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Seven Mistakes to Avoid As a Buyer When Buying Short Sales




Short sales have become an everyday term of our lives in the last two years. I bet many of us haven’t even heard this term 7-10 years ago, but now it’s as common as a burger or plasma TV. A “short sale” means in simple terms that the bank is willing to take less than what the bank is owed by the homeowner and allows to sell the property in order for the homeowner to avoid a foreclosure and a trustee sale. The banks are doing it not because they all became so grateful to the tax payers for bailing them out in the course of this financial crisis, but because of a pragmatic “lesser of two evils” calculation that figures that it will cost the bank less to write off a portion of the loan as a result of the short sale than the cost of a foreclosing, holding the asset and then eventual disposing of the asset (i.e. property) at a later date. Plus, in today’s market, especially after the infamous stress tests that the Feds put many banks through, they really need to show liquidity, i.e. as much liquid cash in the bank as possible, because if they don’t, the Feds may require them to take more TARP money, which comes with a magnifying glass over the bank’s payroll, or might end up on FDIC “near-dead” list?.

Many buyers shun away from short sales though. They got so much bad publicity that many buyers and many real estate agents don’t even want to put an offer on a property offered as a short sale. Most people think that short sales are endless mazes that will lock the buyers into contracts and after hanging in there for the next eight months, the buyer will not get the property at the original price anyway. Some of these fears are true. Many are true because of the ways banks handle the process, though some are true because of the incompetence of the agents handling short sales. But we are not here to blame anybody, we are here only to explore what you as the buyer should and shouldn’t do in order to stay sane and eventually achieve your Goal: buy your dream home at the price you can afford. So here we go, our seven lessons of short sales:

1. Don’t expect the banks to give the houses away.

Yes, the banks don’t want to take this inventory on their books, but they also don’t want to lose their shirt completely and they have to work within their internal guidelines. Making super aggressive lowball offers on short sales doesn’t always get you even a serious look from the lender. You can expect a discount of 5-10% off the market value of the property depending on the status of the foreclosure process and the condition of the property, but anything beyond that number will make the bank indifferent to your offer and will make them think that they can get more money by finishing the foreclosure process and then reselling the house as an REO. You can start with a lowball offer, but then be prepared to up your offer if the bank says no.

When the bank starts a short sale process approval, the bank will order a so-called BPO – Broker Price Opinion from a local realtor. It’s a mini-appraisal that states the opinion of that realtor of the condition of the property, comps in the area and fair market value of the property as is and as a 30 day “fire sale” value. Most agents today shun away from doing BPO’s, because it’s a lot of work for a meager $40 that the banks pay for BPO’s on average. (Side note: I don’t believe the banks are really serious about this whole foreclosure crisis because if they were, they would be investing more serious money into the process. For example, they would probably pay more for better qualify more accurate BPO’s, even if they had to recoup this higher fee through escrow. They would also hire and train much better negotiators comparing to people they have working at short sales departments, most of whom have no background in real estate valuations, negotiations, asset management or any other relevant field; are overworked, underpaid, indifferent, unresponsive, rude, and overall incompetent to handle the process).

Once the BPO comes back, the bank’s negotiator will respond to the offer. If the offer is over 10% below the BPO value, expect a counteroffer or an outright denial from the bank. The fun part is that you’ll never get to see the BPO, no matter how insane it is. We had once a house with a cracked foundation and a fair market cash offer based on the fair market value of the house minus the cost of repairing the foundation (which is about $35,000). The bank refused to take our offer because of the BPO value, which was done only from the outside and didn’t even mention the cracked foundation. We even did a full appraisal by an outside appraiser and send it to the bank to show that this is a fair value, no luck. It took us four months to convince the bank to have another BPO done and actually go inside to look at the foundation cracks before we finally got the sale approved.

2. Don’t expect to close in 30 days, even if the listing says so

Short sale approval is a long process. If the listing broker or the seller’s negotiator already submitted the package to the lender(s), it still takes time to get everybody on the same board. Very often by the time the 2nd lender issues an approval, the 1st lender’s approval expires and the seller’s negotiator has to start the process all over again. Short sale process is long and complicated. It takes at least 30 days for the file to find a desk to throw an anchor, and then another 20 days for the negotiator to uncover the file from accumulated dust and boxes of donuts, then another 10-20 days to order a BPO (Broker Price Opinion). In the meantime, the negotiator might also find out that some seller documents are missing and now the file has to go back to the back of the line waiting for all documents to come in, which it seems they don’t read any way, they just need to put a check mark that they have something in the file: “Last year Tax return showing Zero income, Check. Last month’s bank statement showing negative balance, Check. Picture of the neighbor’s dog, Check…”

3. Not all banks are equal

Some banks are more negotiable, some are less. So, before you make an offer on the house, find out who the lenders or servicers are (Servicers are companies that process payments on behalf of the bank or note holder, they don’t necessarily own the mortgage, they just process payments, such as EMC Mortgage as one of the largest ones out there). Some banks like Wachovia, Bank of America, Wells, and some smaller banks are relatively easy and straightforward to deal with. If you see US Bank, Chase or CitiMortgage as one of the lenders involved, expect a long drawn out process that may never close at all, based on our experience.

4. Don’t lock your deposit in a short sale escrow

It’s a normal process to send your deposit to the escrow company once your offer is accepted by the seller, which may amount to 1-3% of the agreed upon sales price of the property. If for some reason your escrow doesn’t close without buyer’s fault or liability, you can always demand your escrow deposit back, and there are very few instances when you can actually lose your deposit. But there is nothing “normal” with short sales. Make sure your agent writes in the purchase contract that the deposit will be forwarded to the escrow company ONLY upon receiving a written approval of the short sale at the agreed upon terms from ALL lenders. This way your hands are free, and if you want to continue shopping for a house while the lenders are getting their act together, you are free to do what you need without jeopardizing your deposit money

5. Don’t play a silent auction

Some listing agents refuse to accept your offer until the lender accepts it, which means that they will send your offer together with any other offer that comes in during the approval process to the lender, and let the lender decide which offer to take. As a result, you are waiting in complete darkness for months and months thinking that you may have a chance to buy the property that you like and not even knowing that every week the listing broker keeps sending new offers to the lenders who are taking their sweet time making a decision. I believe it’s completely wrong, and it puts early buyers who had the sense of urgency into a disadvantage. In my opinion the only reason for such situation is to allow the listing broker to use the early offers like this to gain an approval from the lender without committing to the buyers while waiting for a buyer who will use the listing broker as a buyer’s broker as well. Knowing what the banks will take, the listing broker grabs the buyer as well, and pockets both sides of the commission. Believe me when I tell you that this unethical behavior happens among real estate “professionals” more often that you may think. Besides, I doubt that this practice is lawful: the seller, not the lender, is still the title holder of the property and as such should be the person accepting or not accepting offers, and then sending them for “short pay off approval” to the lenders. The lenders cannot accept offers as they are not title holders with short sales.

Put in your offer specific language demanding that the seller accepts only one offer (yours) and no other offers to be accepted by the seller until and unless you cancel this offer or fail to perform. Sure, the listing broker will try to tell you that this is how they handle their listings, then make sure that your brokers tells them that this is how their brokerage handles purchase offers, and no other way will be acceptable, otherwise you are wasting your time.

6. Don’t even go out of your house without a pre-approval letter

Getting financing is the biggest hurdle in today’s market. This is the number One reason deals don’t close, so it’s only logical that you get this uncertainty out of the way as early in the process as possible. There are plenty of sources of mortgage financing today regardless of what media tells you, especially if you are a looking for a sub-$400,000 house and you have good credit and can prove your income. There are excellent sources of remodeling projects, there are sources for jumbo and super-jumbo loans, even stated income loans are showing up here and there. Collect all you documentation, meet with a lender and get a pre-approval letter based on the highest amount you can afford. It doesn’t mean that you are going to offer that amount, it just shows you the upper limit of your search. After you get your approval and until you close on the purchase, do NOT buy any new toys, do NOT open new credit cards, do NOT co-sign for your brother-in-law’s new fishing boat. As soon as you sign up for new debt, your debt-to-income ratios go out of whack, your scores drop and your pre-approval letter becomes just as valuable as “McCain-Palin” bumper sticker in 2009.

7. You can’t always get what you want…

Can’t get what you are looking for exactly? Is it hard to find a 3,000 sq.ft home on a half acre lot, swimming pool, six bedrooms and a wet bar, all at the price of $400,000 or less? Compromise! Find an alternative way of getting what you want. For example, I have a couple who is looking for a 2,000 sq.ft. home for less than $500,000, and they can’t find anything decent. So, instead we found a property that was a fixer with only 1,100 sq.ft. for $300,000. They financed the property acquisition, the cost of remodel and 1,000 sq.ft. room addition with an FHA 203(K) loan, as a result, they ended up with a $450,000 loan and a 2,100 sq.ft. almost brand new property.

I had another client who couldn’t buy a property because he came into this country two years ago and only had 1 year tax return. Without two years of taxes and a strong pay check, he couldn’t get any financing, even though he had 20% down payment. So, instead we negotiated an All Inclusive Trust Deed, where the seller carried a combination of an existing mortgage and the seller’s private loan and were able to buy the house that the buyer liked. In a year or two, when the buyer has enough documentation to satisfy the lender, he will refinance the seller’s private loan into a regular bank loan in his own name. Be creative, think outside the box, you can make any deal happen if you are working with an educated sophisticated broker.

Buying real estate today is extremely challenging. The markets offer enough nuances as it is, and every week we face new laws and regulations from the state and federal regulators who offer nothing in terms of real estate market understanding but mostly try to score some populist points for the next elections. But despite all challenges, this is still the best time to buy the house of your dreams that you can enjoy for many years to come. Don’t miss this time, don’t read newspapers that spread doom and gloom, think of your needs and move forward. Good luck with your search!


Source by Alex Lisnevsky


Where to Find Those Efficient and Hardworking Affiliates?




Everyone wants a hardworking affiliate, employee, associate, partner, or even spouse, and why not? It’s the next best thing to doing the work yourself. However with the massive outbreak of work and income opportunities available online, how can you beat everyone else and find that one (or more) ideal person who will make your online business explode with success? Here are some of the most ingenious and uncommon ways to snag the idea affiliates for your affiliate program

Direct Sales Agents

Direct sales people are really one of the most enterprising, hard-working individuals in business. They mostly work on commissions or rebates and are willing to literally go door-to-door offering their products to anyone and everyone they bump into. Imagine how much easier their job would be if they could be an affiliate and simply work via the Internet and a mobile device or desktop.

Also, most direct sales people tend to carry more than one brand in their product arsenal so signing up as an affiliate would be almost the same type of work but using a different approach.

Colleges and Universities

Many college kids would be interested in a part-time income opportunity if it would mean funds to help pay for their education, loan, or partying. All you have to do is make sure to offer them products they can endorse as a student.


Did you know that the U.S. Census Bureau’s latest annual report show that 75% of U.S. businesses used freelancers in 2011? Freelancers earned a whopping US$990 billion in 2011 which is a 4.1% increase from the previous year. The only industries where the number of freelancers decreased were in insurance, finance, and construction. Most probably your affiliate program isn’t a part of these 3 industries.

Furthermore, online business and finance experts are predicting the growth to increase incrementally every year even with an economy that is improving. People just want income security and more control over their earnings. With the spate of lay-offs, it’s understandable why many would prefer to work as an affiliate than as an employee.

Scout For Them At Affiliate Conventions

There are annual affiliate conventions held in different cities around the country. You should try to catch one when it is held somewhere near your location. The average turn-out for these types of conventions has increased regularly over the years. Last year, many of them were sold out weeks before the event.


The US Census Bureau has said that as of 2012, 15% of Americans are poor, 43% of young adults depend on their parents to some extent for money. Even more surprising is that the median income of young adults in 1982 was $31,583 and last year it was $30,604 for the same age group! Income is dropping and people are looking for ways to earn additional income outside of their 9 to 5 jobs. That’s where you can come in playing the hero and helping others realize their dream income.

Finally, go online and talk about your product. Make the affiliate marketers come to you and have the luxury of picking the best candidates. You will need some help in marketing your affiliate program so target a marketer who’s experienced in affiliate program and SEO.


Source by Lina Stakauskaite

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Recession Is Here… Six Costly Mistakes Home Sellers Make During Recessions And How To Avoid Them




The U.S. is officially in a recession. What is a recession? A recession is a business cycle contraction or general economic decline due to significant drop in spending and other commercial activities. Most pundits and politicians will blame Covid-19 crisis for the recession, but even pre-Covid-19 the proverbial writing was on the wall.

The U.S. had over 120 months of economic growth, which was the longest expansion in the modern history. Other indicators, such as negative yield spread on treasuries (long term bonds having lower interest rates than short term T-notes), were pointing to an imminent change of the economic cycle and an impending recession. The only real question was: when and how bad?

Then Covid-19 came… If the cycle was going to change anyway, Covid-19 acted as a huge and unexpected accelerant to make the recession much more immediate and severe.

Inevitably during recessions all classes of real estate, including residential homes and condominiums, will be negatively impacted as lower consumer spending and higher unemployment rates affect real estate prices and marketing times.

Here are the six costly mistakes home and other real property sellers make during recessions and how to avoid them:

Mistake #1: This will pass and real estate market will be hot again soon

First thing to remember is that real estate cycles are much longer than general economic cycles. Even if the general economy recovers, which eventually it always does, a typical real estate cycle takes as long as 10 to 15 years. The cycle has four key stages: Top, Decline, Bottom and Rise.

Let us consider the last real estate cycle, which lasted approximately 14 years:

  • 2006 – Prices hit the Top
  • 2006 to 2012 – Prices Decline
  • 2012 – Prices hit the Bottom (Trough)
  • 2012 to 2019 – Prices Rise*
  • 2020 – Prices hit the Top
  • 2020 to? – Prices Decline

*NOTE: In 2016 the national residential real estate price index reached its pre-recession 2006 peak levels. It took 10 years for the real estate market to recover.

The way to avoid this mistake is to recognize that real estate cycles take years to run and plan accordingly. Additionally, nobody knows for sure when the prices will hit the top or bottom until after the fact.

Mistake #2: Low interest rates will make the economy and real estate market rebound

Between 2006 and 2011 the interest rates (Fed Funds) were continuously cut by the Federal Reserve Board and went from low 5% to almost 0%. However, that did not stop the real estate recession and depreciation of property values.

Undoubtedly, low interest rates made the economic decline and real estate recession less severe and saved some properties from foreclosures, but it still took six painful years for the real estate market to hit the bottom and then four more years for the prices to go back to their pre-recession levels.

Some markets had never fully recovered. For example, residential home prices in some parts of California, Arizona and Nevada are still below their 2006 highs.

To avoid this mistake, one needs to realize that although low interest rates help stimulate the economy and the real estate market, they do not cure them.

Mistake #3: I don’t need to sell now, so I don’t care

If you do not need to sell until the cycle plays out, which typically is over ten years, then you will not be as affected, especially if you have a strong equity position, limited mortgage debt, and solid liquid assets.

However, it is good to keep in mind that “life happens” and either professional or personal circumstances can change and we may need to sell property before the downturn runs its course.

Furthermore, if a property has a mortgages and its value declines to the point being “upside down,” meaning the mortgage loan balance exceeds the value of the property, then the options of selling, refinancing or even obtaining an equity line of credit, will be significantly limited.

This does not mean that everybody should be rushing into selling their real estate if there is no need to do so, just keep in mind that circumstances may and often do change and property options will be affected, so plan in advance. As one wise proverb says: “Dig your well before your thirst.”

Mistake #4: I’m selling, but I won’t sell below my “bottom line” price

This is a common and potentially very costly mistake. Generally speaking, every seller wants to sell for the highest price and every buyer wants to pay the lowest price. That’s nothing new. When selling real estate, most sellers want to achieve a certain price point and/or have a “bottom line.”

However, it is important to understand that the market does not care what the Seller, or his/her Agent, think the property value should be at. The market value is a price a willing and able buyer will pay, when a property is offered on an open market for a reasonable amount of time.

Overpricing property based on Seller’s subjective value or what is sometimes called an “aspirational price,” especially in a declining market, is a sure first step to losing money. When a property lingers on the market for an extended period of time, carrying costs will continue to accumulate and property value will depreciate in line with the market conditions.

Additionally, properties with prolonged marketing times tend to get “stale” and attract fewer buyers. The solution is to honestly assess your selling objectives, including the desired time-frame, evaluate your property’s attributes and physical condition, analyze comparable sales and market conditions, and then decide on market-based pricing and marketing strategies.

Mistake #5: I will list my property for sale only with Agent who promises the highest price

Real estate is a competitive business and real estate agents compete to list properties for sale which generate their sales commission incomes. It is not unusual that Seller will interview several agents before signing an exclusive listing agreement and go with the agent who agrees to list the property at the highest price, often regardless if such price is market-based.

Similarly to Mistake #4, this mistake can be very damaging to Sellers, as overpriced properties stay on the market for extended periods of time costing Sellers carrying expenses such as mortgage payments, property taxes, insurance, utilities and maintenance.

Furthermore, there is the “opportunity cost” since the equity is “frozen,” and it cannot be deployed elsewhere till the property is sold. However, the most expensive cost is the loss of property value while the real estate market deteriorates.

During the last recession, we have seen multiple cases where overpriced properties stayed on the market for years and ended up selling for 25% to 40% below their initial fair market values.

The solution is to make sure that your pricing strategy is based on the market, not empty promises or wishful thinking.

Mistake #6: I will list my property only with Agent who charges the lowest commission

Real estate commission rates are negotiable and not set by law. A commission usually represents the highest transactional expense in selling real properties and is typically split between Brokers and Agents who work on the transaction

Some real estate agents offer discounted commissions, in order to induce Sellers to list their properties with them. But does paying a discounted commission ensure savings for the Seller? Not necessarily.

For example, if the final sales price is 5% to 10% below property’s highest market value, which is not that unusual, due to inadequate marketing, bad pricing strategy, and/or poor negotiation skills, it will easily wipe out any commission savings and actually cost the Seller tens of thousands of dollars in lost revenues.

The solution is to engage an agent who is a “Trusted Advisor,” not just a “Salesperson.” A Trusted Advisor will take his/her time and effort to do the following: 1) Perform Needs Analysis: listen and understand your property needs and concerns; 2) Prepare Property Analysis: thoroughly evaluate your property and market conditions; 3) Execute Sales and Marketing Plan: prepare and implement custom sales and marketing plan for your property; and 4) Obtain Optimal Results: be your trusted advocate throughout the process and achieve the best possible outcome.

Finding such a real estate professional may not be always easy, but it certainly is worth the effort and will pay off at the end.

In conclusion, this article has outlined six costly mistakes real estate Sellers make during recessions and how to avoid them. The first mistake is not understanding that real estate cycles are long and take years. The second mistake is a misconception that low interest rates alone will create a recovery. Another mistake is not realizing that circumstances may change and not planning in advance. Mistakes number four, five and six pertain to understanding the market value, proper pricing and selecting the right real estate professional.

By understanding and avoiding these mistakes, real estate Sellers have significantly better chances of minimizing the negative impact of a recession while selling their properties.


Source by Robert W. Dudek

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Useful Tips To Build The Best Gaming Computer




Every gamer will want their computer to be the best gaming computer among their peers. Sometimes, with a little knowledge and tips and tricks, it is possible to build the best gaming computer and show it off to your peers. This article will show you how:

1) You can’t get the best gaming computer from computer retailers

If you want to get the best gaming computer, you have to build your own. Different gamers have different requirement for their gaming machine. Unless you are willing to pay a high price, you will not be able to buy a commercial computer that fulfills all your gaming needs. The only option you have is to build your own gaming computer.

2) You don’t have to be rich to build the best gaming computer

It is not necessary to burn a hole in your pocket to build the best gaming computer. With some due diligence, do some market research and compare prices around the marketplace. Merchant such as TigerDirect and NewEgg give regular discount to their products and you could save a lot of money if you catch them during their promotional period.

3) Most expensive parts do not have to be the best part

Sometime, the latest model or the most expensive model does not have to be the best part for your computer. It requires various components to work together to form the best computer system. When choosing a computer part, what matters is how well it can integrate with the rest of the components. Compatibility is more important than individual performance. What use is there if you spend lot of money on the latest quad-core processor and find that your motherboard doesn’t support it?

4) You don’t need to change the whole PC to own the best gaming computer

It is a misconception that you have to change the whole gaming machine to build the best gaming computer. If you already have a good barebone system, what you need to do is to upgrade the necessary parts and your gaming computer can roar back to life instantly.

5) Brand is important

Unless you want to see your computer system malfunction every few days, it is important that you purchase the parts from branded manufacturers with strict quality control. Motherboard brand such as Gigabyte, ABIT, ASUS are some quality brands that you can consider

If you follow diligently to the tips stated above. You will be on your way to build the best gaming computer. While price can be an issue, it is better not to scrimp on important computer parts such as motherboard, CPU, RAM and graphics card as it will cost you more to upgrade in the future.


Source by Damien Oh

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