Did You Know? The RE/MAX Edition 3.1

Considering a Home Purchase?

Process of Foreclosure in Minnesota

Loss Mitigation -- Saving the Real Estate Market

Times are tough right now and every home saved from foreclosure makes a huge positive impact on the families, friends, communities, and our whole economy.

What Is Loss Mitigation?
Loss Mitigation is the process of negotiating or finding a solution before the lender takes the home back. As foreclosure rates rise, lenders are becoming more creative and willing to work out options with their borrowers. Mortgage companies sell loans—not real estate... Lenders do not want the house! 

Options for staying in the home:

Reinstatement: Pay the full amount owed in a lump sum by a specific date.

Forbearance: Temporarily reduce or suspend payments. 
A forbearance is often combined with a reinstatement.

Loan Modification: Permanent change in one or more of the terms of a loan resulting in a payment the mortgagor can afford. Some involve changing the interest rate from adjustable to fixed, or extending the number of years to repay the loan.

Partial Claim / Partial Release: Owners may qualify if their mortgage is insured, for a new low interest or interest-free loan to bring their loan current through the insurer (usually FHA). 

Options for moving out of the home:

Pre-Foreclosure Sale or Short Sale: Selling the house to prevent foreclosure. If more is owed on the home than it’s worth, lenders may agree to accept less than what is owed on the mortgage when sold. The lender must approve the sale.

Deed-in-lieu: Lender agrees to forgive the debt if owners sign over (via deed) the property to the lender. When there is a second mortgage or judgment on the property/owner, a deed-in- lieu may not be an option.

Real Estate agents are here to help! 



http://makinghomeaffordable.gov/
http://www.mnhousing.gov/

Broker Price Opinion's -- the 411

What are these agents doing outside taking pictures of your neighbors house...? BPO’s! 

What are BPO's?

BPO is an acronym for Broker’s Price Opinion.  In general, the term Broker’s Price Opinion (BPO) is a method that a Real Estate Broker (or an agent acting on behalf of their employing broker) uses to estimate the selling price of a house.  The price estimate is submitted in a BPO report (2-3 pages) that includes local and regional Real Estate market information, neighborhood analysis, and (comps) properties that compare to the (subject) house that is being priced.  This method of estimating a price has similarities to a Certified Market Analysis CMA, like an agent would provide for a seller who is looking to list/sell their property.

Performing a BPO, means that a Real Estate Professional (agent, broker, or appraiser acting in an agent/broker capacity) is requested by a financial institution or third party to submit an estimate of a selling price for a property in a BPO report for a fee. The report will include either making interior access and photos of each room or what is called a drive-by and photos can be taken from the street within the real estate professionals vehicle then comparable properties in the neighborhood are researched and various information complied to obtain the property value. 

 BPO's can be done for the following situations:

      • home equity lines of credit

      • home equity loans

      • requests to remove PMI - Private Mortgage Insurance

      • REO/Foreclosures, short sales

      • due diligence for investors or investment bankers

      • Any other reason that a bank/lender needs to make a financial decision on a property

Qualifications for performing a BPO:

A Real Estate Professional with an active license including:

      • agents/salespeople (REALTORS)

      • brokers

      • appraisers (acting in an agent/broker capacity)

Professional within the direct market area of the subject BPO-- meaning the agent/broker should not be completing an order on a property where they do not conduct regular business.

What is the BPO industry?

A Broker Price Opinion BPO is an excellent means of information for banks and lenders to make financial decisions on residential properties. Due to the financial practicality and quick turnaround time of a BPO, banks and lenders order BPOs from a group of registered/approved Real Estate professional to complete the BPO which can take some time to be approved and most have strict requirements to work for as independent contractors.

What is a BPO Company?

A BPO Company acts as a clearing house for banks and lending institutions by contacting Real Estate Professionals and assigning BPO jobs to them, tracking and expediting BPO job status, and providing quality assurance/oversight for submitted BPOs from the Real Estate Professionals. A BPO Company is either a division of a financial institution/bank or a standalone company. This company is essentially a middle man between the financial institutions such as banks/lenders and BPO practitioners.  BPO Companies qualify and maintain a list of Real Estate Professionals.  They also gather the BPOs that are submitted from the Real Estate Professionals, ensure BPO accuracy, and submit the QC’d BPOs to the banks/lenders.

So don't be scared if someone is driving down the street snapping photos or standing in a front yard camera flashing like lightening-- Probably just a real estate agent ;) 

Tax Values vs Market Values -- Nov. 28th 2010

All across Minnesota and the country people are being over-taxed on average 20-50% on their property than its actual value. We complete many market/price opinions for sellers and even lenders with our values NEVER coming in close to the county assessed value or taxable market value. This issue is a huge problem in the more poor and poverty stricken areas with their home values decreasing over 50% in the past 5 years but their taxes going UP or staying the same. How can they get away with this?! Contest your value and have a Realtor give you a price opinion-- we are happy to help for free.

http://www.startribune.com/local/109090004.html?page=3&c=y

MN Vikings New Coach

Favre says Coach Frazier's NFL playing experience will help him to coach the Minnesota Vikings in the right direction and I have to agree! At age 51 Frazier's time is due and many have been mentioned around the NFL previous that he would make a good head coach. 


Frazier says he has no problem starting Favre and we all know that is a different topic! ...Yes we need a new QB. Childress's record was 40-37 in a little over 4 years with the Vikings and another wasted time in the history of our team. 


Hopefully this will be the start to something good but as always never want to get the hopes up! Good luck tomorrow new coach and team-- NOW STOP LETTING MN DOWN :)




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REO Contracts/Bank Owned property - Not Our Normal Deal

**FOR REAL ESTATE AGENTS AND BUYERS DOING THEIR DD**

Every agent has their opinion on REO's but the bottom-line is they are here to stay for a while, and will be the majority of properties on the market in every market around the US. 

Understanding the basics of a REO transaction and how the banks work are two things EVERY agent should be working on as there is NO WAY to represent your everyday buyer like an agent should if they do not understand the contracts or thinking of the sellers they are dealing with. 

First - Banks are in the paper business. (You can obviously tell this from the 40+ page contracts and miscellaneous forms which they all require - their own versions of.. but thats a different kind of paper!) Seriously though, a bank is a financial institution licensed by the government (there's our first problem). 

Its primary activities include providing financial services to customers while enriching its investors. This license generally is to be a receiver of deposits with most of their ancillary services, outsourced to third parties often for regulatory reasons and normally just to another financial institutions and/or investment groups etc.. 

Note, none of the above states anything about selling real estate - because its not a part of a bank's business model and not a piece they would like to include either, as selling real estate is inverse of the general financial institution's business models. In banking, asset and liability management is the practice of managing risks that arise due to mismatches between the assets and liabilities (debts and assets) of the bank as efficiently as possible to ensure the enrichment of its investors (without investment they have no funds.. banks need investors not customers) A customer is a liability for a bank. This can also be seen in the insurance business.

Now understanding how the banks work may help make sense of their seemingly senseless thinking in respect to REO contract negotiations, procedures, and escrow. 

For the most part, there is no seller to rationalize with and everything from the listing of a REO property to the funding is done through a system or some type of checklist with a group of robotic, under-paid and over-worked people who do not care about a buyer or you. 

The REO contracts NEED to be FULLY READ and REVIEWED. I cannot believe how many agents and their buyers are signing every last right away in respect to a real estate transaction without reading anything other than the purchase price and close date. A REO contract will ALWAYS be in favor the seller and hold the seller harmless for ALL issues which come up. 

AS-IS means, as is.. there is nothing more to that.
If you are reading the REO contract and think to yourself that it does not make sense and seems like a foreign language, CONSULT A REAL ESTATE ATTORNEY. DO NOT advise your helpless buyers that the banks are going to be somehow helpful. With a REO you are on your own. 

This article could go on forever. All I really want to say is get educated on REO and understand as any agent should, what you are getting your buyers into before they sign the contracts.

Michael Culliton

Buying a Home

Whether you've spent years saving and preparing to buy a home, or are unsure if you can afford it, the questions surrounding a house purchase can feel endless.

You can find the answers - and peace of mind - by working with a RE/MAX Real Estate Properties Associate.

Here are some tips to help you become your own landlord.

1. Hire a real estate professional.

   The first step is to select a professional to help you find your dream home and fine-tune your financial expectations. Working with a buyer agent is worth consideration since he or she is legally responsible for representing the buyer's interest in a real estate transaction. Before making a decision, however, have a Realtor explain the pros and cons of using a buyer agent versus a sales or dual agent. Your RE/MAX Associate can guide you through every step to buying a home.

2. Shop for mortgage rates and terms.

   A difference of even half a percentage point can make a huge difference in how much you pay over the life of a loan. For example, the difference in the monthly payment on a $100,000 mortgage at 8 percent vs. 7.5 percent is about $35 per month. Over 30 years, that's $12,600.

3. Prequalify for a loan.

   Your third step should be to get prequalified, which determines how much you can afford. It allows you to move swiftly when you find the right home, especially when there are other interested buyers. It also indicates to the seller that you are serious and really can afford to buy the property.

4. Define what you want.

   The next step is to create a realistic idea of the property you'd like to buy. What features are most important to you? Make two lists: one of the items you can't live without and one of the features you would enjoy. Refine the lists as you house hunt. It is also helpful to search online to see what is currently available on the market. Your real estate professional can then show you houses that meet your expectations.

5. Visit properties.

   Now you're ready to visit houses. Ask your RE/MAX Associate to arrange showings, and keep track of the properties you've seen.

6. Know the features that help or hurt resale.

   In some areas, a swimming pool actually detracts from a home's value and makes it harder to sell. In neighborhoods with two-car, attached garages, a single-car or detached garage may impact the home sale and future value. Your RE/MAX Associate can point out features that hurt, and those that help, resale value.

7. Rate the houses you tour.

   After touring each home, write down what you liked and didn't like. Develop a rating system that will help narrow the field down. For example, pick the house you like best on day one and compare all other houses to it. When you find a better one, use the new favorite as the standard.

8. Make an offer.

   Once you've pinpointed your dream house, it's time to get serious about the financial and contractual side of the purchase. Your RE/MAX Associate will be a strong advantage since you and the seller have different goals.

9. Arrange for a home inspection.

   After your offer is accepted, set up a home inspection. It's common to find problems, including leaky roofs, cracked walls, insect infestations and foundation problems. Your real estate professional can help find a reputable inspector, and will negotiate to get you the most for your money once the inspector's report is final. If you negotiate repairs as part of the purchase, ask for a "walk through" before finalizing the paperwork. Ask your real estate expert about home protection plans, which may save you money in the near future.

10. Close.

    Before your closing date, make sure you've made all necessary deposits and completed the paperwork - including mortgage, title, homeowners insurance and any other paperwork required by local or state governments.

11. Prepare for life in your new home.

    Before rolling out the welcome mat, consider some moving basics: arranging for an alarm company, turning on electricity, water and gas, cleaning or replacing the carpet, and notifying your local post office of your new address. The best time for renovations is often before you move in.

Tips for Sellers

As a homeowner, you can play an important part in the timely sale of your property. When you take the following steps, you'll help sell your home faster, at the best possible price.

1. Make the Most of that First Impression
   A well-manicured lawn, neatly trimmed shrubs and a clutter-free porch welcome prospects. So does a freshly painted - or at least freshly scrubbed - front door. If it's autumn, rake the leaves. If it's winter, shovel the walkways. The fewer obstacles between prospects and the true appeal of your home, the better.
2. Invest a Few Hours for Future Dividends
   Here's your chance to clean up in real estate. Clean up in the living room, the bathroom, the kitchen. If your woodwork is scuffed or the paint is fading, consider some minor redecoration. Fresh wallpaper adds charm and value to your property. Prospects would rather see how great your home really looks than hear how great it could look, "with a little work."
3. Check Faucets and Bulbs
   Dripping water rattles the nerves, discolors sinks and suggests faulty or worn-out plumbing. Burned out bulbs leave prospects in the dark. Don't let little problems detract from what's right with your home.
4. Don't Shut Out a Sale
   If cabinets or closet doors stick in your home, you can be sure they will also stick in a prospect's mind. Don't try to explain away sticky situations when you can easily plane them away. A little effort on your part can smooth the way toward a closing.
5. Think Safety
   Homeowners learn to live with all kinds of self-set booby traps: roller skates on the stairs, festooned extension cords, slippery throw rugs and low hanging overhead lights. Make your residence as non-perilous as possible for uninitiated visitors.
6. Make Room for Space
   Remember, potential buyers are looking for more than just comfortable living space. They're looking for storage space, too. Make sure your attic and basement are clean and free of unnecessary items.
7. Consider Your Closets
   The better organized a closet, the larger it appears. Now's the time to box up those unwanted clothes and donate them to charity.
8. Make Your Bathrooms Sparkle
   Bathrooms sell homes, so let them shine. Check and repair damaged or unsightly caulking in the tubs and showers. For added allure, display your best towels, mats and shower curtains.
9. Create Dream Bedrooms
   Wake up prospects to the cozy comforts of your bedrooms. For a spacious look, get rid of excess furniture. Colorful bedspreads and fresh curtains are a must.
10. Open up in the Daytime
    Let the sun shine in! Pull back your curtains and drapes so prospects can see how bright and cheery your home is.
11. Lighten up at Night
    Turn on the excitement by turning on all your lights - both inside and outside - when showing your home in the evening. Lights add color and warmth, and make prospects feel welcome.
12. Avoid Crowd Scenes
    Potential buyers often feel like intruders when they enter a home filled with people. Rather than giving your house the attention it deserves, they're likely to hurry through. Keep the company present to a minimum.
13. Watch Your Pets
    Dogs and cats are great companions, but not when you're showing your home. Pets have a talent for getting underfoot. So do everybody a favor: Keep Kitty and Spot outside, or at least out of the way.
14. Think Volume
    Rock-and-roll will never die. But it might kill a real estate transaction. When it's time to show your home, it's time to turn down the stereo or TV.
15. Relax
    Be friendly, but don't try to force conversation. Prospects want to view your home with a minimum of distraction.
16. Don't Apologize
    No matter how humble your abode, never apologize for its shortcomings. If a prospect volunteers a derogatory comment about your home's appearance, let your experienced RE/MAX Associate handle the situation.
17. Keep a Low Profile
    Nobody knows your home as well as you do. But RE/MAX Associates know buyers - what they need and what they want. Your RE/MAX Associate will have an easier time articulating the virtues of your home if you stay in the background.
18. Don't Turn Your Home into a Second-Hand Store
    When prospects come to view your home, don't distract them with offers to sell those furnishings you no longer need. You may lose the biggest sale of all.
19. Defer to Experience
    When prospects want to talk price, terms, or other real estate matters, let them speak to an expert - your RE/MAX Associate.
20. Help Your Agent
    Your RE/MAX Associate will have an easier time selling your home if showings are scheduled through his or her office. You'll appreciate the results!

Real Estate Investing

Have you been considering real estate as an investment opportunity? With interest rates andsales prices at historically low levels, it might be the right time to make the move and turn yourinvestment dreams into a reality.  

Why Invest? If you’re thinking about investing in real estate there’s one important question you’llwant to ask yourself: WHY do I want to invest in real estate?Is it because you’re super handy and the idea of having a couple of rental properties,which are providing income, to keep-up is exciting?Maybe you’re looking at all the tax advantages and are thinking about the write-offsthat could put some extra change in your pocket.Do you have a high tolerance for risk and are curious about how far you can take yourinvestment?No matter what your reason is, the important thing to know, from the beginning,is your ability, temperament and knowledge of why you’re investing in real estate. If you have that in mind you are starting off on the right track and have the opportunityto make some very good investment decisions.

Types of Investment Properties:

Residential- Residential family home, duplex or townhouse. Residential investors act as landlords(or contract with a management company) and are responsible for paying the mortgage,taxes, and insurance, as well as finding tenants and building maintenance.

Commercial- Commercial real estate is property that has been zoned for business use. Commercialreal estate can include retail stores, medical offices, office buildings, etc. whose tenantsare operating for a profit. Commercial investors generally contract with a managementcompany to find tenants and maintain the building.

Improvement (flip)- Improvement property is usually bought to be quickly re-sold. Investors “flip” the house;they buy an REO or distressed property well below the market value, invest personalmoney into fixing it up, and then re-list the home at an adjusted, competitive price fora profit. The key to investing in flipping houses is a quick turn-around time.

Land-Land as an investment provides a few opportunities. Land investors can purchase largequantities of land then sell it off in smaller parcels; they can invest in land then bringit through the zoning process and, once approved for residential or commercialdevelopment, sell it for a profit; they can purchase zoned land and develop the roads,sewer, utilities, etc. to sell it to a builder; or they can purchase developed land to buildon. Of course they could purchase the land and bring it through the entire process aswell. In certain parts of the country, land investors purchase land for mineral rights.

As a real estate investor, the usual goal of investing in property or landis profiting from it. Whether you want your profit to pay off the debt of the purchase or, down the road, provide for some steady positive income,there are a number of ways to earn money. Cash Flow- This is what’s coming in versus what’s going out. The most common methodof cash flow with real estate is through a rental property; the cash flow you earn is the difference of your mortgage expenses, upkeep rates and your rental income. Appreciation- This is the increase of value over time and is the difference of what was paidversus what it’s worth now. With real estate investments, a few factors will affect your appreciation; they include location, property condition and thecurrent economic condition.Forced Appreciation- This too is the increase of value, but its value you’ve added by making improvements. In real estate you force appreciation to your investments when you flip houses, update or upgrade rental properties, zone or develop land, etc.<span> Amortization- This occurs over time. With each payment you make towards your investment debt, a portion is applied to the interest on the loan; the other half is paid tothe principal. The reduction of your principal is amortization and as your debtis reduced your equity increases.Tax Deductions- This is huge for most real estate investors of rental properties. The IRS allowsyou to deduct a number of expenses including interest, depreciation costs,repairs, insurance and more. The less money you’re taxed on means moremoney in your pocket.

Remember, Interest rates and sale prices are at historically low levels, making it agreat time to invest in real estate. As you move forward with your realestate investment plans keep in mind these three final tips:

•Constantly be aware of your budget.

•Building wealth in real estate takes time.

•Hire an experienced RE/MAX agent specializing in Investment properties to guide you through the process. 

Minnesota Vikings Fire Brad Childress!

FINALLY WHAT WE ALL HAVE BEEN WAITING FOR... The team announced the decision Monday morning. Defensive coordinator Leslie Frazier will serve as interim head coach for the remainder of the season.


The Vikings fell to 3-7 this year after a lopsided loss to rival Green Bay on Sunday, the final blow to Childress in his fifth season in charge of the team. The 31-3 loss was his most-lopsided home defeat as head coach, dropping his overall record to 40-37, including a 1-2 mark in the playoffs.


We can be excited about a Vikings game for a change!