Denver real estate

Not that I am really sure just what that means, except that it is the opposite of misplaced optimism. I bring it up because I was “accused” last week of having “misplaced optimism” with regard to the real estate market. So, with my usual introspective take on the really silly things people say, I started to think about “misplaced optimism”. Just exactly what could that be? When could optimism ever be misplaced? Does “misplaced” mean that I should not express optimism? Or that optimism is in someway lost? Or If I, or the collective we, just do not want to recognize positive anything? And, if “optimism” is indeed lost, just where should I go searching for it?

Just so the average member of the home owning or wannabe home owner public is up to date, there is a large group of “optimistic” investors wandering around buying residential real estate. Lots of it. They are renting them out, covering the debt, and waiting patiently for the market to rebound. Grasping the fact that all markets move up and down is not a discussion of optimism, it is a discussion of and understanding of basic economics. It’s only been two years when the average American was buying real estate at a furious pace, using loan vehicles that transferred all the risk of borrowing to securities investors trying to get a bit more profit than made good sense. There was not even a hint that the market was at the peak. Just as few people recognize the peak of a market, if is also true that few people recognize the valley of that same market. And those securities investors forgot about the market also. If I owned stock in Merrill-Lynch, I would be furious today that a small group of greedy managers (who no doubt walked away with really big bucks) flushed both the company and my stock value.

In Denver, we are no longer in the valley’s creek. The Denver market has started slowly up toward the next peak. The operative word is “slowly”, because this time around it will take awhile for the the capital markets to re-establish themselves and create equalibrium in mortage loan origination’s. But, it will peak again in three years or ten. That is probably way to long for the average American, but long-view investors will get rich from Joe Citizens impatience.

Written by Larry D. McGee, Denver Realtor - Visit Website Sphere: Related Content

OK, maybe a little about football, but only as a reference point. I watched the Denver Broncos collect a win this afternoon against San Diego. As a Bronco fan since the vertical socks days, I am always glad for a Denver victory. Considering the weird officiating, it could have just as easily been an S.D. win.

There were, for me, two things that made this Sunday afternoon a little different. One was the time I spent switching channels during the breaks, and two was my overall attitude at the end of the game. On the first point, I, for reasons of entertainment value only, bounced between Fox News and CNN, the supposed polar opposites of the electronic media. I really do not know which talking heads were on which channel, and it probably does not matter, since the value of the heads is really just comedy. But juxtaposed between the emotions of a football game and the comedy of the talking fools, I noticed that both channels were comparing the probable results of the upcoming Presidential election using the Red state- Blue state comparisons. Both television news organizations are deciding the upcoming election for us, Red or Blue, Obama-McCain, Elephant or Donkey. We are being polled constantly, a desperate attempt by the opposing media to influence the outcome in favor of, well, I guess I don’t know. Since I really have not heard a great deal about either sides approach to leadership, I guess it is really a popularity contest, like Survival Island. How the the devil did we get ourselves, as a nation, to the point where we are defined as Red states or Blue states. I am beginning to think the Blue vs. Gray of the Civil War is being fought all over again, this time with the opposing media calling the shots.

Now, I am really not completely naive. I understand that the media has been influencing American public opinion since Ben Franklin’s day. But it does seem to have gone a bit overboard lately. As a case in point, the American media has had it in for the housing sector of our economy for at least two years, probably influenced by off-shore media that started the gloom reports as far back as 2004. It’s almost as if no one in the media business owns a home, since every gloom report depresses the value of their house also.

My fellow Americans, it is all about your attitude. Mine is pretty good right now, having just been on the winning side. I suppose that San Diego fans are pretty sad right now, but a football game should not make any sane person so happy or sad that they can’t go to work on Monday. Likewise, the constant buzz from the clown media should not have have the whole country depressed. We should study the positions of the candidates, and make a voting decision based on an intellectual opinion, not because of media induced colors on a map. We need to get moving, now, today. There is much to do, and the media, nor the politicians will be doing it for us.

Written by Larry D. McGee, Denver Realtor - Visit Website Sphere: Related Content

I received a request from a local attorney on Thursday to investigate a property purchased by a potential client of the attorney. The attorney had received a call from a nice lady living in another state concerned that the incredible investment she purchased in a Metro Denver suburb might be a problem.

The nice lady was receiving advice from a web based investment club, and made the purchase through a local affiliate of the investment club. The local affiliate employed Colorado real estate licensee’s. The claim made on the web site was that this property could be purchased way under market value, creating “instant” equity, and that a lease would be executed creating monthly “cash flow”. The nice lady bought the property site unseen.

P.T. Barnum was quoted as saying “There’s a sucker born every minute”. The World Wide Web has just provided a great new way to fleece the gullible, especially those looking for the fabled “great deal”.

The truly amazing thing about these so called “investment clubs” is their ability to convince otherwise smart people to buy property sight unseen using the internet. The advice from these “club” leaders is that they don’t need Realtors, because a Realtors fee just runs the price up. Some people, when offered the “great deal”, seem to go silly, and seldom seek a second opinion. Gotta grab the deal while it’s hot, can’t wait, or some other sucker will get there first.

People will believe what they want to believe, so I suspect nothing I am writing here will stop the stampede of suckers looking for a deal, but perhaps if I could save one or two people from acting stupid, it’s worth my time to write this, so please consider:

1. Do not buy an “investment property” sight unseen. In the situation presented above, the nice lady bought a really pretty home backing to a busy street that will get busier. Busy streets negatively affect value. Not to mention the 5 foreclosed properties down the street.

2. Always get a second opinion. If nothing else, contact an independent appraiser and pay a fee for a unbiased opinion. $400.00 may save you thousands of dollars.

3. If you are buying sight unseen, have the contract reviewed by an attorney. That may be good advice in many real estate transactions anyway.

4. Make sure you have escape clauses in the contract. Perform “due diligence” during the alloted time.

5. Do not obtain an “owner occupied loan” to buy an investment property. That is known as loan fraud. Participants in a loan fraud can look forward to spending time as a guest of the United States in a B&B in Leavenworth, KS. Many times, to create “cash flow”, the happy investment club lender will create an owner occupied loan on a non-owner occupied property.

6. There are 15,000 Realtors in the Metro Denver area. I suspect there are large numbers of Realtors in your neck of the woods. Every one of those Realtors are looking for a deal, either for themselves, or their investor clients. Why does anyone think that there a “secret” good deals? There aren’t.

A savvy investor can do very well buying real estate. There are no “secret” formulas or super deals. Money is made in real estate today just like it has always been made: Slowly, by people who really take the time to understand the local market and the property they are buying.

I know, you have heard all those testimonials from “investors” that have done really well. OK, understand that there really are a few great deals. They are almost always made by people that have taken the time to really understand the local market. (There is also dumb luck.) There are also “shills” chanting the incredible opportunity offered by the “investment club”. If it sounds too good to be true, take 5 steps back and slow down.

The nice lady noted above was taken advantage of by unscrupulous people that search for nice people that want to believe in the “great deal”. There really is no free lunch.

Lastly. are there good investment clubs? Of course. Any club, individual or company that is operating in an honest and ethical manner will provide verifiable information so a prospect can perform independent due diligence. Don’t be in a hurry, there will always be a deal out there tomorrow.

Written by Larry D. McGee, Denver Realtor - Visit Website Sphere: Related Content

The Painful Process

To close out our 4 part series on buying foreclosed property, we will start with a few basic assumptions:

1. You have a pre-approved loan, meaning that subject to an acceptable appraisal you are financially qualified to buy the property you have an agreed to buy with a fully executed contract.

2. You have an agreed contract in hand.

So now you must (hopefully with professional assistance) travel from contract to close. Let’s start with the pre-approved loan. If you wisely selected an experienced local lender with local underwriting and an in-house appraiser, you have a great chance of avoiding difficulties with the mortgage loan. Even so, with a somewhat shaky mortgage market, and with underwriting guidelines changing almost daily, there could be problems with the mortgage loan that are not your fault, or the fault of your lender. You should be certain of your lenders willingness to communicate with you and your Realtor in a timely way. Most unexpected issues can be resolved if everyone involved is communicating.

You will most likely have a contract without the evidence. The “Banks” are notoriously slow in providing the signed contract to their agent. In most cases, the “Banks” will not provide any of the normal state required disclosures, simply because they do not have to. (The exception is the Lead Based Paint Disclosure, required by Federal mandate.) The “Banks” generally respond to your contract offer with a counter proposal that effectively replaces most of the terms you offer. This counter, and/or sometimes a lengthy amendment, must be carefully reviewed by your agent, and perhaps your attorney. The simple fact is; the final contract will heavily favor the “Bank” with regard to the legal technicalities. Negotiating for an acceptable price is just part of the deal. In most cases, the “Bank is not concerned with the timeliness of their requirements, generally taking the position that since you are getting such a great deal, you will put up with their inconsiderate business approach. So, if you want to close on your contract on a specific day or within a certain time frame, you may want to rethink buying a foreclosure. If time is not an issue, press on. (By the way, you have to be timely in your obligations, even if the “Bank” is not. Fair treatment is not part of the rules.)

If the “Bank” agreed to provide you with title insurance, the insurance commitment and subsequent post-closing insurance policy will be provided by the least expensive title insurance company that can deliver the insurance. That does not mean the policy is no good, but it does mean you should investigate the policy underwriter. And good customer service is not part of the deal. From the “Banks” point of view, they are paying for the policy for your benefit, and they don’t care about any lack of service provided to you. (NOTE: if you do not understand title insurance, it’s time to learn.) If an escrow closing agent will be performing the closing for your prospective property, understand that they are working at a low rate pf compensation based on volume. Customer service and timeliness of action is not their concern.

You should (you are foolish if you do not) obtain an inspection of the property. You may need a variety of sub-inspections based on the primary inspection, and you may want a contractor to estimate the cost of needed repairs. While the “Bank” will seldom (OK-never) make repairs, they will at times negotiate a lower price based on major discoveries, such as a broken furnace. The inspection on a foreclosed property is most useful in providing you with an escape if the property has serious condition issues.

If you are obtaining a loan to purchase the foreclosed property, the lender will require an appraisal. Because values on foreclosed property are usually low to begin with, the appraisal will most likely not be a problem, but there are no guarantees. Appraisers are operating in a very conservative manner in light of the present financial situation.

You should be prepared to wait. Even after the entire process is complete and your lender is ready to close, the “Banks” closing system may not be ready for you. The “Bank” will close as soon as it can, and most likely, not at your convenience.

Be Patient. No one can make the system work any faster, and your emotional frustration, while understandable, will not be helpful to anyone involved.

The “Bank” and all of the “Banks” supporting players are running as fast as they can. They really want to close the contract and exchange the non-performing asset (the property) into cash. In most cases, the entire system is simply overwhelmed with a volume that was never expected. And the “Banks” know that the foreclosed property crises will go away a few short years, so it makes no sense financially to build more infrastructure for a short term problem.

In closing you should consider to always work with experienced and knowledgeable professionals, be patient, and educate yourself. Buying a foreclosed property can be a sound financial decision if you take the time to understand both the property and the system.

Written by Larry D. McGee, Denver Realtor - Visit Website Sphere: Related Content