Posts Tagged ‘Raleigh Homes’

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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Durham Area Trends

  Durham US Local Trend
Price Activity      
Current Median Q3 2010 $184,900 $177,100 Up but slow
1 year appreciation .3% -.6%  
3 year appreciation -1.1% -.19.9%  
3 year equity gain -$2,000 -$44,000  


These figures come from NAR, the National Association of Realtors.  Although median prices in the Durham, NC market are up slightly and are ahead of national median prices, it is important to understand that no market exists in a bubble.  The Durham market is reliant on the U.S. market and the entire global economy.  So, without equity as shown by the three year gain, or more accurately loss, home sales will remain sluggish simply because consumers don’t have the money to purchase homes.  Consumer home equity is lost and will take years to recover. 

Home owners can build faster equity in their homes if they make additional payments to principal, avoid borrowing against their properties and if they make cautious investments in enhancing their homes.  Owners contemplating a home sale should gird themselves too; there should not be a presumption of appreciation but rather a presumption of a loss.

Similarly, owners considering a home sale should engage a real estate professional sooner rather than later to discuss merchandising their property, staging their property and enhancing their property so that it stands out among the competition.

Interested in doing so?   Call me, Michael Sullivan, I’m always happy to walk through a property with an owner.  I can also offer rental and leasing solutions to owners in a position to move in that direction.

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Renting and Leasing

According to CoStar Group, the #1 commercial real estate information group, almost every multifamily market saw strong leasing, rising demand and falling vacancy rates in the third quarter as the nations rental market continued a solid 2010 rally. As of now rentals should continue to surge over the next five years, with a growing supply of renters and very little new product in the planning and building pipeline.

Vacancy rates are above historical averages and in many multi-family communities robust incentives are being offered to move renters in. Still the national vacancy rate compiled from the 54 largest markets declined for a third straight quarter in 2010. Raleigh/Durham, Charlotte, Nashville and Dallas/Fort Worth have seen the highest demand and the sharpest decline in vacancy rates.

CoStar Group November 3, 2010

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Maybe the maelstrom in real estate is starting to wear itself out and wind down. I sure hope so and I’ll bet many of my seller clients feel the same way. In an article dated today, Monica Chen with the “Durham Herald Sun,” writes on Durham County North Carolina foreclosures.
According to the NC Administrate Office of the courts; Durham County had 446 foreclosure starts from June through August 2010. This is down from 508 for the summer of 2009. Still the news is not rosy, 446 is a lot of foreclosed home and a lot of people moving from ownership into leasehold. Although Durham’s unemployment rate of 7.6 percent is below the sate wide level of 9.7 percent, there are still a lot of unemployed and underemployed people in our market.
The Herald Sun article further asserts from sources with the Mortgage Foreclosure Defense Project for Legal Aid of North Carolina that current sub-prime lending practices are affecting current foreclosure rates. HUH???? The Herald Sun article points to statistics that are four years old and two years old, kind of destroying the article’s credibility….these are not current lending practices; let’s call them…dated. The Herald does state that there has been a drop in sub-prime lending practices, this is true; there has been a drop in ALL lending practices from all banks.
So, with foreclosure rates starting to decline perhaps we’ll see a market return to stable real estate market.

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2010 Second Quarter Real Estate Wrap Up

Where is the target? Based on the data in the 2nd quarter Triangle Area Residential Realty Report or (TARR) real estate is still trending down in terms of price and up in terms of days on market. Correctly pricing homes is still an issue; traditionally REALTORS and appraisers have relied on sold data to assist home sellers in determining prices for property. With foreclosure filings up 12% in Durham County, and foreclosed homes accounting for 8% of the active inventory these properties aren’t dominating the market but they are indeed driving values down, as are too many short sale properties.

In the Q-2 of 2010 there were 24,450 showings logged into Centralized Showing Service, (CSS) this is a decrease of 10% from Q-1. Additionally there were 970 listings with a status change from either Active or Contingent to Pending in Q-2 2010, this is a 12% decrease compared to Q-2 of 2009. These lower showing numbers and lower pending numbers will also produce lower closing numbers in Q-3 of 2010 and this will place additional downward pressure on home prices.

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Real estate investments and rent to own community service that makes sense
Do you have $10,000 give or take?
Do you want to invest in a sound vehicle that has some risk but won’t scare you?
Then think about this.
In my practice I run across potential buyers who are fairly good risks but have some dinks and dings in their credit or may lack down payment. One such individual that I’m working with now, is currently renting at a high dollar amount. She has a good job, which is steady and stable, she has good income. She is lacking down payment and her credit needs a little clean up. Here is what she is willing to do; she is willing to meet in an on-going fashion with my in house mortgage lender as an ad hoc financial counselor so that she stays on track. The (buyer) has a credit score of 648 (fair), she makes 61,000 per year; she works for the city of Durham. She is looking at a condominium priced at $199,900.
She and I are looking for backers who are willing to buy the property that she’s identified, own said property for three years and then sell said property to her. Here’s how it could all lay out…
In very broad strokes:
We would buy this property, we would then lease this property to her on a rent to own basis and in three years when her credit is completely repaired she would buy this property from us. I say we because I am willing to put in my money too. We would collect incremental profit monthly on the lease and at the end of the term in three years when the property is sold to her.
If we purchase for $199,900, and our mortgage is at a 5% interest rate, we put down 20% which is 39,980, and our final loan amount is $159,920 financed for 30 years; then our payment would be $858.49 principal and interest + taxes $186 + HOA dues $213= which is a grand total of $1257.48
We enter into a rent to own agreement with our future buyer. Her monthly rent could be $1800, less $1257.48 our monthly expenses which leaves us with $543
We apply $200 from that $543 toward her down payment, at the end of three years she has $7200 saved up.
We could apply the additional $343 to our principal or we could divide it up on a monthly basis.
At the end of three years with no additional principal paid our outstanding loan balance would be: $152,000
We then sell her the property at 199,900, less payoff and the return is $47,900 less $39,980 (our down payment) is $7,920 + 12,348 ($343×36 months)= $20,268 return on investment which is not bad and much more lucrative than any bank or the stock market.
The reality going in the door, know that capital is going to be tied up for three years. Once in, then in for the three year period, secondly, know the risks, she defaults, we keep her down payment money and the property, but then we’re stuck with the property.
Additionally, we buy the property a tad discounted at the front end, say for $190,000 or $188,000 with seller paid closing costs and the revenue stream looks even healthier.
Interested in learning more, call me and let’s talk about it.

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This property is being marketed by Michael Sullivan, Realtor with Fonville Morisey Realty. Mike Sullivan is the market expert for Durham, Chapel Hill and the Research Triangle Region of central North Carolina. Put Michael Sullivan¿s 17 years real estate market experience to work for you.

A great Hope Valley Farms home at a terrific price…$154,900

616 Edenberry Drive is a charming, well maintained three bedroom and two and a half bath home in the Hope Valley Farms neighborhood of Durham NC. The two-story entry foyer and living room/dining room combination are adorned with hardwood flooring and soothing neutral paint colors. A lovely wood burning fireplace is the focal point of the living space and sliding glass doors open to a huge, fully fenced rear yard that back up to green space. Just imagine no neighbors behind you and a fully fenced space for gardening, barbeques and playing.

The galley kitchen is modern and functional and has newly added ceramic tile flooring. A convenient door passage leads from the two car garage to the kitchen so if weather if foul groceries can be brought into the house and everyone will stay dry. The kitchen appliances stay with this home and the sellers are offering a one year HSA Warranty with a $100 deductible for buyer¿s peace of mind.

Upstairs are three bedrooms, all with Berber carpeting. The master is vaulted with a cathedral ceiling and ceiling fan and is serviced by its own private bath.

Hope Valley Farms offers interesting and fun lifestyle amenities. There is a swim and tennis club which is optional for residents to join. The neighborhood has miles and miles of sidewalks and is bounded by the American Tobacco Trail which offers miles of wooded, paved trails that wind from downtown Durham and the Durham Bulls Athletic Ball Park to the Streets of Southpoint Mall in southwest Durham. Hope Valley Farms is roughly ten miles to UNC at Chapel Hill, ten miles to Duke University and 5 miles to Research Triangle Park; literally at the center of it all.

Wish to see inside 616 Edenberry Dr.? Call or text Michael Sullivan at 919-608-2372 or email, MSullivan@fmrealty.com

Neighborhood: Hope Valley Farms
Lot Size: .15
Type: Single Family Residential for Sale
Floors: Two or More Stories
Parking/Garage: 2
Bedrooms: 3
Baths: 2
Half Baths: 1
Square Feet: 1344
Year Built: 1999
School District: Durham: Southwest/Lowes Grove/Hillside
Family Room
Forced Air
Hardwood Floors
Fenced Yard

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