Need an incentive to help move a home?

The answer is PITI Abatment. Do not let the financial jargon scare you. For years production builders have used this incentive to move inventory. Now every seller/investor has the opportunity to participate.

What is PITI Abatement?

• An incentive to the buyer to have the first 6 months of the mortgage paid by the seller/investor.
• PITI Abatement program is a product designed specifically for home-buyers. You can give a 6% Seller Contribution that can be used for Principle, Interest, Taxes and Insurance payments.

What are the General Guidelines?

• Loan amounts up to $417,000
• Up to 100% of the purchase price in some markets
• Minimum score of 575
• Fixed Rates and ARMs
• Interest Only is available
• Income limitations may apply
• Closing costs can be paid by seller too
• No prepay penalty

What is the Realtor or Investor marketing element?

• 6 MONTHS PAID!
• BUY THIS HOME AND I WILL PAY YOUR FIRST 6 PAYMENTS
• 6 MONTH PAID MORTGAGE INCENTIVE
• BUY MY HOME AND I PAY CLOSING COST AND 6 PAYMENTS

In today’s real estate market investors need all the help they can get. With increased inventory in just about every market place, realtors and investors need to use unconventional tools to create benefits for their potential buyers. I have seen cars, furniture, pools, and televisions given away. But those items can be difficult to include in the average investor transaction. Giving away 6 months of payments can create separation from the other sellers in your market place.

If you're new here, you may want to subscribe to our RSS feed or sign up for our real estate social network. Thanks for visiting!

Tags: home for sale, home sale, investor, PITI Abatement, real estate, real estate investor, realtor, seller, selling home

The other day I went to a listing appointment and gradually asked enough pointed questions and did enough research that I passed on listing the property. Upon first glance the lot seemed simple, but I noticed some odd layout to the side of it that made it unclear where the property lines ran. After doing research I found that the lines were absolutely crazy. This is an old section of town and the agreements through the years with neighbors left the property legally with no ownership to the side of the house and half the front yard.

It was the oddest example I’d seen. The property had all kinds of gentlemen agreements about who could use what piece, and the house is owned by someone who’s had it 25 years. I could see someone buying it and all the agreements not known, then the buyer having to face litigation problems in the future if anyone came to claim their piece of the property.

Perhaps the attorneys would discover it doing a title search, perhaps it could be missed because of all the convoluted arrangements. The point is that while doing inspections get a survey done so that you have all the information. Coordinate all inspections, physical inspection of a building’s systems and structure, with inspection of all leases, with title search, with special environment inspections for that area, with a survey. Then do a little snooping.

When problems, or red flags, occur, check them out thoroughly. I was once representing a buyer back when seller’s were responsible for termite inspections before closing. I convinced the buyer to have someone go by and inspect the home on the buyer’s dime to double check. I had received a clearance from the seller that no termite infestation was present and had a letter from the termite company. While the buyer’s inspector was not looking for termites, he did notice signs of infestation. I called the listing agent and the listing agent said that she trusted the termite company and that my guy was not experienced to determine infestation. On my dime, I had another pest control company go out with the buyer’s inspector, and they found infestation – I went over and saw the termites with my own eyes.

Stay alert and be thorough with all inspections and at any sign of trouble go into detective mode and bulldog the problem until you are satisfied you understand the full extent. Too many times people ignore red flags and pay dearly later. We’ve had flooding problems in Savannah, so I started the practice of going around asking neighbors whether water drains or stands in that area – I often get a different response from neighbors, especially if they are renting. Sellers will sometimes fudge and if water has never actually flooded the building they report no flooding problems. However, if you are going to start a restaurant and the parking lot holds water, even though it doesn’t come into the property, then you would probably want to find a higher, drier location.

As stated in a previous post the contract should allow you to easily walk away if the problems mount and the seller is uncooperative, or seems to be hiding information. Be a detective, follow leads thoroughly – hear loud warning sirens at every sign of a problem.

I would also ask that you consider something that seems out of place here, but I feel is very important, the psychological factor. Sometimes we get bogged down in nuts and bolts and miss some obvious parts of every process. One of my first posts here talked about the excitement of investment and how the excitement can cloud judgment. What happens in the inspection process is minimization of problems due to the excitement of finding a “good deal”. You might say – “oh, I can fix that” – or, “that won’t cost much to remedy.” As someone who’s underestimated repairs before, I urge you to overestimate repairs, especially on older properties, because what seems like an easy fix can turn out to be more complicated and costly once you’ve gotten into it. What you thought you could do yourself winds up something that requires an expert’s knowledge and skill, then you wind up spending in the thousands when you estimated in the hundreds. Don’t underestimate the repairs and don’t overestimate your ability to fix them.

It would pay to have an experienced, objective tradesman give you a good estimate, then if you can save money doing some of the repairs yourself, fine, but at least you will have the correct estimate with which to negotiate.

Tags: buyer, Buying real estate, flooding, inspections, inspector, real estate, real estate inspections, real estate investment, seller

Upon signing the agreement of sale in most residential real estate transactions, the buyer pays an “earnest money deposit”, which signifies his intention to purchase the property. Typically, the earnest money deposit is held in the escrow account of the listing broker (who represents the seller) and is applied toward the buyer’s down payment and closing costs at settlement.

Know Your Rights!

The parties to any residential transaction, including the brokers, should be aware of the rules and responsibilities that surround any deposit monies that are being held in escrow—the laws vary from state to state, so it is imperative that you familiarize yourself with the laws of the state that govern your particular transaction. Using the Commonwealth of Pennsylvania as an example, a broker receiving money that belongs to another must deposit that money in an escrow account by the end of the next business day following its receipt. This duty can’t be waived and it can’t be altered by agreement between the buyer and seller or by the brokers to the transaction. Although the law is clear as to the course of action a broker must take upon receiving monies belonging to a third party, the law does not dictate who must hold the funds in escrow. Therefore, it is up to the parties to come to an agreement on who will hold the escrow; some examples include the broker for the seller, broker for the buyer, attorney for the buyer, attorney for the seller, builder, or bank. It should be stated either in the agreement of sale or by way of an addendum who will hold the deposit monies. In Pennsylvania, the standard Agreement of Sale contains a default provision, which states that unless agreed upon otherwise the listing broker holds the deposit monies until closing.

The buyer, seller and brokers should be aware of the fact that many third parties, such as a title company or bank, will require the execution of an “Escrow Agreement” as a condition of holding funds. The Escrow Agreement usually states the amount of money being held, the terms and conditions that must be met prior to the release of the funds, and a disclaimer of any liability in the event that the escrow holder releases funds upon a good faith reliance on documentation submitted by an authorized party. Further, both buyer and seller need to understand that just because the deal falls through doesn’t necessarily mean that the deposit money goes to them.

Since the deposit monies are being held in trust, both buyer and seller must agree as to the disposition of the funds before the escrow holder will release it. In most states, the escrow holder can only release funds if there is a written release executed by buyer and seller, if a settlement takes place, or by court order. Therefore, if a dispute has arisen between buyer and seller, the parties would be wise to work out some sort of agreement with respect to the escrowed funds otherwise the monies will remain tied up.

Whether you are the buyer, seller or broker involved in a residential transaction, you need to know what will happen with any deposit monies, so here’s a quick review:

1. Know the laws in your state dealing with escrowed funds- Who is authorized to hold funds in escrow? What are the escrow holder’s responsibilities? If there is a dispute between buyer and seller, what happens to the funds?
2. Identify the escrow holder in your agreement of sale or by way of addendum
3. If there is an escrow agreement, it should be reviewed by all parties. If you don’t agree to its terms, don’t sign it!

Tags: buyer, escrow, real estate, real estate attorney, Real Estate Law, seller, title

Wonder why the real estate market is in some crazy pseudo-gridlock? I’ve read many explanations of the current post-bubble-pre-collapsing housing market, but none of them hit it on the mark like the one I’m about to share with you.

Actually, according to Diane Swonk, chief economist for Chicago-based Mesirow Financial, “we are currently experiencing the worst of the market freeze, which is being exacerbated by the gap between the buyer’s desire for bargains and the seller’s fantasy of what they once thought their homes would be worth.”

It’s perfect in its simplicity. Yes, every buyer I know keeps waiting for prices to just fall already. Yes, every seller I know just refuses to sell their home because it “should” go for more from what they’ve seen in the market recently. This conflict in philosophies between buyers and sellers has put us in a state, not unlike Los Angeles traffic, of gridlock.

Take a look at the Washington Post article I found the quote in. It presents a clear picture of the state of today’s market.

I guess the question now is, who is going to win out in 2007?

Tags: buyer, Diane, estate, housing, real, seller, Swonk