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NAR Calls for More Affordable, Accessible Disaster Insurance

by Mark Rieger, Duke Warner Realty

The National Association of Realtors® (NAR®) wants the federal government to be proactive in disaster relief instead of reactive. The association's immediate past president, Charles McMillan, spoke before two house panels recently to plea his case for more affordable disaster insurance.

McMillan's reasoning, according to an NAR® press release is that tax payers are ending up footing the bill when natural disasters occur because many home owners simply can't afford catastrophic event insurance.

Following is a list of criteria outlined by McMillan and recently published by the NAR®:

  • Ensure transparent and comprehensive insurance is available and affordable at premiums reflecting risk.
  • Acknowledge personal responsibility of those living in high-risk areas to purchase adequate insurance;
  • Provide owners incentives to undertake mitigation measures when appropriate;
  • Acknowledge the importance of building codes and smart land-use decisions, stressing the importance of enforcement at the state and local levels;
  • Recognize the role of states as appropriate regulators of property insurance and the role of the federal government cases of mega-catastrophes; and
  • Reinforce the proper roles of all government levels for investing and maintaining critical infrastructure, like levees, dams and bridges.

McMillan cited House bill, H.R. 2555, the Homeowners' Defense Act, authored by Rep. Ron Klein, D-Fla., as a "good start."

"All reasonable proposals should be considered in creating a national policy to proactively address the inevitable, rather than waiting for the next crisis to occur and rely upon taxpayer-funded bailouts," McMillan told the Congressional panel.

Read the entire press release from NAR® at http://www.realtor.org/press_room/news_releases/2010/03/property_insurance.

We'd like to know what you think about the need for government to help make disaster insurance more affordable and more accessible. Leave us a comment!

Considering a Short Sale?

by Mark Rieger, Duke Warner Realty
 
 

A short sale is when a Lender agrees to accept a mortgage payoff amount for less than what is owed. In a short sale, the homeowner generally cannot continue to make their mortgage payment.

Although short sales can be appealing because they are usually priced below market value, there could be some drawbacks. Consider the following when deciding whether or not to put an offer on a short sale.

Does Your Agent Have Short Sale Experience?

If your agent has no experience with short sales, hire a new agent that does. Agents with short sale experience know how to expedite the transaction while protecting your interests. Agents with short sale experience also know how to deal with the Lender once an offer has been made. The Agent should send your loan pre-approval letter, a copy of your earnest money deposit, and a list of comparable sales that support your offer on the home to the Lender.

Do You Have Time?

Short sale transactions aren't speedy and require time for the Lender's approval. Some short sales can take a year or longer to close. Some Lenders submit short sales to a committee, but most can make a decision within two to three months. Get a name and phone number for the appropriate contact at the Lender. Don't send an offer blindly to a department. Consider giving the Lender a timeline to respond.Even once an agreement is struck, there is still no guarantee the short sale will go through.

Are You Willing to Negotiate?

In many cases, the Lender will reject your initial offer and come back with a counteroffer. Determine beforehand what your absolute highest limit is, and don't be afraid to walk away if the Lender won't meet your figure. Homes that are priced below market value will receive multiple offers. You want to make an offer that will beat the competition yet still be below market.

Did You Check the Public Records?

Make sure the Lender has already approved the short sale. If the seller has not actually gone into default yet, the bank may not be interested in a short sale. The bank may also not be interested in a short sale if it can get more money by foreclosing. Also, ask the seller or his agent what liens are on the property and which Lender is the primary lien holder. Your agent can also find out who is on title, whether a foreclosure notice has been filed, and how much the Lender is owed. This is important because it will help you to determine how much to offer. If there is more than one mortgage loan on the property, it could be problematic, and at the least, much more time consuming.

Have you Weighed the Pros and Cons?

If you are considering putting an offer on a short-sale, proceed with both caution and patience. Some short sales are priced below market value, creating a great opportunity for buyers to purchase a home when they otherwise might not be able to afford one. On the other hand, many banks have little interest in selling homes below market value. The listing price could merely be the amount the listing agent thinks the bank might accept, rather than what the bank has agreed to. If the home is priced far below market value, the seller may be trying to generate a bidding war, which could just be a waste of time.

Because it can take the Lender so long to reply to your offer, it's in your best interest to keep looking at other houses while you wait. Don't be afraid to proceed with purchasing another home if it's in your price range and is a simpler purchase. Make sure your agent writes a short sale purchase agreement to allow you to retain flexibility. However, short sales can be a great deal for some buyers and do occasionally close successfully.

If you are looking to either Buy or to Sell a home that is currently facing, or is already in a short sale status, please give me a call. I'll be happy to discuss this option with you in detail.

Managing Your Investment Property

by Mark Rieger, Duke Warner Realty

Real estate can be one of the best investments you can make. If you plan on investing in and managing rental property, organizational and management skills are a necessity, along with a working knowledge about real estate matters. Here are 5 tips for managing investment property.

Screen Tenants Well

Evaluate prospective tenants by utilizing background checks, credit histories, personal references and employment histories. Require every applicant to provide credit and employment references. Don't be influenced by personal references. Contact previous real estate agents, landlords, employers, accountants, and/or bankers. Ask the question:

Do you believe the applicant(s) would be able to pay $x per month for y months and keep the property clean and in good condition?

Set Expectations for Tenants

Talk with your tenants and set expectations. Ensure that payment arrangements are clear verbally and in the lease. Be consistent. Make late fee assessments clear in the lease agreement and collect late fees when necessary.

Let all tenants know upfront they need to get any changes to the property approved by you. Let them know that any unauthorized changes can result in a loss of the security deposit. When managing investment properties, you want them to appeal to a broad population. Keep carpets and walls relatively neutral and avoid any exotic colors. Ensure that your tenants know they are free to make cosmetic upgrades as long as they are approved by you first.

Take pictures of the inside and outside of the house before a tenant moves in and/or out. Be sure the pictures are dated.

Consider Using a Professional Managing Agent

Utilizing the services of an experienced, professional managing agent can save you time and hassle. Professional Managing Agents have detailed up-to-date knowledge of the residential tenancy legislation, an understanding of local vacancy and rental movements, a background in repairs and maintenance, a reliable network, an awareness of housing price movements, and knowledge of insurance and property taxation.

A Professional Managing Agent can help you manage inspections, property showings, tenant issues, and hiring an agent allows you to remain somewhat anonymous acting as the buffer between you and the tenant.

Consider the cost carefully as hiring a Professional Managing Agent will reduce your income. Across the country, property management fees normally run from 7% to 10% of income on average.

Cover Your Assets

Obtain liability, fire, theft, and other insurance on rental property. As a landlord, you should have commercial insurance, not a typical homeowner's policy. In addition to insurance, you need to have at least one Limited Liability Company (LLC) to protect your assets rather than owning the property personally.

Be Realistic

Have reasonable expectations as an investor. Don't expect to Buy an investment property and immediately enjoy a positive cash flow, meaning the rent you collect exceeds all of your out-of-pocket expenses. Many investment property owners go 3 to 5 years before cash flow turns positive. Immediate positive cash flow usually happens when the investor makes a large down payment and has relatively low mortgage costs.

Have an idea of how much rent you can charge. Research how much comparable properties rent for. A good rule of thumb is to set the rent at 95% of the current market value. Rental properties which are listed just below market value attract the best referenced tenants and maintain minimum levels of vacancy and repair/maintenance.

Owning investment property can be very rewarding, but you can't expect to sit back and collect income year after year without doing any work on your property. Investment real estate can be a worthwhile investment if you are well prepared to face any challenges that may come along.

If you are looking to Buy or Sell an investment property somewhere in Central Oregon, give me a call. I can help.

Buying a Foreclosed Home

by Mark Rieger, Duke Warner Realty

 


The current state of the economy has caused a flood of foreclosed properties on the market. Many home buyers are taking advantage of the extremely low cost of a foreclosed home. A foreclosure occurs when a property owner fails to make the payments on his or her loan which leads to the property being seized and sold.

There are generally two options when buying a foreclosed home. You can either purchase the home from the lender/bank, or you can purchase the home from a foreclosure auction or sale. Because the process is very different for each, this article will specifically focus on bank foreclosures.

Listings of foreclosures can be obtained from most banks. Some agents and brokers who specialize in foreclosures may also assist you in finding foreclosed property for sale. Consider the following tips when looking at a foreclosed home:

  • Inspect the house very carefully. Many foreclosed homes have previous homeowners who did not maintain upkeep on the home or the landscape. Sometimes the repairs are minor, but take into account any unexpected repairs when budgeting. You may want to contract a private inspection to give you a better indication of the cost of repairs.
  • Evaluate the neighborhood. Knock on your potential neighbors' doors to ask them how they like the neighborhood. Research the crime rate in the area as well.
  • Have an agent find the prices of comparable homes in the area to ensure you are actually getting a good deal.

Once you have found a foreclosed property you are considering buying, go to the County Recorder's Office. The County Recorder's Office can provide you with the Trust Deed, the Notice of Foreclosure Sale, and the Notice of Default on the property. These documents are public record and reflect how much was originally loaned to the homeowner, when the loan was issued, how much was owed at the time the Notice of Default was filed, and how much the bank paid for the property. Since there are usually no concrete rules banks follow that determine their bottom-line price, these documents will help you explore the lowest possible price the bank is willing to Sell the home for.

Foreclosed homes are often offered at a significant discount at upwards of 30% or more, so if you are in the market for a bargain and looking to Buy, then a bank foreclosure may be a great option for you. Give me a call and I'll be happy to help.

Water Conservation

by Mark Rieger, Duke Warner Realty
 

20 Water Conservation Tips that Won't Cost You a Penny

According to the Division of Water Resources, the United States consumes approximately 293 gallons per person per day. Water conservation not only saves money on utility bills, it helps preserve our environment.

Here are 20 Tips to help you conserve water that do not cost you anything and will eventually save you money:

  1. Don't use the toilet as a garbage can. Each time you flush, you use 3-6 gallons of water. Throw used tissue paper and cotton pads in the trash.
  2. Check faucets and pipes for leaks.
  3. Use your dishwasher only when it is full. If you have a newer model, pre-rinsing is usually not necessary. Use the appropriate setting when washing dishes, and do not run the "Pots and Pans" option unless absolutely necessary.
  4. Match your clothes washer setting to fit the size of the laundry load. Avoid the permanent press cycle, which uses an additional 5 gallons of water for the extra rinse. If you are in the market for a new washer, consider purchasing a water-saving frontload washer.
  5. Don't let the faucet run when you rinse off vegetables and fruit. Wash them in a bowl instead.
  6. Keep a bottle of drinking water in the fridge. Waiting for the tap water to cool wastes water and time.
  7. Take shorter showers. Use a timer or an alarm clock if necessary. Reducing your shower time by 1-2 minutes can save up to 150 gallons per month.
  8. Turn off the tap when brushing your teeth.
  9. Use the garbage disposal sparingly. Use the garbage can instead.
  10. Monitor your water bill. Your bill and water meter are tools that can help you discover leaks. If your bill reflects unusually high water usage, you may have a leak.
  11. If the toilet flapper in the tank doesn't close after flushing, replace it.
  12. Washing dark clothes in cold water saves both water and energy while helping your clothes maintain their colors.
  13. Reuse your towels.
  14. When washing your hands, don't let the water run while you lather the soap.
  15. If you drop ice cubes on the floor when filling your glass from the freezer, don't throw them in the sink. Drop them in a house plant instead.
  16. Teach your children to turn off faucets tightly after each use.
  17. When washing dishes by hand, fill the sink or a large container with clean water. Rinse when all the dishes have been scrubbed with soap.
  18. When you give your pet fresh water, don't throw the old water down the drain. Use it to water plants, trees, or shrubs.
  19. Use a broom, not a hose, to clean driveways, garages, and sidewalks.
  20. Don't water the sidewalk, gutter, or the road. Position your sprinklers accordingly, and avoid watering your lawn on windy days. Ensuring that your sprinklers water only your lawn will avoid wasting water. Also, your neighbor who recently washed his car will appreciate not getting sprayed as he drives past your house.

I hope you found this information useful. If you are in the market to either Buy or Sell Real Estate in Central Oregon, please let me know. I have been a licensed Real Estate professional since 1985.

About Appraisals

by Mark Rieger, Duke Warner Realty
 

A home appraisal is an important part of every real estate transaction. An appraisal is an independent, detailed report that helps establish a property's market value. The buyer's lender usually determines whether the buyer will pay for the appraisal upfront or if the appraisal will be included in the closing costs, which are sometimes covered by the seller.

The Lender generally orders the appraisal through an Appraisal Management Company (AMC). In the past, Lenders ordered appraisals directly from appraisers; however, all Lenders must now order the appraisal through an AMC. This process ensures that the appraisal is unbiased and is in no way influenced by the Lender. Lenders use the appraisal to determine the mortgage loan amount.

All appraisals are performed by a licensed appraiser who should be an objective third party with no financial connection or other connection to any person involved in the transaction. The appraiser will usually inspect the property - inside and out - and take interior photos including all bathrooms, kitchen(s), and living areas. Appraisers will also measure the house to obtain an independent opinion on square footage. By obtaining this detailed data, appraisers can conclude the current market value of the property.

Appraisals are very detailed reports, but here are some things they include:

  • Details about the subject property, along with side-by-side comparisons of three similar properties.
  • An evaluation of the overall real estate market in the area.
  • Issues the appraiser feels are detrimental to the property's value.
  • An estimate of the average sales time for the property.
  • What type of area the home is in.

The appraiser can determine a property's market value using the following 3 methods:

Sales Comparison Approach

The Comparison Approach is the most widely-used approach and the most accurate because of the fluctuation of the market. Appraisers identify homes in the area that have recently sold and compare them to the subject property. Lenders generally expect appraisals that analyze three comparable properties. Proximity in both timing and location are important in a sales comparison analysis. Ideally, the appraiser uses sales that have concluded within six months of the appraisal and within one mile of the subject property. Price adjustments are made for differences in the comparables and the subject property.

Cost Approach

The Cost Approach combines an estimate of land value with an estimate of depreciated reproduction or replacement cost of the improvements. This approach is a best estimate of what it would take to replace the existing structure at current market rates. The Cost approach is commonly included in every appraisal.

Income Approach

The Income Approach is usually used for investment properties or typically used only if the home is in an area with a lot of rental properties.

There are a number of reasons why an appraisal may come in low. Here are a few:

  • Declining market values due to fewer buyers shopping among a larger inventory of homes.
  • An abundance of foreclosures or short sales in the neighborhood.
  • Overpricing by the seller.

Displaying blog entries 1-6 of 6

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