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The ideal property that needs...HELP!

Spotlight on the HUD 203K Loan Program
So, you have your eye on a property that needs work? You have good credit and you qualify for a home loan but, you don’t have the capital required to renovate a home. Think about the HUD/FHA 203K loan.
• You can acquire a home loan to rehabilitate the home of your dreams.
• You close on your mortgage only once.
• You use an account as a draw to renovate your home.
• You must use a licensed general contractor.

Who do you talk to?
• You start with me; I will put you in touch with a terrific lender who will get you started on the pre-approval process.
• Once approved we shop for your home.
• We submit and offer and hopefully push it through to contract.
• We have two levels of inspection; a home inspection to determine condition of the home and then
• An inspection by a licensed general contractor to help us determine the costs of items needing replacement or renovation.

Once all of that is complete we close and you begin fixing up your new home.

Your “draw” can be used for the following:
• Insulation
• Carpeting
• Ventilation
• Heating and Air Conditioning
• Paint
• Vinyl flooring and the list goes on and on.
• Permitting fees
• Up to six month outside living expenses.
• Contingency reserve

Other requirements:
• This will be your primary residence so no flipping is allowed.
• You may not use a 203K on investment properties
• There are caps on how much can be borrowed.
• The program takes LONGER than conventional financing, but not painfully so.

There is more but a blog is not the venue to go into all of that. Call me, Michael Sullivan at 919-608-2372 for a free no obligation consultation where we will discuss whether or not a 203K loan is right for you. I have 17 years market experience in the Raleigh, Durham, Cary and Chapel Hill real estate market where I have helped thousands of families find their spot to call home. You may text to 919-608-2372 or email me at MSullivan@fmrealty.com. Learn more about Team Michael Sullivan at TeamMichaelSullivan.com

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302 Pekoe Street Durham NC 27707

302 Pekoe Street

The Short Story of a Financial Mess

In 2005 302 Pekoe Street was listed for sale for $93,000 and it sold for $105,000 and the seller the Historic Preservation Society of Durham paid $5000 to connect the property to services and $2000 in buyer closing costs.

I was called in 2009, in the fall to look at the property and prepare a market survey for the purpose of listing and selling the property.  At that time the owner related to me that he had to sell the house in the neighborhood of $149,900 to pay it off.  He had been given all sorts of home equity money in the house by Bank of America.

The property had not been completely renovated.  The kitchen was incomplete as were the baths, the second floor drywall and the landscaping.  The home is in a nice area within close proximity to NCCU but the neighborhood has never been financially stable since most of the population is hourly workers subject to the whims of a changing economy.

At that time the house had been listed; the agent and owner started the price at $177,000 and had incrementally dropped the price down to $166,000.  My market survey at that time fall of 2009 indicated that the owner would be LUCKY to get $80,000 for the property and I indeed thought that tax value would be a more appropriate listing price, that being $69,986.  It was my opinion that this property at 302 Pekoe Street, Durham NC 27707 was NEVER worth what the owner had paid for it, let alone what Bank of America had lent out on it. 

Furthermore it was my opinion that both Bank of America and the now previous owner had speculated as to the value of this property.  302 Pekoe Street is now in foreclosure at a list price of $59,900. 

The fellow who has lost this home to foreclosure purchased the home through its listing agent.  Unfortunately, the listing agent did this buy a disservice by not really looking out for his best interests.  Of course the previous seller should never have over financed this home and Bank of America should never have lent so much money out on it.  It is a financial mess and perfect illustration of what has destroyed the real estate market in the country.   Interested in learning more, and there is so much more to learn about foreclosed and short sale properties.  Phone me, Michael Sullivan at 919-608-2372 or 1-888-574-6400 and ask for Michael Sullivan at Croasdaile.  You may text me at 919-608-2372 or email me at MSullivan@fmrealty.com  

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This is a lot of foreclosed property coming onto the market.  This will further drive pricing down I believe.

Fannie, Freddie Double Number of Mortgage Modifications | NewsGeni.us.

So, if you’re seeking a foreclosed home in Durham, Cary, Raleigh, Chapel Hill, Hillsborough, Mebane or in the entire Research Triangle Region of NC, call, text or click me, Michael Sullivan.  MSullivan@fmrealty.com or 919-2372

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Buying a foreclosed home? What you should know going into the process?

For the next two to three years those who are able are going to have their pick of the litter when it comes to foreclosed homes. The trend in the last six month of 2010 is that there are some pretty good foreclosed homes coming on the market in Durham, Chapel Hill, Raleigh, Apex, Cary and Morrisville, North Carolina. Gone are the days, for the most part of the stripped down, abused and beat up foreclosed home. Gone also are the days of really holding the banks hands to the fire and driving a hard nuts bargain.

Lesson one; foreclosed homes are by their very nature at bargain basement prices. This is where most consumers miss the boat. Many real estate consumers of foreclosed homes believe that they can rake the banks over the coals and score a really terrific deal. Banks work off a system where by an actuary puts numbers into a formula and those numbers determine, list price, sales price, concessions if any and commissions. The consumers with whom I’ve worked; who have been successful in purchasing a foreclosed home have “hit their initial offer into the ballpark.” This initial offer is typically within three to five percent of asking price and this includes all concessions. Concessions being closing costs, warranties and any other out of pocket expense the bank would be asked to pay.

Lesson two; unless the property is a portfolio property, the bank has little if any investment or money into the property. Almost all mortgage loans, including those defaulted upon are bought and sold on secondary markets as commodity therefore the bank selling the foreclosed home is a loan servicer and their exposure is in holding the home in inventory. The servicing bank is exposed if the house burns down, develops mold, is vandalized and that’s about it.

 Lesson three; what is as is where is? Simply put, what you see is what you get and what you don’t see is what you get. Here is where you need an experienced savvy buyer’s agent to help you through the process, you also need an agent who knows your market and generally this will not be the listing agent. Most REO/Foreclosed home listing agents don’t work with buyers; they represent the best interests of the bank. This is where I can help you. My 17+ year’s market experience allows me to guide you through the process. I have also sold numerous bank owned properties. Here are my responsibilities to you the buyer:

 1. Make you aware of all hidden and latent fees associated with your purchase of a foreclosed home.

a. Did you know that you might be responsible for de-winterizing and re-winterizing the property even if you don’t get to the closing table?

b. Did you know that there might be significant issues of title including un-cancelled deeds of trust (mortgages).

 c. There indeed might be hidden document fees paid to the bank holding ownership of the foreclosed homes.

d. The bank contract or purchase addendum for the property being pursued may require that the buyer pay fees normally associated with the seller side. Having these documents in hand is critical before purchasing a foreclosed home.

Lesson four; in this down economy there may be unwelcomed residents and conditions associated with the foreclosed home that you are pursuing. I have seen squatters move in during the contract period and the sheriff has had to evict them prior to settlement. I have seen foreclosed homes vandalized or stripped of copper during the escrow period. What the buyer needs to understand is that the bank is under no obligation to bring the house back to the condition that it was in when first discovered by the potential buyer. That is indeed a painful reality.

Lesson five; the listing agent will get me a better deal on this foreclosed home. Nope, isn’t true at all. Most listing agents of foreclosed homes are playing a numbers game. If you don’t buy it someone else will and they are so swamped with paperwork and reporting to their masters at the bank that they don’t have the time or inclination to work with buyers.

Interested in learning more, and there is so much more to learn about foreclosed and short sale properties. Phone me, Michael Sullivan at 919-608-2372 or 1-888-574-6400 and ask for Michael Sullivan at Croasdaile. You may text me at 919-608-2372 or email me at MSullivan@fmrealty.com

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