Hi, Book Scan readers. I spent the first part of last week hanging out with community planners at the American Planning Association’s national conference. Though I haven’t read the book described below, I thought the author (who gave the closing keynote at the conference) had some beautiful thoughts on home ownership that real estate professionals would appreciate. Enjoy! —MW
Early Pearl has a great idea for dealing with an intractable problem. As a homeless 11-year old Chicagoan, she sees all of the sturdy housing stock that stands empty and abandoned in her south side neighborhood and decides to take action.
From the cover of Blue Balliett's new book, Hold Fast
She gets some friends together and, with a few cameras, they snap pictures of these empty houses. They send the pictures—along with their imaginings of how the structures could be transformed into dream homes for kids without anywhere to live—to community leaders in an effort to spark a change in their unfortunate circumstances.
Early is only a character in Blue Balliett’s newest mystery novel, Hold Fast (Scholastic Press, 2013). But there are more than 30,000 kids in Chicago alone who are homeless just like she is, and some 16,000 vacant properties like the ones that Early dreams of inhabiting.
“Kids will easily share their dreams about a home,” Balliett said in her keynote speech at the American Planning Association’s national conference last week. “They never make small plans.”
Balliett, a bestselling author of young adult literature, told planners that she came up with the idea for Hold Fast during the housing downturn, when she noticed a dearth of news stories about the effect foreclosures were having on her target audience.
“The children were invisible,” she said. “I kept wondering about the kids: Who are they and what does it feel like to grow up without a front door?” Continue reading »
Back when her life ran smack into the foreclosure crisis, Stephanie Alison Walker started blogging. It didn’t stop offers from evaporating or credit scores from plummeting. It didn’t keep her and her husband out of bankruptcy court. But it did turn out to be a great little love story. 
Walker strung together her blog entries and created a book called Love in the Time of Foreclosure. You ride with her and her husband, Bob, down the rocky path that millions have traveled since the start of the housing crisis. Originally they had put 20% down on a 30-year, fixed-interest loan, with the income to back it up. Then, Bob lost his job and their dream house wasn’t too far behind.
Here at the Book Scan blog, we’ve covered the real estate + romance novel mashup. But Walker’s story isn’t about poofy blouses or forbidden trysts. This memoir is about how to keep a marriage together and romance alive under one of the most stressful situations a couple can go through together. And this isn’t about the perfect couple that can handle any of life’s problems, either. Stephanie and Bob have almost broken up before. What’s to say the end of homeownership might not also be the end of their union? Continue reading »
Some properties are being advertised as a short sale when they really aren’t in an attempt to lure bargain-hunter buyers. A new book,Foreclosures, Short Sales, REOs, and Auctions: Tools for Success in Today’s Real Estate Market, published by Dearborn, provides guidelines for using the term correctly. Here’s an exclusive excerpt:
There are a number of licensees who are attempting to attract buyers by using the term short sale in marketing property. It is very similar to the furniture stores that are constantly advertising that they are going out of business to draw purchasers. The fact that a home has lost value or that the loan has increased in amount and is now more than the value of the property does not automatically make the transaction a short sale.
It’s important that a licensee conduct a thorough analysis, not only of the property value and loans but of the prospective seller’s financial condition as well. As was indicated, according to some licensees who are experts in the field, only a small percentage of short sales are approved by lenders.
What is to be gained by these licensees who advertise properties as short sales when they really aren’t? The answer is attracting more buyers, of course.
Some licensees are describing properties as preforeclosure listing or short sale and use the terms synonymously. Appropriately, a preforeclosure sale of property would involve one where the owner is in default. The property may or may not be worth less than the loan amount. Continue reading »
By Melissa Dittmann Tracey
QUICK SKIM
Slowing home sales, a tightening credit market, record-high foreclosures — how did we get to this point? Richard Bitner’s book Confessions of a Subprime Lender (Wiley, 2008) gives a close-up look at how the worst credit crisis in modern history came to be. Bitner, who founded a subprime mortgage company in 2000, left the business in 2006 after foreclosing on a subprime borrower that never should have been approved for a loan in the first place. While being careful not to blame any single source, Bitner gives an interesting view on what went wrong in the subprime mortgage market and how to fix it.
FROM THE BOOK: 5 REASONS THE SUBPRIME MARKET CRUMBLED
In 2000, as housing prices grew out of reach for buyers, more creative financing crept in and subprime lending became big business. Wall Street wanted its hands on more of these loans, and the hot housing market spawned a wave of new subprime companies. By 2004, 75 percent of borrowers were buying a home without using a down payment or proving income.
But by 2006 the subprime market started falling apart; Borrowers were defaulting on loans and subprime companies were going out of business. Bitner says these are some factors that caused the subprime market to crumble:
1. Greed. Mortgage brokers made more money if they sold loans with higher fees and interest rates. So borrowers would often be steered toward riskier products, even if a more traditional (and less risky) loan were available. “My income was directly proportional to the revenue I generated, and subprime was three to five times more profitable than any other type of loan we securitized,” Bitner says. “I saw no logical reason to sell something that made less money and carried no competitive advantage.”
By Melissa Dittmann Tracey
QUICK SKIM
Bargain shoppers are on the hunt for foreclosures, so get ready to help them find a hidden gem. But first, you might benefit from some pointers. After all, buying foreclosures can get tricky — whether you’re making the purchase at auction, through a bank, or from an emotional and financially-strapped home owner. In the new book Finding Foreclosures (Entrepreneur Press, 2007), real estate investor Danielle Babb and mortgage broker Bill Nazur take you through the complexities of buying foreclosed properties, from finding the best deals to avoiding common pitfalls.
FROM THE BOOK: 5 WAYS TO GET GOOD FORECLOSURE DEALS
Foreclosure rates are spiking and brewing up a hot market for investors and buyers. To get the best deal possible, follow these tips from the authors:
1. Timing is everything. Borrowers often are given a chance to avoid foreclosure with a grace period, typically two to three months, to pay off the amount they owe. The borrower may opt to sell the property during this pre-foreclosure stage if they can’t make up their missed mortgage payments. This is typically the best time to strike a deal, as home owners are looking for ways to avoid foreclosure. Another prime time to buy: prior to an auction date.
2. Look in the right places. Follow the foreclosure trail. Title companies, banks, purchase money escrow offices, and credit unions can be good sources to find out about new foreclosures. Online services, such as RealtyTrac provide national information on foreclosures, broken down into such categories as bank-owned, auction, and pre-foreclosure. The Hudson & Marshall Web site has auction schedules and even lets you make bids online.
By Melissa Dittmann Tracey
QUICK SKIM
As emotions kick in, buyers and sellers often turn into their own worst enemy. Where does that leave you? In the middle, trying to sort out the half-truths and translate what your clients really mean. Veteran real estate broker Richard Courtney helps decode a language he calls “Buyerese” in his new book. Using a humorous approach, he uncovers the big “lies” of buying and selling a home from four perspectives: the buyer, the seller, and the real estate agents who represent each of them. Buy This Book
FROM THE BOOK: 5 BUYER AND SELLER MISPERCEPTIONS
In Buyers Are Liars & Sellers Are Too! (Fireside Books/Simon & Schuster, 2006), Courtney points out some of the following popular misperceptions of clients and offers suggestions on how you can get them closer to the truth:
1. Ma and pa approval. Warning about meeting the parents: They can spot a nail hole from 70 feet away through two sets of windows, Courtney writes. When working with first-time home buyers particularly, expect the parents to meddle, to be overly protective, and to question how in the world their little boy or girl will be able to afford such an expense! For a positive working relationship, correct parents gently when they’re wrong, reinforce their ideas when accurate, and thank them for their insight in areas you may have overlooked.
2. Popped nail — the house is falling! Don’t let home inspections scare your clients. Some home inspectors will note every nail pop, paint chip, settlement crack, and squeaky faucet. Encourage clients to educate themselves on what’s major and what’s not. After all, most repairs that inspectors consider necessary are inexpensive and easily fixable. When the inspection is done, work with the sellers and their agent to decide who will pay for the repairs. Continue reading »
By Haley M. Hwang, REALTOR® Magazine
Making Big Money Investing in Foreclosures Without Cash or Credit Peter Conti and David Finkel (Dearborn Trade Publishing, 2003) 267 pp., $18.95
Buy this book from Amazon.com.
Although Making Big Money Investing in Foreclosures Without Cash or Credit by best-selling authors Peter Conti and David Finkel is geared toward consumers, there is enough good information in it to make it a worthy read for real estate practitioners who want to learn about the foreclosure niche.
Whether you’re interested in learning about this niche to better serve your investor clients or you would like to start investing in these types of properties, this book teaches you the basics of how to purchase, finance, and profit from foreclosure properties.
The book provides a good overview of the legal process of foreclosures, including a step-by-step breakdown of structuring a foreclosure deal and definitions of industry terms. Pay particular attention to chapters 2 (The Big Picture of Investing in Foreclosures), 3 (12 Ways to Structure Deals Without Cash or Credit), 4 (22 Ways to Find Motivated Sellers), and 6 (24 Foreclosure Pitfalls That Can Cost You Big!). If you want the nuts and bolts of the information without all the unnecessary frills, skip all the “David’s Story” and “Peter’s Story” anecdotes offered by the authors, and the contrived scripts offered throughout the book.
The authors stress that investing should be an educational pursuit that doesn’t stop with the last page of this book. At the end of the book, they provide a list of real estate associations, other investing books, home-study courses, live workshops, mentorship programs, and Web resources to further learn about investing. The book also gives you access to a bonus Web pack, which provides a state-by-state summary of the foreclosure process and links to applicable state laws for many areas of the country, among other things.
Conti and Finkel are seasoned real estate investors, speakers, and authors. Conti also is co-author of How to Create Multiple Streams of Income Buying Homes in Nice Areas With Nothing Down. Finkel also wrote Making Big Money Investing in Real Estate Without Tenants, Banks, or Rehab Projects and hosts “Real Estate Radio,” a nationally syndicated weekly radio show.
Tips for Real Estate Professionals
- Become familiar with the legal process of foreclosures in your state. You should know what things can stall a foreclosure process to give you or your investor clients more time. In some states, for example, just by filing an answer to the lender’s complaint can buy you an extra month of time. The authors write that investing in foreclosure is like a game. “To get good at playing it, you’ve got to study the rules,” they write.
- Best stage to buy is in preforeclosure. The authors write that while there are multiple steps to a foreclosure procedure and there are advantages to buying in each stage of foreclosure, their preference is to buy in the “preforeclosure stage”—the first stage of foreclosure when a borrower misses a payment on his or her loan and, after the grace period (typically 60 to 90 days), he or she falls delinquent on the loan. In this stage, the authors write that you have much less competition because most other investors won’t know about the foreclosure yet and you have more time to negotiate a better deal; you can get into investing with very little money because earlier in the foreclosure process, the borrower tends to owe less money in back payments; and you have plenty of time to find a solution. “Our advice is to buy as early in the foreclosure process as possible because that’s when you’re likely to make the most money,” the authors write. “We and our students have profited in the tens of millions of dollars by buying distressed houses directly from the owners before the house is sold at auction. We believe this is the easiest entry point to immediately start making money investing in foreclosures.”
- Don’t look for foreclosure deals; look for motivated sellers. The authors provide a few not-so-original marketing ideas for finding homeowners who are motivated to sell. Their major marketing suggestion is to run “I Buy Houses” classified ads or post similar signs around your target neighborhood. Other ideas include sending postcards, letters, and coop mailing campaigns (where you team up with other businesses to send out a join advertising mailer). The authors also recommend that you obtain lists of people who just filed for divorce, probate property owners, vacant-house owners, building code-violation owners, and condemned property owners—all good prospects for motivated sellers. Also subscribe to your local legal notice newspaper, where you’ll likely find the addresses of people in both the starting and advanced stages of foreclosure.
- Avoid foreclosure pitfalls. If you have investor clients, you would be wise to read Chapter 6 (24 Foreclosure Pitfalls That Can Cost You Big!) carefully so that you appear knowledgeable about the process and the most common mistakes to avoid with foreclosure deals. Some of the cautionary tidbits offered include talking with the seller’s neighbors to learn the real story about the history of the house, any major repair problems it has had, and other valuable information about the neighborhood; running a credit check on the seller so that you can determine if there are any current or impending bankruptcy, check marital status, and learn about any other creditors; and getting the property professionally inspected so that you know what you’re getting yourself or your clients into and can make an intelligent decision about moving forward with the deal.
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