Brian Richard Homes Website

 

Richard Realty Groups—REO Service 

REO Asset Marketing Services - 

Dedicated team to handle all aspects of the REO process

- Comprehensive BPO Services -Same-Day Service Available!

- Fully Paperless Office -all documents, photos, and forms are handled via Adobe Acrobat (.pdf) Files, and emailed to Asset Managers, or Faxed upon request.

- Online Services—RES.NET, REOTrans, DispoSolutions.

- Current Bank Partners: IndyMac, Accredited

- We maintain a complete staff of  associate brokers, 2 transaction coordinators, 2 licensed contractors, 3 housekeeping services, and 1 attorney on retainer.

- We are fully automated and handle everything from BPOs to Securing The Property, Utility Transfer, Trash Out, Repairs, Construction Supervision, Listing, Marketing, Escrow Coordination, and Sales.

- We have a Single Point Of Contact for all REO and Asset Managers -you speak to one person, and get answers immediately.

- All assets are treated on a unique basis, based on the criteria of the REO and Asset Manager -we listen and respond to your needs.

Complete San Diego Area Coverage-

91901,91902,91910,91911,91913,91914,91915,91941,91942,91945,

91948,91950,91977,91978,92003,92007,92008,92009,92010,92011,

92014,92019,92020,92021,92024,92025,92026,92027,92028,92029,

92037,92040,92054,92055,92056,92057,92058,92064,92067,92069,

92071,92075,92078,92081,92083,92084,92085,92091,92093,92101,

92102,92103,92104,92105,92106,92107,92108,9210992110,92111,

92112,92113,92115,92116,92117,92118,92120,92123,92124,92126,

92127,92128,92129,92130,92131,92137,92138,92139,92145

Including—San Diego, Encinitas, Carlsbad, San Marcos, Escondido, Oceanside, Vista, Poway, Scripps Ranch, Carmel Valley, Del Mar, Cardiff, Solana Beach, La Jolla, Pacific Beach, Ocean Beach, Point Loma, Mission Valley.

FULL ASSET MARKETING SERVICES

Contact -

Richard Realty REO Services

Brian Richard

Brian@RichardRealtyGroup.com

Office—760.603.8377

Fax—760.603.8773

Cell—760.533.4244

www.BrianRichardHomes.com

Richard Realty Groups, Inc.

Top Producing Brokerage

90 + Agents—Fastest growing Real Estate Brokerage in San Diego County 2008 & entering 2009

100 million + in Closed Transactions 2008.

165 Closed Transaction Sides

The Richard Group -

Bill Richard & Brian Richard

Bill Richard

Broker over 90+ Realtors

#8 in Coldwell Banker out of 2100 agents 

#4 in Keller Williams out of 2200 agents

Taught classes nationwide to over 3000 agents>

Teaches at the North San Diego County Association of Realtors (NSDCAR) 

Taught new & experienced agents for Keller Williams & Coldwell Banker

Brian Richard

North San Diego County Association of Realtors (NSDCAR) Director—District 4

Chairman—Habitat for Humanity

GRI—Graduate Realtor Institute

ePRO—Internet Professional

ABR—Accredited Buyers Representative

RDCPro—Real Estate Default Professional

NVSI—BPO—Certified Broker Price Opinions

- The Team – (Your Team)

Experienced in Short Sales & REO negotiations and Sales

REO team to handle bank assets

Full support Staff providing exceptional marketing and transactional support

50/50 Buyer & Seller business

Top 1% in the nation

Top 1% in Southern California

Bottom Line – The Bank & Asset managers are bogged down and need the work ethic and service that Richard Realty Groups is able to provide – full service. We are at your service…

Brian Richard Homes Website

The current financial market is in a state of flux and is becoming more and more constrained. Lending is tightening up and it is becoming more and more tough for people to purchase a home. President Obama is signing into law today, February 17, 2009 the $787 Billion Stimulus Plan that the government will hope to turn this economy around. The white house has opened a website, http://www.recovery.gov, that will allow the people to track where the money will be sent.

This is a look into the current changes in the lending practices and where the lending standards are heading…

For The Buyer:

1. There are 71% fewer mortgages available than a year ago.
2. Tightening credit standards are now in place at 85% of our banks.
3. Buyers putting down less than 20% must have a FICO score of at least 720.
4. All assets and income must be verified and could be re-verified at closing.
5. Fixed rate mortgages account for 69% of funded loans.
6. New conforming residential loan amount for San Diego is $546,250.00
7. Short-sales are selling for 97% of list price, while foreclosures sell for 101% of list price.

FHA is the New Big Player.

1. Up-front insurance premium (MIP) is now 1.75%.
2. Over 95% financing, .55% monthly and .50% for less than 95%.
3. Down payment is 3.5% and the FICO score must be at least 580.
4. Down payment assistance programs have been abolished.
5. 45% front end and 55% back end debt ratios and 2 year employment history.
6. Must be greater disclosure to buyer on monthly payment changes.
7. Borrower must have a valid Social Security Number and be a legal resident of U.S.
8. Owner-occupied properties only, but “gift” is still available for down payment.
a. “Kiddy Condos” for kids in college.
9. Ch 7 BK – discharged 2 yrs. / 1 yr. Ch13 and foreclosure/short sale is 3 years.
10. FHA appraisers must be certified, which will cause a decrease in the number of appraisers.
11. New FHA Loan Limits for San Diego:

One Unit Two Units Three Units Four Units
$546,250 $699,300 $845,300 $1,050,100

For Lenders:

1. Some lenders may no longer use “in-house” appraisers.
2. Financial institutions will be held liable for any misleading advertising.
3. Adjustable sub-prime loans cannot have a pre-payment penalty for 4 years.
4. Fixed sub-prime loans cannot have a pre-payment penalty for 2 years.
5. Truth in Lending statement must be printed in the native language of the borrower.

The Investor:

1. No more than 4 investment properties can be financed. (Just changed to 10)
2. If investor puts down less than 20%, it introduces: PMI; higher rates; added approval by insurance companies.
3. Loan rates are usually 0.75% to 1.0% higher than owner-occupied financing.
4. Investor loans are more difficult to get, because 40% of foreclosures are investment properties.

Source: FHA, Mortgage Bankers Association, Federal Reserve

For The Seller:

1. Foreclosures and short-sales will continue to dominate the 2009 real estate market, as San Diego filed 7,062 notices of default in the 3rd quarter of 2008.
2. Listing prices must be competitive with these properties for a successful sale.
3. Regardless of sellers’ expectations, their house will be appraised conservatively.
4. The buyers are still in control of pricing:
a. give careful consideration to a counter offer.
b. expect to pay for all termite and inspection report disclosures..
c. length of escrow will be the buyer’s choice.
d. market conditions can push escrow periods much longer.
e. making repairs and improvements ahead of time will help the marketing.

Loan Modifications:

1. Must have authorization letter to communicate with lender.
2. New law allows borrower to have an intermediary to discuss situation.
3. Fannie Mae has a Streamline Modification Program (SMP) for its securitized loans.
It is a fast-track method for getting homeowners affordable mortgage payments, extending the term of the loan, lowering the interest rate and even deferring payments. Seller must be 3 months behind, live in the home and have no bankruptcy filings.
4. Obtain required information and help seller complete the package properly.

Short Sales:

1. Must have authorization letter to communicate with lender.
2. Expect the entire process to take approximately 4 to 6 months.
3. Be aware that after servicing provider gives approval, the investor may have to sign off.
4. Make sure to “pad” estimated HUD-1 and cover non-paid items such as taxes, association dues, transfer fees, county taxes, etc.
5. Escrow closes within 30 to no more than 45 days.

Foreclosures:

1. New law requires lenders to contact borrowers 30 days prior to filing a notice of default, but only on owner-occupied home loans.
2. New state law allows renters to have 60 days to vacate a foreclosed property.
3. Lender or investor acquiring the property must care for abandoned animals.
4. Law requires lenders or investors to maintain the properties or face $1,000 dollar-a-day fines.
5. Both Fannie Mae and Freddie Mac will now notify renters prior to property entering the foreclosure process, and will execute a short-term rental agreement until the property is sold.
6. California has followed the Federal laws, extending tax relief from any debt forgiveness.

IRS:

1. Will expedite release of tax liens on homes and paychecks.
2. In Offers-in-Compromise, equity in the property will no longer act as a deterrent.
3. Will postpone collections due to a loss of job, devastating illness or significant medical bills.
4. Will be more flexible on missed payments due to loss of job or hardship.
Source: FHA, Mortgage Bankers Association, Federal Reserve, IRS,

Brian Richard Homes Website

2008 Year in Review: The Economy, Government and Financial Markets: October – December.

Oct. 03: Wells Fargo announces an agreement with Wachovia with no assistance from FDIC. Congress passes the Emergency Economic Stabilization Act to provide $700 billion (TARP) so the Treasury can use the money to buy distressed mortgage-related securities from banks.

Oct. 07: FDIC announces deposit insurance coverage to $250,000 per depositor.

Oct. 08: Fed cuts rate to 1.5% and agrees to lend AIG another $37.8 billion, bringing the total to $123 billion.

Oct. 12: Fed approves the purchase of Wachovia by Wells Fargo.

Oct. 14: Treasury says it will use $250 billion to inject capital into the banking system and another $125 billion to loan to the 9 largest banks (because they need the money). The FDIC announces that it will guarantee up to a total of $1.4 trillion in loans between banks.

Oct. 24: PNC Financial purchases National City Corp., creating the 5th largest bank in the nation.

Oct. 29: The Fed cuts the interest rate to 1.0%  the lowest rate since 1958!

Nov. 10: The Fed and Treasury replace loans to AIG with a new $152 billion package – largest in U.S. history! American Express receives approval to become a bank.

Nov. 11: The Treasury announces new streamline loan programs for HUD and the HOPE alliance.

Nov. 12: Treasury says it will no longer buy distressed mortgage-related assets, but will inject capital into banks.

Nov. 14: Treasury purchases $33.5 billion in shares of preferred stock in 21 U.S. banks. Three large insurance companies seek money from the TARP program.

Nov. 17: Treasury announces it has loaned a total of $158.6 billion to 30 U.S. banks.

Nov. 18: The three automobile giants go to Congress for TARP money.

Nov. 20: Fannie Mae and Freddie Mac suspend mortgage foreclosures until January 31, 2009.

Nov. 21: Treasury purchases $3 billion of stock in 23 more U.S. banks.

Nov. 23: The Treasury says it will invest $20 billion in Citigroup. Citigroup received $25 billion on Oct. 14

Nov. 25: The Fed announces that it will purchase up to $600 billion more in mortgage-related loans and will lend another $200 billion to holders of securities backed by various types of consumer loans under TALF.

Nov. 25: The Fed announces new programs to buy Fannie Mae, Freddie Mac, Federal Home Loan Bank, and mortgage-backed securities up to $100 billion with another $500 billion through asset managers.

Nov. 26: Fed approves Bank of America’s acquisition of Merrill Lynch.

Dec. 03: SEC agrees to measure transparency and accountability at credit rating agencies for greater disclosure.

Dec. 05: Treasury purchases another $4 billion of preferred stock in 35 U.S. banks.

Dec. 10: FDIC reiterates that it will guarantee all FDIC claims in the event of bank failures.

Dec. 11: National Bureau of Economic Research announces that the U.S. expansion peaked in December ‘07 and we have been in a recession ever since!

Dec. 12: Treasury buys $6.25 billion of stock in another 28 U.S. banks.

Dec. 15: Fed approves the acquisition of National City Corp. by PNC Mortgage Co.

Dec. 16: The Federal Reserve reduces the discount rate to 0.25%.

Dec. 19: Treasury approves $13.4 billion for General Motors and $4 billion for Chrysler through TARP. Treasury purchases another $27.9 billion in stock from 49 more U.S. banks.

Dec. 22: The Fed approves Citigroup as a bank holding company.

Dec. 23: Treasury buys $1.91 billion of stock in 43 U.S. banks.

Dec. 24: The Fed approves GMAC and IB Finance Holding to become a bank, and approves $33 billion to a Utah industrial loan company to become a commercial bank.

Dec. 29: Treasury buys $5 billion equity stake in GMAC, and gives $1 billion to GM to help GMAC become a bank.

Dec. 30: Fed announces the beginning purchases of mortgage-backed securities from Fannie Mae and Freddie Mac, as announced on Nov. 25th.

Dec. 30: The SEC recommends the suspension of fair value accounting standards.

Dec. 31: Treasury buys $1.91 billion of stock in another seven U.S. banks.

Epilogue:

As 2008 came to a close, the government had either loaned or guaranteed a total of $8.7 trillion dollars, which resulted in the money supply increasing by 71.8%! All this intervention has yet to help the economy, provide stability in our banking system or make credit available for the financial markets.

2.6 million jobs were lost last year (worst since 1945) and the unemployment rate has risen to 7.2%

1.8 million mortgages entered foreclosure, with the banks taking back 860,000 properties!

Stocks declined 37% and financial stocks declined 55.3%!

The mortgage relief for homeowners has yet to materialize in any significant way. One reason is that those securitized loans represent 68% of the total home mortgage market. These instruments are just too complex to unwind easily; they possess too many different owners in various “tranche” positions and, as housing prices fall, there is no simple way to fix this mess, which was originated by complex computer models…

Brian Richard Homes Website

In August of 2007, mounting losses on sub-prime mortgages and mortgage-related securities began to strain financial institutions around the world. The repercussions from these losses have triggered a period of severe turbulence in world financial markets. In response, the Federal Reserve, the U.S. Treasury and other federal agencies have taken a series of actions, some unprecedented, to stem the turmoil.

2008 – January – September

Jan. 11: Bank of America acquires failing Countrywide.
Jan. 22: The Federal Reserve cuts the discount rate to 3.5%.
Jan. 30: Federal Reserve cuts the discount rate to 3.0%.

Feb. 07: Congress passes the Economic Stimulus Act to provide 159 million rebate checks to help the economy.

Mar. 11:  The Federal Reserve announces the creation of Term Securities Lending Facility (TSLF) with a $200 billion rescue package to banks and investment houses, allowing them to put up the risky mortgage-backed securities as collateral.
Mar. 14: JP Morgan Chase and Company announces the acquisition of Bear Stearns.
Mar. 16: The Fed announces it will loan $29 billion to JP Morgan Chase to purchase Bear Sterns.
Mar. 18: The Fed cuts the discount rate to 2.25%.

Apr. 30: The Fed cuts the discount rate to 2.00%.

June 05: The Fed approves the acquisition of Countrywide by Bank of America.  Standard and Poor’s downgrades AMBAC and MBIA from AAA to AA.

July 11: The Office of Thrift Supervision seizes IndyMac Bank and FDIC pays out $9 billion to depositors.
July 13: The Fed increases the credit line to both Fannie Mae and Freddie Mac.
July 30: Congress passes the Housing and Economic Recovery Act, authorizing $300 billion to help troubled homeowners (HOPE Program).  Another $100 billion goes to Fannie and Freddie, to bring a steady supply of mortgages to homebuyers, and conforming loan amounts, including FHA, are increased

Aug. 05: The Fed lowers the discount rate to 1.75%.

Sept. 07: Treasury puts Freddie Mac and Fannie Mae into conservatorship, pledging $200 billion to back assets.
Sept. 14: Bank of America announces the acquisition of Merrill Lynch.
Sept. 15: The Fed can not find a buyer for Lehman Bros. which is forced to file for bankruptcy.
Sept. 16: The Fed injects $85 billion into AIG to cover major calls on credit default swaps.  The Fed injects $70 billion more into the nation’s financial system.
Sept. 17: SEC temporarily halts short-selling of stocks.
Sept: 19: The Fed guarantees $50 billion to depositors of money market funds.
Sept. 25: The Office of Thrift Supervision seizes Washington Mutual and then sells it to JP Morgan Chase with guarantees backed by FDIC.
Sept. 29: The Fed makes an extra $330 billion available to other central banks, boosting to $620 billion the amount available to the Fed through currency “swaps” arrangements for foreign currencies.  The Fed triples to $225 billion the amount available for short-term loans to U.S. financial institutions.  Citibank enters into an agreement to acquire Wachovia with guarantees from the FDIC.

Next Post – 2008 Economic Year in Review: Continued.
We will see how the Fed increased the activity in Decemeber leading into 2009. This is an excerpt from an economic forecast that I attended given by Gary Watts who is a Realtor and economist. You can find out more about me,  Brian Richard, on my website. Thanks for reading and let me know your thoughts…

My Website

I attended a seminar given by Gary Watts, a real estate economist and Realtor.  Here is an excerpt of the past financial market events leading to where we are now.  This will give us an idea of where we are headed based upon where we have been:  – Brian Richard, Realtor.  Richard Realty Groups. 760-533.4244

Chronology of the Market:
Chronology to a Financial Disaster  “The Perfect Storm”

1933 – Glass Steagall Act is passed to prevent banks and investment houses from acting as one entity.
1970 – HUD creates the first transaction using a mortgage-backed security sold by Ginnie Mae.
1977 – Community Reinvestment Act is passed to help make loans to less-qualified borrowers.
1985 – Asset securitization is applied to auto loans.
1986 – The first securitization of credit cards is sold.
1987 – Wall Street and insurance companies employ PhDs in mathematics to design new tools.
1988 – Citigroup invents the Structured Investment Vehicle (SIV).
1994 – Congress further empowers the CRA to increase homeownership.
1997 – Congress allows both Fannie Mae and Freddie Mac to lower reserves from 12% to 2.5%.
1998 – AIG does its first credit default swap.
1999 – Gram-Leach-Bliley Act re-merges banks and investment houses back into a single entity.

2002 – Federal Reserve lowers interest rates as the economy continues to feel the effects of 9/11.
2002 – Credit rating companies begin their initial rating of SIVs, many with AAA ratings.
2002 – Audits of both Fannie Mae and Freddie Mac show mismanagement and accounting irregularities.
2003 – Two independent reports show that both Fannie and Freddie have no positive impact on housing.
2003 – Congress reduces future funding of both Fannie and Freddie.
2003 – Wall Street increases its participation in mortgage-backed securities.
2004 – The Fed, mistakenly thinking economy is weak, pumps in excess liquidity and keeps rates low.
2004 – Analysis of Collateralized Debt Obligations (CDOs) shows sub-primes are the dominating debt.
2004 – Fannie and Freddie, trying to be viable again, begin purchasing these CDOs from Wall Street.
2005 – Fannie and Freddie are considered the “less affordable lenders,” and buy $1 trillion of CDOs.

2005 – Charge-off rates are below long term averages and lenders loosen credit standards.
2005 – Option-ARMs began making up 19.5% of the total loan volume.
2006 – Option-ARMs grow to 28.7% of the total loan volume, and sub-prime begins to show late-pays.
2006 – CDOs grow to $557 billion, but delinquencies on sub-prime loans begin to rise rapidly.
2006 – Credit rating agencies begin to make major downgrades on SIVs, affecting all credit markets.
2006 – The SEC keeps market to market rule in place, beginning the destruction of equities.
2007 – By May, sub-prime loans are dead and lending tightens.
2007 – In early August, there is a major call on credit default swaps against CDOs.
2007 – By the end of August, the securitization market is dead and the funding market is frozen.
2007 – SEC abolishes the uptick rule and drives the stake of death through financially sound institutions.

Next post: 2008 the financial Year in Review: Economy, Government and Financial Markets.

My Website

I wanted to post this information about the current economic factors. If you would like to see the most recent home listings including REO’s, Bank Owned Homes or Short Sales please vist my website at www.BrianRichardHomes.com.

On Monday, January 5, the Commerce Department reported total construction spending fell 0.6% in the month of November. Economists had anticipated a much steeper drop of 1.3%. The primary cause for the drop was residential construction spending, which fell in November by 4.2% to a seasonally adjusted annual rate of $328.3 billion. Residential construction spending is down 23.4% from a year ago.

On Tuesday, the National Association of Realtors said pending sales for existing homes in November fell to the lowest level in the eight-year history of its index. The trade group said its seasonally adjusted index fell 4% to 82.3 in November from a revised 85.7 in October. Economists expected a reading of 88.

The Commerce Department reported factory orders declined by 4.6% in November, nearly double the 2.5% drop economists expected. Orders have been falling since August, with a 6% drop in October, the biggest decline in eight years. The report showed that demand for durable goods, items expected to last three or more years, fell a modest 1.5% in November. Durable goods dropped 8.5% in October. Demand for nondurable goods, items such as food, paper and petroleum products, dropped by 7.4% in November following a 3.8% decline in October.

The Labor Department said on Thursday the number of people continuing to claim jobless benefits rose by 101,000 to 4.61 million, above the 4.5 million economists expected.

On Friday, the Labor Department reported that the nation’s unemployment rate increased to 7.2% in December from 6.8% in November as businesses cut 524,000 jobs. Employers are also cutting workers’ hours. The average work week in December fell to 33.3 hours, the lowest level on record dating back to 1964.

In other news, the New York-based real estate data company Radar Logic Inc. reported that motivated sales, which include foreclosure auctions and banks selling homes taken over for non-payment, in the 25 largest U.S. metropolitan areas increased 193% between January 2008 to October 2008.

Upcoming on the economic calendar are reports on retail sales on January 14 and consumer inflation on January 16.

If you would like to know more about how this affects you as a potential Home Buyer or Seller or if you would just like more overall information please feel free to contact me anytime. My cell phone – 760.533.4244 or email – brian@richardrealtygroup.com.

Brian Richard, GRI, EPRO, ABR

NSDCAR Director 2009 – Carlsbad
Chairman – Habitat for Humanity Carlsbad

Richard Realty Group
6986 El Camino Real | Ste. H | Carlsbad | CA | 92009
760 533 4244 Cell | 760 603 8773 Fax
Brian@RichardRealtyGroup.com
www.BrianRichardHomes.com

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending November 28 soared 112.1% from the previous week. Purchase volume increased 38%, while refinancing applications jumped 203.3%.

The Labor Department said that productivity rose at an annual rate of 1.3% in the third quarter. That’s down from the 3.6% growth rate in the second quarter, but higher than the 0.9% rise economists expected.

The Commerce Department reported Monday that construction spending dropped by 1.2% in October, a bigger drop than the 0.9% decline analysts had expected.

The National Bureau of Economic Research officially announced the U.S. economy slipped into recession in December 2007. The economic expansion from November 2001 to December 2007 lasted 73 months. The previous expansion of the 1990s lasted 120 months. The average expansion since the end of World War II has lasted 57 months.

The Institute for Supply Management reported the monthly index of manufacturing activity fell to 36.2 from October’s 38.9. The November reading was the lowest since May 1982. The institute also announced its services sector index fell to 37.3 in November from 44.4 in October. Economists had expected a reading of 42. Figures below 50 indicate contraction.

The Commerce Department reported Thursday that factory orders dropped 5.1% in October, the largest decrease since an 8.5% fall in July 2000. Economists had expected a 4% drop.

Upcoming on the economic calendar are reports on pending home sales on December 9, and producer price index and retail sales on December 12.

Contact me, Brian Richard, on my cell – 760.533.4244 or email – brian@richardrealtygroup.com anytime if you have any questions about the home market. I am at your service…

Before you start your house hunting in earnest, the real estate professional with whom you are working likely will “prequalify” you to determine a price range you can afford. According to Brian Richard, ABR®, prequalification is a necessary part of the home buying process that helps save you time and money.

“Don’t be shy or withhold information about your income or credit status. Your real estate professional isn’t trying to pry. Rather, he or she must know all details related to your ability to obtain a mortgage,” Brian Richard, ABR,GRI,ePRO of the Richard Realty Groups says.

“By candidly discussing your financial situation, you’ll give the agent the information necessary to show you homes you can afford, Richard notes. “If you don’t open up, you are placing the real estate professional in the role of a tour guide, not someone who can help you find a home within your budget. You’ll wind up wasting your time and that of the seller,” Richard says.

Once you have signed a contract to purchase a home, you must choose a lending institution or mortgage company from which to obtain your home loan. Your loan application will request financial data including your place of employment, assets, and liabilities (including recurring debts such as credit card bills and car payments).

Here are two important tips on loan qualification from Brian Richard, 1) Do not borrow the down payment without disclosing the loan, submit fake letters-of-credit or gift letters, or make secret financial arrangements. 2) Accurately list your income and assets, all debts and the approximate amounts you owe.

You’ll most likely be charged a credit report fee by the lender, which will cover the cost of having your credit history examined. Credit reporting agencies compile credit reports on consumers, including bill payment history, as well as whether you have been sued or filed for bankruptcy among other information.

Federal credit reporting laws do not give you the right to inspect the actual credit report at the reporting agency or to receive an exact duplicate of the report. But, you are entitled to a summary containing the sources of the report’s information.

If your ability to obtain a mortgage is adversely affected by the credit report, you have the right to challenge its accuracy and seek corrections.

“The credit report is part of the information the lender uses to determine if you qualify for a loan. It is not a mechanism to prevent you from buying. Remember, lenders want to make loans, not turn them down,” Richard says.

Brian Richard is one of more than 40,000 members of the Real Estate BUYERS AGENT Council (REBAC) of the NATIONAL ASSOCIATION OF REALTORS®, who have attained the ABR®, Accredited Buyer Representative, designation. As the world’s largest association of real estate professionals focusing specifically on representing the real estate buyer, REBAC is “The Voice for Buyer Representation,” with more than 44,000 active real estate professional members of the organization throughout the world.

If you have a question about Buying a Home or Selling check out my website – www.BrianRichardHomes.com or email me anytime – Brian@RichardRealtyGroup.com. Real Estate is my livelihood and it supports my famliy. This is not a charity I treat it as a business. I look forward to the opportunity to work with you or if there is someone you know of right now who would like more information about Real Estate in North San Diego County have call me – 760.533.4244. I am at your service…

Brian Richard ePRO, GRI, ABR, RDCPro, NVSI

NSDCAR Director – District 4

Chairman – Habitat for Humanity

-for immediate Press Release 12/5/2008. Copyright Protected

Do you want to know how to buy bank owned property?

Everyone has seen the late night infomercials about how easy it is to buy real estate from the bank and make a quick buck. The reality is that it is not as easy as they make it sound. There is definitely buying opportunities available but you need to understand how this process works. Learn everything you can so you are prepared.

REO vs. Foreclosure

REO (Real Estate Owned) is a home that the bank takes back from the owner that is not sold at auction. Typically, the bank will work with the home owner to help them cure the default so they can avoid the foreclosure because the bank does not like being in the real estate business. In other words, they do not want to have property on their books. The REO property is typically property that has a mortgage balance equal or greater then the value.

If you plan on attending a bank auction, you will also need to be prepared to not only pay the balance of the mortgage, but typically the bank will add on any other fees or costs that they have incurred up to that point. This could include accrued interest, attorney fees and other costs that have been part of the foreclosure process. The other problem with auctions is that the bank will want you to have cash in hand if you have a winning bid on a property. Banks will not typically give you time to line up financing and this can make it impossible for anyone other then a real estate investor to get in and purchase a home.

One more item that is a big concern: Be aware of what you buy. At an auction, you are not going to have the time needed to research any other liens that may be recorded against the property.

It is common to find most property being offered at an auction, actually have more owed against the home then it is actually worth. Few foreclosures actually end up as a successful sale. If the property does not sell, this is when it goes back to the bank and becomes a Bank Owned Property, REO (Real Estate Owned).

REO Real Estate for Sale
If you are dealing with REO’s, remember that the properties are now owed by the bank and free of any liens. The banks are still going to try and get the most money they can for the property but they are more willing to take a quick loss and move on.

At this point the bank may have to evict the tenant, do some repairs to the property and get it ready for sale. Other items the banks will handle may include removing IRS tax liens and paying off HOA dues. The biggest benefit of buying bank owned property is you will have the opportunity to get title insurance. Title insurance will ensure that you do not have any additional liens recorded against the property. Some of the issues buying property in distress are that you have other liens that have to be satisfied which can make it very difficult to get clear title insurance. Bank owned property will come with clear title.

Be aware: REO property may not be right for you. Do your research before making any offers. If you do make an offer and move forward on the purchase, make sure that you are paying a fair price compared to others in the area. Don’t get into a bidding war because the property appears to be a good deal. Many times, people chasing REO or auction property end up paying market value because they get into a biding war. Foreclosures are not always the bargain you may think they will be.

How do banks sell REO property?

Every bank is a little different when it comes to selling REO property but one thing remains the same. They all want the highest price possible and do not want to sell the property cheap. The other item that is similar among all banks is that they usually have a separate department set up to only handle REO property.

Typically, when you make an offer to a bank on an REO property, you can expect to receive a counter offer. Sometimes it will be much higher than expected, but banks do this to show investors that they are attempting to get top dollar for the property. If you really want to buy this home, expect that you will have to make a counter offer to the banks counter offer.

If the offer becomes accepted, you may experience a delay getting a final approval or because the offer may need to be approved by someone else at the bank. Typically, it can take an extra 4-5 days for your offer to get final approval.

What is the condition of the property?

Be prepared to buy the property as is, or make a strong offer to get your repairs made. Banks will always push to sell the property “As Is” to avoid coming out of pocket with additional money. Section 1 termite clearance is typically still covered by the bank but you will have to work hard to have additional items covered. Working with a solid REALTOR can help your negotiations.

The banks always want to sell the property in “as is” condition. Most of them will provide a Section 1 termite clearance but make sure you include this in your offer. In addition, make sure you get a good inspection of the property so you know exactly what you are buying. It is so important to have a good physical inspection of the property.

Most contracts call for a time period to back out of the transaction should you find problems with the home. Make sure you have enough time to back out of the transaction if you need to and do not jeopardize your deposit.

Even though the bank wants to sell the property “As Is”, make sure you try to get the bank to make the needed repairs or provide you with a credit at closing to complete the necessary work. If it really gets tough and you feel that you really want to back out of the deal because of the repairs, the bank may work with you instead of having to go out and find another buyer. This depends a lot on what the current market is doing in your area and how many other buyers the bank may or may not have.

Writing up an offer

Before the offer is made, make sure you contact the agent listing the property so you can ask some of the following questions. It is important that you ask the following:

• Are you selling the property “As Is”? Is the bank willing to do any repairs?
• Have any inspections taken place for the property? If so, can you provide a copy of these inspections?
• Has the bank agreed to do any repairs to the home?
• How will the offer be delivered to the bank?
• How long should I expect the bank to respond to my offer?

The offer is typically sent to the bank. The listing agent will take the originals. At this point you must have a little patience. It can take a few days for you to get a response from the bank. Many Realtors work weekends, but banks do not typically have anyone around after 5pm or on the weekends so you will not get a very quick response.

Make sure you have a pre-approval letter or copy of a loan approval to go along with your offer. This will make the offer more attractive and help the bank make a decision. Make the offer clean and easy to read. Most agents will use a computer based program for generating all of the paperwork.

I hope these tips will help you deal with any banks you may try and buy a home from. Remember that the late night infomercials are not as easy as they appear to be. I would be happy to help you prepare and make an offer on any bank owned property. I have the experience to make it happen.

Over this past year I took it upon myself to strive for further education and training.  I have the honor to hold these cetifications and distinctions:

GRI – Graduate Real Estate Institute

ABR – Accedited Buyers Representative

 ePRO – Electronic Professional