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foreclosure

Foreclosure - Preparing to Buy

by Larry D. McGee, Denver Realtor on September 6, 2008

So You Want to Buy a Foreclosure - Part 2 - Preparing to Buy

Step # 1) Meet with an experienced Realtor® for a needs assessment consultation. This does not necessarily involve looking at property for sale. It does mean obtaining a through understanding of the process, gaining knowledge of the local market, and determining your long term goals. Determine your Realtors ability to assist you in obtaining what is best for you. Houses are big, expensive things that require more than a cursory knowledge of the implications of ownership and real estate investment is as complicated as it is lucrative. Much of the blame for the present “housing crises” must be laid at the feet of an inexperienced public and a poorly informed and greedy capital market. Your Realtor® should be a skilled consultant, experienced negotiator and have a through understanding of the processes required to close the purchase of your home. An experienced Realtor® will be able to provide you with recommendations for experienced mortgage counselors, and the myriad of other professionals that may be necessary to perform the necessary due diligence involved in your purchase.

Step # 2) Arrange your finances and obtain a pre-approval for any necessary mortgage loan. Arranging your finances means different things for different people. The great story you heard from your workmate or relative about their home purchase does not apply to you. Every home buyer is different. If you are a first time buyer looking to capture a great deal with depressed home prices, you absolutely must obtain a mortgage credit approval.

That means you must invest time to consult with an experienced mortgage loan counselor. Shopping for the just the best interest rates without understanding the loan and the costs of obtaining that loan is the mark of inexperience. If you have credit issues, you must improve your credit picture before you can buy. If you are an “investor” looking to improve your portfolio by investing in real property for long term hold, you probably have cash or an experienced lender at hand. Even in that case, you would be wise to discuss today’s financing with an experienced Realtor® referred mortgage counselor.

Step # 3) Learn about the neighborhood, or any neighborhoods you may be considering as home or investment. Many people believe that finding the perfect home can be done on the internet. While the WWW is good for research, you must understand the neighborhood in which you considering buying. Visit the local school, eat in a local restaurant, determine the capabilities of the local fire and police agencies. Check out sources of water and utilities, consider transportation and commute times. You may have certain requirements that need specific research, if so, do that research before you discover the perfect house. Lastly, knock on a few doors and speak to the neighbors of any property you are considering buying. Comments from friends and relatives may be invaluable, just do not buy a home because it is convenient to your brother or work place supervisor. The property you choose must be the best choice for you and your loved ones, regardless of its use as your home or as an investment.

Tomorrow: You have found the perfect house, now what?

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

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Who’s Buying the Foreclosures?

by Larry D. McGee, Denver Realtor on August 17, 2008

The Denver Post ran an interesting feature article on Sunday, August 17. The feature with the byline of Margaret Jackson, discussed just what kind of buyer was snapping up the low priced foreclosures in Metro Denver. Turns out it is real estate investors, not the fix-and-flip bunch, but the serious folk that buy for long term hold. I have had extensive conversations with Margaret over the past year concerning the impending onset of this good news phenomenon, and I am most pleased that she wrote a well researched piece on this subject. The fact that long term hold investors are buying cheap is a strong indication that they expect to sell high. All of those unfortunate families that have lost out to foreclosure have to live somewhere, and after living in a house, it’s tough to go back to an apartment. The fantastic thing is, these properties are cash flowing. How can that be?

Well, it is actually pretty easy. The various financial institutions that have been foreclosing on homes find themselves with a bit of an excess of inventory. This excess of inventory is forcing values down to a point that it makes sense for the investor to buy such properties and rent them to people that have lost out to foreclosure. Investors are buying with cash, or making considerable down payments to obtain acceptable financing.

It is the market at work (albeit the bloody side of the market), with a little help from various levels of government. And a caution, before everyone rushes out to cash in on foreclosures, this is a long term investment strategy, probably 4-5 years. Those savvy investors who buy cheap and rent the houses for 4 years or so will fix an improve as necessary, and sell into a much busier market down the road.

This is an exceedingly complicated story that will take many blogs to fully explain, so stay tuned. In the meantime, thanks Margaret. Investors buying for long term hold is great news for the Denver area market.

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

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Dropping Out of the Negative

by Larry D. McGee, Denver Realtor on August 11, 2008

I am dropping out. Out of the negative. Tuning in to the positive. Turning on to the idea that the media is not where I want to be.

With apologies to the 1970’s counter culture, I have dropped out of the media quote game. Just like many other people, I like to see my name in the newspaper, and have enjoyed seeing my name in lights many times lately. But stroking my ego is not helping me, my company, the market, or the consumer. I know the local Denver dailies will miss me (not) but there are plenty of other industry professionals that will continue to damage their own business and the market by feeding the media lots of great info that will be printed as negative. Good luck to all.

Please understand that I do not have rose colored glasses. The national economy is hurting, and housing/lending practices are a big piece of why that is true. Residential home sales values have declined 13% since late 2005. Capital market losses are large, and when the dust settles, we may find out just how much capital disappeared.

So having acknowledged the obvious, let us move on. The United States today is a consumer economy. Simplistically, that means the economy functions well if all of us have money and are spending it. Today all of us have less money for a variety of reasons well documented in the media, and therefore we are spending less money. But are things really that bad? I think not, so please consider:

The gross domestic product (GDP) in the second quarter of 2008 was $14,256,500,000 That is up $144,000,000 from the first quarter of 2008. In spite of the negative press, we are still making scads of money. And we are still the largest economy in the world, by a bunch. There has not been a decline in present dollar GDP since WWII.

69.1% of Americans owned homes in the first quarter of 2005. That was the highest percentage of American home owners on record.

68.1% of Americans owned homes at the end of the second quarter of 2008. That is a loss of just ONE PERCENT!

The 1% loss of consumer ownership did not mean a loss of the homes. It just means the ownership of those homes was transferred. To Banks. Or, more specifically, to the Real Estate Owned (REO) Departments of various financial asset organizations. The REO’s will sell those homes (with a reduction in value, or loss of capital) to investors and new homes owners.

According to Realty Trac, which keeps up with these things, 99% of American homes are NOT in foreclosure. They choose not to say it that way, but 99% not having a problem sounds a bit more positive than focusing on the negative.

Home owners that do not need or have to sell at his time are not affected by any losses in value. Losses are realized at time of sale. And some markets across the country are having value increases.

Hang on people, the market will recover.

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

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