Q: I am a realtor with a new listing–the homeowner is behind on their mortgage, how do I know if we’ll have to do a short sale? Crystal, Mount Holly, NJ A: Great question. Whether a short sale is necessary to sell the home depends primarily on two factors: 1) Net $ Proceeds From Sale and 2) Outstanding Lien Payoff Amounts. Unfortunately, both the net proceeds from the sale and the outstanding lien payoffs will occur in the future on the closing date and are currently unknown. When a borrower is in default, mortgage lien payoff balances typically skyrocket and increase on a daily basis due to unpaid interest, legal fees, property taxes etc. However, you can normally predict whether […]
continue readingThis letter sent by 13 Senators, one of whom is my Senator from New Jersey is a welcome sign that at least some of our representatives in Congress are paying attention to something other than raising money to get re-elected. While encouraging private growth in the mortgage market is an admirable goal, as the saying goes: the road to hell is paved with good intentions. Lowering the Freddie Mac and Fannie Mae loan limits may turn out to be a dangerous experiment that we can ill afford right now in the middle of an encouraging yet fragile real estate recovery. -Gerald Click here for the original article!
continue readingDefaulting on your mortgage payments is rarely what you have in mind when you buy a property—but if you don’t have the money, then you can’t pay. As the saying goes, you can’t get blood from a turnip. The good news for people who did default on their mortgage during the financial crisis is that there are lots of other people who found themselves in this identical position. With millions of people in the same unfortunate situation, it’s in the best interest of both banks and the federal government to find a responsible way to lend to previously foreclosed-upon homeowners who have since recovered financially. It will most likely take more time and require more paperwork to get approved for […]
continue readingYou should always have a home inspection contingency in a real estate contract you sign to protect yourself from unforeseen problems with a property like termites, a leaky underground oil tank or major structural defects. In a hot real estate market where there is lots of competition between buyers, people often get frustrated are often tempted to cut corners just to win a bid and make a home purchase–this is a huge mistake that may come back to haunt you later. You have the most control in a transaction when you buy, if you waive the inspection contingency in real estate contract you sign, you may end up stuck purchasing a property with major problems that make the property uninhabitable […]
continue readingReal estate is always a good investment if you know what you are doing regardless of whether the writer of this article says it’s the next hottest investment or not. Also, you should not use averages and macro trends like # of housing starts or # of new permits to make an individual real estate buying decision. There are people who make money and people who lose money in EVERY real estate market–you just want to make sure you are one of the former. The writer does give two good pieces of advice: 1) “Investors should should filter opportunities based on the project partner and project’s ability to generate yield & 2) investors should come in with an understanding that […]
continue readingHeadlines like RED HOT HOUSING MARKETS are compelling and attention-grabbing, but it’s important not to lose sight of the fact that banks are still saddled with tons of foreclosures and pre-foreclosure properties. Because there are still so many homeowners upside down on the mortgages or behind on their mortgage payments, banks are deliberately manipulating housing inventories giving the impression that a housing recovery is happening. Ultimately, income drives everything and a long sustained housing recovery is not going to happen until the economy and people’s incomes start rising again. Do your homework and get intimately familiar with your local real estate market because every residential real estate market is different—each local market has its own property characteristics, its own regulations […]
continue readingBy the reducing the waiting period for a government-backed mortgage, this new FHA rule change represents a huge benefit to homeowners who’ve experienced financial hardship and found themselves unable to meet their mortgage obligations. The welcomed change incentivizes homeowners in mortgage default to resolve their current financial hardship quickly rather than languishing in pre-foreclosure limbo. The rule change should help homeowners in crisis to get back on the road to financial solvency and homeownership more quickly which is a boon for the real estate industry, the banking industry as well as the overall US economy. -Gerald Click Here to Read The Original Article!
continue readingProper due diligence is critical to making wise real estate buying decisions. While nobody can predict the future, you should always take the time to do your homework before you sign a purchase contract to buy real estate. Unexpected surprises that can affect your property are not limited to homeowner association documentation. Towns, gated communities and condominium associations may also have rules or ordinances that can have an enormous impact on your real estate investment. Here are 5 additional questions you should answer before you buy a property: 1. Are there any deed restrictions on the property you want to purchase? (Control) 2. What is crime rate in your property’s neighborhood? Are there any registered sex offenders in the neighborhood? […]
continue readingQ: Hi Gerald, I found a great deal on a property that I want to buy. I’m satisfied that I did adequate due diligence: I checked sold price comparables and the property is fully rented in an area where I know I can find other tenants. The problem is that my attorney is trying to convince me not to buy it. What do you think I should do? Kevin, Salt Lake City, Utah Gerald: Hi Kevin, attorneys do not exist to give financial advice although they often do. An attorney’s job is to interpret the law. Unfortunately, attorneys thrive on power—this power is maximized by creating fear in their clients. The more frightened they make their client, the more their […]
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continue readingQ: Hi Gerald, I need to find a good contractor to do some property renovations. The last time I hired a contractor, he took forever to do the work and never finished even though we paid him in full. I’d do the work myself, but with our new baby and the increased hours I have to work on my new job, I just don’t have the time. What should I do? Steve, Hartford, Connecticut. Gerald: Hi Steve, first of all, don’t beat yourself up about what happened with the last contractor you hired—it’s water under the bridge and is something you can learn from. We all make mistakes and unfortunately even the most seasoned real estate investors have had bad […]
continue readingGerald Lucas is currently featured in the July/August Edition of Fast Company as one of “America’s Top Business Leaders.” Jersey City, NJ – July 3rd, 2013 – Gerald Lucas, Managing Director of Performance Property, LLC., can be seen on newsstands across the United States in the current edition of Fast Company magazine. In a full-page feature, Gerald Lucas is being recognized by America’s PremierExperts® as one of “America’s Top Business Leaders.” The July/August edition of Fast Company hit store shelves on June 25, 2013. Here’s what the Fast Company feature had to say about Gerald Lucas: Gerald Lucas is a real estate investor, author, coach and professional speaker. Gerald has developed numerous condominium complexes, owned and managed apartment buildings and […]
continue readingIn a traditional real estate transaction, homeowners are responsible for paying the closing costs associated with selling their property. These seller closing costs include things like property transfer fees, realtor commissions and attorney or title company fees. In a short sale transaction on the other hand, the seller’s closing costs are usually paid out of the money the buyer brings to the closing. Normally, the seller’s lender must approve all of these seller closing costs before a short sale can be approved and completed. Let’s take a look at an example of a short sale from the seller’s perspective (Note: the buyer also incurs closing costs in a real estate transaction that will not be covered here). Seller closing costs […]
continue readingQ: I’m a new landlord. I’m preparing to rent out an apartment in my new property. A friend of mine told me to avoid section 8 tenants. Can I refuse to rent to a tenant if he or she gets section 8 assistance? John, New Brunswick, New Jersey Gerald: Hi John. In New Jersey you cannot discriminate based on a person’s source of income, thus refusing to rent your apartment to a tenant because they receive section 8 assistance would certainly violate that rule. Landlord tenant laws vary a great deal from place to place, so always consult the rules in the area where your property is located. As a landlord, it’s best to have a thorough written rental policy […]
continue readingIf you’re paying cash, you can buy a home the day after you short sell your property. You can also qualify for a home loan again soon after a short sale in some cases in two years or less. Short sellers normally have to wait for a period of time after closing a short sale to qualify for a new mortgage loan, but the time frame and requirements vary depending on the type of loan and the down payment they are able and willing to pay. For a conventional loan, the higher the down payment a buyer is willing to pay after a short sale, the shorter the amount of time that is required to wait to qualify for another […]
continue readingIn a short sale, because of the extra time required to negotiate with the seller’s bank, the task of finding and then maintaining a patient buyer is critical to successfully completing the sale. Here are 5 essential tips for getting and then keeping a buyer throughout a short sale transaction:
continue readingBy Gerald Lucas What impact will a short sale have on your credit score? The correct answer is that it depends. Your credit score is calculated based on a complex formula that tries to figure out the likelihood that you will not pay back your debts. The term ‘short sale’ is unlikely to appear on your credit report. The number of points you’ll lose on your credit score after a short sale will be based on how your mortgage loan was closed and on how that closed account was reported to credit reporting agencies. Normally, a short sale is reported as ‘settled debt’.
continue readingBy Gerald Lucas Before a homeowner sits down to write the hardship letter for their short sale application, they often ask me how long the letter should be. There are two schools of thought on how long a hardship letter should be. One school contends that a hardship letter should be as short as possible. The other school of thought is that a hardship letter should be lengthy, comprehensive and very detailed. The second school encourages property owners to go into great detail about their personal history with their property, the circumstances that contributed to their financial problems as well as the steps that they have taken to deal with those problems.
continue readingBy Gerald Lucas One of the biggest complaints people have about short sales is how long they take to complete. Here are 4 specific tips proven to speed up the short sale process: Tip #1: Continue to pay all property-related expenses that are not wrapped into your regular mortgage payment–expenses like HOA fees or condo fees as well as water, sewer or other utility bills (basically any expense that is not included in your regular mortgage payment). In most cases, you have to be behind on your mortgage payments before your lender will consider discounting your mortgage loan.
continue readingBy Gerald Lucas If your mortgage loan balance is higher than the value of your property and you don’t have the money to make up the difference, you probably want to know whether you’d qualify for a short sale. To find out, we have to look at a short sale from a bank’s perspective. While there are many factors that banks consider, getting your lender to approve your short sale application generally boils down to 3 main challenges:
continue readingIt’s very easy to get discouraged and want to give up when you fall behind on your mortgage payments. I’ve heard many homeowners say, “I’ve already ruined my credit, it can’t get any worse.” Unfortunately, it can get worse, because the nightmare does not end when the bank forecloses on your property.
continue readingMost people who are thinking about doing a short sale want to know what happens to the unpaid loan balance after the sale. Homeowners often ask me if they are going to be responsible for the difference between the reduced amount their bank receives at closing and the amount they actually owed for their mortgage.
continue readingThere are many factors that affect the amount of time required to complete a short sale. More importantly, there are concrete steps you can take to significantly shorten the time required to complete a short sale. The following actions affect the duration of the process:
continue readingThe thought of writing a hardship letter sometimes causes fear and anxiety in homeowners, but it’s really quite simple and if written properly, a good hardship letter can help a homeowner make a powerful case to their lender. Certain elements written into your hardship letter can help make your case to the bank while others can hurt your chances of getting a short sale approval. Here are 7 tips to writing a persuasive hardship letter:
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