I've had some listing appointments where the sellers had an idea of what they wanted to list their home for, and it was not what I had in mind.  Some have an inflated value of their home and surprisingly some would have listed at too low.  There are actually a lot of variables that go into setting a listing price and it's not always an exact science.  During this phase of the home selling process, your agent should help you set your list price based on:

• Pricing considerations
• Comparable sales
• Market conditions
• Offering incentives
• Estimating net proceeds

Pricing considerations
In setting the list price for your home, you should be aware of a buyer's frame of mind. Consider the following pricing factors: If you set the price too high, your house won't be picked for viewing, even though it may be much nicer than other homes on the street. You may have told your agent to "Bring me any offer. Honestly, I'd take less." But compared to other houses for sale, your home simply looks too expensive to be considered. If you price too low, you'll short-change yourself. Your house will sell promptly, yes, but you may make less on the sale than if you had set a higher price and waited for a buyer who was willing to pay it.

TIP: Never say "asking" price, which implies you don't expect to get it.

Using comparable sales
No matter how attractive and polished your house, buyers will be comparing its price with everything else on the market. Your best guide is a record of what the buying public has been willing to pay in the past few months for property in your neighborhood like yours. Your agent can furnish data on sales figures for those "comps", and analyze them for a suggested listing price. The decision about how much to ask, though, is always yours.

The list of comparable sales an agent brings to you, along with data about other houses in your neighborhood presently on the market, is used for a "Comparative Market Analysis (CMA)." To help in estimating a possible sales price for your house, the analysis will also include data on nearby houses that failed to sell in the past few months, along with their list prices. This CMA differs from a formal appraisal in several ways. One major difference is that an appraisal will be based only on past sales. In addition, an appraisal is done for a fee while the CMA is provided by your agent and may include properties currently listed for sale and those currently pending sale. In a normal home sale, a CMA is probably enough to let you set a proper price.

A formal written appraisal (which may cost a few hundred dollars) can be useful if you have a unique property, if there hasn't been much activity in your area recently, if co-owners disagree about price, or if there is any other circumstance that makes it difficult to put a value on your home.

TIP: If you do order a market value appraisal, make it clear you don't need an elaborate, or full narrative report -- the kind that's complete with photos of the house and neighborhood, a map specifying the site, and floor plans is sufficient.

Consider market conditions
A Comparative Market Analysis (CMA) often includes Days on the Market (DOM) for each comparable house sold. When real estate is booming and prices are rising, houses may sell in a few days. Conversely, when the market slows down, average DOM can run into many months. Your agent can tell you whether your area is currently a buyer's market or a seller's market. In a seller's market, you can price a bit beyond what you really expect, just to see what the reaction will be. In a buyer's market, if you really need to sell promptly, offer an attractive bargain price.

Offering incentives
Some sellers list at the rock-bottom price they'd really take, because they hate bargaining. Others add on thousands to the estimated market value "just to see what happens." If you want to try that, and if you have the luxury of enough time to feel out the market, sit down with your agent and work out a schedule in advance. If there haven't been many prospects viewing your home after three weeks, you may need to lower your list price. If that doesn't bring any prospective buyers, you may need to lower your list price again. Plan on doing that regularly until you find a level that attracts buyers. Make a written schedule in advance, before emotion takes over and you're tempted to dig your heels in.

Sometimes cash incentives are as effective as lowering the price, especially in the lower price range where buyers may be "cash poor." You may offer to pay some or all of a buyer's closing costs and discount points required by the buyer's lending institution. If you haven't had much traffic through your house and you're in a hurry to sell, you may want to add the offer of a bonus to the selling broker, in addition to their commission. An example of the wording for such an offer may be "to the broker who brings a successful offer before Christmas."  There's an actual "fun" factor added to these that seem to get more results than just lowering the price.

Estimating net proceeds
Once you've been given an estimate of market value by your agent, you can get a rough idea of how much cash you might walk away with when the sale is completed. This can be particularly useful as you start looking for another home to buy. From the estimated sales price, subtract:

• Payoff figure on your present loan(s)
• Broker's commission
• Any prepayment penalty on your mortgage
• Attorney's fees, if any
• Unpaid property taxes

In addition, your agent can tell you whether local customs or rules dictate that the buyer or seller to pay for the following items:

• Title insurance premium
• Transfer taxes
• Survey fees
• Inspections and repairs for termites and the like
• Recording fees
• Homeowner Association transfer fees and document preparation
• Home protection plan
• Natural hazard disclosure report

As far as closing costs are concerned, you and your eventual buyer may agree on any arrangement that suits you, no matter what local practice dictates. Your agent will assist you in estimating what your final closing costs will be.

As you can see there is a lot that goes into making this very important decision.  Most people will go through this process once in their lifetime.  Some people will do it two or three times.  Some, like me, do it for a living...

The U.S. House passed a housing aid plan in May that would provide $300 billion to refinance mortgages for homeowners facing foreclosure.

Under the program, lenders will get an FHA guarantee on the loan if they write down the principal amount by 15 percent from the home’s current appraised value. The bill excludes investors and those who lied about their income on a loan application.

A companion measure would give first-time home buyers a $7,500 tax credit and provide $15 billion to allow communities to buy and fix abandoned homes. The vote on the FHA plan was 266 to 155, drawing support from 39 Republicans. The homebuyer tax credit was approved by a margin of 322 to 94.

The bill now goes to the Senate, which must debate and vote on it.

President Bush has said he would veto the measure if it passes.

 

 

With all of the doom and gloom that has been painted in the news over the last year and a half there are a lot of scam artists that are preying on those that are down and out. 

Delinquent homeowners looking to break free from default notices are getting tricked by brokers promising to save them from foreclosure, only to make off with thousands in fees or what home equity is left.

Take rent-to-buy scams. In cases like these, a fraudulent rescue company convinces a homeowner to sign over the title while building equity as a renter. The homeowner avoids foreclosure but risks being evicted by the very firm that promised to save his home.

The situation is bad enough in Florida, one of the nation's foreclosure capitals, that State Attorney General Bill McCollum has filed suit against National Foreclosure Management, a mediation company, for allegedly defrauding troubled homeowners; fraudulent rescue companies in Illinois have been increasingly penalized, while in Massachusetts the for-profit practice of foreclosure rescue transactions has been banned.

With rising foreclosures threatening homeowners, rescue brokers prey on subprime or adjustable rate borrowers because many facing foreclosure are overextended and desperately looking for a way out of their mortgages.

Low-level schemes involve those who pose as mediation specialists or counselors promising to rescue homes from foreclosure. Naturally, they work for a fee. While they might not charge an excessive amount of money, between $300 and $6,670, according to the Illinois state's attorney's office, the Federal Trade Commission says that once homeowners pay that first check, these so-called specialists disappear.

It hurts to lose a few hundred dollars, or even a thousand, but the wilier schemes involve surrendering the title.

The most basic involves pushing on homeowners' phony documents that appear to be a new mortgage application. These are known as rescue loans which, if correctly represented, give a homeowner the cash to stave off a foreclosure. Instead, these false documents turn over the title.

A more sophisticated version of this scam involves a rent-to-buy provision. Here, a mediator matches a distressed homeowner with a management company that takes over the property while giving the homeowner the ability to become a long-term renter, with his rent paying down the mortgage.

The premise here is that the management company has great credit and can refinance at a better rate, which they will do for a fee. This arrangement is attractive to a delinquent homeowner because the months-long foreclosure process is a black mark on a credit report.

"By the time a delinquent loan goes into the foreclosure process, borrowers typically are behind many months in payments, and the debt has grown with late fees and other charges," says Peggy Twohig, associate director of the Division of Financial Practices at the Federal Trade Commission. "Because of the late payments, the borrowers' credit histories have deteriorated."

Of course, once the title is surrendered, the fraudster makes off with what equity the homeowner has built. Even worse, if the title has been surrendered and the new owner falls into foreclosure, the original homeowner will be evicted because they no longer possess a legal claim on the property.

S.C. to get mortgage fraud hot line

South Carolinians who think they have been the victims of mortgage fraud will have a dedicated telephone hot line to call soon.

The S.C. Attorney Generals office and S.C. Department of Consumer Affairs will announce the hot line and discuss the state of mortgage fraud in the state at a news conference Monday.

Mortgage fraud cases have increased nationwide as banks and other institutions relied more on third-party brokers during the housing boom, the FBI said in a report released last month.

Mortgage fraud complaints nationwide are on pace this year to rise by one-third over last year and nearly double compared to two years ago, the FBI reported.

The number of pending mortgage fraud cases rose 50 percent last year nationally, according to the FBI.

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DEATH, DIVORCE & MOVING are the three most stressful experiences in life. There are two very different kinds of needs that people have while moving. First there are the transactional needs, like finding the home that is just right for them, finding a seller who is realistic, negotiating the price, filling out the paperwork, handling the escrow, and arranging for the move. But there are also emotional needs that are involved when moving, and this is where the biggest stress comes in. Any competent agent will handle the transactional needs for you, but if your emotional needs are unfulfilled, you'll be frustrated and may not act in your own best interests. The ideal real estate agent is one, who is competent with paperwork and numbers, but can also guide, direct, and counsel you through the emotional ups and downs of moving. This is the kind of service that the team here at Myrtle Beach Investing delivers.

Here are the six best ways I've found to beat the stress.

1. Begin with the end in mind. Have an ultimate scenario of where you're trying to be. What will life be like when you get there? How will it be better than where you are now? Dwell on that picture and write it out, fill up at least a page about how it feels in the new place. This is imperative. Having the goal in front of you at all times energizes you to achieve it, in spite of setbacks and frustrations. Emotions will run high and you need an anchor. You too must focus on that future goal when anxiety threatens to get the better of you.

2. Be flexible. In your monetary calculations, overestimate by a thousand dollars. In this market, anything can happen between contract acceptance and closing. It could be the inspections reveal areas of concern that the seller is unwilling to fix or the repair costs are higher than the amount limited in the contract. Or the interest rate changes which affects the necessary down payment and closing costs you will need to come up with. As your real estate team, we will strive to tie up loose ends as quickly as possible, but remember there is no perfect world. Most buyers feel a bit overwhelmed when taking on a new mortgage and the responsibilities of a new home. I've seen many buyers get angry when it seems like the cost just keeps going up. Anger is caused when reality doesn't match up with the expectations you had in your mind. So if you anticipate this happening in advance, you won't get angry. In fact, it'll probably go better than you expected.

3. Trust in the process. There's just so much to do, it's easy to panic. You wonder if it will ever work out. In fact, when we bought our house, we couldn't eat for a day, we felt sick to our stomachs! You think you're taking a big chance, but the truth is you're giving yourself a big chance. Even though you can't see every step of the way, as you move towards your goals, the way opens up. You probably haven't moved in a long time and it's a major upheaval in your life. But we've been there many times before, and we'll be looking out for you. Trust that we know the way to get you there.

4. Get knowledge. One thing you'll probably feel during this transition time is being out of control. It feels like everyone else has taken over your life. The seller, your lender, the appraiser, the inspectors, they all have the power to say yes or no to your moving plans. We'll try our best to let you know ahead of time what your expenses will be, and what the unknowns are. We'll tie down the loose ends as soon as possible. We'll try to get your loan approved within a reasonable time frame. We'll educate you as best we can and let you in "behind the scenes" so you won't ever feel stupid or out of control.

5. What is your option? When things don't go as smoothly as you had hoped, don't let emotions take over. Always ask yourself "What is my option?" because there are always options. Let's pretend the lender takes longer than agreed upon to get your loan. He keeps asking you for more and more documentation until it feels like he also needs to know how many gold fillings you have in your mouth! You feel upset because you wanted to feel certain about the move and now you still have to live with the uncertainty. You want to say "Forget it, I'm fed up with this!" But what is your option? Find a new lender and start the process over again? That may take weeks, plus you will have to provide all the paperwork all over again. If the lender is trying his best, it may be better to give him a few more days. Each case is unique, but when setbacks occur we've found that asking yourself this question helps to defuse the situation and restore clear headed thinking.

6. Seek entertainment. When there's nothing you can do about the situation, take your mind off of it altogether. Maybe you expected loan approval on Friday, but now it won't come until Monday. You hate being in limbo and feeling powerless. So do something else entirely, maybe something where you aren't powerless. Take a hike, play tennis, get out of town for the day, watch a movie, pray, or pour yourself into your work. Whatever diversion works best for you- now would be a good time to engage in it. Just forget the situation and refuse to listen to those irritating thoughts when they come into your head. Think about something else instead and just take it one day at a time.

To keep stress to a minimum, here's how we'll serve you when you work with us in buying your new home:

• We promise not to take your business for granted
• We will inform you of your options
• We will give you our best-reasoned expert counsel and advice with your best interests in mind
• We will clarify your goals and motivation, so that you can decide if moving is the wisest choice at this time
• We will provide recommendations and information to help your kids through all the changes
• We will negotiate effectively for you to get the lowest possible price for your new home
• We will protect your interests during escrow, keeping a detailed record of the transaction
• We will be your levelheaded sounding board or relief valve when the stress is overwhelming
• We will counsel you through the feelings of "buyer's remorse"
• We will alert you ahead of time to every possibility so you
  feel more in control
• We will contact you daily during the last 10 days of the transaction to serve your needs
• We will provide guidance and help with movers, change of address, utilities shut off, cleaning, etc.
• As your Real Estate cunsultants, we will continue to give you information of value after the transaction... for life.

You've probably seen lots of financial arguments about why you should own your own home rather than rent.  This includes budgeting (no rent increases) and the tax savings you'll most likely have.  Now I'm going to give you some reasons you probably haven't heard.

#1:  Freedom to pursue other goals in life once the major goal of home ownership is achieved.

Strange as it sounds, many of my first-time buyers have told me that once they bought the house, other things in their life started to fall into place.  It's as if not owning took so much of their mental energy that other goals were not worked on until that big goal was reached.  So buy a home and get on with your life!

#2:  A greater sense of belonging to the community.

Once you own a home, you feel more attached to the city in which you live.  You're more interested in what happens in town, to the roads, schools, and shopping areas.  Some people even become involved in local politics.

#3:  A commitment to something, a sense of stability.

Home ownership is an anchor, something that cannot be pulled out from under you.  You'll never get a notice that you have to move.  You're kids will never have to change schools.  It gives you freedom to plan years ahead.

#4:  You can change things, a feeling of being in control.

It's your home.  You can add to it, remodel it, change the landscaping, do whatever projects you want.  You have a feeling of being in control of something in your life.  At work we don't always have control of what happens, but your home is your castle and you have dominion over it.  You can see what you're building take shape before your eyes.

#5:  More control over the children than in an apartment complex

In a neighborhood, kids usually play in the yards or go to friend's houses a few doors away.  My clients have told me that in an apartment complex they never knew where the kids were.  They could be in any of hundreds of apartments, doing who knows what.  In a home you get to know the neighbors and watch out for each other's kids.

#6:  Children do better in school and feel more secure.

This one surprised me, but buyers have reported to me that their kids calmed down in school after they bought a house.  I don't know why, but it seems to work that way.  I remember a single mom watching her son play in the yard, making steps in the slope and building things.  She didn't have to tell him to leave everything alone, like she did at the apartment complex.  I guess kids feel the same need for control we adults do.

#7:  Time and money saved by not going to the Laundromat.

A small point, but if you have kids, you know the value of this one.  You gain a whole evening a week when you buy a house!  The wash gets done in between other things, or while you're at work.  What would you do with the extra evening you'll have?  How about going out for dessert with your spouse with all those quarters?

I've been in a home of our own for so long; I take these benefits for granted.  I forgot what it's like to be a renter!  If you have anything you can add to the list, please let me know via email.  I would love to hear from you!

You've been hearing about a lot of people getting into trouble because they have an adjustable rate mortgage and can't afford their payments.  There will probably be even more over the next few years as teaser-rate adjustable mortgages skyrocket to double-digit interest rates.  Adjustable-rate mortgages were created to take the risk of rising rates away from banks and mortgage companies and place it squarely on the shoulders of the borrower.  Given the complexities of adjustable-rate mortgages, it should come as no surprise that this type of borrowing can give rise to confusion.  I'm going to do my best to explain exactly how they work.

An adjustable rate mortgage (ARM) is one that provides for the interest rate to change (adjust) at fixed intervals throughout the term of the loan. How often the interest rate can change is determined in advance, and is spelled out in the loan agreement (note). The three most typical ARM loans adjust monthly, every six months, or annually.

The Basic Features of an ARM Loan

Index: The index is the cost of the money to the lender and is what the interest rate of an ARM is based upon. There are several indices in use today: the 1-Year Treasury Bond index (which is the one most commonly used), the Six-Month Treasury Bill index, the 11th District Cost of Funds index, and the LIBOR index, among a few others. The value of the index changes at regular intervals.

Margin: This is the spread between the value of the index and the interest rate actually charged to the borrower. Essentially, it is the lenders profit margin. The margin is set at the beginning of the loan and does not change for the life of the loan.

Initial interest rate: This is the interest rate that you pay until the first adjustment. Often the initial interest rate is lower than the sum of the current index value and the margin. When this happens, it is called a "teaser rate." If the ARM loan has a teaser rate, the interest rate will almost certainly increase at the first adjustment or two.

Adjusted rate: This is the new interest rate that the borrower pays for the next adjustment period. It is calculated according to a formula that involves the index value, the margin and the adjustment cap, the terms of which are set forth at the beginning of the loan in the mortgage note. (see How the Interest Rate is Calculated at Each Adjustment Period)

Adjustment cap: The adjustment cap limits the amount the interest rate can change from one adjustment period to the next. It is set at the beginning of the loan and does not change for the life of the loan.

Adjustment period: This is the fixed interval period at which the interest rate will adjust. The payment will then change based, in part, upon the new interest rate.

Life cap: The life cap of the loan is the maximum interest rate that can ever be charged on the loan, regardless of how high the value of the index rises. The life cap is typically quoted as an interest rate; i.e. a "five percent life cap" which means the life cap is five percent over the initial interest rate.


How the Interest Rate is Adjusted at Each Adjustment Period

For this example, Bill and Sue obtained an ARM loan with the following terms:

Index: Initial rate: Adjustment Period:

1-Year Treasury Bond 4.50% 1 year

Margin: Adjustment cap: Life cap:

2.50% 2.00% 9.00%

After paying 4.50% for the first year, Bill and Sues interest rate will be adjusted, and a new payment calculated. The lender does this by calculating two possible interest rates and giving the borrower the lower of the two:

Interest rate calculation formula #1: Interest rate calculation formula #2:

Value of index + Margin ------------------------ New interest rate

Current interest rate + Adjustment cap ------------------------ New interest rate

Based on these formulas, heres the calculation of Bill and Sues new interest rate:

Interest rate calculation formula #1: Interest rate calculation formula #2:

4.98 + 2.50 ------------------------ 7.48%

4.50 + 2.00 ------------------------ 6.50%

Since the interest rate in calculation #2 (6.50%) is the lower of the two, it becomes Bill and Sues new interest rate for the next year. At the end of one year, and every year thereafter for the life of the loan, the lender will do this again. Each time, the new interest rate for the next year then becomes the current interest rate that is used in calculation formula #2 at the next adjustment. Remember: the margin and the adjustment cap remain constant throughout the life of the loan. Only the value of the index and the interest rate change.

How does the life cap come into play? In this example, if the interest rates calculated according to both formulas ever exceed 13.50%, Bill and Sue will be given an interest rate of 13.50% - the life cap of their loan.

How to double-check your lenders calculation? The values of all the commonly used indices are published in the Wall Street Journal, and can also be found online.

I hope this answers any questions that you have about ARM's.  A knowledgable real estate professional can help to guide you through the process and decide if this is the best option.  With today's present rates there are fewer and fewer people choosing ARM's and many are refinancing and locking into fixed rate mortgages. 

Your imagination is the most powerful tool you have to improve the value of your property and it's free. Here's how: Step out of your own shoes and step into your potential buyer's shoes. Then take a good, realistic look at your house and property, and consider: Is it appealing? Can you imagine yourself living there comfortably? Or do you imagine yourself putting in a lot of work to make the house and property acceptable?

Most buyers are interested in three things about a property they're considering:

Visual appeal (landscaping, spaciousness, cleanliness, color, lack of clutter)

Maintenance (everything in working order, nothing to repair or paint)

Safety (locks and deadbolts, burglar/fire alarm systems, busyness of the neighborhood)

If a potential buyer can't form a good mental picture of living in your house no sale! With this in mind, you'll want to give your property a good, hard look from the outside in. You want to create a fabulous first impression so everyone will want to come inside.

What to Look For On the Outside

Roof and gutters: When buyers look at your house from their car, about 30% of what they see is your roof. Be certain it's in good repair.

Landscaping: A well-manicured yard and a smooth, even driveway reassure potential buyers that you care about your property. A yard free of mud and weeds suggests a good sprinkler system and low maintenance.

Paint and siding: Neutral colors and a clean appearance are important. Consider repainting or power-washing both your house and roof.

Porch or covered patio: Make sure it's clean and uncluttered.

Fence: Fencing should be in good repair.

What to Look For On the Inside

Kitchen: Regardless of your kitchen size, you can make it feel spacious: Remove appliances and gadgets from your counter tops and store them. Repair broken or cracked counters.

Bathrooms: Replace faucets, medicine cabinet, and towel racks if necessary; be certain the bathrooms are spotless and fresh-smelling.

Master Bedroom: Spaciousness and decor are important. Remove and store nonessential furniture.

Flooring: An investment in new carpeting almost always increases the perceived value of a home. Select a neutral color of medium-grade carpeting and padding. Replace cracked and broken tiles.

Wall covering: A fresh coat of paint can do wonders. Always use neutral or soft, warm colors. Avoid wallpaper.

Personal touches: Eclectic personal touches may distract potential buyers.

Deciding What to Do First

The most important thing to think about first is this: Fix what you can see! Cosmetic changes, regardless of the cost, will make a world of difference when it comes time to sell. Whatever you saw when you put on your potential buyer's shoes, that's what you do first, from the outside in.

Keep in mind that you want the best return on your investment. When you make cosmetic changes, you maximize popular appeal. People will see what looks great, and they'll picture themselves living there. Conversely if your home looks untended, people will imagine how much work they have to do- again, no sale!

The cost of such a project might frighten you; however, think about the cost of not doing it. If it costs $2,000 to repair your roof and gutters and you balk at the price, think again. The same roof repair will probably decrease your asking price by $4,000 when a buyer begins to negotiate. Ask your Realtor for guidance.

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Real estate appreciation refers to an increase in value of your home and the property. When your property "appreciates" you have greater equity against which to borrow, and you realize a greater profit when you sell. Property values fluctuate regularly for many different reasons, so how do you know the home you're buying is going to appreciate over the years?

Property values appreciate in value over time due to inflation.  Inflation is caused by an increase in the amount of money in circulation.  The value of money declines when the supply of money increases and the end result is increased retail prices. The cost of the land, construction materials, labor costs, building permits and fees, etc. go up over time making it more costly to replace an existing property.  These factors alone do not guarantee that an income property will increase in value.   Factors such as poor upkeep, the general decline of an area, economic obsolescence, reduced demand, increased crime levels, etc. can cause properties to decline in value even when replacement costs are increasing.  In summary, personal residences and income property usually appreciate in value over time due to inflation because the cost to replace them has increased.

Regional economic and social factors also affect real estate appreciation. Many homebuyers choose to live in areas with the best and most convenient features for households to thrive, such as a close proximity to schools, jobs and commerce.  A good school district can also be an indicator of good home appreciation. It is believed that good schools help foster lifestyles associated with high levels of attainment at the individual, household and community level.

You can increase the value of real estate by making cost-effective improvements.  Improvements such as siding, a new roof, a new addition, new carpeting, landscaping, paint, etc. can increase the value of both personal residences and income property.  Some improvements, dollar for dollar, will result in a greater increase in value than others.  You should plan carefully and make improvements that result in the highest level of appreciation for the dollars that you spend.  Keep in mind that if you make too many costly improvements, you might not recover those costs when you sell.  Small improvements can sometimes deliver the greatest bang for your bucks.

Demographics also play a role in real estate appreciation. For example, during the 1980s, much of the baby boomer generation (People born between 1946 - 1964) was buying real estate, causing homes to appreciate at a faster rate than inflation and made real estate a profitable investment. The group referred to as Generation Y (born roughly between 1980 and now) is the biggest generation since the baby boomers. Their contribution to real estate is expected to be far greater than their older siblings of Generation X (born between 1965 and 1979).  Population increases can affect the home prices in an area.  The United States sees an average population increase of 3 million each year.  The total US population topped 300 million in 2006, so the average population increase for the US would be approximately 1%.  Horry County saw an increase of over 21% between 2000 and 2006 and these numbers are continually increasing.  If you combine this with the affordability of homes in the Myrtle Beach area and the millions of people that vacation here year after year, you could make an educated guess that prices are going to steadily climb when we get out of this "mini recession".

I have listed a few of the reasons why real estate appreciates in value. As a real estate investor, you should be looking for a combination of the above factors that will result in a high level of future appreciation.  Be sure to take advantage of leverage to compound the affects of appreciation.  Leverage is the use of borrowed money to increase real estate profits.  You can compound your real estate gains by using leverage effectively.  For example, you put $40,000 down on a $200,000 income property. It goes up 10% in value in one year.  You have a gain of $20,000 and a before tax profit of 50% on your initial investment amount of $40,000. 

Let me take all of the guess work out of finding your next investment property... 

 

Negotiation is back in style, and is likely to remain a necessary part of buying or selling a home in today's beleaguered residential housing market. Other key elements to a satisfactory closing are flexibility, perseverance, creativity and diligence.

Needless to say, you need to work with the best real estate professionals you can find in your area. In most cases, it takes a team effort to put a home-sale transaction together and see it through to fruition.

Successful negotiations usually require give and take by both parties. It has been said that the sign of a successful negotiation is one where both parties walk away feeling they have won. It has also been said that the key to a mutually acceptable agreement is that both sides feel a little wounded.

A must in this market is a commitment to exhaust all possible ways to put and keep a deal together before calling it quits. Recently, it looked like a purchase contract was about to fall apart. The buyers had originally offered a price that seemed insultingly low to the seller.

The seller set his personal feelings about the price aside and countered the buyers' offer at a price he felt was reasonable. The buyers accepted. As it turned out, the price was one that was halfway between the seller's list price and the price the buyers offered. Splitting the difference is often a winning strategy.

The house in question had been well inspected before the buyers entered into contract to buy it. However, when it came time for the buyers to remove their inspection contingency, they requested a large monetary credit from the seller. Not only did the buyers discover a few health and safety issues that weren't covered in the previous reports, they also developed a serious case of cold feet.

These buyers were able to find jumbo financing at a good interest rate. However, to obtain this financing, they had to make a larger cash down payment than anticipated. This left them feeling cash-strapped.

The seller refused to credit the buyers the amount of money they requested. However, he was willing to credit some money. Or, he would carry a second mortgage for the buyers so that they didn't have to put so much cash down.

Flexibility gives the parties to a negotiation a way to explore options for making a deal or for keeping one moving forward. In order for the buyers in this case to feel comfortable closing the sale, they needed a concession from the seller in order to ease their financial strain. By offering to carry a second mortgage against the property, the seller found a way to free up more cash for the buyer.

As it turned out, the buyers elected not to take the seller-financing offer and accepted a monetary credit at closing.  Sellers should carefully consider whether it makes good financial sense to carry financing for a buyer who is making a relatively small cash down payment. 

This is just one example of how my years of experience could help you with selling or buying a home, given current market conditions.  Don't hesitate to call me 843-267-1879.                              

A home potentially houses a wealth of deductions that can open the door to significant savings for homeowners at tax time*. But which costs are actually deductible? As we enter tax season, it's a great time to review the tax advantages associated with owning your own home. Of course, consulting your tax advisor is always the key to ensuring that you receive the most updated, accurate information and that your write-offs are right-on, but here is a brief overview of what are generally considered some of the typical deductions that might help maximize the returns on your investment, as well as some new developments that took effect in 2007.

1. Mortgage Interest Payments. A major tax advantage for homeowners, mortgage interest is usually deductible on a primary residence, as well as on a second home meeting certain requirements. Every January your home loan lender should provide you with a Form 1098, which outlines the amount of interest you paid for the year.

For example, if a homeowner's monthly mortgage payment is approximately $2,000, he or she may pay only a few hundred dollars to the principal per month, particularly if the homeowner has only been paying on the mortgage for a few years. Of course, the balance of the payment is applied toward the interest. In just one year, that can add up to thousands of dollars in deductions.

2. Mortgage Insurance Payments. Your 2007 mortgage insurance payments may be tax-deductible, since Congress extended the mortgage insurance deduction for an additional three years. The mortgage insurance deduction will help certain low- and moderate-income homeowners, particularly first-time home buyers. While there are certain restrictions, the deduction could save taxpayers who itemize as much as $300 to $350 in federal taxes.

3. Points. Also known as loan discount or mortgage origination fees, points are often paid to the lender upon purchasing a home. This cost (even when paid on your behalf by the seller) may be tax deductible as a prepayment of interest if certain basic requirements are met.  If certain requirements are met, points can be deducted in the year that they are paid; however, in some situations, they are deducted over the life of the loan. By having your tax advisor review your closing statement, you can potentially capitalize on tax benefits available from paying points on your new mortgage.

4. Property Taxes. These annual taxes are based on the assessed value of your property and may be a considerable deduction each year. If you use an impound account through your lender, these costs are often shown on your mortgage interest statement. The closing statement on your new loan may also include real estate taxes, which could be deductible as well.

5. Home Improvements. It is important to keep receipts for your home improvement expenditures. Although these costs cannot be deducted while you own your home, they could help lower your taxes when you sell it. In some states, the sales tax paid on building materials may be considered as a deduction.

6. Home Equity. Leveraging the equity in your home to set up a home equity loan could mean tax benefits that would not be available through other credit sources, such as credit cards or personal loans, because the interest paid on a home equity loan is often tax deductible.

The bottom line. Owning your own home yields a host of advantages- everything from a sense of pride and freedom, to long-term investment opportunity.  And at tax time every year, it can really bring home the savings.

*The tax advantages of homeownership are based on several factors and are subject to certain limitations. As a result, the actual tax benefits realized will vary from homeowner to homeowner. Consult your tax advisor for details on tax advantages for your individual situation.

Real estate is hot on the Grand Strand. Believe it or not, the real estate market in Myrtle Beach and the surrounding areas always has been. Sure home sales have slowed down but if you're looking to buy this means that there are incredible deals out there to be had. Imagine if you knew three years ago that the Hard Rock Theme Park was going to be built or that Market Commons was going to spring out of the middle of the "Old Air Force Base". Land in the area surrounding Hard Rock Theme Park sold for about $100,000/acre before the park announcement and was selling for around $700,000 to $800,000/acre last October. I'd say that someone got a good return on their money.

This area has seen record growth in the last decade and that doesn't look to stop anytime soon. The addition of the Hard Rock Theme Park and Market Commons are just a few examples of the upgrades that this area is presently going through. Google is huge in Charleston right now. Georgetown has a ton of untapped potential. I know that the Atlantic Ocean is here- always has been and always will be. Families are always going to vacation, golfers are always going to golf, and the local population continues to rise. Sounds like a recipe for success if you're looking to invest in real estate in "Coastal Carolina" if you ask me!

Home prices on the Grand Strand were down for the second month in a row, but sales have inched up, according to a February Realtors association report released this week.

The lower prices are what the area needs to jump-start real estate sales, help eat up excess inventory and stabilize the market, analysts said.

Until recently, steady home prices were considered the silver lining for an otherwise lackluster real estate market.

But now the oversupply of homes is forcing sellers to be competitive in their pricing. As a result, condo prices have fallen three of the past four months and single-family house prices have dropped since December.

February was $193,245, down from $198,000 in January. Condos fell from $166,500 to $155,000. That brings single-family house prices down 10 percent from those sold in February 2007 and condo prices down 29 percent. The median price is where half sell for more and half sell for less.

"The market is starting to show decreases in pricing which we weren't necessarily seeing for the overall market," said Tom Maeser, market analyst for the Coastal Carolinas Association of Realtors. "The good news is the sellers are typically getting more realistic. ... All of this has to happen before you start seeing a good recovery."

The declines are evident marketwide - even million-dollar oceanfront condos are going into foreclosure and being sold for less - but the steepest price drops are in highly concentrated condo complexes where more than 10 percent of the units are listed, Maeser said.

"Right now where I'm seeing the most declines is in condos in areas where there are a lot of listings in that project," Maeser said. "Those that have just a whole bunch of condos in it and they were all built during the growth time, they're probably sitting on a lot of inventory right now."

The multiple listing service shows that many Myrtle Beach condos are selling with price cuts: One Myrtle Beach condo at the Patricia Grand recently sold for $138,500, down from the $146,000 asking price. Another on Lake Arrowhead Road sold for $180,000, down from the $189,500 asking price.

Foreclosures also are bringing down prices, although those don't show up in the multiple listing service report unless they're sold through a real estate company.

A Mortgage Bankers Association's report found 1.86 percent of S.C. mortgages in the fourth quarter of 2007 were in foreclosure, up from 1.68 percent in the third quarter and reaching its highest rate in more than two years.

On the Grand Strand and in Brunswick County, N.C., there were 50 foreclosure filings - default notices, auction sales notices and bank repossessions - in January, up from 32 in January 2007 but down from 79 in December 2007, according to RealtyTrac.

"I think the foreclosures play a role in the initial phase of the recovery period that we're in because they're distressed sales. They're problems, and the people unfortunately have to sell," Maeser said. "As a result of that, you've got what I call bottom feeders: people that come out and just can't wait to be picking up these distressed sales."

The lower prices and cheap foreclosure properties are luring some buyers back into the market. The number of house and condo sales, though still fewer than this time last year, went up from 327 in January to 444 in February.

February's uptick in sales is a good sign, said Coastal Carolina University research economist Don Schunk. He expects sales to remain fewer than last year, but to stay steady or increase slightly for the first six months of this year.

Prices will be one of the last things to turn around, he said. When they do start to rise, he doesn't expect them to skyrocket as they did during the hot real estate market of 2005 and 2006.

"I think a lot of people in terms of builders, mortgage lenders and borrowers have learned a lot of lessons in the last year, and that's going to lead to a more realistic market over the next few years as opposed to the frenzy we saw a few years ago."

Thank you for taking the time to let me share some of my experiences and knowledge with you.  I'll be updating my blog at least twice weekly with valuable information about Myrtle Beach and current real estate market issues and topics.  I encourage you to comment and please feel free to call me with any questions that you may have.  I look forward to serving you and once again thank you for your support.

Buying bank owned properties
There is a lot of interest in buying bank owned properties these days. A lot of information, some good and some bad, is floating around about the subject.   Often the information offered is for sale, with the promise that you can make a lot of money with little effort once you know "the secret formula".  The fact is that there are no secrets, and to make money does require effort.

What's an REO?
REO stands for "Real Estate Owned".  These are properties that have gone through foreclosure and are now owned by the bank or mortgage company.  This is not the same as a property up for foreclosure auction.  When buying a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees accumulated during the foreclosure process.  You must also be prepared to pay with cash in hand.  And on top of all that, you"ll receive the property 100% "as is".  That could include existing liens and even current occupants that need to be evicted.  A REO, by contrast, is a much "cleaner" and attractive transaction.  The REO property did not find a buyer during foreclosure auction.  The bank now owns it.  The bank will see to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.  Do be aware that REO's may be exempt from normal disclosure requirements.  In California, for example, banks are exempt from giving a Transfer Disclosure Statement, a document that normally requires sellers to tell you about any defects they are aware of.

Is it a bargain?
It's commonly assumed that any REO must be a bargain and an opportunity for easy money.  This simply isn't true.  You have to be very careful about buying a REO if your intent is to make money off of it.  While it's true that the bank is typically anxious to sell it quickly, they are also strongly motivated to get as much as they can for it.  When considering the value of a REO, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale.  The bargains with money making potential exist, and many people do very well buying foreclosures.  But there are also many REO's that are not good buys and not likely to turn a profit. 

Ready to make an offer?
Most banks have a REO department that you'll work with in buying a REO property from them.  Typically the REO department will use a listing agent to get their REO properties listed on the local MLS.  Before making your offer, you'll want to contact either the listing agent or REO department at the bank and find out as much as you can about what they know about the condition of the property and what their process is for receiving offers.  Since banks almost always sell REO properties "as is", you'll want to be sure and include an inspection contingency in your offer that gives you time to check for hidden damage and terminate the offer if you find it.  As with making any offer on real estate, you'll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.  After you've made your offer, you can expect the bank to make a counter offer.  Then it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer.  Realize, you'll be dealing with a process that probably involves multiple people at the bank, and they don't work evenings or weekends.  It's not unusual for the process of offers and counter offers to take days or even weeks.

Call me today for up to date listings including foreclosures and REO's.  I can lead you through the process and eliminate all of the guesswork.  Act now!!!

Being an investor has become more and more difficult these days with financing and borrowing money seeming almost impossible. Well I want to hear from some others on what's working for them or if you have specific questions related to borrowing money and how to get creative with lending, please reply and I'll be more than happy to give you some helpful pointers and lend you some advice that has worked for me in the recent months!!

Shawn