Megan McGinnis' Blog--Get Connected!

What Happens to Repossessed Houses?

Megan — Thu, 02 Sep 2010 21:28:38 +0000

What Happens to Repossessed Houses?

There are a few stages in the foreclosure process and today we will talk about what the bank does with a property once it has been repossessed. After a home has been foreclosed upon it will be transferred to a property auction for liquidation, usually called a trustee sale or sheriff sale, in order to try to regain the remaining value of the loan. These defaulted properties can be a great value to home buyers since banks do not want to hold these properties fearing costs of maintenance and property insurance so they are willing to get rid of these properties at discounted prices but these sales are also filled with risk.

Anyone may gain access to these public auctions and are usually not widely advertised as the financial institutions do not want to incur these costs. The usual starting bid at trustee sales includes the remaining amount of the loan plus expenses to obtain the title and any fees or costs from selling the property. The bid will rise from there but since these auctions are usually only attended in small numbers the price remains relatively low. If these low minimal costs are not met, as most times happens, the property will be returned to the bank for another type of liquidation.

Research is vital when attending a foreclosure property auction–trustee sale or sheriff sale– to evaluate what the property is worth and whether it is really a value. It is suggested that before you attend you establish a maximum price for the property you are attempting to own, although you will not be able to view the property interior prior to making bids at this type of auction which makes them a risky proposition. The emotion of an auction environment can get the better of some so it is important to use self control when bidding. Attending multiple auctions before you visit the one with property you wish to bid on that way you can understand how the process works and build your confidence that you will be bidding in a calm collected state. When you are researching it is important that if there is anything that deters you from purchasing you should be able to walk away and trust your instincts that it is not a wise investment.

When the property reverts to the trustee, ie the bank, they then make the choice of listing the property on the MLS (multiple listing service) using a real estate agent or they may list the property for sale with a national REO auction house–there are several of these national auction liquidators. At this stage, the risk is reduced to nothing as perspective buyers can visit the house during open houses to review condition and would therefore not be buying the property “sight unseen” as in a trustee sale or sheriff sale.

National auction liquidators typically encourage perspective buyers to not only attend the open houses but to bring along a real estate agent and an inspector to determine value and condition. This aides in determining the maximum bid you should make on the property in the auction.

National auction liquidating auctions are held either in a physical ballroom setting or on its secure online bidding platform. Online auctions give the bidder the convenience of bidding from the comfort of their own home. With our advanced platform, bidders can place monitor the auction in real-time and set their maximum bid. Highest bid at end of auction is announced as the winner.

Ballroom auctions are similar to online only auctions with the exception of the venue. Auctions are held in a venue on a specified date. Once at auction, bidders can view all information regarding auction process from one of the numerous auction staff walking around.

If you take these practices to heart and wisely research and comb through properties you will surely find a property that fits your needs budget, and means at a seriously discounted price. So go forth and bid with confidence knowing that you are getting a great property at a great price instead of the trying to buy at a risky venue like a sheriff sale or trustee sale.

And that is what happens to houses after they are repossessed. Sooner or later these houses will end up in the hands of homeowners who will take care of them.

Please add your comments.

National REO Liquidation Auction Vs Short Sale

Megan — Sun, 29 Aug 2010 21:22:28 +0000

National REO Liquidation Auction Vs Short Sale

Have you noticed how many houses are for sale on the MLS? Not very many and those that are on the MLS are typically short sale listings. For those of you who are new to this term, short sale, that is when the bank will accept a price for the house that is less than the amount owed by the current owner of the property. In a nutshell, the homeowner is upside down in their mortgage, they owe more than their house is worth, and they are trying to get rid of this albatross by “selling it short.”

The challenge of trying to buy one of these listings is that there is no guarantee that you will get the home and the banks are taking months, if not years to negotiate these deals. Furthermore, the deals that are going to close are usually cash deals because, with the lack of inventory, the banks are driving hard for the best terms and accepting the best offers– which tend to be all cash offers.

As an example, a friend of mine just purchased a house as a short sale that she has been negotiating for over a year. Luckily for her, it’s an investment property because if she had to sell her current house in order to get the new one, she’d have been sitting in limbo for quite some time. I don’t know about you, but that’s not a comfortable limbo to be in.

Another example of a current short sale transaction that I’m aware of is this: my sister wants to buy a new home because her family has expanded and they need additional space. She has a home she owns with equity but wasn’t getting any short sale offers accepted in a timely manner and had a contingency based on the selling of her current home. Again, a very untenable position, so they decided to sell their home with equity, rent for a year and launch many offers on short sales, hoping to land something. Good luck with that, sis!

Well, there’s another alternative to sitting around waiting for a short sale to be accepted. The other largest outlet of houses for sale besides the MLS is a national REO real estate liquidation auction. I’m not talking about trustee sales or sheriff sales which host auctions but rather I’m talking about the large national auction houses, of which there are a few, that sell the bank’s inventory. The Banks are liquidating their foreclosed inventory through these outlets because it’s fast & easy for both seller and buyer.

Here’s why the banks like it: banks put their inventory up for sale with an auction house. In month one, the auction house hosts the open houses & sell the properties. In month two, they finalize and close the transactions. Very little paper work for the bank, very little use of their resources–especially compared to a short sale with all of the negotiations, the paperwork, the tracking and the hassles involved in that transaction.

Here’s why it benefits the buyers: in month one, you visit the open houses and define your target house and target price, attend the auction and buy the target property. In month two, you close on the transaction and move in. No waiting, no worrying.

Buying at auction is a much more secure way to purchase a new home than to try to buy a short sale. Don’t you think?

What are your experiences…..

Hip Resurfacing Doctor Interviews

Megan — Thu, 26 Aug 2010 16:32:38 +0000

Hip Resurfacing Doctor Interviews

Thanks to our friends on the Surface Hippy website.

My personal experience has been with Dr. Koen De Smet (interview 2 & 12)in Belgium. His knowledge, expertise and dedication has made him the teacher to orthopedic surgeon world wide interested in learning the science of hip resurfacing. AND he’s a friendly, helpful human being!

Thanks to our friends on the Surface Hippy website.

Megan McGinnis Presents The Viral Power of Social Media Marketing

Megan — Mon, 23 Aug 2010 15:36:43 +0000

Megan McGinnis Presents The Viral Power of Social Media Marketing

Why are Sheriff Sale & Trustee Sale so Risky Compared to REDC Auction?

Megan — Fri, 20 Aug 2010 21:28:22 +0000

Why are Sheriff Sale & Trustee Sale so Risky Compared to REDC Auction?

Learn How to Become a Realtor in California

Megan — Wed, 18 Aug 2010 19:21:13 +0000

Learn How to Become a Realtor in California

I have tried for several years to make it to those free real estate classes held at my local agent’s office but I could never fit it in my busy schedule. Now, through John’s course, I’ve been able to do it when I have free time which is sometimes late at night, sometimes early in the morning. You get to choose when you will study.

I currently have an hour commute each way–2 hours a day I spend in the car. I have a carpool buddy so we decided to use a portable DVD player and study during our commute! I know this way I will finally get my license after thinking about it for 5 years and my friend will too. We are both very excited to do this. Thanks, John, for giving us this portable tool!

Add your comments on how you made the time to study for your real estate agent’s license.

Peace, Megan

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VA Vendee Program Offers 5% Down Financing For Investors

Megan — Tue, 17 Aug 2010 14:58:34 +0000

VA Vendee Program Offers 5% Down Financing For Investors

Again, I turned to the expert, Angella Raisian, for this info.

VA Vendee Program Info & Questions:

VA Vendee Financing Program offers 5% down financing for Real Estate Investors, and is now administered by the Bank of America. It used to be called the VA Repo, or OCWEN program.

I’m in the middle of qualifying for a VA Vendee Financing Program, AKA Veterans Administration Vendee Financing Program. I bought a number of homes with the VA Repo program in the 90’s, when they were 0% down, but this is my first time going through the Bank of America VA Vendee Financing (they won the contract from OCWEN, who stunk because I was never able to register with them).

I loved the program in the 90′S, and I loved getting rental properties with No Money Down that cash flowed immediately.

There are good and bad reviews about the VA Vendee program. Personally I don’t care, because 5% down for investors is a great financing option (of course you have to qualify for it), but do any of you know of pitfalls to watch out for when going under cotract?

Here re some good and bad posts about the VA Vendee Financing Program:

Are you kidding? this program is awesome for investors!!

5% down, and a 4.5% rate of the _entire_ 95% of the balance!, no PMI either folks, cha ching! Up to 6% towards closing costs. No appraisal. No # mortgages limit. Seasoned investors can even use 75% of appraised rent for the property being bought towards calculating debt to income ratio. Still need convincing?

The VA fee is 2.25% which is 100% deductible in the first year as qualified mortgage insurance. It’s basically prepaid PMI and because its VA its “qualified”.

BoA charges a flat $2500 for closing costs and VA wont pay title policy so don’t bother asking.

The quality of the properties seems to be much better than the average foreclosure in my area. I just closed on one with no deferred maintenance and got it rented in two weeks. I am closing on another this coming week that needs just a couple grand for cosmetics.

The closing process is a bit of a brow beating as far as documentation is concerned. I swear I thought they were going to ask for my first born too. But I guess that is par for the course now giving the new lending market risk aversion.

As another poster mentioned they are real miserly on coming down on the price. I’ve found that by being patient and waiting until the first price adjustment (usually around 3 weeks on market) then coming in 3-6% below usually seals the deal. Don’t freak out if someone else beats you to it. About half the contracts these days are falling through so you’ll probably get a second chance.

I have found that a property with these financing terms cashflows easily. I’ll continue to snap them up as they come on the market

——————————-

I am working one right now and it is a BITCH. The closing costs are huge. You need to buy it in your name then have it transfered to an LLC as they will not loan to an LLC.

I am dealing with Bank of America and they are not moving an inch on the price. It has been on the market for 90+ days with no price reduction and they will not go less than 6k lower than asking on a 160k property. I think they think that the loan makes the high price worth it?

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For more VA Vendee Program Info, go to the next post called VA Vendee Financing Program Facts & Data.

So guys, any personal experiences with the VA Vendee Program?

VA Vendee Program Facts

Megan — Fri, 13 Aug 2010 13:52:05 +0000

VA Vendee Program Facts & Info:

My friend Angella Raisian, who is always on the cutting edge of info (check out her blog ), just published this great information….

VA Vendee Financing Program offers 5% down financing for Real Estate Investors, and is now administered by the Bank of America. It used to be called the VA Repo, or OCWEN program.

If you have access to the MLS, search for “veteran” in the seller name to match Department of Veteran Affairs. Another hint is if it is a foreclosure and you need a pre-approval letter from BoA. You can do MLS search on my website at BankRepoBusTours.com. Find properties & pre-approval info at:

(800) 960-0842 x6901
VA.REOTrans.com
VA.Equator.com

VA Vendee Financing Program Quick Facts:

Any purchaser can apply for Vendee Financing. You do not have to be a Veteran
Vendee Financing is available for non-owner and owner occupied buyers
4.5% Interest Rates a of today
The seller may contribute up to 6% of the contract sale price for closing costs
2.25% VA Funding Fee
No pre-payment penalties
An appraisal is not required for underwriting
Seller may contribute up to 6% of the contract sales price to pay for funding fee, closing costs, prepaid and other expenses
Vendee Financing is not a credit score driven product
Vendee mortgages are assumable by qualification
There are two available terms, a 15 and 30 year fixed rate
Can be financed with as little as 0% down. The loan amount may be increased up to 2% to finance closing costs, prepaids or other expenses. Funding fee may not be financed

Non-owner occupied (Investors) buyers only:

No maximum number of investment properties
Can be financed with as little as 5% down. Investors may use 75% of anticipated rent based on appraiser’s estimate to offset against the subject property monthly payment
Investors must have experience managing rental properties to include anticipated rent on subject property in underwriting

For vasic VA Vendee Program, go to the previous post called VA Vendee Financing Program Offers 5% Down for Investors.

Any other facts & data I might’ve omitted?