidewalks swept.
• Plant flowers along walkways
• Clear out any excess clutter from your yard.

3) Bring your old floors back to life-From working with many buyers and from my experience with showing many properties, I have been able to see what are some of first things that buyers notice when they look at homes. I can tell you without a doubt, one of the first things that buyers mention about a home they are looking at is the floors. If you want to impress buyers, make sure that your home boasts some nice floors.

If you have hardwood floors, make sure they are clean and shining. If the wood is old and dull looking, have the floors cleaned and polished. If need be, have the floors sanded down and re-sealed as well. If you have tile floors, have the tiles professionally cleaned or go rent a tile cleaner. Also be sure to clean and re-seal the grout between the tiles. If you have carpet floors, have the carpets steam cleaned or replaced if need be. If you have any type of laminate flooring, be sure the floors are cleaned and replace any damaged sections.

4) Slap on a fresh coat of paint-When it comes to top items that buyers take notice of, I would have to say that the paint is up there with the flooring. The good news about this is that painting is one of the cheapest and easiest things you can do to improve the look of your home. A nice paint job can really bring the house to life. If your home is in need of a paint job, go to a local paint store or contact a good painter and talk to them about and get advice on painting your home. They should be able to tell you what kind of paint you need to use throughout your home, and they should also be able to give you good advice on good color schemes, what brands of paint to use, ect...

Also, if there is any damaged sheet rock, baseboards, doors or door frames, have those items repaired or replaced as well before you paint.

5) Check and fix problems with all major systems in your home-Before you put your home up for sale, be sure to have all the major systems in your home checked out. This includes the electrical system, the plumbing system, the heating and cooling systems, the roof and the structure of the home. If there are any problems with any of those systems, a prospective buyer will find it later on when they have the property inspected. It is much better to discover the problems before you sell the home. That way you can either fix the problems ahead of time or you can disclose the problem up front to prospective buyers and price the home accordingly to take into account for the problem.

If you have the ability to do so, I would suggest fixing any problems with any of the above mentioned systems before you decide to sell the property. By fixing any of the problems with any of the major systems it actually helps in two ways. First off is the obvious reason. You have fixed the problem, and the buyer now won't get freaked out because they think they are going to have to spend a whole lot of money to fix something. Second is that if you fix the problem, it gives you the opportunity to show prospective buyers that you are the kind of person that maintained their home well, and this will make buyers feel a lot more at ease when they are thinking about buying your home. Trust me, this is big. This leads me into my next main point.

6) Save all of your receipts for any repairs, regular maintenance, renovations or upgrades you have done to your home, and have them available to show to prospective buyers-If you can show buyers all of the receipts for all of the repairs, regular maintenance, renovations, or upgrades related to your home, this will help you sell your home. You might not know this, but the decision to buy a home is not mostly a logical decision. It is a decision based largely on emotion. When a person buys a home, they want to feel good about buying the home. They want to feel comfortable and at ease. One of the best ways to make a buyer feel at ease when they buy a home is to show them that you have done a good job at maintaining your home. This sends all kinds of good messages, but the main message it sends is that the buyers don't have to worry as much about any hidden problems because you maintained your home well.

Remember my point from earlier. In this market you are competing against a lot of distressed properties. One of the disadvantages of buying a foreclosure or short sale properties is that you don't really know all of the problems that these properties have. If you can show that your property has been well maintained, this will give you a competitive advantage and will help you win over the buyers who are also thinking about buying a short sale or foreclosure property.

7) Offer to pay for buyers closing costs/ and or repair allowances-A lot of times when people are buying a home, they make enough money to make the monthly payments on the home loan that they are getting to purchase a home, but they may have a hard time coming up with a large amount of cash that is needed for both the down payment and the closing costs associated with buying the house. This seems to be especially true amongst young first time home buyers who have good income but who have not accumulated a large reserve of cash. If you offer to pay for all or at least a certain amount of a prospective buyers closing costs, you may attract a whole new group of buyers that you would not have attracted if you were not willing to pay for the buyers closing costs.

Really you have no reason not to offer to pay for buyer's closing costs. You can pay for buyer's closing costs and still receive the same amount of money from the sale of your home as you would even if you didn't pay for the buyer's closing costs. You just simply increase the price of the home by the amount of closing costs you are offering to pay to the buyer at closing. If the buyer is getting a loan to pay for your home, this will make his/her loan amount and his/her monthly payment a little higher since you are increasing the purchase price of the home, but he/she won't have to come with several thousand dollars out of pocket to pay for the closing costs. However, you will net the same amount of money. It's a win-win situation.

You can also apply this situation to any repairs that the buyer might want completed on the home. For example, let's say your property needs a new roof. The cost for replacing a new roof is $4000 for your home. The current amount of money that the buyer is willing to pay for your home is $170,000. The buyer could purchase your home with the bad roof for $170,000 and just fix it on his own after the closing, but he does not have $4000 in cash to replace the roof anytime soon, and the roof needs to replaced very soon. So what you and the buyer agree on is that you will give him a $4000 roof allowance at closing and you all will increase the purchase price of the property to $174,000. Since the buyer has good income, he can afford to increase his loan amount by the $4000 that he will need to since you all agreed to increase the purchase price of the house by $4000. The buyers monthly payments will be a little bit higher, but he won't have to pay $4000 out of pocket to pay for the roof. You will net the same amount of money as if you had sold the property to him for $170,000 and not paid for the roof to be fixed. Again it's a win, win situation.

Being flexible with offering to pay for buyers closings costs and/or allowing repair allowances will give you a competitive advantage over a lot of the foreclosure and short sale properties that are listed for sale. Many banks don't want to offer closing cost assistance or repair allowances to buyers. I'm not sure why they don't, but they don't. For this reason, a lot of cash strapped buyers can't purchase those properties. If you offer closing cost or repair allowances to those cash strapped buyers with good jobs though, they might just buy your home.

8) Eliminate unpleasant odors- If you want to turn buyers off from buying your home, having a stinky house will do the trick. If you are serious about selling your home, make sure your home is free of unpleasant odors. You can accomplish this by keeping the home clean and dry. Also, you can invest a small amount of money into some of those plug in air fresheners that usually last for a month or two.

9) Keep your home clean and uncluttered- Before you list your home for sale, make sure that your home is clean and presentable. You can either spend the time and clean the home yourself or have a cleaning service come in and clean your home. Having a dirty home can turn buyers off.

In addition to having your home cleaned, you should make sure that your home is neat and uncluttered. Don't have stuff just laying around everywhere. All of the extra stuff that is laying around your home should be stored away. Too much clutter distracts buyers and it can also make your home appear smaller than it actually is. Another tip is to take down all of the family pictures on your walls and around your home. It's harder for buyers to picture the house as their home when your family pictures are all over the house.

10) Have your A/C system cleaned and serviced-When a buyer purchases a home, they will almost always have the property inspected by a home inspection company. One of the most common negative things that home inspectors put on the home inspection report is that the A/C system needs to be cleaned and serviced. This small negative item that inspectors often note on their inspection report sends a message to the buyer that the current owner has not done a good job of maintaining their home. It's only about $100-$150 to have an air conditioning company come out and clean and service your A/C system, so go ahead and spend the money to get it done. It will make it easier to sell your home if you do.

11) Install closet organizers in your closets- One of the most common complaints about a home that buyers have is that the home does not have enough closet or storage space. Closet organizers are cheap and pretty easy to install, and they will provide your home with more room to store stuff away which will appeal to prospective buyers.

Conclusion

We are in a competitive real estate market these days. With all of the foreclosures and shortsales that are for sale at bargain prices, home owners must now go above and beyond to make their homes stand out above the rest in order to attract home buyers. However, there are still buyers out there who will pay a little bit more money for a nice house that is in tip-top condition. If you follow the tips I have outlined here today, you will be a lot more likely to entice one of these buyers to make an offer on your home.

If you have any questions about any of the tips in this article or if you have any questions about other things you can do to get your home sold in this tough market, please feel free to contact me by phone at (850) 567-0037 or via email at nahoom1171@yahoo.com. You can also write me on my blog.

Tips to successfully purchasing foreclosure and/or short sale properties.

As you have already probably read in the news and heard in the media, our real estate market is currently flooded with distressed sales, both foreclosures and short sales. I am quite confident that in 2011 the glut of foreclosures and short sales currently on the market will not only remain constant but will grow larger. If you are currently in the market to purchase residential real estate or if you will be in the market to purchase residential real estate within the next year or two, there is a very good chance that you will end up deciding to purchase either a short sale or a foreclosure property. I don't blame anyone for wanting to purchase a foreclosure or a short sale. You can end up getting a great deal if you do. However, there are certain risks associated with purchasing these types of properties, and there are all sorts of problems you can run into. Today I am going to provide you with some tips that will help you minimize these risks and help you avoid potential pitfalls that could end up costing you both precious time and money.

1) Choose a Realtor who has ample experience at dealing with and successfully closing on foreclosures and short sales.

If you make a decision to purchase a short sale or a foreclosure property, it's important to have a Realtor in your corner who has the experience that is needed to overcome potential obstacles and problems that can come up along the way toward closing on one of these properties. An experienced Realtor can provide you with a wealth of knowledge and resources to make the transaction as smooth as it possibly can be.

When choosing a Realtor to represent you if you buy a short sale or foreclosure, be sure to ask the Realtor how long have they been actively working as a Realtor in the area you are looking to buy, how much experience they have at dealing with foreclosure and short sale properties, and how many foreclosure and short sale properties have they closed on.

From my experience, there are all kinds of problems that can pop up when you are dealing with distressed properties. Having an experienced real estate agent that is familiar at dealing with these types of properties can be the difference between you closing on the deal and the deal falling through.

2) Go to a lender or mortgage broker and get pre-qualified for a loan before you begin your home search.

If you are paying cash for a property, this does not apply. However, if you are going to be obtaining a loan for purchasing a property, you need to go to a lender or mortgage broker and get pre-qualified for a home loan before you start your home search.

If you are purchasing a foreclosure property, the property is usually owned by a bank or some other type of financial institution. These financial institutions that have acquired properties through foreclosing on the properties are serious about selling these properties because they don't want to own them. With that being said, if they have a prospective buyer for one of the properties that they own, they want to make sure the buyer has the ability to buy the property in question of being purchased before they take the property off of the market. Banks who are trying to sell off their inventory of foreclosure properties will not even look at an offer unless the buyer has provided them with a pre-qualification or pre-approval letter stating that the buyer has the ability to buy the property for what they are offering to purchase the property for.

With a short sale, the property has not been foreclosed on yet, but the current owner's lender, who the owner has his/her home loan with, still must approve the buyer's offer in order for the deal to close. From my experience with short sales, the owner's lender will always require that the buyer provide a pre-qualification letter with the offer on the property. Again, if the buyer does not do this, the seller's lender will not even look at the offer.

Banks and lenders have a lot of foreclosure properties on their books that they want to get rid of, and they also have a lot of short sales that they are trying to get sold so that they don't have to foreclose on those properties. They don't have time to waste. If they took offers without being sure the buyer has the ability obtain the loan that they need in order to purchase the property at hand, these banks could end up doing a lot of work thus wasting a lot of time and money. For this reason, they won't look at offers where the buyer is getting a home loan unless the buyer can prove they have the ability to get the loan they need to buy the property. You must get a pre qualification letter from a lender before you start searching for foreclosure or short sale properties.

If you don't know of any good lenders out there who can help you obtain a home loan, visit my website at http://www.bobbynahoom.com/ and click on the "preferred lenders and partners" tab on the left hand side of the screen.

3) If you are looking at buying a short sale, ask if the property is an approved short sale at the listing price. If not, ask the listing agent to provide you with a list of comparable properties that have recently sold.

If you have found a short sale that looks like a great deal, you need to find out some information before you start moving forward with the property. Remember that with short sales, the properties have not been foreclosed on yet. However, the owner's lender still must approve the offer that you make on the property. So the question is "how does the owner's lender decide whether or not to take an offer on a property." Once an offer is received, the owner's lien holder will usually pay a third party real estate broker, who is not involved with the transaction, to come look at the property, evaluate comparable properties, and give them their estimate of value. If the offer is in line with or is higher than the value that the third party broker assigns to that property, the owners lender will usually approve the offer.

However, the owner's bank will usually not tell the owner or the agent listing the property, how much they will take for the property before they receive an offer on the property. This means that the listing agent must list the property for what they perceive the market value is. I have seen agents list short sale properties for outrageously cheap prices that are well below market value. This means that they usually don't have any comparable sales to back up the price that they have it listed for sale at. If that happens and someone makes an offer on the property for the price they have the property listed at or below the already very cheap list price, the owner's lender will usually reject this offer because the offer can't be supported by comparable sales. When this happens, you can end up wasting a lot of your time and effort. With short sales, it can sometimes take up to 90 days before you get an answer from the owner's lender about your offer, so you can also miss other opportunities as well while you are waiting on an answer.

This situation can usually be prevented. Before you make an offer on the short sale that you have your eye on, approach the listing agent or approach your real estate agent who is representing you and ask him/her to provide you with at least 3 comparable sales from the same area or neighborhood that have sold within the last 6 months. Within the last 3 months would be even better. Also, ask the listing agent or your real estate agent to provide you with at least 3 comparable properties in the same area or neighborhood that are currently listed for sale. If the price that the property is listed for is well below the prices that these comparable properties suggest that the property you are interested in should be listed at, than chances are the the owner's lender won't approve an offer for the price it is listed at.

At this point you would need to ask the agent who is listing the house for sale if the owner's lender has pre-approved this short sale at the low price they have it listed for sale at. If they do, ask to see a copy of the approval letter from the owner's lender/lien holder. If they have not approved the list price, you should probably make an offer somewhere in the price range of the comparable properties you looked at, or you should move on and find another property. Otherwise, you will most likely be wasting your time and effort.

4)If you are purchasing a short sale, see if you can get a Seller's Property Disclosure filled out by the owner of the property you are buying.

A seller's property disclosure is a form that the owner of a property sometimes will fill out when they are selling their home. These seller's property disclosures have useful information about the property including the plumbing, electrical, and roof systems, whether or not the property has had any trouble with termites or any other wood destroying organisms, the condition of the appliances, any additions or remodeling that was done to the property, ect...

A seller's property disclosure is no substitute for making sure you have the property properly inspected, but they can provide you with useful information about the property that you can look at to screen the property before you go spending your hard earned money on inspections.

Please make a note that if you are buying a foreclosure property, the owner of the property will pretty much never provide you with a seller's property disclosure. This is because foreclosure properties are usually owned by some financial institution halfway across the country, and they probably know next to nothing about this property they own that you are interested in buying. So with foreclosures, make an extra effort to have the property carefully inspected.

5) Always make sure you order a general home inspection to be done by a licensed and experienced home inspector.

You are about to make a big investment. Before you go ahead and spend all of this money to purchase a property, it's a good idea to have the place carefully inspected so you know you aren't buying a pig and a poke. With a general home inspection, the home inspector will look at the heating and cooling system, he will evaluate the general condition of the roof, he will check out the plumbing and electrical system, he will check for any signs that suggest the property has any structural or foundational issues, and he will also check the condition of all of the appliances in the house. Also, if the inspector sees any other misc. problems, he will make note of those issues in his report as well. If there are any serious problems with any of the big ticket items such as the plumbing, roof or the electrical system, the inspector will usually recommend further inspection by a specialist. For example, if the plumbing was all messed up, the home inspector would recommend to have the plumbing checked out by a licensed plumber to give you an idea of the extent of the repairs that are needed.

When buying foreclosures, home inspections are even more necessary. Again, this is because the owner is probably a bank that knows nothing about the property, so it's up to you to discover any unknown or undisclosed problems. Also, from my experience, a lot of the time foreclosure properties have not been lived in for a while, and they are often beat up and in poor condition. As the old Latin saying goes.... Caveat Emptor. Translated to english...buyer beware. Applied to this situation...get a home inspection done before you buy a distressed property.

For a list of good home inspectors, you can visit my website at www.bobbynahoom.com and look under the "preferred lenders and partners" tab.

6) Always get a wood destroying organisms inspection (WDO inspection) done before you purchase a distressed property.

Termites, wood rot, powder post beetles and other wood destroying organisms can end up costing you a lot of money in repairs. Before you purchase any property, you always need to have a WDO inspection done. These inspections cost around $125, but could save you from buying a property that requires thousands of dollars in needed repairs caused by termites or other wood destroying organisms.

7) Have the property inspected for both Radon Gas and Mold.

Radon Gas-Radon Gas is an odorless and colorless gas that can come up into your home from the soil underneath the house. The gas can accumulate in the slab, crawl space or basement in your house and seep into your home. Radon gas runs randomly in veins of soil. This means that your neighbor could have radon gas issues while your home is free of radon gas. Radon gas can cause lung cancer over a long period of time. In Leon County, statistics show that 1 in 4 homes have radon gas levels above the level that Environmental Protection Agency deems safe.

The two home inspection companies that I have on my website will perform a radon gas inspection. If you are getting a home inspection done by one of these companies, they only charge a small additional fee to also include a radon inspection.

Mold-The weather conditions here in Tallahassee most of the year are perfect for mold growth. Tallahassee is hot and humid most of the year. A warm and moist environment is just what mold needs to grow. A lot of the time, short sale and foreclosure properties have been sitting vacant with no air conditioning to cool the place and keep the air dry. If there have been any water leaks in the property, this will make matters even worse. Water leaks plus no air conditioning could mean that the property could have serious mold issues.

Mold can cause serious health problems. Many home inspection companies, including the two on my website, will also do a mold inspection. If you are already getting a home inspection, sometimes these companies will only charge you a small additional fee to have the inspection done.

8) If the home you are looking to buy is built before 1978, you should get a lead based paint inspection.

Inhaling only small amounts of lead based paint dust can cause serious health issues...especially among infants and small children. Southern Home Consultants, one of the inspection companies on my website, does lead based paint inspections. You can also search the internet for lead based paint inspectors.

9) Be Sure to purchase owners title insurance, and have a title search done on the property before you close on the property.

Before you close on a short sale or a foreclosure property, you need to make sure you have a title search done, and you need to make sure that you also buy title insurance.

When a title company performs a title search, they go through the chain of ownership back as far as the property has been listed on public record. They make sure that the person you are buying the property from actually owns the property and has the right to sell it to you. They also make sure no one undisclosed owners own the property. The reason for this, is that you don't want any undisclosed owners coming around later on saying they own the property still since they did not sign off on selling the property to you. Also, when the title company does a title search, they check to see if there are any liens attached to the property. If there are, the seller has to take care of removing the liens before they can sell you the property. Unless you want to assume the liens...which I would advise against.

In addition to performing a title search, the title company is going to provide you with an owner's title insurance policy. The owner's title insurance policy will basically cover you in the event that the title search fails to discover any of the potential title issues I mentioned above. Title insurance is just a one time fee that you pay at closing. It's well worth the investment.

Having a title search and getting title insurance is very important...especially if you are purchasing a short sale or foreclosure property. A lot of the time with short sales, you will have liens attached to the property. The owners have not been paying their mortgage payment, and a lot of the time they have not paid other bills including homeowners association dues and their might be liens attached to property. A title search would discover those liens. With foreclosures, there have been many issues lately with banks not properly foreclosing on properties, and the previous owners who were foreclosed on sometimes come back and claim ownership of the home. With this type of issue, an owners title insurance policy would cover you.

Moral of the story, before buy a distressed sale, make sure you have a title search done and purchase an owners title insurance policy.

Conclusion

You can get a great deal if you purchase a short sale or foreclosure property. You just need to make sure that you are careful and prudent going into it. You can run into a lot of problems with foreclosures and short sales. If you take my advice and follow the tips I have suggested here today, you will have much less of a chance of running into unpleasant surprises after you close on the property.

If you have any questions about purchasing a foreclosure or short sale property, feel free to email me at nahoom1171@yahoo.com or give me a call at (850) 567-0037. You can also write to me on my blog.

2010 Tallahassee Real Estate Market Update

Today I will be giving you an update on the current condition of Tallahassee's real estate market. Once again I have taken the liberty of doing some research, and using the Tallahassee Board of Realtors MLS statistics, I have pulled and analyzed some very useful data that I will be using here today to give you an idea of how Tallahassee's residential real estate market is doing.

In my research I made year to year comparisons covering and comparing the time periods of May 1st 2009-September 31st 2009 to May 1st 2010-September 31st 2010. To make my data as meaningful as possible, I divided propeties by both price range and location. I divided the properties up into 5 different price ranges and 4 different areas of town. In my research I looked up the number of homes listed during those time periods, the number of homes sold in those time periods, the average sale price of the homes that sold in those time periods, the average number of days it took for a home to sell in those time periods, and the sale price to list price ratio (this is the average % of what a home sold for compared to what it was listed for sale at). I pulled all this data for all properties in each price range and each area of town. Below is a summary of the data that I found categorized by price range and for Tallahassee as a whole.

Real Estate Summary For Tallahassee As a Whole

Overall real estate activity in Tallahassee has decreased from last year. The number of homes listed for sale has decreased by 7.7%. This means that not as many people are trying to sell their homes. Overall home sales in Tallahassee have decreased by 9% this year compared to last year. Home prices in Tallahassee have dropped by 5.25% compared to last year as well. The average time it takes a person to sell his/her house has stayed about the same. Finally the sale price to list price ratio has stayed about the same, which means that the spread between what people are selling their homes for compared to what they are listing their homes for has increased.

Overall Market conditions in Tallahassee have taken a slightly unfavorable turn since last year. The number of homes on the market for sale, the number of homes that have sold, and the average price of homes that have sold have all decreased. Overall this signals weaker demand for homes. This is likely caused from the overall unfavorable economic conditions, especially high unemployment.


$0-$125,000 Price Range

Overall this price range has seen a significant increase in activity since last year. However, prices of homes in this price range have dropped. The number of houses listed for sale this year has increased by an average of 17.2% since last year with the biggest increase occuring in NW Tallahassee. Also, sales of homes in this price range have increased on average by 20.2% with the largest increase in sales also occuring in NW Tallahassee. While sales and listings have increased, prices of of homes in this price range have decreased by an average of 12.2% since last year.

In NE and SW Tallahassee, the average number of days to sell a home went down compared to last year, and in NW and SE Tallahassee, the average number of days it took to sell a home went up.

The sharp rise in shortsales and foreclosure properties in this price range has caused an increase in the number of listings and the number of sales. The fact that more foreclosures and shortsales have come onto the market has also been responsible for prices decreasing. Distressed sales typically sell for less than market value. When these properties sell for below market value, it puts downward pressure on home prices across the board. Right now is a great time to buy a property in this price range because you can find some very good deals.

$125,001-$250,000 price range

Overall this price range has seen a decrease in listing and selling activity compared to last year, but prices have remained stable.

Since last year, the number of homes listed for sale in this price range has decreased by 17%. The number homes sold in this price range has decreased by 22%. The average price of a home sold in this price range has increased very slightly since last year by just 0.91%. The average number of days it took to sell a home in this price range has decreased in all areas except for in NW Tallahassee, where the average days it took to sell a home in this price range increased from 105 days to 114 days. Finally, the sale price to list price ratio stayed about the same for homes in this price range compared to last year.

There are not as many people looking to buy or sell homes in this price range this year compared to last year, but it appears home prices in this price range are leveling off and even slightly increasing. This is great news for people who own homes in this price range.


$250,001-$400,000 Price Range

In this price range, the number of homes sold and the number of homes listed for sale has decreased since last year, but homes in this price range have appreciated in value since last year.

Prices have remained stable in this price range with very slight increases in value coming in NE, SE, and SW Tallahassee. In the NW the average value of homes sold in this price range decreased by 7.4%. The number of homes listed for sale has decreased by 12% since last year. Home sales in this price range have decreased by 10% since last year. The average number of days it has taken to sell a house in this price range has decreased in all areas of town except for in the NW where it increased from 125 days to 194 days.

In this price range, real estate activity has decreased since last year, but prices have remained stable with slight increases. With the exception of NW Tallahassee, it is taking less time to sell a home in this price range than it did last year. This is good news for people with homes in this price range who are looking to sell their homes.


$400,001-$750,000 Price Range

In this price range, there is much less activity as opposed to homes in the lower price ranges. In the SW part of Tallahassee, there were no homes listed or sold in this price range in 2010. In 2009 there were no homes sold and only three listed for sale.

In NW and SE Tallahassee, the number of homes sold stayed the same while sales decreased in NE Tallahassee by 26%. In NW and SE Tallahassee, the number of homes listed for sale slightly decreased while the number of homes listed for sale in NE Tallahassee decreased sharply by 29%. On Average the value of homes in this price range actually increased by an average of 11.5% with bigger gains in value occuring in NE and NW Tallahassee.

$750,000 and up Price Range

In this price range, there was very little activity in both 2009 and in 2010. I will give you a break down of each area for this price range.

In the NE sales remained the same at 5 properties. Listings decreased from 29 to 27 listings. The average sale price decreased from $908,800 to $818,800. The average days on the market to sell a house in this price range increased from 189 days to 223 days. The average sale price to list price ratio decreased from 92.19% to 81.07%.

In NW Tallahassee, there were no homes that sold in this price range in 2010, and only 1 was newly listed during this time period.

In SE Tallahassee there was not any activity in 2009 in this price range. In 2010 there were two homes listed and two homes that sold. The average sale price of these two homes was $792,500 and it took an average of 206 days to sell these homes.

In SW Tallahassee there was not any activity for homes in this price range.

Overall, property values of homes in this price range have gone down and the average days on the market to sell a home in this price range has gone up. This leads me to believe that demand for homes in this price range has come down sharply.

Conclusion

Prices are down, sales are down, and the number of homes that went up for sale went down in 2010 compared to 2009. However, the decrease in home values from 2009 to 2010 was much smaller than the decrease we saw in the couple of preceeding years. This means that things appear to be getting better. Inventory of homes is down, which is good. Sales are down, which is probably due to the fact that the bad economy has decreased housing demand.

There are homes in some price ranges in which their values are leveling off. These are mainly homes priced between $125,000-$400,000. Home values under $125,000 have decreased because of the rising number of foreclosures and short sales in this price range. Home values in the more expensive price ranges are decreasing due to lack of demand for more expensive homes.

Most likely we will continue to see very slight declines in home prices in Tallahassee. It probably won't be long though before demand picks up and home prices start to slowly increase across the board.


If you have any questions about the Tallahasee Real Estate market, please feel free to contact me directly at (850) 567-0037 or email me at nahoom1171@yahoo.com.

The new foreclosure moratorium. Another blow to an already frail Real Estate Market.

At a time when our fragile real estate market looked like it was finally showing signs of a slow but certain recovery, major banks including Bank of America, J.P. Morgan Chase and GMAC announced that they are putting a halt on foreclosure sales and taking thousands of their foreclosure properties off of the market. Apparently these major banks have been accused of not properly foreclosing on homes. Employees of these major banks have testified to signing thousands of foreclosure documents every month without even reading the documents they were signing. This includes the employee for Bank of America dubbed "The Robo Signer" who said he signed as much as 10,000 foreclosure documents a month without reading any of them. Also, these banks are being accused of losing the deeds to properties, not verifying documentation throughout the foreclosure process and even foreclosing on properties that they had no business to foreclose on. Because of this, these banks are having to suspend the sale of thousands of foreclosure properties throughout the country so they can fix all of these problems. The banks in some cases are even having to re-foreclose on some of the properties.

Make no mistake about it, this is going to be bad for our economy. There are hundreds of thousands, if not millions, of foreclosure properties on the market for sale right now. In most cases, these properties are priced below market value, and they continue to suppress home values throughout the country. In order for our real estate market to recover, we are going to have to get these distressed properties sold so real estate values can continue to increase. This foreclosure moratorium being carried out by Bank of America, Chase and GMAC will delay the sale of foreclosure properties by as long as 6 months to a 1 year. Also, keep in mind that there will probably be more banks who will also join these three banks and also issue foreclosure moratoriums on their foreclosure properties. Citi Bank is one bank that is currently being investigated. They have not suspended their foreclosure sales yet, but don't be surprised if they do.

Another issue is arising that is directly tied to the problems these banks have had with their foreclosures. Some title companies are not writing title insurance policies on foreclosure properties that are owned by Bank of America, Chase and GMAC. Title insurance protects the buyer and the buyer's lender from issues pertaining to clouds on the title that are not discovered in the title search that is done before closing. Examples include claims of ownership by unknown previous owners and liens on the property that were unknown prior to the buyer purchasing the property. If title insurance companies won't issue title insurance on these foreclosure properties, that means that buyers will most likely not purchase these properties. This will also slow down the sale of foreclosure properties.

Foreclosure sales have been a big part of my real estate sales this year. This year I have seen a lot of investors, who have lots of cash, come out and start buying many of these foreclosure properties. Investors have been doing this because they can't earn a high return on their money in the banks right now, but with real estate prices being so low, they have been able to earn a good return on their money by investing in real estate. These real estate investors with lots of cash have accounted for a very large number of real estate sales this year thoughout the country. All of the issues with the banks improperly foreclosing on properties might scare many investors away from buying foreclosure properties. This could really dry up property sales.

In our last 7 recessions that we have had in this country, real estate has pulled us out of those recessions. Real Estate will probably be what pulls us out of the current recession as well. Now that this foreclosure moratorium has occured, the recession could drag out much longer than expected.

My advice to real estate investors who still want find good deals on properties and buy them is to start looking at short sales. A short sale is when the current owner has not had their property forclosed on yet, and the current owner's lender agrees to accept an offer on the property that is lower than what the current owner owes on the property so that the lender does not have to foreclose on the property. Lenders are motivated to agree to short sales for a couple reasons. First off, going through the foreclosure process actually costs the lender money. Second, since we are in a declining real estate market still in most areas of the country, the value of the property will probably be less after the bank forecloses on the property (which could take 6 months to a year since the courts are so back logged with foreclosures) and put the property up for sale at a later date.

Short sales may take longer to close than a foreclosure sale, but there are usually less unknowns with a shortsale. With a shortsale, the current owner usually knows much more about the property compared to a bank who has foreclosed on the property, so the buyer knows more about the property with shortsales before they put an offer on the property. Also, with a shortsale, the buyer usually is the one who picks the title company to handle the closing. With foreclosures, the bank who owns the property usually requires the buyer to use their title company. These title companies that banks use with to close on their foreclosure properties are usually located out of town, and from my experience they don't provide good service. Lots of times, these out of town title companies cause closings to get delayed due to not getting their work done before the closing date. If the buyer can pick the title company, that title company will usually provide good service because they want the buyer's repeat business. These out of town title companies that you have to deal with when buying a foreclosure property are not concerned with the buyer's repeat business since they are out of town.

If you have any questions about foreclosures or shortsales, please feel free to contact me.

How foreclosure properties affect our real estate market, and why right now is a great time to buy a foreclosure property.

Buying an investment property is a great way to make money and help secure your financial future. Like any kind of investment though, such as with stocks or bonds, buying an investment property at the right time is very important. If you want proof of this, talk to someone (including myself) who bought a property between late 2004 and early 2007. If someone bought a home in that time period, it is safe to say that their property now is not worth nearly as much as it was when they bought it. Buying real estate in that time period is an example of bad timing. However, if you talk to someone who bought a property in the early 1980's during the recession back than, their property is probably worth a lot more today compared to when they purchased the property back when old Ronald Reagan had recently taken office.

Ideally you want to buy an investment when it is priced low and sell when it is priced high. You are probably asking yourself "Well how do I know when those times are?" Good question. Going through the finance program at Florida State's College of Business, I managed to learn a thing or two about investing in stocks. I know that in the crazy ever changing stock market, this task can be somewhat tough....well actually pretty much impossible. Stocks prices pretty much react to news which changes everyday, thus it is pretty much impossible to predict what a stock will do. However, real estate is a much slower changing market and generally operates based on basic economic fundamentals. So in real estate, how do you know when a good time to buy is? Let me provide you with a somewhat round about answer to this question.

First off, in real estate, prices are very dependant on supply and demand. The higher the demand is for homes, the higer the prices will be and visa versa. The higher the supply of homes the lower the prices of homes will be and visa versa. Many variables can drive demand and supply in real estate including interest rates, tax laws, unemployment rates, number of homes for sale, ect... When assessing supply and demand for homes in real estate, it is important to know what affects supply and demand in real estate, because if you do, this will help you be able to predict whether the value of your home is going to increase or decrease.

So let's look at today's real estate market here in Tallahassee. In today's real estate market in Tallahassee, the fundamental economics of our real estate market are stronger than most people probably think. I did some market research earlier this year, and what I found indicated that our market is on the upswing ( if you want to view my full market report that I did on Tallahassee's real estate market, view my blog from back on May 20th titled "Tallahassee's 2010 Housing Report") First of all, overall sales in the first part of 2010 were up 27% compared to the first half of 2009. Also, our inventory of homes for sale shrunk significantly as well. So sales up, housing inventory down...in my world that is a strong sign that the housing market is on the up and up. Sales went up because prices went down from 2009 to 2010. As you know though, when sales start increasing due to increased demand and the supply of homes begins to shrink, it is only a matter of time before home values begin to increase in value again. However, in today's real estate market we have something a little unusual going on which throws a wrench into the equation of determining how soon home values in Tallahassee (and everywhere else in the country for that matter) will start to rise again. This wrench is the foreclosure crisis we are going through.

When I finished my study on the market conditions in Tallahassee and I got done looking at and analyzing Tallahassee's real estate market statistics, my first thought was "there is something wrong with this picture." The market statistics showed that sales were way up, inventory had shrunk down quite a bit, yet the value of our homes here in Tallahassee are still decreasing. According to the laws of supply and demand, this should not be happening. Well what is causing our home prices to drop is the increasing number of foreclosed homes that are coming onto the market for sale.

You see, once a bank forecloses on a home, they are very motivated to get that home sold. Banks refer to these foreclosed homes as "non performing assets." This is because they are assets that are tying up the bank's money, but they are not making the banks any money in return. In fact, they are causing the banks to lose money. Every month, the bank has to pay the normal expenses of owning the home including taxes, insurance and homeowners associaion fees if there are any. Because of this, banks want to get these properties off their books as soon as possible. Often times banks will sell these properties for less than market value, and in some cases for dirt cheap. Well when that happens, guess what else happens? It brings the value of the sorrounding properties down. When a lot of these foreclosed properties pop up for sale and are sold for dirt cheap, the resulting devaluation of homes in that community can be quite severe. This is why prices have been dropping in our community and other communities across the state and country despite the increasing number of sales and the shrinking housing inventories. So what does all this mean?

Basically what all this means is that home values won't start increasing until all of these foreclosed properties get sold off. This could be a while. If I were to guess, I would say it will be another 2 years before we start to see home values increase in Tallahassee. There is some bad as well as some good news though. The bad news is that it is going to get worse before it gets better. Last month our country saw a record number of homes that were foreclosed on by banks...the most ever recorded. This means that over the next few months we are going to see lots of foreclosed homes hit the market for sale. The good news though is that the number of people who are delinquent on there mortgage payments is decreasing. This means that the pace of homes being foreclosed on is going to start slowing down.

If you are in the market to buy an investment property though, right now is the time to do so. We know that the basic economic fundamentals of our real estate market are strong. We also know that over the next few months more forclosed homes will hit the market for sale, but in the next year or so the number of foreclosed homes will start decreasing. When this happens, home prices in Talahassee will start rising. This means that anytime in the next year is a great time to buy an investment property...especially if you are paying in cash. Banks will sell you a home for less money if you pay in cash because they know the closing is fast and certain.

I have helped several investors this year purchase properties for great prices. For example, I sold one investor a 2 story condo with 2 bedrooms and 2 bathrooms, granite countertops, new appliances, tile floors and tiled showers for only $45,000. I also helped a client of mine purchase a 3bedroom/3bathroom condo in Savannah Crossing as an investment property for only $84,000. He paid cash for his, and he is earning about an 8% annual return on his investment (not counting appreciation) which is a much better return than he could get at the bank these days. There are other great deals out there right now like these, and there will be more to come in the near future. As I mentioned earlier, buying an investment is all about the right timing, and now is the right time to buy investment property in Tallahassee if you are thinking of doing so. If you wait around too long after all of these foreclosed and distressed properties have been bought up, you will miss the boat and a great chance to make money through buying an investment property at the right time.

If you have any questions about purchasing an investment property or if you have any real estate related questions, please don't hesitate to contact me at (850) 567-0037 or via email at nahoom1171@yahoo.com.

Reverse Mortgages; A way to help fund retirement.

Hello,

Today i'll be talking about a mortgage program that has been around for many years, but you probably have not heard of or don't know much about. This mortgage program is very different from most mortgage plans you have heard of. With this type of mortgage, you actually will never have to make a mortgage payment in your entire life. Even better than that, you will actually be the one receiving payments from the bank!! You are probably asking yourself "what in the world is he talking about?" I am talking about reverse mortgages. Before I get into the nitty-gritty details of how they work, let me give you the general idea of how reverse mortgages work.

General Overview

Basically, reverse mortgages are for people who are 62 years or older and who have a home that is either paid off or they have a substantial amount of equity in their home. The homeowner can go to a lender that offers a reverse mortgage program, and they can take out a loan on their home which is based off of the value of the home and the age of the homeowner/borrower. If the homeowner still has a balance on his or her existing mortgage, the reverse mortgage will pay off the existing mortgage balance, and the rest of the proceeds from the reverse mortgage will go to the homeowner to spend on whatever his/her heart desires. If there is not an existing mortgage on the home, the homeowner will get to spend all of the proceeds from the reverse mortgage.

This kind of sounds like a rifinance doesn't it? Well it's not...so get over it. The proceeds from the reverse mortgage are for the homeowner to spend. The homeowner can receive the payments via monthly payments, a line of credit or receive a one time lump sum. The great thing about reverse mortgages though, is that you never have to repay the loan during your lifetime. If you use your loan proceeds up before you die, you will not have the house taken from you either. The loan does not have to be repaid until the homeowner passes away. The loan is usually repaid through the sale of the home, and if the sale of the home does not cover the entire loan amount, say due to decreasing property values, the bank get's paid back via an insurance policy they have on their loan. The loan does not have to be paid off by selling the home. If there are heirs of the deceased borrower who want to keep the home, they can pay the home off via cash or through getting another mortgage on the property.

On a side note, if during your lifetime the value of the property goes up, you can have your loan reviewed and possibly qualify for an increase in your loan limit!

How to determine your eligibility for getting a reverse mortgage and the loan amount you will receive

To be eligible for getting a reverse mortgage, you have to be at least 62 years of age. You also must occupy the home. The property also must be a single family or a one to four unit owner occupied dwelling. This would include condos, townhomes, single family homes and some manufactured homes. The propery must also meet the Department of Housing and Urban Development (HUD's) minimum property standards.

The loan amount you can receive from a reverse mortgage is determined first by the property value. The more the property is worth, the higher the loan amount will be. The second variable that determines your loan amount is the age of the borrower. The older the borrower, the higher the loan amount will be. In the case of their being two borrowers on the loan (I.E. husband and wife) they will use the age of the youngest borrower to determine the loan amount. Both borrowers must be 62 years of age or older to qualify. The third factor that will determine your loan amount is the current interest rate. The lower the interest rate, the higher your loan limit will be. Finally, your loan amount can not exceed the establised loan limit for your area set by The Department of Housing and Urban Development (HUD).

Requirements associated with reverse mortgages

Once you qualify for a reverse mortgage and receive the proceeds, there are certain requirements that you have to comply with in order to avoid having to repay the loan during your lifetime. First off, you have to pay and keep current on your homeowners insurance and your property taxes. Second, at least one of the borrowers has to continue to occupy the home. In other words, the home has to continue to be the primary residence for at least one of the borrowers. Third, you have to maintain the home according to Federal Housing Administration's (FHA) property standards. If the property owner gets sick and remains in the hospital, they are allowed to be in the hospital for up to 12 consecutive months before they will have to pay the loan back. If there is more than one borrower, this would not apply if one of the borrowers remained in the home.

As long as these requirements are met, the property owner will not have to pay back the loan during his/her lifetime.

Payment Options

You have a few different options as to how you can receive your reverse mortgage loan proceeds. To begin with, you can receive the loan proceeds in periodic payments (usually yearly or monthly payments). This is a great way to supplement your income if you are living off of social security, pension income or any other type of fixed income.

The second payment option is having an open line of credit that you draw upon at anytime. This is a great option if you want to use the loan proceeds for specific expenses that may not be frequent, or if you want to use the loan proceeds on unforeseen expenses that may arise.

The third payment option is receiving a lump sum of money.

The reverse mortgage process

If you decide to get a reverse mortgage, there is a process that you must go through. The steps in the process are as follows.

1) Education-The first step is getting educated about reverse mortgages. The best way to do this is to go and talk with a reverse mortgage specialist. He/she will be able to educate about reverse mortgages and answer any questions that you may have. They will also provide you with reading materials that contain information about reverse mortgages that you can take home and review. It would also be a good idea to talk to an accountant about reverse mortgages so you know what all the financial implications are.

2) Counseling- If you decide that a reverse mortgage is right for you, you must attend a counselor education session with a HUD approved counselor. They will further educate you about reverse mortgages, the reverse mortgage process, and they will explain to you the financial and legal obligations associated with reverse mortgages.

3) Application-Your reverse mortgage loan specialist who works for the lender making the reverse mortgage will meet with you and help you fill out the application for the reverse mortgage.

4) Processing- Once the application is filled out and submitted to your lender, it must go through several processes before it is approved.

• First off, an appraisal will be ordered by the lender to determine the value of the home
• Second, homeowners insurance will have to be ordered for the home.
• Third, a title insurance policy for the lender will have to be ordered. A title insurance policy for the homeowner is highly recommended, but not required. Title insurance protects the lender and the homeowner from claims against ownership made by undisclosed spouses, heirs of previous owners, creditors holding liens against previous owners, and other parties.
• The last stage of processing is underwriting. Once the appraisal is approved and value of the home is determined, the title search has been cleared, and homeowners insurance has been ordered, the property will go to the lender's underwriters for final approval.
• It generally takes 6-8 Weeks from the time the application is submitted until the closing of the loan occurs.

Overall, reverse mortgages are a great way to help ensure one has enough money during his/her golden years and through retirement. To qualify for a reverse mortgage, you don't have to worry about credit score or your income as the loan is determined by the value of the home, the age of the borrower and the current interest rate. This is truly a great way to increase income for older people who own their home outright or have a lot of equity in their home. If you have any questions about reverse mortgages, please feel free to contact me at (850) 567-0037 or via email at nahoom1171@yahoo.com.

You can also contact your local reverse mortgage specialist, Michael Weltman with Wells Fargo at (850) 556-6694 or via email at michael.weltman@wellsfargo.com.

Have a great week!