Watch out for these Real Estate Scams!

Buyers, renters and potential investors beware! You can fall prey to some of these fake programs and housing frauds. Forbes recently highlighted three of the most common real estate scams today:

1. Rental scams: Listing information of homes for sale are taken from websites and re-posted as homes for rent on other sites. The modus operandi of these scammers is to collect upfront fees as non-refundable application fees, or security deposits to ‘hold’ the property. Ask to view the property at least twice, and check out the property management company online or through the Better Business Bureau. 

2. Foreclosure counseling scams: These scammers offer fake foreclosure or bankruptcy counseling and fraudulent government loan modification programs for a fee. Foreclosure counseling is free from agencies like the U.S. Department of Housing and Urban Development. Make sure you contact your lender directly to work through a modification process. You don’t need anyone to intervene for you.

3. Flipping Homes Workshop scams: Forbes reports: ‘An investment guru will host a get-rich-quick real estate investing seminar and have you sign up for a course that is free or low-cost. The investor may then give you actual properties to invest in if you offer up thousands of dollars in advance. They make bold promises that you’ll become a millionaire, but then nothing ever happens. Also, a form you may have signed initially to take the class may prevent you from taking legal action against the instructor to recoup your money.’ Once again, check out the program before signing up and check the company’s rating with the Better Business Bureau.

Source: Realtor Magazine | July 2013

Boomerang Buyers: The Newest Group of Home Buyers to Hit the Market

According to reports, “boomerang buyers” are the latest new buyer group to emerge. These are former homeowners who had gone through a short sale, foreclosure or bankruptcy in the past few years and are now ready to buy a home.

So, how soon can they buy a home?

Past homeowners who had FHA loans may need to wait only three years provided they can prove that a hardship, such as job loss or death of a wage earner, led to their foreclosure or short sale.

Freddie Mac’s wait time is usually four years following a short sale or deed-in-lieu, and seven years after a foreclosure. Fannie Mae may require a seven-year wait for a foreclosure, but only a two-year wait following a short sale as long as the borrower can provide a 20 percent down payment.

Most lenders required buyers to wait 5 – 7 years to qualify for another loan, but mortgage giants have begun to change their rules to allow homeowners who underwent a foreclosure or short sale to qualify sooner. For those who underwent a short sale, it may be sooner.

Question is why would homeowners with such past histories want to buy again?

General conception is that renting a home is akin to throwing money away, and with a more stable economy, pride of homeownership has raised its head again.

But the 3 most important reasons cited are:

• Rents are on the rise
• Interest rates are on the rise
• Home prices are on the rise

Boomerang buyers are coming. Most have saved up for a down payment and qualified to purchase a home again. The hardest hit areas of 2008 – 2010 will see the most. That includes South Carolina.

Which is good news indeed!

Source: Realtor Magazine, July 2013

The 10 Most Secure US Metros to live in

The “Most Secure Places to Live in the US”? Sperling’s BestPlaces’ survey for Farmer’s Insurance was based on the cities’ economic stability, crime statistics, extreme weather, risk of natural disasters, housing depreciation, foreclosures, air quality, environmental hazards, life expectancy, motor vehicle fatalities and employment numbers.

Here is the ranking for large metropolitan areas (population of 500,000 or greater):

1.      Bethesda–Gaithersburg–Frederick, MD
2.      Grand Rapids–Wyoming, MI
3.      Pittsburgh, PA
4.      Austin–Round Rock, TX
5.      Cambridge–Newton–Framingham, MA
6.      Omaha, NE/Council Bluffs, IA
7.      San Jose–Sunnyvale–Santa Clara, CA
8.      San Francisco–San Mateo–Redwood City, CA
9.      Portland–Beaverton, OR/Vancouver, WA
10.   Dallas–Plano–Irving, TX

The most secure places to live among mid-size cities (population between 150,000 and 500,000): 

1.      Kennewick–Richland–Pasco, WA
2.      Boulder, CO
3.      Fargo, ND/Moorhead, MN
4.      Olympia, WA
5.      Binghamton, NY
6.      Sioux Falls, SD
7.      Bellingham, WA
8.      Lincoln, NE
9.      Fort Collins–Loveland, CO
10.   Rochester, MN

Sadly, no city in SC figures in these rankings!

Source: Realtor Magazine

A Home Buyer’s Sad Story

We put in an offer on a home for a buyer. Let’s call her Ms Bea.

A little background. Ms Bea is a single mom, has a good job and has worked hard for the last 2 years to get her credit in order. She had to attend classes and take tests, but at the end of it, she was ready to buy a home and also qualified to get a down payment assistance grant from the county.

So… we looked at several houses before settling on this home at 123 Homeseller St. It was perfect for her – 4 bedrooms, 2.5 bathrooms and a fenced backyard where the kids would be safe. There were hardwoods on the main level and apart from the formal living and dining rooms, it had a large family room.

Bea was excited, as was I.

This was a short sale i.e. the homeowners were heading towards foreclosure, so though the offer was accepted by the seller, it still had to get approved by the seller’s bank that was his mortgagor.

Days went by. Nothing from the seller’s bank.

Then we were told that it would be advisable for the Bea to get a home inspection. This way, if anything showed up as not working, the seller’s bank could be informed.

I was completely against it, but when I put it to Bea, she agreed to have the home inspection. She spent $280 – there was nothing majorly wrong with the house.

And so we waited. Another month went by. The seller’s bank ordered a second appraisal.

And here’s the funny thing. Not ha-ha funny, but weird funny. The appraisal came out much higher than the previous one. And the bank decided to increase the sale price of the house by 30%!

Sadly, Bea could not qualify for the bumped-up price. So, after 4 months of waiting and spending $280 on a home inspection, she is back to square one.

So… buyers beware! Appraisals are coming in higher and banks have no compunctions about increasing the asking price.