What’s the Difference Between Short Sales, Foreclosures and Traditional Real Estate
Residential real estate has been turned upside-down in the last 4 years. Purchasing a home was a fairly simple process. A buyer could find a home they like, make an offer directly to the owner, negotiate price and terms, then close within thirty days. Today real estate is a completely different world and the market is dominated by short sales and foreclosures ( up to 50% of all sales in some areas). However, there’s a lot of confusion concerning expectations and values between these types of sales. The largest differences between the three types of sales are price, timing, terms, and condition.
A traditional real estate sale will usually reflect the top price of the market. In most cases the owner has maintained the home and will quickly negotiate reasonable offers. In addition they will be open to fixing problems that come up during an inspection. This situation is ideal for a purchaser that wants to quickly.
Short sales are a type of distress sale where the owner can not keep up with mortgage payments or property maintenance. This type of purchase can take between two & six months before receiving a counter offer from the seller’s mortgage company. Most cases the seller will likely not make repairs to defects in the home. The typical discount when purchasing a short sale is 13%-30%. If you have time to wait and don’t mind making a few repairs this can be a great option.
Foreclosures are usually the deepest discount, but there are many unknowns. The home has been vacant for some time and an empty home in the winter has a high probability of frozen water pipes which then break. Repairs can be extensive and a buyer will need cash or a rehab loan. If the repairs needed are extreme, the home may not qualify for financing. A very thorough home inspection is needed to determine what type of repairs are necessary and how they will cost. Responses from the bank are usually quick and very from 24-72 hours. Closings can also happen quickly and in 30 days or less. This is definitely a “buyer beware situation.” If not planned properly a foreclosure could turn into a money pit.
When purchasing a home you must consider which option best fits your situation. Before falling in love with a home find out what type of sale it is and can it be financed. Realistic expectations are critical.
Interveiw with Real Estate Investor Sharon Vornholt
Sharon Vornholt shares some strategies of what’s been working for her in her Real Estate business for over 14 years. She talks about how she finds her motivated sellers as well as cash buyers. Even gives some knowledge on how she found a buyer from a simple well known blog website.
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Real Estate Investing is Just Like Weight Loss
It amazes me how many people start investing in real estate, only to fail when the going gets tough. As soon as people discover they can’t get rich in a week or two, they are on to the next “guru” secret. It’s the same as weight loss–everyone talks about it, many try it, but few succeed.
There are thousands of “get rich quick” and “get slim quick” gimmicks. No wonder both the real estate investing information and weight loss product industries make BILLIONS!
Weight loss isn’t easy; ask anyone who has tried it. However, the concept is very basic: Burn more calories than you ingest and your body will react accordingly. Unless you have a medical disorder, this formula works for just about anyone.
Simple as it may be, the formula is HARD, meaning it takes a lot of discipline and hard work. So the weight loss industry has offered us thousands of ways to make it easier. Many of these solutions do work, but they only work if you put forth effort.
How does having help and information help?
Now, let’s start with the premise you don’t need any of these solutions to make real estate investments OR weight loss work for you. You can eat fewer calories, go walking or jogging every day, and you will lose weight.
But having knowledge of the caloric content or carbohydrate content of different foods is relevant. Having the advice of a physician, dietitian, and personal trainer will help you prevent injuries and maximize your efforts.
Same principle applies to real estate investing: You can go out and make hundreds of offers to motivated sellers and find a good deal. However, having information about how to solve the sellers’ needs and construct an offer helps.
Having an attorney, real estate agent, or “guru” to assist you construct the offer and paperwork will make it easier. Having advice from other people who have already done hundreds of deals will also make it easier for you to learn from other people’s success (and failure).
However, whether it’s weight loss or real estate investing, the bottom line is not just knowing, but DOING. You can’t blame the diet if you don’t stick to it.
The key ingredient is you
Many people have successfully lost weight using “The Zone,” Weight Watchers®, Dr. Atkins, and other similar plans. Many people have succeeded with the famous plans, but many have failed, NOT because the plan isn’t effective, but more likely because they didn’t give the required effort.
Both real estate investing and weight loss are simple, but neither is easy. They take a lot of work. Having a proven system or plan helps only if you stick to it.
If the diet plan says to exercise 3 times per week, you can’t be sloppy about it and expect results. It’s like the people reading a book on the treadmill at the gym. If you can read a book, you’re not working HARD ENOUGH.
Likewise, people call newspaper ads and say, “Hey, you wouldn’t want to sell me your house cheap, would you?” This is not DOING; It is TRYING. You have to give 100% to a particular plan or formula before you say, “This stuff doesn’t work.”
Many people who are interested in weight loss join a gym or hire a personal trainer. From personal experience, I can say that both are great for weight loss. But, the weeks I didn’t show up, it was a BIG WASTE OF MONEY!
The same thing goes for a real estate investment training system or mentor program. If you don’t put forth any effort, it won’t work! And, of course, you’ll likely get bitter about all the money you spent and blame the guru. After all, it can’t be YOUR fault!
Real estate investing and weight loss scams
The “magic pills” that melt off fat are probably a scam. These snake oil salesman are offering the lazy and desperate people a solution–no work and results. Ha! If you bought into this scam you deserve to be parted from your money.
Likewise, any real estate investment guru who promises riches with no work is also a scam. My favorite promise is “no selling involved.” That’s the biggest lie ever told. No business can be successful without a certain amount of selling of the product or service–period!
So, while there is a dark side to the weight loss and real estate investing information businesses, most people fail at either because of their own lack of action, not the fault of the systems.
If you aren’t willing to work, another weight loss program or real estate seminar won’t get you any more results than you are currently getting. Save your money and take more consistent action.
However, if you are willing to work hard and take a lot of consistent action, a guru or program will likely give you more results. If you bought a book, course, or program and already have results, another program, course or book will likely give you tools to get MORE RESULTS.
I often hear about successes people have with my real estate investment programs, but a lot of them are not first time successes. They are most often people who have already been successful and, using my tools, became MORE successful.
If someone asks me whether my program will make him successful, I ask, “What other programs have you bought?” If he’s already spent thousands on other programs and has done NOTHING, I discourage him from buying mine.
Those people are looking for the elusive “holy grail” that all the other programs left out. More than likely, the missing element is lack of action on their part.
If you aren’t willing to take action, you won’t get more results by buying more products. If you have the discipline to work hard and take consistent action, then products and services will help you get there faster. Whether you are looking to get rich or lose weight, the bottom line is YOU!
By: William Bronchick
So Who Do You Think You Are?
You may think ‘I know who I am’… but I’m sure there are times when you think, feel and react in ways that you neither recognise, or want!
Of course we all have our own unique genetic differences – and our predispositions to certain character traits, our own preferences, our self-concept, and our degrees of introversion and extroversion.
Our brains aren’t mature until the age of 25 and they also have the ongoing capacity to change as needed in response to our experiences and the meaning we give to these experiences.
Our values, beliefs and needs change too – we are not a ‘constant’ and fixed entity – and that’s even before we go down to the Quantum level at which we are mainly empty space anyway!
We also have the added complexity of having a whole ‘cast of characters’ or ‘Sub-personalities’ within us. These came into being as a result of our earlier experiences – particularly traumatic ones; and the people who have influenced us; and the sense we made of these experiences at that time.
The ‘decisions’, about how to cope and survive your life, were made outside of your awareness and by your immature brain, and they have shaped your present-day life – usually not for the better!
Any one of these ‘characters’ can ‘jump into the driving seat’ of your life at the most inappropriate and unhelpful moments. This is different from Multiple Personality Disorder – also called Dissociative Identity Disorder, or Schizophrenia, which are much more profound mental disorders that require specialist psycho therapeutic help.
Perhaps your ‘Inner Critic’ and/or ‘Inner Saboteur’ keep making life difficult for you, by constantly nagging at you, and ensuring that you don’t succeed, or reach your full potential. There may be a Seducer, or a Tragic Victim, or an Aggressive Adolescent lurking inside you – waiting in the wings to jump on stage and take over the show! Maybe your ‘People Pleaser’ sub-personality has a convincing mask – and although you know it’s just a mask, perhaps people only seem to like you when you’re wearing it, and so you dare not even try to take the mask off.
Some people are so accustomed to wearing masks they have forgotten who they are underneath and live their lives as if the masks were real. They may then have some form of ‘breakdown’ or rather a ‘breakthrough’ when the real and authentic ‘self’ breaks through the fake personae and cries out to be seen, and to desperately try to get their needs for love understanding and belonging met.
Most of the time we are living our life like a child inside a ‘grown-up’ body; and the ‘child’ within us yearns for help, care and understanding. We may try to silence these deeper longings by using alcohol or drugs, by promiscuity, gambling, over-spending, over-eating, work-a-holism, self-harming and other ways of avoiding the real and deeper needs we have. Needs which we haven’t allowed ourselves to become fully aware of, or to find a way to have sufficiently met.
Although we appear ‘whole’ we are in fact more like a mosaic of fragments held together that give us the ‘illusion’ of solidity and predictability – some people being more cohesive and resilient to life’s pressures than others. Not surprisingly, our early experiences, and the meaning we ascribed to them, will have determined how ‘well-glued-together’ we are.
Without access to the insights of who we now are, and how we became that way; we are condemned to repeat old unhelpful patterns. We may have a conscious hope of changing the outcome of our familiar dramas – but we are doomed to keep repeating these until such time as we introduce knowledge, understanding, and the skills to make the changes we want. We may have to change the subconscious ‘Script’ of our life and create a new healthier and positive drama, and attract a new cast of people into it, too.
Isn’t it time you got to know more about who you are, and why?
This will have a significant effect upon your choice of partner, the health of your relationships, how you parent your children, and whether you succeed in your chosen job/career/life path.
Flipping Houses Works in ANY Market!
For years, hot-shot speculators made huge profits flipping condos in Florida and Vegas before they were even constructed. All the while, the naysayers in the ivory towers of Wall Street and academia warned of a “housing bubble” that was sure to burst as all bubbles do.
When Fed chairman, Alan Greenspan, said that the national real estate market was “frothy,” the writing was really on the wall, and anyone with half a brain could see that we were in for a “cooling” of the housing market, at best. Yet still, speculators continued to profit, and the real estate bull market marched on…
But the bulls aren’t marching now. Greenspan handed his matador’s cape to the new Fed chairman, Ben Bernanke, who continued the policy of interest rate hikes designed to deflate housing.
No longer accelerating at a break-neck pace, home prices have flattened like a pancake in many markets, and new the condo speculators who got in late are in for a world of hurt.
Clearly, the housing “boom” is over in many parts of the country. But contrary to the media hype, this is great news for flippers!
Flipping vs. Speculating
There is a difference between flipping and speculating. While speculators may be a subset of flippers, they are, at best, the amateurs of the real estate investing family. Flippers who have consistent success are more conservative and have a fundamental approach to real estate investing.
While it may not be as exciting as speculating, the rewards of more conservative flipping are nearly as generous, and they far less risky. The biggest difference between flipping and speculating is that flipping works in any market, whereas speculating only works in certain places at certain times.
From 2002 to 2004, Las Vegas was a great time and place to be a speculator. But if you were still in the market in 2006, chances are you got burned by more than the hot desert sun.
Basically, speculating often works on the “greater fool” theory that you can always find a greater fool than yourself to take a property off your hands in the expectation that he will be able to find yet a greater fool. Eventually, someone is left holding the bag, and that’s when the party is over.
Flipping, by contrast, relies on fundamentals. The idea is not to catch a shooting star in a rapidly appreciating market. Rather, the plan is to find undervalued properties, rehab them, present them in an attractive manner, and sell them for a reasonable profit. Not only is a rising market not a requirement of flipping success, it may even be a mild detriment!
After all, it is a bit harder to find bargain properties in booming areas. Sure, it can still be done, but the point is that even falling markets are prime for flipping since the holding period is generally too short for the value of the property to decline beyond the deep discount at which it is purchased. Assuming you add value through rehabbing, you almost can’t lose!
Exit strategies–Always have a Plan B
While speculators rely on the “greater fool” strategy, flippers tend to have one of two exit plans:
- Quickly flip the title to another investor, or
- Rehab and sell the property at the retail level
While the lion’s share of the profits go to the retailer, a quick wholesale deal can free up your cash (and energy) for the next deal. But what if neither strategy works? What if the market really crashes and the buyers disappear? Is all lost? Of course not!
For complex economic reasons, the rental property market does not always correlate with the housing market. In fact, they are often counter cyclical. Although most flippers aren’t terribly interested in being landlords, generating rental income from a botched deal is a solid backup plan.
Better yet, you can usually refinance the property after rehabbing it to get all of your money out. From that point forward, the bulk of your rental income will be pure profit, and when the market improves, you can make the sale. Even better still, you can offer your tenants a lease with an option to buy, which is attractive to many young families looking for their first home.
The media portrays real estate flippers as the investment world’s version of Wild West gunslingers. But in reality, nothing could be further from the truth. Compare the “worst case” rental income scenario of real estate flipping with the “worst case” Enron scenario of stock market investing. There really is no comparison!
If you take a fundamental approach to real estate rehabbing and flipping, your risk is limited and your profits are virtually limitless. It really is the best of all worlds.
By : William Bronchick
How Positive Affirmations Can Make You More Intuitive
Many people wonder why they should use affirmations. Some even say that affirmations don’t work. But the reality is that every thought you think, in fact is an affirmation. Repetitive thoughts become very strong affirmations because they get imbedded in your mind and shape you as a person.
Look at your regular thoughts. Are most of them negative or positive? If most of your thoughts are positive – then you’re already doing positive affirmations. If most of your thoughts are negative – then you should start doing positive affirmations as soon as possible to counteract the negative effect of bad thoughts on your health.
If most of your thoughts are negative then your intuition gets shut down also. Negative thoughts come from fear and fear is opposite to intuition. Fear overruns intuition. The voice of fear is always highly emotional, loud, minimizing and negative. The intuitive voice is subtle, gentle, reassuring and focus towards positive outcomes.
Positive thinking will help you to tune into positive events, attract them into your life and become more intuitive to the positive things around you.
I know some people who think that they are only intuitive to the bad things in life. And they attract them. Bad things and events follow them.
The explanation here is simple: their negative thoughts put them in tune with negative events. Therefore they attract them.
To change this negative circle they must start thinking positive.
Positive thinking not just affects your mind but affects the biochemistry of your body as well. Your body changes its functions under the effects of positive thoughts. And this is why you will become more intuitive to good things in life – because of the biochemical changes in your body.
Every morning when you just get up, start your day with the words to yourself: “You are wonderful.” Or “You are amazing.” And feel it. It doesn’t matter what happened to you yesterday, forget this – because today you are amazing.
And of course, you should act as if you are amazing too. Your intuition will thrive, especially if you add on daily mediation to your routine. You start seeing and sensing positive things and attract them into your life.
During the day remind yourself about how wonderful you are. Self-approval will make you listen and hear your intuitive voice – your Higher self.
Then you will achieve extraordinary results with anything you do.
Now, say a complement to yourself. Say it again and again and again… Feel it and repeat it later on also. Tune into positive things and see the results you will get.
How to Get Motivated Sellers to Call You
The key to success is finding good deals
Any experienced real estate investor knows the opposite is true. Finding great deals is one of the toughest jobs. Funding or flipping good deals is easy. The market is full of bargain hunters and private investors who have money. So the real key to real estate success is finding properties you can pick up at a great price or with great terms.
There are plenty of opportunities for those who are willing to do what it takes to find deals. But some methods require more grunt work than others. I discovered long ago that I prefer having customers call me asking me to do business with them. I don’t like knocking on doors unannounced or cold calling people on the phone.
Accelerate your success with a marketing plan
My answer was to learn effective direct response marketing techniques. On average, my company consistently buys three or four properties each month by marketing ourselves as home buyers. Sellers call us.
In order to build a lucrative real estate investing operation, you must treat it as a business, whether full-time or part-time. The goal of any business is to generate profits, and you can improve your chances of success by understanding the vital role of marketing.
Effective marketing is delivering a well-crafted MESSAGE to a targeted MARKET through the use of various types of proven MEDIA. The advantages of using marketing to get motivated sellers calling you are numerous. A few include:
- Everyone you talk to will be prescreened. That means they own a house, they’re thinking of selling, and they’re motivated enough to respond to your message. You leverage your valuable time by speaking only to prescreened prospects. And you will buy a higher percentage of the houses you find for sale.
- You can educate the seller about how you buy houses and the specific benefits you offer before they call. That way you’ll spend less time repeating your message to every prospect.
- You eliminate the need to call sellers. Homeowners with FSBO signs, classified ads, pending foreclosures, or expired listings will call you.
- You will talk to sellers who have not done anything to publicize their need to sell. That means less competition.
Develop your marketing strategy
To develop your strategy, break it down into three parts. First, clearly define your message. Next, identify who needs to get your message. And finally, decide what media you want to “test” to get your sales message delivered.
- Developing your message
What are you offering the sellers? What makes your program unique when compared to other options the sellers have? What are the most important benefits you can offer to a seller? What problems can you help a seller overcome? Why is it easy and safe to do business with you? Why should they call you now? What do you want them to do next? - Identifying your market
Who do you want to talk to (sellers)? Who can you help the most (flexible sellers)? Who has a demonstrated need for your services (foreclosure, divorce, transfer, landlords, etc.)? Who do you want to avoid (renters)? Where do you want to buy? Do you want to focus on certain types of property? - >Choosing your media
Classified ads, display ads, flyers, yard signs, web site, email, free recorded message, special report, letters, postcards, business cards, faxes, seminars, radio ads, TV ads, billboards, yellow pages, etc.
Your goal should be to develop the most comprehensive message you can by communicating everything that would be of interest to your targeted market.
Tell the whole story. Deliver the entire message when it’s cost effective (as with a detailed flyer or sales letter). When cost prohibited, use a two-step approach. For example, your sign or classified ad might direct sellers to call a free recorded message, or visit your web site, where they then get “the rest of the story.”
Most beginning investors have more time than money. And a marketing plan requires a regular investment. You can call sellers and knock on doors for free. And during the startup stage of your business, that’s OK. But consider this: A $15,000 profit from buying and selling one house can fund all your marketing for an entire year, even if you’re spending up to $800 per month.
If you know how to solve sellers’ problems by buying their houses creatively, apply some of these ideas to buy more houses with less work and make more profits.
by: Richard Roop
4 Good Ways To Live Life With Integrity
Life can be challenging and in an effort to save time and energy we sometimes cut corners by settling for a little less or doing a lot of what we don’t want because it’s easier. But that little voice inside of us that voice that tells us that something isn’t right, that we should expect more keeps coming up. Living a life of integrity is not the easiest path. It can mean consistently going against the majority, taking a stand for yourself in a way you may not have before and putting your foot down even if it means upsetting a friend. Not everyone wants to rock the boat but for those who want to create a life that fulfills them, a life that just feels right, here are four ways to get started:
- Don’t settle for less than what you deserve in your relationships – Too often we believe that it is humble to settle, based on what I like to refer to as a shame-based belief system. Somewhere along the way someone or something let you know that you were less worthy. As a result, you took that assumption as true and have been settling for less ever since; less than ideal partner, less than supportive friends, less than gratifying job, even a less than happy you. The bottom line is that living with integrity requires that you challenge yourself by asking what your life would be like if you had your ideal partner, more supportive friends, a more gratifying job or even a happier, more fulfilling life. How would those changes look and feel? You’ll find that because they look and feel better than what you’re currently experiencing, you’ll be more compelled to make the changes that align with that new vision of your life.
- Ask for what you need from others – We have been indoctrinated to believe that if we ask for what we need from someone else then we are needy. As a result suffering in silence has become noble, even romantic. I submit that martyrdom is just another form of settling for less. Our bodies are great example of asking what for what you need. If you’re stomach grumbles, you give it food. If your eyes are heavy, you get some sleep. If you are coughing and sneezing, you take cold medicine. We fulfill those needs quickly because they are physical. But what happens when you have a friend who says she is going to take you to the airport but when you call her, she went on a trip out of town for the weekend without letting you know? What need does that violate? Reliability, trust, respect, honesty, those are just some of the needs we should expect from others. Understanding your needs helps you to establish solid boundaries. Making your needs known helps you to enforce those boundaries and teaches others how to treat us.
- Speak your truth even if it makes others mad – How many times have you disagreed with what your friend did to someone else but were afraid to tell them because you believe that they you would lose a friend? It’s common for us to let little injustices slide because it would just be easier; evidence of that is in the world around us. The problem with that habit is the little things have a tendency to add up. Having a voice to express our truths is one of the most powerful privileges we have as humans. If we speak our truth with caring and respect, then the message can be that much more effective. If you wind up losing a friendship because of it, you have to wonder if that person really was a good friend after all.
- Make choices based on what you believe – When I was being too much of a teenager, my mother would ask “if your friends were jumping off a cliff, would you jump too?” While my answer was obvious, it’s a lesson that belies the simplicity of the question. How many of us have done things, said things, been things that others believed we should be while ignoring who we really are? It is easy to get caught up in the latest and freshest because a lot of other people believe it’s relevant. What if that’s not what we believe or who we know ourselves to be? The quickest way to stifle potential and waste precious time is to live the unlived lives of others. Those desires you have for a more fulfilling job, starting your own business, traveling more, mean something otherwise, why would they repeatedly surface? Making your choices based on your beliefs is one of the best ways to live with integrity
Working on these four points helps you to behave in ways that align with your personal values and to become who you need to be. Only then will you be able to understand what it means to live with integrity.
Should an REO Offer Be Different Than a Short Sale or a FSBO Offer?
While REOs (bank-owned Properties), short sales and For Sale By Owner (FSBO) offers are made to different types of sellers, the offers have some common traits, but are essentially very different.
REOs are properties foreclosed by lenders who take them into their property portfolio and intend to resell them in the future. They could be acquired by a Trustee’s or Sheriff’s Sale, Deed in Lieu of Foreclosure or a number of less common ways.
Investors make offers on REOs once they become listed on the Multiple Listing Service. Only a few smaller regional banks and credit unions will sell their REOs directly to investors without listing them. In some areas of the country, REOS are hot sellers and full listing price is offered by investors.
The listing prices are determined by the asset manager in charge of the case after reviewing a Broker’s Price Opinion (BPO) from the listing agent. The problem is this BPO relates to the highest closing prices in a specific neighborhood and may not take into account the condition of the property or the legal issues with the title to the property. Because of the distressed nature of most of these properties or their neighborhoods, the offers investors make should be based on a wholesale price well below the initial listing price of the REO. As a generalization, REOs bring about 30% – 40% of the final judgment amount or the total amount owed the lender after fees and expenses for the foreclosure.
Short sales are actually principal reductions of mortgages so a property can be sold that was upside-down in the market place. This means more was owed than the property could be sold for. The homeowner is the seller, not the lender. However, the lender has to approve the sale because he is taking a discount from what is owed on the mortgage. Short sales, again as a generalization give the lender back about 50% to 65% of the amount owed on the mortgage.
Owners selling their properties are different than either of the above examples. These individuals, if they are truly motivated sellers, can make decisions instantly, not weeks or months later. They also will take less than fair market value (FMV) if they don’t want to have two mortgages or have no use for the property. Here an offer can be pegged to FMV and can be more easily negotiated. Expect to pay between 50% and 80% of FMV, but you will know what you are getting and when. In addition, an investor will get an extended inspection period in which to market and sell the property to another buyer before he closes.
In summary and as a generalization, REOs will be much lower priced than short sales and even FSBOs in most cases. Short sales will need to be close to the BPO for the Loss Mitigation Representative of the lender to agree to the sale – usually 80% is acceptable. FSBOs can be all over the board depending on the condition of the property and the motivation of the seller. It is fair to say that if your first offer is accepted, your offer was too high!
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