Tag: mortgage

Buying, selling, and owning real estate is often the most expensive transaction many individuals will undertake in their lives. Hundreds of thousands of dollars are involved and dishonest tricksters and scammers are out there hoping to take advantage of those involved.

Con artists may use several methods to swindle you in one of their schemes. Foreclosure bailouts, home equity fraud, home renovation scams, rental fraud, and deceptive timeshare scams, are just a few types of real estate fraud that may be performed. Here are three of the most common:

Foreclosure Bailout

A foreclosure rescue scheme is a type of fraud that takes advantage of homeowners who have fallen behind on their mortgage payments.  The fraud perpetrator approaches the homeowner with promises of paying off the delinquent mortgage and helping the homeowner stay in the property. 

There are many variations of a foreclosure rescue scheme.  Some schemes require the homeowner to unknowingly transfer the property title to a third party.  Other schemes will promise homeowners that if they transfer the title, they can continue to rent the home and repurchase it at a future date.  The purchaser of the property, sometimes the foreclosure rescue artist, is now free to refinance the property or to sell the property to another party.  Sometimes the foreclosure “rescuer” charges the borrower high ‘service fees’ up front and then disappears with the money without providing the promised service. 

Home Equity and Home Renovation Fraud

According to the Council of Better Business Bureaus, home-remodeling contractors ranked slightly behind car salespersons and auto mechanics in generating the most consumer complaints. Be very careful when using your home or your home equity as security for a home improvement loan. Fast-talking salespeople will offer to refinance your home at a lower interest rate to provide cash to the homeowner, the cash can be used to pay for home improvements or to pay off bills. Victims are frequently asked to sign blank contracts or contracts that they were not allowed to read before signing. Later, the homeowner discovers that they signed a contract that contains terms in contrast to the originally promised terms. This results in the loss of equity in the victim’s home, and they have signed a mortgage in which they have incurred considerably higher interest rates. The homeowner is now faced with a higher mortgage payment, one that they may not be able to afford.

Rental Fraud

Rental scams occur when the victim has a rental property advertised and is contacted by an interested party. Once the rental price is agreed upon, the scammer forwards a check for the deposit on the rental property to the victim. The check is to cover housing expenses and is, either written in excess of the amount required, with the scammer asking for the remainder to be remitted back, or the check is written for the correct amount, but the scammer backs out of the rental agreement and asks for a refund. Since the banks do not usually place a hold on the funds, the victim has immediate access to them and believes the check has cleared. In the end, the check is found to be counterfeit and the victim is held responsible by the bank for all losses.

Another type of scam involves real estate that is advertised online. The scammer duplicates postings from legitimate real estate websites and reposts these ads, after altering them. Often, the scammers use the broker’s real name to create a fake e-mail, which gives the fraud more legitimacy. When the victim sends an e-mail through the classified advertisement website inquiring about the home, they receive a response from someone claiming to be the owner. The “owner” claims they’re unable to show the property without payment because they are either out of town or out of the country. If the victim is interested in renting the home, they are asked to send money and shortly thereafter the property is no longer available.

The Bottom Line: Be suspicious of unsolicited email or telephone offers. Scammers often find victims through these spam emails. They may send tens of thousands of those emails, hoping to find a handful of individuals who will respond. With advanced technology and interacting digitally with victims, it can be challenging to avoid real estate scams. However, it’s important to stay vigilant about protecting your personal information and bank accounts. Only work with qualified professionals you trust and familiarize yourself with some of the common warning signs. If you believe you’ve been involved in a real estate scam, make sure to contact the authorities immediately.

Usually, when someone puts their home on the market, the goal is to reach as many potential buyers as possible via one of the Multiple Listing Services (MLS). These listings are shared by brokers and list all of the local homes that are currently up for sale. However, some property owners prefer to manage their home sale quietly, through a pocket listing. Pocket listings aren’t included on the MLS or real estate websites like Trulia or Zillow, either. Basically, there won’t be a for sale sign, the listing will stay in the realtor’s metaphorical “pocket”. He or she will share the home through word of mouth and with a small number of clients or colleagues. There won’t be any contracts signed between the realtor and the seller.

Benefits of a Pocket Listing:

• If the seller wants to maintain their privacy for their home sale this is a good way to go. This prevents the sharing of too much personal information with strangers online, as well as showings and open houses. The pocket listing narrows the buying pool to a much smaller audience and reduces public interest in the home. Instead of showings to people who can’t really afford the home to buy, only serious contenders will come through.
• The homeowner may not want to negotiate the price and may not “have” to move so this option will allow them the ability to test the market and see what buyers are willing to pay.
• With a pocket listing, the seller is able to analyze and experiment by seeing how this smaller group of vetted people react to the property. After the initial launch, the seller can adjust the sale price based on what they and their realtor learn.
• A seller may want to get the word out about his home but delay putting it on the MLS due to repairs and improvements needed.

Cons of a Pocket Listing:

• The biggest negative to a pocket listing is less exposure means fewer people will come through the home and there will be less competition. If the owner must sell, it could come at a lower sale price due to a lack of competitive offers. In desperation, the seller might end up having to make concessions on a sale.
• Pocket listings will take longer to sell due to the lack of visibility. The seller is relying on the word of mouth of the one realtor they are working with.

The Bottom Line: If you are a seller who, for whatever valid reason, wants to use the pocket listing method, the one thing for sure is you’re going to need the very best realtor to handle the job. Who you hire should be connected and involved in the local community and should have a long, positive selling history.

Online real estate company, Trulia, performed a study indicating roughly 44% of Americans have buyer’s remorse after buying a home. The biggest purchase you will ever make is most likely buying a home. Due to the magnitude of this investment, what steps should be taken to keep you from becoming one of the 44% after closing?

Create a Realistic Budget: Establish a budget that encompasses all hidden significant costs, including mortgage payments, property taxes, and maintenance costs. Doing this will give you a complete view of your financial commitment and prevent overspending. There’s more to homeownership than paying the basic principal and interest

Create a Wants and Needs List: Sit down and put together a list of must-haves and nice-to-haves for your ideal home, like location, size, and amenities. This list will keep you centered on what truly matters during the home search, helping to avoid hasty decisions. An example – If you have children and are planning on having more, buying a home in a good school system is a need.

Learn the Neighborhood: It’s critical when buying a home that you always consider the location of the home. What is the proximity to highways, parks, schools, and railroad tracks? Is this a forever home or a transition home? If you’ll be moving again, you’ll want to be in an area where the market is projected to go up over the next few years.  Visit the home at different times of the day and under various weather conditions. This will help you to really see the neighborhood, traffic patterns, and overall environment.

Be Patient: Avoid rushing into a decision simply to secure a property. Take your time when searching for a home and making an offer. Patience will help you wait for the right opportunity to present itself, minimizing the risk of future regret. Know that the entire home-buying process may come with various unexpected challenges and setbacks. Be flexible and adapt so you are able to navigate any hurdles.

The Bottom Line: Always trust your gut during the search for a home. Rushing into a home that just does not feel right will never be a good decision. Don’t be rattled by what is going on around you, how many offers a home has, or the fear that you may lose out on a home. If you are in a situation where you’ll be without housing soon, you may have to make sacrifices. If that is not the case and you are in a home, absolutely listen to your gut and pass on homes that give you a bad feeling, are too pricey, or just aren’t giving you enthusiasm. Your home should be your refuge, not a place full of regret.

MYTH: You don’t need title insurance

Everyone needs title insurance. You may think you know the entire history of the house you’re purchasing, but it’s impossible to know everything. Title insurance protects your right to the property in the event that a previously unknown heir claims ownership of the property if it is later revealed that the “sellers” were not the rightful owners, or if liens against the property resurface. If you have an owner’s title insurance policy, you will not be responsible for paying any of the fees associated with protecting your right to the property, should these types of issues arise.

MYTH: New construction homes don’t need title insurance

Your home could be brand new, but the land on which the house is built isn’t. Chances are, the land had several previous owners before construction began. Buying property on such land opens you up to certain risks tied to ownership issues from previous owners.

Disputed wills, easements, and property liens are just a few of the issues common to land ownership. You could get caught in the mess and end up losing your resources or, worse still, your new property as well. Title insurance is crucial even for a new home and should be on your list of priorities during the closing process.

MYTH: If no one challenges ownership, then the title policy is a waste

At the closing, when you purchase a title insurance policy, the closing company does the bulk of the work behind the scenes. The title company goes through many steps to make sure that everything is in place by that time, including conducting a comprehensive title search and identifying any potential issues. The team investigates the entire history of the property to ensure that you, the buyer, will be aware of any problems that will need to be addressed before closing. By the time the closing comes around, the title company has completed a great deal of research and legwork for you.

MYTH: Title insurance offers only minimal protection

When you purchase a home, you receive the “title” to the property. This title is your legal right to own it. Early in the home-buying process, a title search is conducted to review the history of the property and uncover any issues that could limit your right to ownership. Even after the most meticulous search of public records, there can be hidden title defects, such as tax liens, forged signatures, claims by ex-spouses, and recording errors. These title defects can remain undiscovered for months or even years after you purchase the home.

MYTH: Title insurance is the same thing as homeowner’s insurance

Homeowners insurance protects you so you have the resources to pay for any damage that might occur to your property. Title insurance protects you from anyone else claiming your home is theirs or for some prior owner’s back taxes or encumbrances or any other real property dispute

Title First Agency: Dedicated to innovation and passionate about service, Title First Agency is your comprehensive, nationwide resource for title and real estate settlement services. Headquartered in Columbus, Ohio, Title First has branch offices throughout the Midwest and a robust virtual partner network throughout the country. Title First got its start in 1956 as an affiliate of a local law firm and has since emerged as one of the largest independent title agencies in the nation. Proudly servicing Realtors, lenders, builders, developers, law firms, buyers and sellers, Title First is equipped to serve your residential and commercial title and settlement needs.

Real estate investing comes with plenty of pros and cons to consider. It’s especially important to evaluate the situation and the property that you are attempting to put an offer on and eventually buy. How do you identify if there are any signs that you might be jumping into a bad investment?

It’s important to know that when a realtor shows excitement in selling you a property, it is literally their job to do so. However, if they seem overly avid or even pushy, there might be some details about the property that could make it hard to sell which is making the realtor a bit extra aggressive to sell it. Listen to your instincts and, if necessary, investigate as much as you need to ensure you are making a good investment. Have the property fully inspected before agreeing to sign anything. Realtors should be truthful and upfront, offering their professional guidance on the best course of action, even if it’s not what you were expecting or hoping to hear.

One of the most important factors that determine if a property is worth investing in is the location. Even if the property is in a perfect state, if it’s poorly located, chances are you will be losing money. Some of the factors that determine a location are the local economic health, the levels of vandalism and crime, the school district, etc. Before coming to a final decision, make sure you do a thorough investigation of the location. Choose areas, for instance, that have great schools, fun attractions, quality transportation options, high walkability, and great retail spots. Proceed with caution—no matter how the numbers look on paper.

If a property has been on the market for six months or longer, other investors have probably checked it out. There’s a reason it’s not selling. It could be a bad neighborhood, or too many issues to fix, whatever the reason…a property that has been for sale for months and hasn’t sold might be too much trouble than it’s worth. Dig deep into why it has been for sale for far too long to find out why exactly. While it’s possible for a property to simply evade the attention of other prospective buyers and investors, this isn’t the most likely explanation for a listing that’s been up for a long time. If it seems like there’s no interest in a given property, it’s a red flag that there isn’t sufficient market demand for that type of investment.

A property can look good on paper and still be a bad investment. If a house has structural damage, foundation issues, or other problems that will require a long inventory cycle or cost so much that it will eat into your profits, then your best bet is to walk away. Considering renting out the home? If the plumbing, electricity, and other infrastructure will need constant and frequent repairs, it could be a bigger headache than it’s worth.

Thinking to the future not only on the property you are interested in but to its surroundings as well. Learning of the current and potential growth in an area can greatly benefit any investor. Visiting the municipal planning department can yield information on developments and project plans that have already been zoned into the area. 

One important consideration is the amount of new construction in the area. Lots of new planned projects and those still in development typically represent an area of substantial growth. If you will be renting out the property that would mean new tenants with the growth of the area.

The Bottom Line:  These are just a few signs on how to spot a bad investment. Nobody wants to deal with the fallout after a bad real estate investment, so you must do everything you can to minimize your risk and do a lot of investigating on each property. Arm yourself with a good realtor, access to information, and patience.

Closing on a house is the most rewarding part of the home-buying experience. This is a time to celebrate this important milestone in your life! And it’s the last step in buying your new home. The actual closing and paperwork can be tedious and sometimes a little overwhelming. What should you expect once the seller accepts your offer? The behind-the-scenes work begins and then you can expect closing to happen within 30 to 90 days.

1. Select a Closing Agent: If you are working with a realtor, with your permission, he or she may place an order with a closing agent as soon as your sales contract is accepted. The closing agent can be a title company, an escrow company, or a settlement company. Most homebuyers rely on their real estate agents to select a closing agent – someone they work with regularly and know to be professional, reliable, and efficient. The closing agent will oversee the closing process and make sure everything happens in the right order and on time, without unnecessary delays or glitches.
2. Draw up an Escrow Agreement: First, a contract or escrow agreement is drafted, which the closing agent reviews for completeness and accuracy. The agent will also put your deposit into an escrow account, where the funds will remain until closing.
3. Title Search is Conducted: Once the title order is placed, the title company conducts a search of the public records. This should identify any issues with the title such as liens against the property, utility easements, and so on. If a problem is discovered, most often the title professional will take care of it without you even knowing about it. After the title search is complete, the title company can provide a title insurance policy.
4. Shop for Title Insurance: There are two kinds of title insurance coverage: a Lender’s policy, which covers the lender for the amount of the mortgage loan; and an Owner’s policy, which covers the homebuyer for the amount of the purchase price. If you are obtaining a loan, the bank or lender will typically require that you purchase a Lender’s policy. However, it only protects the lender. It is always recommended that you obtain an Owner’s policy to protect your investment. The party that pays for the Owner’s policy varies from state to state, so ask your settlement agent for guidance. before closing.
5. Obtain a Closing Disclosure: Your lender must provide a Closing Disclosure to you at least three days prior to closing. Your lender may also have a closing agent provide the Closing Disclosure to you three days before you close your transaction. If your lender makes certain significant changes between the time the Closing Disclosure form is given to you and the closing, you must be provided a new form and an additional three-business-day waiting period after the receipt of the new form. This applies if the creditor: 1: Makes changes to the APR above 1/8 of a percent for most loans (and 1/4 of a percent for loans with irregular payments or periods) 2. Changes the loan product 3. Adds a prepayment penalty to the loan. If the changes are less significant, they can be disclosed on a revised Closing Disclosure form provided to you at or before closing, without delaying the closing.
6. The Finish Line: Prepare for Closing: As closing day approaches, the closing agent orders any updated information that may be required. Once the closing agent confirms with the lender and the seller, he or she will set a final date, time, and location of the closing. On closing day, all of the behind-the-scenes work is complete. While you’ve been busy packing, ordering utilities, and coordinating the movers, your closing agent has been managing the closing process so that you can rest assured, knowing all the paperwork is in order.

The Bottom Line: This long process can seem daunting at times, but if you are teamed up with the best realtor and title agency you will be well prepared. When you finally reach the closing date and are holding the keys to the property, plan a celebration!

What do new home buyers want? We are in the era of social media, smartphones, and AI algorithms, leaving us with a plethora of information on how we should renovate, remodel, and increase the value of our homes. Of course, affordability tops the list, followed up with updated large open gourmet kitchens with large center islands for cooking and gathering.

If you will be selling your home and you only have a certain amount of time and money, there are a few things that buyers are looking for right now.

HOME OFFICE: More than 13 million Americans work from home, according to the most current U.S. Census data, and all signs point to that trend continuing. That makes a home office important for many buyers. As you would list rooms like kitchen and living room, a greater amount of people working and schooling from home means “home office” should be included in the listing. Or, consider saying there is a room as a potential home office.

ACCESSIBLE LAUNDRY ROOM: According to a nationwide survey of recent and prospective homebuyers conducted by the National Association of Home Builders, 87% of respondents wanted a laundry room, making it the most requested feature on their list. No more dark basements. Today’s home buyers seek a bright and large laundry room with plenty of storage, and counter space for folding clothes and it’s always a plus to have a utility sink.

ENSUITE MASTER BATH:  If your master bathroom only contains a shower stall or a tub and not both, you’re going to be at a big disadvantage when it comes to selling. According to the latest annual report published by the National Association of Home Builders (NAHB), a whopping 76% of millennial buyers consider this their top must-have. When pushed to specify, potential buyers also revealed that they’d want the tub to feature whirlpool jets and that the shower should have multiple heads. 

CENTRAL AIR CONDITIONING: Nearly seven in 10 homeowners said they would be willing to pay more for central air conditioning — the same as new kitchen appliances and more than any other feature. Central air conditioning was considered “very important” by more than 60% of people in all age groups.

ENERGY EFFICIENCY: This is a top home feature that has earned high marks from home buyers. As the cost of energy continues to rise, many home buyers today are looking for homes that are going to be easier and less expensive to run long-term. Consider installing LED lights or using a programmable thermostat.  These features can be attractive to home buyers because they often result in saving money on utility bills.

The Bottom Line: Team up with the most successful realtor in your area who will recommend what updates you will need in your specific home to bring in the most money. We can’t control the circumstances of the current real estate market, but we can control parts of our home’s value and appeal. Making strategic improvements can significantly increase the success of the sale of your home.

What can I get for my home? This is one of the first questions a homeowner will ask a realtor.  Hiring an experienced realtor is key to getting the magic number – the price that your home will sell. Getting your home priced right is quite possibly the most important thing your realtor can do for you. Too many times, realtors will tell sellers what they want to hear instead of what they need to hear to sell their homes.

Pricing a home is a skill that takes training, an understanding of the market, and comparable sales (comps). Negotiating a home price requires a lot of patience, organization, and sometimes compromise. When a home is listed too high, buyers pass on even looking at it. It will end up being on the market for a long period of time and the price will eventually be forced to be lowered to be competitive. But, by that time buyers assume there must be something wrong with the home and it will gain a bad reputation and continue to be bypassed. Even the buyers who do look at it will lowball the new price and the home will end up being sold for less than what it would have had you priced it correctly to being with. Homes sell for the most money when they are on the market for less than 30 days in almost all markets.

You don’t want your home priced lower than it is worth, but you want it low enough to create excitement among buyers and possibly even multiple offers coming in. This is an excellent option if you want to sell a home fast.

A good Realtor will make sure that the seller’s home shows up in online searches. To make sure this happens, a proper price is paramount. If the neighborhood comps are lower, the house may not show up if it’s even slightly higher! For instance, if the comps top out at $300,000, and the buyer wants a 4-bedroom home in that neighborhood under $300,000, the house listed at $325,000 won’t even show up in the search.

Pricing a home to sell properly is a skill that the best Realtors have. It is the most critical piece to selling your home. The right price is 75% of the marketing for any home on the market. It’s what will attract buyers. So, when you are interviewing Realtors to sell your home, ask the question “What’s my home worth” and know they can’t tell you what it will sell for but expect comparable sales, pending sales, and active sales. Finally, ask to see a track record of their previous listings – the original price and the final sale number. And, don’t be afraid to ask for a personal guarantee from them.

The Bottom Line: If your home is immediately identified as being overpriced, agents will dismiss the property. As a result, sparking interest may take drastic measures (i.e. massive price reductions) and you might end up lower than where you could have been if you had priced the property right the first time.