More info…
The Veterans Housing Act allows the Department of Veterans Affairs to guarantee a home or mobile home loan. While eligibility is still determined by VA, the benefits vary depending on when you served in the military and the type of service. While those currently or previously on active duty are allowed benefits after serving anywhere between 90 days to 24 months, depending on the year, reservist and national guard members never called to duty, will need to contact VA to determine eligibility.

While most consumers feel VA gives a borrower a loan, VA only guarantees loans in case of default. Loan approvals are made on their behalf by approved lenders. VA does require all homes be appraised by a VA roster appraiser and there are only special circumstances in which VA reviews a loan for credit determination.

VA Home financing allows 100% financing, 4% seller contribution, limits what a borrower can pay in the form of closing costs, provides excellent interest rates and does not require perfect credit. A VA loan will consider approval for a borrower with no credit. It is by far the best loan program available, and it is only for veterans.

Is it a Buyer’s Market?

Times have definitely changed in the last year in most parts of the country. I’m in Birmingham, Alabama and we are lucky to have 3 new automoblie maufacturing plants located in a triangle around our city.

But – if you are in an area that doesn’t have commodities or heavy industry (two sectors that are doing well right now), what is your market like?

Chances are – you’re in a “Buyer’s Market”.

What does that mean exactly? It means that there is more inventory than there are potential customers for that inventory. just like in the stock market – when almost everyone is selling and few are buying – the stock price will go down.

Many seller’s think that because they paid a certain amount for a property, they can get at least that amount when they sell. Sadly, this leads to overpricing and a long, long wait until they sell much later at a lower price. My best advice is to find a real estate agent who will tell you the truth about market conditions and back it up with recent sales prices of similar home.

Last week, I was driving around Destin, Florida. Every third home was for sale. Auctions were common. Prices escalated in the area for 5 years and then they reached a top. What’s happening now? The seller’s are “holding out” for their price as more and more homes come on the market at significant discounts to what they are asking. The bottom line is that the sellers who put their homes on the market first are going to take a big hit.

As time goes on and the market is flooded with inventory, prices will go down and down and down. A smart seller would realize this and take the loss now before any further reduction in prices happened.

Is there anything you can do if you are trying to sell into a buyer’s market?

Yes – make sure your home is:

#1) Priced very competitively with TODAYS prices (not what you paid 2 years ago)
#2) Make sure that your home looks like NEW (and I mean new – not just “touched up”)
#3) make sure you get PLENTY of exposure.

The rpice, the condition, and the exposure are everything when it comes to selling into a down market. Good Luck!

by Mike Carraway,

What Happens to OLD Foreclosures?

A bank or mortgage company forecloses on a property. After a few months of legal hassles, the lender finally gets clear title to the property and hires a local real estate agent. Of course, the lender, at this point, wants to try and recover almost all of the money lent on the property.

6 months or a year go by and this period is full of price reductions and repairs to the property. The property may have been vandalized, lived in by squatters, had new carpet and paint, even had new landscaping. The problem is usually that the lender refuses to set the price where it should be so the property, although shown many times, continues to sit on the market.

There is a hidden time limit for this lender. Does anyone know how long it is? How long can the lender keep a non-performing asset on its’ books? How long can the property be an REO? We aren’t talking about government foreclosures here (FHA and VA loans), the government can keep them forever. We are talking about bank or lender owned foreclosures.

I have a done a little research and it appears that the time limit that a private lender can keep an REO on its’ books is 2 years plus or minus a little.

The questions is… What happens to the house or property AFTER the statutory time period has expired and the lender is forced to “get rid of the property at any price”?

Unfortunately, researching this topic has produced very little in the way of usable results. However, I did happen upon a few references to something called The REO Black Hole List. Apparently there really is a place that lenders can “dump” their old REO inventory as a last measure. And, they dump them at dirt cheap prices – usually for thess than lot value.

My research has found that there appears to be a handful of asset managers, companies that buy these old REO properties in bulk, that lenders turn to when they absolutely must liquidate the non-performing assets. These asset managing companies turn around and sell, in bulk, to a “secret” list of private, seasoned investors who actually purchase 50 to 100 to 400 houses at a time.

And guess what? These investors are able to purchase these homes, on average, for $2350 to $5000 per house! I kid you not. I actually spoke to an investor who bought around 182 houses direct from Fannie Mae for $400,000. You do the math. That is under $2500 per house.

The thing about this kind of setup is that the investor must buy all of the homes in a package – whether they are vacant lots, burnouts, or condemned. AND – they are not in one location but spread out all over the country. That’s why the average price per home is so cheap…to spread the risk. But, these homes have all been in an MLS system somewhere – they were all REO properties at one time – so there is a way to find the market value pretty easily: Call a local agent!

AND since the investor may live in Maine or south Florida, he or she will also call a local agent to list these properties. They usually pay a high commission because the price will be low and because they have very little invested in the house. Does anyone have any experience with these types of investors? Or – if you know a local investor, would they be interested in this kind of “bulk buying”?

One other little tidbit I found out: a lot of the packages that these asset managers sell consist of only 10 or 20 homes. Think about that. You could buy 10 homes for $30,000 or $40,000. While some of them may not be the jewels you would want, several of them will always be great fix and flip homes that will sell for as much as you paid for the entire package.

Again, little information can be found on this “underground network” and the only place I could get any information was at this REO site. I know it exists. If you know how to get on this list or how to get in touch with the investors that participate, please post it! If you are in Ohio and I am in Alabama, we are not competing against each other!

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