Denver Property Tour News

After a few weeks of being under contract, the flip house was closed yesterday.  Our purchase price was $125k with $32k in improvements, and it closed for $225k.   Not bad for a few weeks of work.You don’t make your money when you sell your flip home; you make it when you buy it.  Buying right is the key to making money on flips.  If the numbers don’t add up, then PASS on that property.  People tend to get attached to deals, and it kills their profit.  I met the young couple that bought the home, and they said they fell in love with it the moment they saw the home.  What sealed the deal was that everything was done in the home.  This is the key; first time home buyers are used to living in rentals where mostly everything works and the exteriors are usually maintained.  They don’t want to worry about having to fix this issue or that.  Turn key properties sell in any market; just make sure you follow through and finish them 100%.Raichart Out…….

Well after a few showings and several intersted parties, the flip is under contract.  It is sheduled to close next month.

Things are starting to pick back up as far as buyer activity goes.  If you look at my last blog, I spoke about the market slowing down from “back to school” mentality.  Now with concerns that the first time home buyer credit will end (except for those in the military), maybe more buyers will jump off the fence.

My next project is already lined up and should be on the market in January.  More info on that soon.

Raichart Out….

Has the market slowed down?  You bet it has.  Since mid August (Back to School Season), buyers in all price ranges appear to have gone into hibernation.  I believe this is due to a combination of market pessimism, uncertainty concerning the extension and increase of the tax credit and the uproar over health care reform.

The inventory and interest rates in the Denver Metro area are at all time lows.  I was hoping the Fall would generate a huge increase in sales activity, but alas the market has come to a stand still.  Speaking with several other brokers, it appears turn key property values are starting to drop significantly.  The consensus on pricing is 5-10% below current market levels, and your home may sell.  This though causes additional marketability issues as most people do not have the additional 5-10% to sacrifice.

I personally have 4 turn key properties listed as of today.  My sellers have all lowered their prices over the past two months.  The showing activity has increased, but alas, no offers.  I thought we were at the market bottom, but we may be 6 months off.  What say you fellow bloggers???

Raichart Out…..

Are you in a financial funk?  A melee of debts and reduced income?  Not quite sure what your options are?  It all depends on exactly what your situation is and who your creditors are.  Let’s say for instance you were making money.  And now you are not, and you don’t know how you will pay your mortgage.  Your home was worth $250,000 last year, but now it is worth $180,000, and you owe $230,000.

First contact the company you send your mortgage to.  Ask them if they are willing to do a short sale (take less than what is owed on the note).  If they agree to do a short sale, then hire a competent Realtor / Short Sale specialists, such as myself to sell your home.

If the bank does not agree to do a short sale then ask them about a loan modification.  They will only modify the loan if you can prove that you can make the payment.  If you are unemployed or self employed, it will be very difficult to obtain a loan modification.

If you are already behind on your mortgage and other payments, and you only own your primary home, then you may want to consider Chapter 13 bankruptcy.  This may allow you to restructure your current debt payments and retain your home.  I highly recommend you consult a bankruptcy attorney in this matter.  They can advise you properly and give you instant mental relief.

Worst case scenario is that you may have to give the home back to the bank (foreclosure).  If the bank is unwilling to work with you, then I would suggest you offer them a deed in lieu of foreclosure (DLF).  In a DLF, the bank may obtain a property sooner and may even give you some cash for the keys to the property.  Although this is still technically a foreclosure, it may have a lessor impact on your credit versus a foreclosure.

I am frequently asked how do these actions affect my credit or my ability to purchase property in the future.  I have heard from bankruptcy attorneys that a credit score can increase after bankruptcy has been filed.  The real damage to a credit score happens when you are late on your mortgage payment.  You must maintain a minimum of a 620 FICO score, and most lenders require a 660 FICO score to purchase a home.  With a late payment, your score will most likely be around 600.

Try to avoid a foreclosure if you can.  Help is out there; you just have to ask for it.

Raichart Out…….

Everything is coming along well.  I should have the finishing touches put on this week and am shooting to put it on the market by this Saturday.  The new driveway and walkway were installed.  The front and back decks are finished along with the exterior paint.  New electrical has been put in.  The interior is being painted today with floors to be refinished tomorrow.I have really enjoyed working on this project and am looking for the next one or two.  If you know of anyone looking to sell a house, let me know.Raichart Out…

Well there has been quite a bit of progress.  The texture and drywall were finished tonight.  We are in the rebuilding stage now.  The back Trex deck is complete along with the new windows.  I received a great bid on the driveway and walkway, so those are getting replaced this week.  Paint and a new roof will also be done by the weeks end along with electrical.  The kitchen tile is down and I took measurements for the cabinets today.  So far, this has been relatively worry free.  Let’s just hope it there are no surprises.  It will be on the market by September 14th.Raichart Out…

Well folks, I am about 4 days into a flip and thought you all would like to follow it.  The subject is a 3 bedroom, 1 bath ranch in South Denver.  The purchase price was $125,000, and it should be on the market within three weeks.  Here is a short list of what I am doing:

• New Doors and Windows
• Trex Porch in Front and Rear
• New Roof and Interior/Exterior Paint
• New Tile and Refinished Hardwood Floors
• New Kitchen and Bath
• & More…

We demoed Monday afternoon and are now rebuilding it.  Join me as a friend on FaceBook by clicking this link and you can see all the photos. I will keep you updated….

Raichart Out….

A quick followup to last months entry about loan modifications.  If you are currently trying to modify your loan and your lender also sends you documentation to fill out for a short sale… Please be aware that by filling out short sale documentation and submitting it to your bank, you may have just killed your loan modification. 

  The bank has two separate departments, one for loan modifications and short sales.  Once the loan mod department is notified that you ahve submitted paperwork to qualify for a short sale, they assume you no longer want your loan modified and close your case file. 

Now back to today’s message: I currently have a mortage that was serviced by Taylor Bean & Whitaker (TB&W).  If you recall on August the 4th, federal regulators shut this institution down.  I, of course, pay my mortage between the 5th and 10th of every month trying to squeeze out every penny of interest before I give it to the mortgage company.  Last week when attempting to go online and pay, TB&W could not find my loan and asked me to call them.  I did, but the number was busy. 

 I then did some research thus finding out that Bank of America (BofA) will be my new servicer.  I called BofA to see if they had my loan, and they stated that they had not received all of the loans from TB&W but would have them over the next 2-3 weeks.  I asked her how was I supposed to make my payment… What about the late fees??? 

 She calmly stated that they would all be waived and not to worry and that I would be receiving a letter in 1-2 weeks stating where I could send my payment. 

 This news, of course, gave me no solace because I know that I will not be able to make my payment until sometime early September.  I most likely will have a 30 day late mortgage payment on my credit report.  I should be able to get this fixed, but it may take several months. 

The lesson to be learned here, I guess, if you think your mortgage company is going to be taken down by the feds, make sure you have the ability to pay your mortgage by other means other than electronically. 

Raichart Out….

What’s the difference?  Really?  I, like the millions of real estate owning Americans whose homes are now worth 50% less than what they 5 years ago, have been attempting to either short sale or complete a loan modification(mod).  Last week, when I filled my gas tank, I had a more meaningful conversation with the gas station attendant than what I had with the loan mod department at the bank.

I pumped gas, bought Gatorade, and the attendant knew who I was; he told me how much and I paid him the money.  Every week I call my lender, ask for my loan mod status, and I have to tell my entire story every time I call.  I think my bank is working with an abacus and slide ruler.

I was supposedly approved for a loan mod 5 weeks ago.  They overnighted a package, and I signed their documentation, agreed to their loan terms, and even sent them a check for the amount of my new payment.  I was VERY EXCITED.

I was concerned when my check was not cashed.  Last week, they sent it back stating that they no longer take personal checks, and it was for the wrong amount.  I called, told my story, waited on hold for 10 minutes, and then finally a supervisor came on saying my loan mod was not approved and was still being processed.  She also asked that I send in certified funds, and those funds would not be sent back.

So here I am, four months after my initial request to have my loan modified and NOTHING HAS HAPPENED.  They have had all my documentation for over two months, and still no answer.  Who knows if and when this will get approved.

Raichart Out…. I think I will go down to the local convenient store if his loan mod has been completed.

Over the last several weeks, the 3 and 5 year ARMs have become increasingly competitive.  Allow me to digress…

Several years ago, the mortgage industry went through a transformation.  The banks were printing money and lending it with little or no documentation.  Anybody could get a loan and buy a house.  Subprime lending allowing borrowers with a FICO score as low as 620 to obtain 100% financing reached its peak in 2006.  To further the ability of marginal borrowers to obtain financing, lending institutions also offered an abundance of adjustable rate mortgages, thus referred to as ARMs.

The 3 & 5 year ARM products are loans that although are amortized over 30 years, the rate is only locked for 3 or 5 years respectively.  In months 37 & 61 respectively, the rate general will go up 2 points and 1 point annually with a maximum of a 5 point increase for the remaining life of the loan.

These arms were generally priced a full point lower than your 30 year fixed.  This would allow an individual who could not qualify at the 30 year fixed rate at 6.5 to get financed at 5.5%.

These ARMs have reset in the last few years and will continue to reset over the next few years.  Borrowers can no longer refinance because property values have decreased and credit guidelines have tightened.  A large portion of foreclosures are these ARMs that have reset, thus putting the payment out of reach for many consumers.  Therefore, the lending institutions started pricing their ARM products at par with their 30 year fixed products.  It made no sense to get a 5 year ARM when you could get a 30 fixed rate.

Well, now that 30 year fixed rates have gone up from and average of 4.875% to 5.625%, the refinance boom of late has ground to a halt.  The lenders, in their infinite wisdom, have decided to offer these ARM products at the average rate of 4.5%.

This is a tremendous rate that can be locked in for 5 years, but only borrowers who are in control of his or her finances and are aware that in year 6 this rate may go up two points should be obtaining this type of financing.

Raichart Out….