What If I Owe More Than My Home is Worth?

If you owe more than your house is worth, you might say "upside down" or "under water." And you are not alone. Before you resolve yourself to foreclosure and walk away from your home, consider some of the following options.

Loan Workout/Loan Modification/Loan Rework--Banks are becoming more willing to do loan workouts, also called loan modification or loan reworks. Banks are not in business to sell homes. They would much prefer that the homeowner stay in the home and pay their mortgage. Even if you have received a foreclosure notice, there still may be time to save your home and your credit. Below are the different options for reworking your loan:

1. Loan Reduction. This is simply a process by which the lender reduces the amount you owe on your home. If you can show proof that homes like yours in your area have recently sold for less than what you owe on your home, the lender may agree to lower your loan amount. Lower loan amount equals lower the monthly payments. To get started, call your lender and ask for the loss mitigation department.

2. Extension. This loan modification (also handled by your lender's loss mitigation department) extends the term of your loan. Your payments are lowered and spread out over a longer period of time.

3. Interest Rate Reduction. This option is especially favorable if you have an adjustable rate mortgage that has risen so high that your payment is no longer affordable. Often, the bank would rather reduce the interest rate than foreclose.

NOTE: DO NOT, at any point, stop communicating with your lender. This makes them more likely to move forward with foreclosure proceedings.

Forbearance
If you are a couple of payments behind, but are expecting a lump sum of money (yearly bonus, insurance payout, or tax refund) that will catch you up, consider requesting a forbearance. The lender agrees to allow you to temporarily stop making payments. But you must bring the payments up to date by a specified date and start making your payments at that time. Resuming the payments is called reinstatement.

Repayment Plan

This is a plan that your lender agrees to, where you make your monthly payments and add on a little extra. The extra amount will be applied to your overdue balance.

Rent/Lease Your Home

If you have no hope of being able to pay your mortgage, you may be able to rent out your home. There are a lot of people who are looking for a home to rent. If the house will not rent for enough to cover your payment, it will probably be worth making up the difference yourself. You can find a cheap place to rent in the meantime. These are hard times, and it won't be forever. Once housing sales recover, sell the house then. You may even make a little money on it.

Short Sale
If you've been devastated financially, you may not be able to pay for your home at all. A short sale may be the best way to avoid foreclosure. In a short sale, the house is put on the market at a price that is less than you owe. Sometimes the bank will accept the reduced amount. Other times, they will expect you to pay part of, or all of the difference. They will work out a payment plan for you to pay them the shortage.

Loan Assumption

If you have a reasonable interest rate and loan amount, you may be able to sell your home to a buyer that can assume your loan-that means they take over the payments for you. Work closely with your lender on loan assumptions. Scammers have tricked some into thinking their loans are being assumed. In the end, the sellers gave up their homes but still owed the mortgage.

Deed in-lieu-of mortgage

A deed in-lieu-of mortgage is one step above foreclosure. This is a process by which you voluntarily surrender the home to the lender. A deed-in-lieu-of mortgage is less damaging to your credit than a foreclosure.

A foreclosure on your record says that you breeched a legal contract on life's most important financial obligation. It further says that you breeched it in a way that forced the bank to sue you. It gives the impression that you are not honest.

Foreclosures follow people for years, even for the rest of their lives. Once you lose your home, you will need to live somewhere. When you apply to rent property, the landlord will probably check your credit. Did you know that employers often check credit before hiring or promoting? Knowing that a foreclosure on your credit makes you look dishonest, do you want that on your record?

Foreclosure should be avoided at all costs.

By Lyn Collier

Learn from Lyn Collier's years of Real Estate experience.

Read simple, to-the-point articles about avoiding costly mistakes and what to do if you owe more than your home is worth at http://www.e-home-mortgage-loans.com/index.html

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The Key to Real Estate Sales Success

One of the first steps toward success is to know what you want out of your real estate career, and "financial independence" is not a specific-enough answer.

I've been in real estate, either in direct sales or teaching, speaking, training, writing, or coaching people, for nearly 20 years. I've met tens of thousands of agents and nearly every one started selling real estate with the same goal of financial independence. Countless times I've asked the same question: "Tell me, how do you define financial independence?" What I usually hear in response is some variation of the answer, "So I don't have to worry about money anymore."

The key to eliminating money worries is to establish a financial goal - an actual number ¬¬- that you need to accumulate in order to achieve the quality of life you want to enjoy. Financial independence boils down to a number. Set that number in your mind and then launch your career with the intention to achieve your goal by a specific date.

With your financial goal in mind, you'll have a clarity that will see you through the valleys and hard work that lie ahead of you. When you have to endure the rejection, competition, disloyal customers, and challenges that are inevitable along the way, your knowledge about the wealth you're working to achieve will help you weather the storms of the business.

Pathways agents follow in search of success

Agents follow one of these four basic approaches in the quest to achieve real estate success:

1. Become a workaholic. More than 80% of agents who generate a reasonable income achieve their success by turning their careers into a seven-day-a-week, 24-hour-a-day job. They answer business phone calls day and night, they make themselves constantly available to prospects and clients, and they work on-demand with no restraints.

2. Buy clients. The second-most frequent pathway to success is to buy business through massive marketing campaigns. Some agents buy or "brand" their way to the top level of real estate by investing in billboards and bus benches, thousands of direct mailers, expensive ad schedules, and all kinds of promotions. Others buy their way to the top by discounting their commissions. By offering themselves at the lowest prices, these agents eliminate the need to emphasize their skills, abilities, and expertise.

3. Take the shady road. Another avenue to real estate financial success is to abandon ethics and just go for the deal and the resulting money. Unlike the vast majority of agents who advise and advocate for their clients, agents who take this route choose not to be bound by the ethics and code of conduct of the National Association of REALTORS. They put their own needs first and their clients' best interests in distant second place. Fortunately, these agents are few and far between.

4. Build a professional services business. The fourth and best pathway is to create a well-rounded, professional services business not unlike that of a doctor, dentist, attorney, or accountant. Fewer than 5% of all agents follow this route, yet the ones that do are the ones who earn the largest sums of money ¬- some exceeding $1 million annually while also having quality lives and time for friends and family. Plus, when they're ready to bow out of the industry, they have a business asset they can sell to another agent. This is the route I urge you to follow.

By Dirk Zeller

Dirk Zeller is an Agent, an Investor, and the President & CEO of Real Estate Champions. His company trains more than 250,000 Agents worldwide each year through live events, online training, self-study programs, and newsletters. He's the widely published author of Your First Year in Real Estate, Success as a Real Estate Agent for Dummies®, The Champion Real Estate Agent, The Champion Agent Team, Telephone Sales for Dummies®, and over 300 articles in print.

Real Estate Champions is a premier coaching company. Training covers a wide spectrum from new agents, to seasoned, as well as those interested in real estate marketing or real estate investing.

You can get more information at Real Estate Coaching, Free Resources for Realtors

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The Biggest Real Estate Myth

We all think we are in the real estate investing business. This is a fundamental mistake! It's true that we have checks written to us in exchange for services of buying and selling houses, so it's understandable to think we're in the business of real estate. When someone at a party asks what we do, we naturally say "I'm in real estate" So when we look at growing our businesses, we look at what we do for the levers. And that's the mistake.

You're not in Real Estate!

You're in the business of "MARKETING YOUR real estate ABILITIES"

When you really understand this, a whole new world of possibility opens up.

Here is the TRUTH:

1. When you move marketing to the center of your business, your view changes dramatically.

2. Realize that what you do - the tasks specific to providing the service - should be viewed as marketing itself. From the very first interaction a prospect has with your business, whether it's an online ad or a phone call or whatever else, you're creating an experience. That experience is a core marketing function. Is the experience you provide worth talking about? How do you make them feel?

3. 95% of the people in real estate don't know marketing. The first step to breakthrough success is to clear your mind of 'how it's always been done' and to look at the problem of marketing with fresh eyes.

That is why real estate investor must wake up and realize that only by using a precision marketing plan is it going to get them more leads and deals. Internet marketing is the new medium for doing business. Savvy real estate investors can now dominate their markets and send profits soaring by using online marketing. However, there are some very important online fundamentals that you must learn that will create the desired effect.

I would like to suggest to you to start to take notice of everything within a perspective of marketing. The whole world will become your classroom. Do you notice how the hotel offered you a rewards program? That's marketing. Do you think that's effective? If so, how do you use that idea?

The other day, at the airport parking lot, I was surprised and delighted by the fridge of free water bottles placed next to the machine where I feed my ticket as I pulled out. Amazing! How does that make me feel? How can I apply that lesson?

When you're a lifelong student of marketing, and take action on ideas you will begin to see opportunity everywhere you look. I would suggest you seek out the trainers who clearly understand this new way of doing business and mirror those methods!

By Duncan Wierman

Bio: Software CEO turned Real Estate Investor and Marketer. Duncan Wierman shows you how to use creative online marketing methods to do more deals online.

http://www.duncanwierman.com

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Issues Related to Appraisals For Condemnation

When a property is being taken by the state, a local government body, or a statutory body, the property owner is usually sent a letter that says in effect that they will be taking your property and further stating that they have had the property appraised. The condemnor will usually make an offer to the owner for the appraised value. However, the detail from the appraisal itself is typically limited to raw transactional data with limited or no analysis included in the letter. Sometimes the appraised value and subsequent offer will be fair as the appraised value might have been generated giving significant weight to the Fair Market Value detailed above. However, usually, the owner of the property being taken under eminent domain laws has little evidence of the property's value beyond that being stated by the condemning party. This makes it very difficult to determine if the offer is a fair one?

Any discussion of appraisals in the eminent domain arena should be understood with a few definitions in mind. Thus, we direct the reader to the following Definitions:

Eminent Domain: The right of government to take private property for public use upon the payment of just compensation. The Fifth Amendment of the U.S. Constitution, also known as the takings clause, guarantees payment of just compensation upon appropriation of private property. (Source: The Dictionary of Real Estate Appraisal, 4th Edition, Published by the Appraisal Institute)

Condemnation: The act or process of enforcing the right of eminent domain. (Source: The Dictionary of Real Estate Appraisal, 4th Edition, Published by the Appraisal Institute)

Condemnation Blight: A diminution in the market value of a property due to pending condemnation action. (Source: The Dictionary of Real Estate Appraisal, 4th Edition, Published by the Appraisal Institute)

"Fair Market Value" - Used in Eminent Domain Cases: The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available. (Source: Code Civ. Proc. § 1263.320(a), State of California)

In California, recent changes to the law require the plaintiff (the body exercising its right to condemn the property under eminent domain laws) to give the defendant (the party who's property is being condemned) $5,000 for appraisal fees. Other changes in the law also make it harder for the condemner to take the property without having first agreed to the value of the property. These two combined changes in the law should make negotiating with the plaintiff an easier process, as the defendant now has the money to pay for an independent appraisal as well as the power of time given by the requirement that a financial settlement much be reached before the property will be handed over to the plaintiff.

But even with these changes, it is our opinion that in most cases the defendant should seek legal representation, avoid negotiating with the condemner directly and avoid hiring the appraiser on their own.

We have three reasons for these opinions:

1) The appraised value provided to the condemner was written by an appraiser who in all likelihood would act as an expert witness for that side in the event of a trial. As such, it is quite possible that they have not taken to heart the definition of fair market value above (I strongly suggest reading it!). I have been involved in situations where the municipality's appraised value was almost one half of the actual value.

2) Even if you use the $5,000 for your own appraisal, you then have to negotiate with the body yourself. This is an arduous process and you would be dealing with skilled negotiators. Moreover, the appraisal you engage will become part of the record, either in the form of the copy you give the other side, or via the process of discovery before trial. This leads to the third reason to hire an attorney.

3) Most importantly, your attorney should hire the appraiser directly. The appraiser can be hired as a consultant and issue the appraisal in a restricted format. If you and/or your attorney do not like the appraisal, the appraiser, or the results, your attorney can hire a new appraiser without the previous appraisal making it into the court record. That is because it is protected by attorney client privilege.

What to Expect From Your Appraiser

Once you hire your attorney they will likely engage an appraiser that they are comfortable with. Once engaged the appraiser will inspect the property and behind their search for the appropriate comparable sales and rental datum. If the highest and best use is an alternate use, the appraiser will likely be searching for land sales, whereas, if the highest and best use is for continued use, sales will be of similar improved properties. If the property is income producing, or has the potential to be income producing, the appraiser will also likely conduct an income approach. Either way, the appraiser should be looking for the "highest price on the date of valuation that would be agreed to" between a buyer and seller (see definition of Fair Market Value above).

By law the appraiser is an independent third party and this does not change in eminent domain cases. Most appraisers guard their independence vigorously, so it would not be a good idea to try and push or sway the appraiser in the direction you are hoping for. Furthermore, your attorney is hopefully experienced in the field of eminent domain and condemnation law, so you would be well suited to let the attorney handle all but the most tertiary discussions with the appraiser. However, in the event that you disagree with the appraiser's results, you can always ask the appraiser, through your attorney, to revisit the analysis with whatever new information you provide.

Your other option is to hire a new appraiser and keep the original appraisal in the attorney's files. This will protect the appraisal in the event that the case goes to court and the appraisal will not be discoverable.

By James A. Stein

Los Angeles; Orange County Appraisal

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How to Search Efficient Real Estate Agents

Finding an efficient real estate agent can be a daunting task as they are relatively few in numbers. It is often said that 20% of the real estate agents do 80% of the business. The agent best suited for you must be an experienced professional who will listen to you, carry out the tasks in an ethical manner and knows your requirements.

All Realtors are licensed to sell real estate and function as an agent but not all real estate agents can be called realtors. Only registered realtors can display the Realtor logo. Registered realtors® belong to the National Association of Realtors and are bound by the Code of Ethics, a comprehensive list containing 17 articles and underlying standards of business practice.

It is a fact that most real estate agents remain in business because their satisfied clients refer them to friends, family, neighbors and colleagues. You can therefore ask the people known to you who they hired and ask them to describe their experiences various real estate agents. Successful agents make customer satisfaction their number one priority. Try to find agents who go above and beyond their responsibilities. You can even ask other real estate agents for referrals. Agents are happy to refer buyers and sellers to associates, especially if the service you need is not a specialty of the agent who is referring you.

There are plenty of Web sites that will refer agents to you though there is no assurance they will be competent. It is likely that the agents they refer are those who have paid the Web site owners a fee to be listed in their directory. Instead it is better to Google the top real estate companies in your area, visit those Web sites and look up profiles of individual agents and their customer testimonials.

Attending open houses will enable you to meet real estate agents in a friendly working environment. Collect their business cards and make notes on them. Pay attention to the listing signs in your neighborhood. Make note of the day they go up and when the sold sign appears. The agent who sells listings the fastest might be the one you should engage. If an agent is result-oriented, he is understandably the more efficient and better organized agent.

Get a copy of the agent's production record. From the agent's production record, you can find out how many homes the agent has sold per year, how much they were sold for and where they were located.

Knowledgeable consumers interview potential real estate agents before finally deciding on whom to hire. A few of the questions you can ask him to assess his worth are:
-How long have you been in the business?
-What is your average list-price-to-sales-price ratio?
-What is your best strategy to meet my needs?
-Will you provide references?
-What are the few things that separate you from the other agents?

A good agent will not hesitate to answer these questions.
-May I see copies of the forms that I will be asked to sign?
-How much do you charge?
-What kind of guarantee do you offer?

By Sarah Jose

Sarah Jose is a Copywriter of Wilden.She has written many articles in various topics related to Kelowna real estate. For more information on Okanagan real estate and any other queries visit real estate Kelowna.

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Real Estate Agents - Choosing a Broker That's Right For You!

In an industry like real estate, where being an agent is an unsalaried position and the business experiences so much turnover, which broker you choose to hang your license with becomes an important consideration for your career.

A vital part of your success will depend on your broker and your broker has a responsibility to support your growth and profitability, so that you will do well. Choosing the right broker involves more than supplying leads, or offering the best commission splits and lowest desk fees!

We encourage you to speak to our agents and see that our environment enables you to make real money! Realizing you made the best decision gives you peace of mind. It is important that a broker understands that it's comforting to know you'll have support when you need it, in addition to technology, and a market presence with a broker that the public wants to do business with!

For new agents, the industry poses many challenges. Almost 85 percent of new real estate agents "drop out" after less than one year in the business, and 15 percent of the remaining don't renew their licenses. We want to make sure you're not one of these statistics. Successful real estate agents are self-starters and go-getters. The beginning of a real estate career often involves lots of rejection. But it's only temporary. As a real estate agent, you are more than a person who shows properties, you become a trusted advisor and your clients look to you for your knowledge and expertise. Buying a home is the most expensive (for most people) transaction of their lives.

By Mitra Karimi-Paydar

Mitra Karimi, President
Crestico Realty
http://www.cresticorealty.com

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Price-To-Rent Ratios As a Measure of Residential Real Estate Value

Price-to-rent ratios represent the cost of a dwelling unit relative to the cost of a comparable dwelling unit. This ratio is also subject to the same variability exhibited by the price-to-income ratio. This is not surprising considering rent is generally paid out of current income, so incomes and rents tend to track one another fairly closely.

The ratio of rent to income has stayed within a range from 13.6% to 16.5% from 1988 to 2006. This demonstrates renters have been putting roughly the same percentage of their incomes toward housing for the 18 years period of data examined. The evidence from the sudden and dramatic changes in the price-to-income ratio and the price-to-rent ratio points to a housing bubble. If these two measures of value had been supported by a rise in the rent-to-income ratio, the increase in prices might have been explainable by a shortage in dwelling units causing all consumers of housing to see an increase in the percentage of their income going toward housing. Evidence from the rent-to-income ratio is to the contrary.

Buyers were never forced to buy; it was always a choice. During the market rally, greedy buyers motivated by rising prices and fueled by loose lending standards were able to bid prices up to ridiculous levels. The exotic financing was not a result of high prices; it was the cause of high prices. Lenders were keen to offer these products because they were not taking the risk, and it allowed them to keep transaction volumes high which is how they were making money.

By late 2007, the market balance had shifted from favoring sellers to favoring buyers. The once greedy buyers were becoming desperate sellers: their dreams of riches from perpetual appreciation were in tatters. Many were forced to sell due to their inability to make their mortgage payments. Those that hung on were homeowners with 50% or more of their income going toward paying off an asset which was declining in value. It was not a set of circumstances to be envied. The crushing debt service burdens when combined with falling prices prompted many of these borrowers to voluntarily default. This predatory borrowing exacerbated lender losses as the bubble deflated.

The Great Housing Bubble saw an unprecedented rise in the price-to-rent ratio. This was strong evidence of the housing bubble. When the bubble began to deflate this ratio dropped down to near its historic norm.

By Lawrence D Roberts

Lawrence Roberts is the author of The Great Housing Bubble: Why Did House Prices Fall?

Learn more and get FREE eBooks at: http://www.thegreathousingbubble.com/

Read the author's daily dispatches at The Irvine Housing Blog: http://www.irvinehousingblog.com/

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