According to reports by Forbes Sotheby’s International Realty, the leading Vail Valley real estate brokerage, the country’s luxury real estate market recovery could be making a comeback in Colorado. In the first quarter of 2010, there was a “marked increase” in sales from 145 sales in all of 2009 to 276 in the first quarter of 2010[1]. Representatives of the brokerage say it is not surprising that a recovery would start in this area since mountain real estate has many advantages that simply cannot be compared to most other markets, including desirable climate, myriad “cultural and recreational activities,” and a vast array or quality housing options. The ability to buy in this area and buy a lifestyle as well as a property makes this market particularly appealing, they said.

Adding to all this attractiveness is likely the fact that home prices in Vail Valley are lower than they have been since 2004, making the time for second home-buyers to make an investment absolutely ideal. The growth in Vail is being echoed – on a smaller scale – in many other luxury markets where home owners are buying homes that they never could have afforded while the area was booming. Do you think that the real estate recovery will start with the luxury market? Why or why not?

Thank you for reading! Your comments and questions are welcomed below.

The Obama administration will be launching a national public service announcement campaign about the Making Home Affordable foreclosure prevention program in the coming weeks. The promotion, which was created pro bono by a New York advertising firm, will be available in Spanish and English and feature “real homeowners from across the country who have benefited from the program and the free resources made available by the federal government”[1]. The ad campaign is a response to growing public criticism of the Making Home Affordable program and is designed to bring more homeowners struggling with mortgage payments into the federal assistance fold.

According to HUD secretary Shaun Donovan, the campaign hopefully will help the program reach at-risk borrowers while they are still current on their payments, but perhaps struggling with “unemployment, negative equity… or soaring utility payments.” At present, the program has offered help to 1.5 million homeowners, but only 389,198 have managed to make it into active, permanent modifications. The announcements will be shown in donated advertising space.

Do you think that given the low rate of successful conversions in this program, the government should be trying to get more homeowners involved? If you do not, what are some better options?

Thank you for reading! Your comments and questions are welcomed below.

[1] http://www.dsnews.com/articles/administration-makes-foreclosure-help-public-service-in-new-ad-spots-2010-07-28

A new survey on financial advisor confidence released this week indicates that financial advisors are still “playing it safe with clients’ money” and remaining neutral on the economy and the stock market at the present time[1]. As a result, financial advisors are sticking to relatively safe investments rather than moving back into stocks and more volatile areas of investing.

This could go either way for real estate investors. Most surveys on the subject indicate that the majority of investors still view real estate as a sure bet – assuming that you have the capability to hold on to it once you have “bought low” until you can “sell high.” Even the majority of homeowners feel that their homes will start appreciating again in the next 5 years. However, for those who were accustomed to thinking of real estate as something that could be used to generate “fast money,” the market certainly has become more volatile, although there are plenty of flippers still out there making huge profits.

What type of real estate investing do you think is best for these times?

Thank you for reading! Your comments and questions are welcomed below.

[1] http://www.bankinvestmentconsultant.com/news/advisor-confidence-rydex-2668084-1.html

The U.S. Department of Housing and Urban Development released the results of its 2009 annual report on the state of fair housing in America last week. The report indicated that disability status continues to account for the largest category of discrimination complains, and highlighted efforts and policies that have been implemented over the past year in an effort to deal with this problem. 10,242 complaints were filed with HUD last year, and 44% of those alleged disability-based discrimination[1].

In the past year, HUD has handled a variety of discrimination cases in which discrimination was a problem, including discrimination on the basis of disability, in which the housing association denied a disabled couple the use of handicap accessible parking spaces, discrimination on the basis of race, in which the landlords were found to have evicted a white family for associating with an African-American family (the African-American family received $63,000 in damages) and discrimination against families with children.

How do you handle fair housing requirements in your properties? Has this ever been an issue for you?

Thank you for reading! Your comments and questions are welcomed below.

When an individual is first getting started in real estate investing, many experienced investors recommend that one go out and take a look at some potential investment properties. Even if you do not end up investing in these properties, learning to identify good potential investments will help you as you become more involved in real estate investing.

One of the “classic” signs of a property with potential is a run-down appearance. While there are some homeowners who simply neglect their properties, in many cases this type of negligence is indicative of some type of distress on the part of the homeowner. It can mean that the home is no longer inhabited. This can mean that you may be dealing with an owner that needs to sell and may be willing to work with you on creative financing.

Run down properties can also indicate that the owners no longer have the time or the resources to keep up with maintenance. Again, this is a good indicator that there may be financial problems with the property. After all, if a homeowner is struggling to pay the mortgage then they likely do not have the time to cut the grass or the budget to paint the house.

Of course, not all run down properties are gold mines. In fact, most of them are not. However, if you can spot a neglected property in a neighborhood of well-kept properties, this can be indicative of an isolated problem rather than a downward trend for the entire area.

What signs do you look for when you are looking for potential investment properties?

Thank you for reading! Your comments and questions are welcomed below.

These days many properties and homes are selling for far less than “market value,” making them great buys for real estate investors. In this market, you will likely be dealing with a variety of distressed homeowners, including those seeking to avoid foreclosure via short sales and those who are facing foreclosure. It will help you to understand some basic ramifications of these options for those homeowners even if you are not facing the situation yourself. One thing that you will likely need to address with the motivated sellers with whom you are working is the issue of deficiency laws.

Deficiency laws vary from state to state. These are the laws and pieces of legislation that govern if and how a lender can pursue a homeowner who defaults on a mortgage – even if that default is worked out with the lender prior to the transaction in which the property changes hands, as in a short sale. For example, in some states, a lender can pursue a homeowner for the deficiency – the amount of debt left over – after a short sale is completed. This option is particularly likely if the property owner used a short sale to exit ownership of a second home or rental property. Another issue for property owners facing foreclosure may be the issue of “subsequent loan” deficiencies. While many homeowners believe that once the foreclosure is complete, the issue with a lender is over, in reality they may still be liable for secondary or subsequent loans, such as amounts of money taken out of previously existing equity to finance improvements on the home. While a foreclosure may resolve the original loan, often the lender can pursue the former owner for the subsequent loan amount if that loan is not included in negotiations.

As an investor, being able to explain these issues to a distressed homeowner can help demonstrate why it behooves that homeowner to work with you to sell the property rather than simply await foreclosure or postpone dealing with the problem. How do you deal with the issue of deficiency legislation in your area?

Thank you for reading! Your comments and questions are welcomed below.

While many homeowners are electing to go through the mortgage modification process or use short sales or deeds-in-lieu to deal with their loan stresses, thousands of homeowners in the Silicon Valley and Bay areas in California are simply living in “limbo,” waiting on their lenders to make some type of move that will help them see clearly what the next step in their homeownership will be[1]. While many are unable to afford their homes due to unemployment or other economic issues, many more have simply opted to wait their lenders out and live essentially “rent-free” until such a time as the lender makes a move.

Currently, many lenders are unwilling or unable to do so. Flooded by requests for loan modifications, lenders may not be able to handle the volume of work and foreclosure proceedings may fall far behind as the entire market backlogs. One homeowner in the area who has tried twice to modify the loan on his condo and been denied, reports that he stopped paying on his loan nearly a year ago, hoping that the appearance of true distress might help his case. This scenario is not unfamiliar, as many homeowners report that their lenders or loan modification officers actually advise them to fall behind before applying for modification, forbearance or other aid.

According to CoreLogic, about 4.5% of mortgages in the Bay area are in this type of limbo: 3 or more months behind but in no particular state of foreclosure. These people will likely live on the edge until the banks can catch up and either work something out or take control of the property.

How do you think this homeowner “limbo” should be handled? Is it appropriate to stay in a home once you stop paying on your loan?

Thank you for reading! Your comments and questions are welcomed below.

You might have thought when you were starting out in real estate investing that you would not be dealing with real estate agents much. After all, as an investor, part of what you do is fill in gaps where traditional home sales fall short. However, there will be times when you need the help of a real estate agent to market a property that you do not have time to promote on your own. In these instances, you will be asking many of the same questions that a conventional homeowner would be asking. In addition, though, you need an agent that can cater to your needs as a real estate investor.

When you are interviewing agents, make sure that you are clear about what you want out of the work that the agent is going to do. Simply saying that you want to sell the house will not be enough. The agent needs to know – and understand how to promote – if you are willing to use creative financing or if you have special requirements for the sale. For example, you might specialize in lease options and have invested in the property specifically because you thought it would be a good property for such a venture. In that instance, the agent finding you a permanent tenant or a buyer who wants to take possession immediately might not actually be what you are looking for.

Additionally, you need to insure that the real estate agent is prepared to devote an adequate amount of time to your project. For different investors, this will mean different things – and it can also influence the amount of commission that you pay. If you need a house moved fast, then you need an agent with lots of time to promote. On the other hand, if you are just feeling out the market and want to be notified whenever a buyer that meets your specific requirements comes along but the rest of the time are not really that worried about selling, you might be able to go with an agent that devotes less time to your property.

Have you ever worked with a real estate agent? What do you look for in a realtor?

Thank you for reading! Your comments and questions are welcomed below.

We’ve all heard of people who faked their own deaths to get out of things, but have you ever heard of a lender requesting that you do so? A woman trying to qualify for HAMP recently received just such a notification; in order to get a break on her mortgage payments, she had to provide bank statements, a utility bill and her own death certificate. The woman, in perfectly good health, refused to do so. Earlier this month after a number of calls and letters to sort out the issue of her own demise, she did get a permanent loan modification, which she accepted [1].

While one or two of these paperwork issues might make for an amusing anecdote, the stories are starting to pile up. And that means that your taxpayer dollars are not going to help your neighbor out – whether you endorse this or not – but rather going to straightening out ridiculous requests like death certificates for living homeowners and further explanation of “short-term hardships” like the death of a spouse and subsequent loss of income. Furthermore, a great deal of funding has gone toward making sure that non-English speaking clients of lenders can access the same services that English-speakers can, but then those same clients find their applications delayed or returned because they are not filled out in English.

We know that these ridiculous examples are in the minority. We know that whether or not we agree with the principles behind HAMP and HAFA, a lot of lenders are working hard to make things better for honest homeowners trying to get by. But the volume of this type of example of total ludicrousness is staggering and it costs money that would be better spent on making the programs work rather than sorting out stupid errors. The U.S. Treasury cites “start-up challenges,” but I think it’s time that we all started paying a little more attention to the details and their costs.

What you do think about this type of goof-up?

Thank you for reading! Your comments and questions are welcomed below.

[1]http://online.wsj.com/article/SB10001424052748704421304575383540017919202.html

According to new information released by the U.S. Department of Housing and Urban Development (HUD) and by the Department of the Treasury, home affordability in the United States remains “near the most attractive levels in 10 years” . The joint report indicates that HUD’s Neighborhood Stabilization Program (NSP), has “spurred local investment and is beginning to make affordably-priced homes available to consumers.”

Key points of the report include:
•    Twice as many homeowners have received “restructured mortgages” as have had their foreclosures completed.
•    $6 billion spent on NSP to help qualified grantees purchase foreclosed homes, repair, redevelop, rent and sell them to low- and moderate-income households
•    HAMP 90-day delinquencies on permanent modifications are less than 2%
•    Historically low interest rates are and will continue to promote affordability and successful conventional refinancing of homes.

Based on this report, it looks like things are starting to look up in the housing market, although clearly there is still some distance to go. Are you experiencing this improvement in your real estate investing business?

Thank you for reading! Your questions and comments are welcomed below.