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INSPECTING PROPERTY
When it comes to buying distressed properties, inspections take center stage.
It's absolutely critical that you take the time to conduct a thorough inspection before you buy any property. You don't want to be caught off guard by problems that turn a home from a cash cow to a money pit.
Distressed properties present a particular challenge because you often can't go the traditional inspection route.
The most savvy distressed property investors rely on a sharp eye and insider expertise to find out which properties are worth their time and money.
This month's newsletter is all about giving you, whether you're an investor or buyer, that insider expertise so you can make smart purchase decisions that lead to sound, money-making property investments.
You'll get home inspection tips that gurus like Foreclosure.com CEO Brad Geisen has taken to the bank time and again.
Read on for time-tested inspection advice and, as always, helpful tips and tricks to make your distressed property purchase a resounding success.
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'IN THE FIELD' WITH BRAD GEISEN
If you didn't realize the value of home inspections before, you do now.
Brad Geisen, CEO of Foreclosure.com and self-made real estate business leader, knows the value of home inspections, too.
Brad has built his empire on knowing how to tell the good deals from the bad. And in his DVD, "In the Field: One-on-One with Brad Geisen," he shares his secrets with you.
Throughout the DVD, Brad walks you through several different foreclosure properties and highlights the potential and concerns in each one. This process is invaluable for any real estate investor because a trained eye can tell you right away whether a property is a deal or a dud.
Here is a sneak-peek and what Brad reveals on his DVD:
- The very first thing to do when inspecting any foreclosure property
- The secret potential behind overgrown yards, piles of trash, graffiti and more
- The hidden equity in a foreclosure and how to spot it
- How to set rehab goals based on property values and target buyer price points
- Renovations that provide the most bang for your buck
- When to invest and when to walk away
You'll also get tons of insider tips that can save you mega cash, like:
- How to get your kitchen professionally designed for free
- How to get an electrician's advice at no charge
- Cheap and easy upgrades that add value without breaking the bank
"In the Field: One-on-One with Brad Geisen" shows you how to create serious equity in a foreclosure property so that you can make tens or even hundreds of thousands above and beyond your purchase cost and renovation budget.
The DVD is chock-full of advice for new investors and seasoned veterans alike. As you watch Brad conduct his home inspections, you'll learn dozens of tips and tricks that you can put into practice immediately.
"Anybody can be successful in real estate," Brad explains. "There's been more wealth created in real estate than any other industry."
It was that realization that kick-started his career and led to the creation of Foreclosure.com.
Says Brad: "[Foreclosure.com is] here to give you the tools so that you have the knowledge to go out and buy a property with little or no money down and profit from it."
His DVD is a great place to start and you can get it for free when you purchase "Get Rich Buying Real Estate Foreclosures," a breakthrough six-CD real estate course that will help get you off and running in distressed property investment.
It's really quite simple: Learn the ropes and commit to your own success. It's a strategy that worked for Brad Geisen and will work for you, too.
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Web site search tips
NEW! STREET-LEVEL FORECLOSURE ALERTS
Foreclosure alerts from Foreclosure.com have always been cutting edge because we get the listings first and fire them off to you as soon as possible.
Now you have an even greater edge on the competition because our alerts just got better.
Instead of specifying only zip code, now you can choose the actual streets you want to scour for foreclosures. It's the perfect tool for both buyers and investors intent on a particular location.
Foreclosure street alerts are free and easy to use. Simply type in your preferred zip codes and, if you wish, specific streets. Foreclosure.com does the rest.
To create a street alert right now click here.
The moment a new match pops up in our database, you receive an email. If the listing interests you, you can scope it out on Foreclosure.com and then do an in-person inspection.
It's that simple.
The tool is very useful, not just for scoping out your favorite neighborhoods, but also doing a little detective work in your own backyard. By searching your own street, you can analyze your neighbors' home values real time (not to mention how they're affecting your own).
And if you find a house in foreclosure, you might even end up making them a deal they can't refuse.
You can sign up for up to 10 street-level foreclosure alerts at a time, which gives you the flexibility to keep tabs on multiple areas automatically.
Start your search off right. Sign up for your free street-level foreclosure alerts. Click here.
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Hot off the press
HOME APPRAISAL LAWS GET TIGHTER
On Sept. 1, 2010, the way a home's value is appraised will change.
The change is a logical progression in the face of unprecedented mortgage defaults. Mortgage insurers want appraisals to be more thorough and balanced so they can accurately reflect a home's true market value.
Here are the major changes in a nutshell:
- Interior photographs of all major areas must be included in the appraiser's report.
- Appraisers must be experts in a given geographical market and have access to the necessary data sources.
- Selection of comparable properties must be more relevant.
The changes are in an effort to combat the often-reported problem of computer valuations using inappropriate data (like vacant lots or severely damaged foreclosures) as comparables for the home in question.
Previously, when the computer came up with a lower value than expected, lenders would simply modify their numbers accordingly without further investigation.
Vice Chairman of the National Association of Realtors' Appraisal Committee Frank K. Gregoire commented that many home sales have been "sabotaged by lenders and underwriters arbitrarily reducing the value estimate" provided by the appraiser.
In essence, a lower number was given, which reduced the amount the lender was willing to loan, which meant deals would fall through because buyers were no longer approved for the amount the seller was selling for &mdash and sellers and agents were understandably incensed at being asked to sell a property for less than it was really worth.
As soon as next month, these issues will hopefully no longer problems. Fairer guidelines require more open communication and more appropriate comparables so that home sales are no longer kyboshed by inaccurate valuations.
Get reliable advice from contractors and other experts. To view a Foreclosure.com-approved list of contractors click here.
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Our success stories
HOME INSPECTIONS FROM THE SPECIALIST'S MOUTH
In 2008, Linda Martignetti was ranked among the top 25 of all Century 21 Realtors in South Florida. She was also selected to receive the Realtor.com "Online Marketing Award of Excellence."
In April and May 2010, she held the number two spot for gross closed commissions in her office of 100-plus Realtors. And in June she moved up to number one.
Today, Linda calls Ocean Trust Realty in Deerfield Beach, Fla., home and has built her business on customer service and a strong ethical code.
That includes surrounding herself with a team that shares her standards. One invaluable team member is David Manley, owner of Gold Coast Inspections.
"David is my preferred inspector because he does a thorough inspection and tells it like it is," Linda explained to us. "I can't tell you how grateful I am that he has integrity and is not just about the 'deal.'"
It's a commitment to quality that Linda's clients appreciate.
David Manley agrees that inspections are important; in fact, he says, they are more critical than ever before.
"'Offer based on appraisal and inspection' is a term that is commonly used within the transaction process," said David. "As a home inspector performing more than 4,000 inspections within the South Florida market, I have never seen a more true definition of 'distressed property' than I see at the moment [and] no better time for a buyer to exercise this contractual language."
David and Linda agree that, while many are thinking of sellers as vulnerable in today's textbook buyers' market, it's buyers who actually need to watch their backs.
"If there is any advice to be given to today's buyer," David cautioned, "[it's] to be observant, diligent and cautious. Align yourself with a real estate agent who is dedicated to the client and hire a home inspector who prioritizes the inspection and not the transaction."
In other words, don't be blindsided by a tiny price tag because it may be concealing expensive repairs your budget simply won't tolerate.
Foreclosure.com offers a number of webinars, many of which are free, that teach you how to make smart investment decisions and sidestep the pitfalls. To check out our complete library click here.
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Real estate tips
THE ART OF FORECLOSURE INSPECTION
Distressed properties can be tough to inspect because often you're dealing with a stressed out homeowner who isn't interested in cooperating with the process of losing their home.
You can hardly blame them.
That's the reason why, when you are shopping for a preforeclosure, you need to conduct a little inspection of your own.
The most obvious place to start is the exterior.
Here's what to look for in preforeclosure properties:
- Debris. Not only does it signify a poorly maintained home, it also could be hiding more significant problems.
- Slope. Ensure the slope of the land is away from the home for proper water drainage.
- Driveway and walks. Look for potholes and cracks in the driveway, the path up to the house, and the sidewalks.
- Decks. Is the porch/deck in good condition? Also check the siding and garage.
- Attic vents. A poorly ventilated attic can cause moisture and mold problems inside the home. Attic vents should be open.
Even if the house is in foreclosure already and you can use a traditional appraiser, he or she may miss some things if they are less experienced with the unique issues surrounding distressed houses.
Here's what to look for in preforeclosure properties:
- Chimney. Check to make sure it is functional and in good condition.
- Attic. Inspect insulation and wiring and check for soft spots in the attic floor.
- Electrical system. Check for damage to the electrical meter and look for nearby rust or moisture.
- Windows. Make sure windows are functional and secure. Beware of boarded up windows, which can prevent proper air circulation and cause moisture problems.
- Mold and water damage. Mold can hide just about anywhere, so check carefully to minimize the risk of dealing with these potentially costly repairs.
- Unwanted guests. These include termites, rats and other vermin, but also include vandals. Look for signs of vandalism or squatters.
As with all investments, there is a degree of risk involved. That's why it makes sense for you to inspect a distressed property from top to bottom before you make a purchase decision.
Use these tips before you commit to any distressed property and remember: A home inspection is what differentiates the diamonds from the duds.
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Deals of the Month
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Linda's Learning Lane
DIG FOR GOLD
As a freshman in college, I studied Fashion Merchandising.
Some of the coursework I took focused on fabric and how to inspect the fabric. I learned how important it is to check the seams, buttons and other accoutrements to make sure they are solid.
Similar to buying clothing, inspecting a potential property inside-out is a must.
On certain distressed investments you may not have the opportunity to do so. For instance, when buying at a Sheriff Sale it is common that you will be unable to inspect the property before the auction because of the current owner or tenant occupying the property.
When purchasing an auction property, thorough inspection is probably the biggest risk involved.
However, when purchasing any other deal be sure to not skip the step of inspection. Professional inspectors evaluate typically five main items, including:
- Roof, siding, exterior of home
- Plumbing systems
- Electrical systems
- Walls, floors, ceilings
- Structure
It's important to know what you are stepping into if you decide after the inspection to move forward.
Even when purchasing "as is" you need to be able to make an informed decision and enhance your negotiating ability. Home Inspectors can also provide tips on maintenance and other information to help you protect your investment.
Remember: What you don't know can and will hurt you. So get smart and dig for those answers!
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