The people who made dishonest or incompetent deals then have mostly disappeared so now it is up to the State to regulate the situation and bring it back under control, but every time you introduce a “solution” to a problem that comes from people that are not directly familiar with the problem you end up having a bigger problem, and this is what is apparently going to happen with residential loans starting as of January 2010.

A whole new set or regulations, called RESPA (Real Estate Settlement Procedures Act), will go in force and change the way people will buy houses and the way banks will deliver loans and the way title companies will have to perform closings. Chances are your average Realtor is not very informed about this, since it is a quite complex subject, but the fact is that this is the most sweeping change in procedures in the last 25 or more years.

The objective is to deliver in the hands of consumers a very clear idea of what they loan will look like so that they are able to shop around knowing exactly of the figures compare from one lending project to the next. But not only this, when the prospective buyer will get a Good Faith Estimate from a mortgage broker or from a bank underwriter, this estimate will contain some figures that will be set in stone and that will not change until he goes to the closing, and will have to be placed on the closing statement (the so called HUD-1) which will change and will become three pages long versus the two pages document we are used to see.

The whole real estate industry will change because of these new regulations and Realtors will be greatly affected as well as buyer and sellers, because their ability to actually close on a transaction will depend greatly on their understanding of these new rules. To put it simply: if the initial work is done wrong, then it will be very difficult to get to the end and still be able to close.

Real estate like other industries is becoming regulates more than ever. And the US seem more and more like Europe. Actually, from what I have heard during a 2 hours seminar just on this topic, closing on a house in the US will be much more difficult than buying one in Europe. The pendulum has now swung all the way in the other direction.

Roberto Mazzoni

Watch it! It is really worth it.

Roberto Mazzoni

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

Banks today list their properties at prices which are fairly well aligned with the market, so to entice potential home owners who wish to live personally in the house. Gone are the days when they established their selling price based on the remaining loan balance. Today they know how to market competitively and sometimes they even start with a price that is well lower the current market value. If the basic elements are fine: roof in good condition, functional plumbing and electric components and no structural damage, a retail buyer is likely to win against any investor since the home owner is willing to offer much more and he is also ready to put up with the basic repairs that could be needed to make the home fully functional. A broken water heater or A/C unit, new carpet and paint, new windows are usually acceptable for an home owner who can still get the house at a good discount.

The investor has better chances of acquiring a property for a price that is right for him when he deals with homes that require substantial work or that have been on the market for some time. I found that after a couple of months the house has been listed, the bank becomes much more willing to deal with investors. Banks sometimes start a bit too high and don’t accept lower offers for sometime until they discover that nobody is willing to bid anymore. At that time they usually accept a lower offer.

The more rehab work is required on the property, the easier it will be to get a very good price, but this demands closer attention to evaluating the costs and then finding the right contractor that can perform within those costs.

You will find that it is always good to involve two or three contractors as soon as the house is under contract with the bank and before the usual one week inspection period comes to an end. In this way you will be able to walk away from the deal if you discover that you offered too much compared to repairs required and you wil get different ideas and costs for the rehab.

Call the same contractors that you plan to use for the actual rehab and after you chose the one you want for that job, you should do a final walk through of the property detailing what will have to be done and where, putting everything in writing and defining both the scope and the timing of the work as well as the amounts to be paid at the various stages, leaving a substantial quota for the final inspection.

The materials chosen for my rehabs are conceived to make the product interesting for both an American and an European buyer. I therefore try to stay away from carpet whenever I can using laminate or tiles. If the price of the house warrants it, I will put the same type of tiles pretty much every where, making sure I get a very competitive price. The other key aspect to consider is selecting block homes rather than frame homes whenever possible: they are so much easier to sell to an international buyer.

Roberto Mazzoni

Yet, the key components for mold remediation are not so expensive and you can find reliable professionals who can get rid of the problem for a much smaller cost and also prevent it from occurring again.

Here are some tips you might want to use if you run into the same type of problem.

1. There are various types of mold and the most dangerous one is the mold that grows inside wall partitions, between two drywall sheets, where there is little or no air. This mold will be quite black and needs special care in removal (using masks and special filters). Superficial mold, that grows only on the outside surface of drywall, is not really dangerous and can be cleaned fairly easily using chemical products that contain a compound of bleach and other aggressive substances.

2. The mold that grows inside a house has usually one place of original formation and then the spores get spread around by the air conditioning system. So the first step in the remediation would be to get the air conditioning ducts clean first by saturating them with chemicals that then get spread around the house, while also cleaning the walls, the ceilings and all surfaces at the same time.

3. Once the drywall has been cleaned or substituted and the whole house has been treated with chemicals, you usually add some chemical that prevents mold formation in the new paint you put on the walls and the ceiling.

4. Check up you air conditioning system and air circulation. Mold got formed because moisture was present in the premises for some time.

5. Get rid of cheap furniture that can have absorbed mold spores: it is usually cheaper to get a new one rather than trying to clean the existing one. Your cleaning professional will tell you what to do.

Check your mold remediation professional against the points above and you’ll know whether you are dealing with a true expert. Also be wary of very high prices tags, they don’t necessarily mean higher quality and you’ll be able to find more affordable estimates if you just connect with other people in your area that have already solved the same problem.

Roberto Mazzoni

These type of loans give the buyer approximately 97% financing, with the remaining 3% covered often by government grants. Therefore they are in high demand because they allow any buyer to get into a property with practically no money down.

One caveat is that FHA requires the property title to have been “seasoned” for at least 90 days. That means that an investor who buys a home from a bank or a motivated seller, rehabs it and then puts it back on the market for a profit must wait 3 months before closing with a buyer who has an FHA insured loan.

This is not necessarily an issue considering that a typical rehab job will take between 2 and 4 weeks and that the marketing of the property will require at least another 2 o 4 weeks before a potential buyer is found.

Adding the time it takes to get the lean approved we easily get past the 90 days. The problem now is that banks, in order to lend to first time home owners, can only use FHA approved appraisers which introduces a bottle neck in the process because there are not so many of them.

Additionally. FHA approved appraisers are fairly expensive and can take a while before doing the appraisal since there is such an high demand. The bank also is likely to challenge the appraisal and ask for more data, adding time to the process. Then, when the bank runs out of government funds, they must wait for new funds to come in and this can easily add 15 more days. So it is common for a loan to take at least 45 days to actually be approved and delivered at closing, with some horrible delays that sometime bring the overall process at 6 months.

But there is more to it. The appraisers are now invited to take into account also bank owned properties while taking comparable sales for the area. Originally they used to only consider arm-length-sales while estimating the potential value of a property. That is they would consider only those properties sold by a private owner to a private buyer, both trying to do the best for themselves.

Therefore the average appraised value will go down and this trend will slow down sales and reduce average prices, as if they weren’t already low enough. It is funny because banks seem to be playing against themselves.

By tightening the lending process and by forcing appraisers to lower their appraisals, they will also reduce the average selling price of bank owned properties so accelerating the whole spiral on the foreclosure front.

Roberto Mazzoni

You can deal with buyers, private money lenders or prospective partners that are anywhere in the US or the whole world for that matter and multiply your efficiency many, many times over.

Webinars are not only a selling tool, actually they are one of the most powerful promotional tools that exist. They prepare people for the sale and create the level of understanding and agreement that is paramount for a smooth relationship.

Setting up a webinar (on computer and telephone) or a teleseminar (on the phone only) is very easy: you just need an account with a company that provides a bridge line service or a site like GoToWebinar.

But there are the 17 steps you need to take to make it a success:

1. Select a JV partner that has a product of interest for an hot target market (this can be done through an evaluation of what he has already sold in other teleseminars or keyword Google evaluation on the subject if he has a new product).

2. Find out what your list or prospective new members want or what they are already buying (Google keyword evaluation, surveys on the members and other sources).

3. Evaluate the content of the product offered by the partner (info products are those who sell best).

4. Create a bonus package with the JV partner that is perceived to be far more valuable than the product being sold.

5. Create a time limit or quantity limit or both for the availability of the product promoted.

6. Together with the JV partner, define a script for the teleseminar. Create a system/script that can maximize returns.

7. Practice on the script by delivering the webinar or teleseminar to a friendly audience (for free) until you feel ready. If you have never done Webinars before you should practice at least 5 times before delivering your first “paid for” webinar.

8. Build a turn key system out of the offer so that people can simply pay and get going immediately with the specific product being introduced.

9. Make a payment system available to collect orders from the call (whether through the partner or directly). The best would be a Web page, but that could be complemented with an operator that could collect payments over the phone.

10. Setup an autoresponder for the project, to collect information from the registrants (name, e-mail address and sometimes phone number if we are going to do voice broadcasting to remind people about the call).

11. Setup an opt-in page and a confirmation page (date, time) and invite them to print it and keep it in view.

12. Write a series of e-mails to drive people to a landing page. Create value and the sense of a big event.

13. Get people registered collecting personal information. Possibly collect phone number to reminder them about the call shortly before it happens.

14. Remind people to attend several times (particularly in the morning of the day the call is due and just before the call starts). Give them the connection information again.

15. Do the live call with an operator/organizer who can assist people while they login and can collect questions while the speaker talks and who can contribute to the content by questioning and introducing the speaker (tha would be me). On big teleseminars more people might be needed: the organizer and one or more operators to individually help the people while they connect to solve potential audio issues or taking care of congestion.

16. Record the call with backups so to be sure not to fail and make it available as a replay over the next few days with several e-mails sent to people in the list.

17. If feasible, send a series of e-mails inviting people to participate to an encore presentation in case they missed the original live call or the web replay.

It seems a lot’s of action and it is to some degree, but you will get maximum results when you follow this sequence and you will work much less compared to telling the same things over and over to every single prospect, individually.

Roberto Mazzoni

When selling to international buyers, the transaction often happens with a cash payment, since the buyer has money available personally or because he has secured a loan in his own country: it is increasingly difficult to get US banks to lend to US citizens, much less to foreigners.

But there are three factors that play an important role when the buyer transfers his money to the title company from his European account.

1. When he goes to his European bank to order the transfer, the buyer has to specify the exact amount of US dollars that he wants to transfer and give immediate authorization to his bank to perform the conversion between euro or pounds and dollars at the rate available at the moment.

   If he forgets to give his consent, the European bank will transfer the corresponding amount in euro or pounds to the intermediary US bank, the one that acts as a middle agent between the European bank and the final US bank holding the escrow account. There are always at least three banks involved.

   The intermediary bank will hold the money waiting for the authorization for the converting it to dollars at a defined exchange rate. The authorization will never arrive because your buyer will know nothing about it and the money will remain floating for one or two months in the international bank system and the it will return to the original European account. And the closing will be impossible.

2. The European bank wants to be paid an hefty fees for the transfer and the currency exchange, so your buyer has to have the money to cover also that (make sure he checks his bank fees ahead of time).

3. For some strange reason the intermediary bank always collects an additional fee of approx $35 or $50 therefore the buyer should transfer just that much more money.

These simple concepts will allow you to avoid pitfalls and get to your closing smoothly and successfully.

Roberto Mazzoni

]]> http://landwriting.com/international-real-estate/three-important-things-when-selling-to-international-buyers/feed/ 0 http://landwriting.com/international-real-estate/new-lending-bill-threatens-to-change-investing-rules/ http://landwriting.com/international-real-estate/new-lending-bill-threatens-to-change-investing-rules/#comments Tue, 09 Jun 2009 11:35:29 +0000 Roberto Mazzoni http://www.landwriting.com/blog/?p=457 After a major financial or social disaster you can always count on somebody to comer along and advocate for some new drastic measure that unbalances everything. This is the case with a bill that has been approved by the House of Representatives and that is currently at the Senate. The name of the bill is HR 1728 “Mortgage Reform and Anti-Predatory Lending Act”. It amends the “Truth in lending Act” by specifying more restrictive rules for the originators of residential mortgages.

This bill is creating ripples of alarming comments in all real estate investor associations throughout the nation, particularly because, amongst many things, it limits the ability of an individual owner to owner finance one property only once every 3 years.

There are people who are already talking of possible ways to work around the obstacle and others who are advocating urgent lobby actions with senators so to remove of change the few sentences that effect private owner financing.

These are the types of transaction you would be restricted from doing: sell your own home with a land contract or with a mortgage held by you, doing any kind of installment sale of any kind of residential property. To do more than 1 owner financed deal every 3 years you would have to follow the complex requirements set forth in the proposed law, and maybe get additional licenses.

With this piece of legislation the US gets closer to Europe where NOBODY is allowed to owner finance ANY type of property. Only banks are entitled to issue loans and private individuals can only accept cash payment for their properties. If the bill passes the Senate, the US real estate market is going to change. Many creative exit strategies for sellers and investors will go out of the door and some markets will probably reduce.

In Europe today the real estate market is very slow because it is becoming more and more difficult to sell properties since the banks have tightened their already strict lending policies. The bill seems conceived to protect the weakest buyers and tenants, those who got themselves into dire straights because of poor money management and careless house purchases. You might watch out to the consequences it will have on the free open market.

Roberto Mazzoni

P.S. My friend Sam Bell made a much more extensive exam of the bill and the possible counter actions on his site http://sambell3rd.com/realestatementor/real_estate_financing/90/us-senate-seizing-control-of-real-estate-investing/

It can happen that on a single property many offers arrive at the same time offering even more than the bank originally asked for. So you need to be flexible and fast in locating your deals and ready also to move outside of your backyard if needed.

You have to weed through many bad deals, that’s true and you need to have a system that allows you not only to find good opportunities but also to fund them and then to market them as fast as you can.

Five ways to find properties and their pros and cons:

1. You can consult the MLS if you are also a Realtor or with the help of a friendly Realtor who can make daily extracts of what comes up in a specific area. This is fairly effective if you are dealing in a limited zone and if you have somebody who can do the work for you. The list tell you the up to date situation of the property (listed, under contract, sold) and you have most of the information you need about the house, including picture. Sometimes the Realtor can use an automatic system to send you daily e-mails so you are kept regularly updated. The problem here is that you are limited to one area and you cannot tell which is a good deal from a bad deal upfront. You need to do research on every property and it can be time consuming.

   

2. You can go on the many free sites maintained by different banks. The advantage here is to span the whole nation, but the disadvantage is that you need to check every single deal (no selection is made upfront) and you need to look up many different sites: both for covering the different banks and for collecting all the information you need about a property, including pictures.

3. You can purchase a “ready made lists” of foreclosure or bank owned properties. Here you often have some kind of value associated to the property so that you can make a general selection upfront and you can operate in many different markets. These sites sometimes also provide basic information about each property. The drawback is that these lists sometimes are not updated and therefore you waste time on properties that are already under contract or have been sold already. And you need to pay for the list.

4. You an use a software that pulls data from the MLS and let’s you make offers in an automatic fashion. MLS Gorilla is one of these software, for example. The drawback is that these software have often an high price tag attached to them, they get locked in specific areas if one of your competitors decides he wants to have exclusive access and you need to take a shotgun approach by making low offers on everything, which can lead in getting acceptances on junk properties that you then need to discard and missing the houses that are in better shape and where you could afford to make higher offers and still get a nice return.

5. You can finally subscribe to a search engine specifically designed to locate bank owned properties. In this can you can access directly the bank database without relying on MLS and any error that could be in it, you can access the private databases of major wholesalers and you can make a search for properties with a defined discount ranges, while also getting all the other properties in the area in a separate list from which you can pick and chose freely. The only system I know that is capable of doing this right now is REO Goldminer (http://budurl.com/reog) which I have been using now for 3 months and that has kept improving the quality of their leads.
   

   You can still get properties that are already under contract sometimes because it takes a while for the bank to update its own database, but you can span the whole US and pick and choose only those area where REO’s ARE available. Additionally they are providing an outstanding training support for using the system and marketing deals and they have also developed a community for wholesale exchanges. The main drwaback is that the system is not available to everybody: you have a limited number of subscribers that are allowed on it.

Pick and choose the system that fits you best and have success with it.

Roberto Mazzoni

P.S. REO Goldminer is reopening its gates for a few days starting today at noon. Last time they sold 500 memberships in 2 days or so. This second and last offer will stay open until Friday June 5^th and then it’s gone! http://budurl.com/reog.

]]> http://landwriting.com/international-real-estate/five-ways-to-find-bank-deals/feed/ 1 http://landwriting.com/international-real-estate/a-flood-of-people/ http://landwriting.com/international-real-estate/a-flood-of-people/#comments Tue, 26 May 2009 11:48:29 +0000 Roberto Mazzoni http://www.landwriting.com/blog/?p=424 Did you know that the US population grows at the rate of 3 million a year. It is just a whole city as big as Rome was coming out of nowhere every single year and spring in full growth just right before our eyes, with it’s fresh new population needing food, work, entertainment and sheltering. Look around, do you still see families of 5 or 8 people living all in the same home? No, everybody wants his own place to live, his own area of freedom and privacy, a place that he or she can tailor to her life and needs and that can call home.

Nowhere in Europe we same a comparable growth and how comes therefore that the real estate market in the US is suffering while European houses still maintain pretty much their value? In areas that have been hit hard by the downfall, like California, Florida, Arizona, Nevada and Michigan, prices have come down as much as 50% and keep drifting down. Is there going to be an end?

When we look at the real market we see that transactions are still occurring, spurred by the incredible prices available for bank owned properties. Investors are still doing business, maybe using foreign money to fund the deals, but they are more selective and professional.

Those who know how to go about it get rewarded the opportunities that this market also offers. They estimate that in the US alone there is $ 9 trillion on the side line ready to surface in the form of pent up housing demand. You need to be able to stay in the market and profit from it while the new uptrend will spring. How do you do it? Well, by knowing your staff and learning it from people who have been successful in real life and still are doing what they teach (which is unfortunately not so common).

You need fresh ideas and fresh way to approach old issues. I found some very good ones in the book : “Be a real estate heavyweight” by Dan Auito, a friend of mine who has a passion for teaching and has been investing in real estate himself for over three decades. Dan has now put together an impressive volume of 1479 pages! You find it on a CD and it contains the tips and strategies of the most successful real estate investors in the US. Each one has written his section of the book so it is like having many volumes condensed into a single huge reference guide.

You have everything you might ever need for the next 12 months of adventure in the real estate field. There is no better time than today to master these skills and test your abilities in a field that has never presented so many problems and opportunities combined together in a single time.

Roberto Mazzoni

P.S. I strongly advise that you get a copy of this book and ready it. It is very affordable and if you are at all serious about dealing in real estate you cannot skimp on your education. This is the opportunity of being taught directly, in their own words, by 96 experts! http://budurl.com/auit