Buying a Home: The 5 Biggest Mistakes that a Home Buyer Makes

By Donald Lawson

As a Professional Real Estate Inspector I get to see and hear the right and wrong things people do when buying a home. These 5 tips will help you choose the right Real Estate Agent the first time.

Mistake #1: Not using an agent at all or using the Listing Agent as your 'Agent'. Not smart at all. By law, the listing agent is required to keep the Sellers best interest at stake, not yours! Why would anyone enter into a relationship handicapped like this?

I’m not aware of any state that makes a Buyer pay for their Agent. The Buyers agent normally gets paid from a cut of the Listing fees or the commissions are split.

If you choose wisely, you can put a trained real estate professional on your side for free! A true Buyers agent can help you negotiate a contract, fly through the mountain of paperwork, help you find the right home and help you schedule the needed inspections and appointments necessary when you do find your dream home.

Mistake #2: Relying on the Home Inspector your Agent recommends: I’m still amazed at how many people will blindly take the advice and recommendation of their Agent, or of the Listing Agent, when choosing an Inspector.

The agents have a financial stake in seeing the deal go through. Why risk the conflict of interest by solely relying on their choice of Inspectors? With a little research you can find your own home inspector who will have your best interest at stake. Don’t know where to start? The American Society of Home Inspectors (ASHI) has an easy to use search tool on their web site. You can choose by zip code or by state and city. You can find it here:
http://www.ashi.org

Mistake #3: Putting up “Non-Refundable” earnest money. This is like giving the Sellers a check and saying, “Here, you keep this. Even if we don’t buy your home, you can keep our money”. That’s just plain stupid. If your Agent recommends it, find another agent because they don’t have your best interest at stake.

I’ve seen Sellers request up to a $20,000 non-refundable earnest money check. Luckily my Client had a good agent and she told the Listing Agent “That is the most ridiculous thing I’ve ever heard. We’ll give you the standard $1000 refundable earnest check. Take it or find another Buyer.” The Seller accepted rather quickly since her home had been sitting on the market for 5 months.

Mistake #4: Falling in love with the home: “Earth to love struck home Buyer, they’re building more homes every day!” The one group of consumers I see getting taken advantage of the most are those that “fall in love” with a home.

They will accept any terms set by a Seller. They will buy the home and tell themselves “It just needs a little work, I can do that myself.” Even though they have never picked up a hammer in their life. They let their “love” cloud their vision and Judgement and end up paying hefty ‘stupid tax’.

Mistake #5: Buying more home than what they can afford. There is a rule of thumb that says you should not buy a home that cost you more per month that 20 to 25% of your take home pay. I rarely see anyone following that rule of thumb today.

What I do see is consumers buying homes that take a large part of their monthly income. This leaves little room in their finances for emergency’s, furniture, vacations, investing, etc. With the relaxed lending requirements, people are buying way more home than what they can realistically afford. If you go down this road, chances are that you’ll grow to hate this home. You should own a home, the home should not own you.

I’m not a real estate agent, broker or attorney, nor am I a financial consultant nor do I claim to be an expert in any of these fields. The above views are my own and have been obtained from experiences in the Home Inspection field. Always consult with your financial planner and/or Real Estate Agent before making any decisions.

Donald Lawson is a Professional Real Estate Inspector licensed in Oklahoma (454) and Texas (#5824) and currently owns V.I.P. Home Inspections in Houston Texas. V.I.P. Home Inspections is a multi-inspector firm that inspects both commercial and residential inspections. You can find out more by clicking on this link to his site: http://www.best2inspect.com

Article Source: http://EzineArticles.com/

How to Find and Buy a Bargain House with Little or No-Money Down

by Jeanette Fisher

Real estate investors know how to make money buying distressed houses. Investors recognize that bargain houses offer the best way to make a return quickly.

Bargain houses also open up a way for first-time home buyers to buy with little or no savings for a down payment. If you want to reduce the amount of down payment needed to buy a house, get the seller to pay your closing costs. In a hot seller's market when more buyers compete for the same properties, you either need to increase the purchase price to cover your closing costs or find a distressed seller.

A bargain house may be in bad shape or the seller may be distressed. Home sellers who suffer from problems such as job loss or transfer, divorce, death, pending foreclosure, and lack of funds sell fast for less. Often these sellers offer incentives to the buyer, like paying the buyer's closing costs.

A distressed house may also be a "doghouse," a dump, or a fixer. Owners of fixers are not always distressed sellers, but they may still feel pressure to get rid of their problem house.

How to Find a Distressed Seller

Look for listings and advertisements with the words "make offer," "fixer," "must sell immediately," "handyman's special," "divorce," "owner transferred," and "owner help with closing costs." If you see two or three of these clues, you know you've found an anxious seller.

Discovering the seller's problem and finding a solution is the key to buying a bargain property from a seller under pressure. Perhaps the seller needs to close quickly; in this case, a buyer ready with financing in place with a lender who acts fast can make an offer with a short escrow. Prepare yourself for quick action by getting your credit and financing in order before you go home shopping.

How to Buy a Distressed House

You must understand that a property also needs to qualify for financing. Extreme fixers in poor condition don't qualify for a 100% purchase loan. However, houses needing only cosmetic upgrades easily pass a lender's inspection. If you find a great bargain fixer, make sure that the house will pass health and safety codes. Sometimes home buyers will help the seller with little changes that make a house "loanable." Minor changes like covering exposed wires with switch plate covers, which cost as little as 19 cents, and repairing broken windows can make the all the difference in passing inspection.

If you need help with your closing costs, find yourself a distressed seller under pressure to sell. Not only will you get help with funds needed to buy a home, you might also get a great purchase price and be on your way to making your future investing in real estate.

Copyright (c) 2005 Jeanette J. Fisher-All Rights Reserved.

Jeanette Fisher, author of Credit Help! Get the Credit You Need to Buy Real Estate, Doghouse to Dollhouse for Dollars, and other books teaches real estate. She loves to help first-time home buyers get into a home. For a free 30-page "Credit Tips for Mortgage Financing" report, go to http://recredithelp.com

For more information for beginning real estate investors, see http://www.doghousetodollhousefordollars.com

What Does Your Dream Home Look Like?

Many women I know got into the flipping houses business because they desired a dream home. My friend Ruth bought and sold many fixers on her way to buying her dream home on the St Johns River in Palatka. Of course she also had to make enough money to retire early so she could move to Florida.

Another friend of mine sold her dream home to buy five fixers. She told me that her dream home really didn't make her happy and that it took too much time to keep up, even with hired help. After flliping her five houses, she bought an oceanfront condo and went travelling.

Maybe your dream isn't a home at all. Whatever your goals, if you want to make extra money flipping houses, transform your fixers into your buyers dream home.

Copyright (C) 2005 Jeanette J. Fisher. All Rights Reserved.
Doghouse to Dollhouse for Dollars:
Using Design Psychology to Increase Real Estate Profits

Sell Your Home for Top Dollar FAST!
Design Psychology for Redesign and Home Staging

Las Vegas Real Estate Investment Club

Join the Las Vegas Investment Club and benefit from over 100 members.

I'll being speaking about how to build strong credit for financing multiple investment properties July 14 at the Gold Coast Hotel & Casino, 4000 West Flamingo Road.

Thursday 7/14, 7-9:30 PM

Get the credit you need to buy your dream home or financial future.

Apple Green Book Cover and Cars

My husband insisted that I get a new car because we no longer need a van to drive children around. New cars cost as much as a down payment on a house that makes us money, so I was reluctant to purchase a car that loses money.

I test drove the new Caddie and Lincoln. Ho-hum. Then my children told us about a car they saw the same color as my Doghouse to Dollhouse for Dollars book cover. I love apple green colors. My new Mustang convertible is FUN to drive, and it matches my book cover!

New Format for Doghouse to Dollar$ Workbook

Order your companion book to "Doghouse to Dollhouse for Dollars," Doghouse to Dollar$ Workbook: Turn "Yucks into Bucks" Investor's Guide, now available in softcover.

Although most of my students prefer the notebook format, you now have a choice. Because the paperback edition costs so much less to print, email for a discount price.

See the contents.

Enjoy investing!

Jeanette

Kitchen Makeover Ideas

Money spent updating a kitchen rewards you better than money spent on any other upgrade to your fixer. When it comes to kitchens, buyers continue to demand improvement in efficiency and style, and they usually want the kitchen fully remodeled and operational when they move into a new home. However, find out how to fix your kitchen up without too much expense.

Read full article Kitchen Makeover Ideas for Preparing Your Home for Sale

Credit Help for Real Estate Financing: Five Categories of Your Credit Score

Get the Credit You Need to Buy Multiple Investment Properties

1. Payment History -- 35%

The number of accounts paid as agreed and a good payment history give you a higher score.

Negative points lower credit scores because of 30 days, 60 days, and 90 days late on any debt. The dollar amount of these delinquencies also impacts credit scores. Severity of delinquency, how long past due, and number of delinquencies are nasty remarks on some credit reports. The older these derogatory items are, the less impact they have on credit scores. You do not want any present delinquent accounts when applying for a real estate loan.

Never, ever pay a mortgage payment more than 30 days late. Lenders do not like to see any delinquencies on real estate loans.

Adverse public records, such as bankruptcy, judgments, suits, liens, and wage attachments negatively dominate credit history. Any of these items cleared up helps improve a credit score, unless the item is aged. The older the derogatory entry, the less the impact. Any activity on a particular item makes the item update and therefore, remain on the report for another seven years. So, if a derogatory item is more than four or five years old, don’t bother with it.

Collection items unfavorably shape credit payment history. The more age a collection account has, the less its consequence. Most mortgage companies require that collection accounts be cleared before lending. If this is your problem, see “Help with Collections” later in section six.

2. Proportional Amounts Owed -- 30%

The amount owed on a credit line compared to the available credit is termed the proportional amount owed. With a credit card limit of $5,000, the score will be higher if less than $2,500 is owed. Even better is to owe less than 1/3rd of the available credit or less than $1501. To have the highest proportional amounts owed scoring factor, owing less than ten percent of the available balance gives you the best possible rating. On the other hand, owing over $4,500 on an account with a limit of $5,000 lowers your score significantly, especially if you have too many credit cards and other loans with high balances compared to available balances.

Tip: Call your creditor and ask them to raise your available credit as long as you don’t use this credit. This raises your proportional amount owed scoring factor.

To raise your credit score dramatically and quickly, pay down as much as possible on each credit line instead of paying off one credit card at a time. If a credit card is totally paid off, it does not compute in the proportional amount owed; therefore your rating does not benefit from paying balances in full. On the contrary, paying balances in full takes the account out of the equation and you don’t get higher points for the low proportional amount owed.

3. Length of Credit History -- 15%

Any account over twelve months with a good payment history helps a credit score if the balance is not too high compared to the available credit. Six months is the minimum length of time to establish credit. The time since accounts opened and the time since account activity are factored into the length of credit history.

4. New Credit -- 10%

Whenever you apply for a new credit line, your score receives a negative hit. The more inquiries you generate, the lower your score. Obtaining new credit lowers your credit score. We only apply for credit when applying for mortgages. Every time we get a new mortgage, our credit scores go down.

Never finance a new car or get a new line of credit when you are getting ready to finance property. Wait until after closing to apply for further financing. Be aware that after your new loan shows up on your credit report, your financing abilities shrink. If you need credit funds for any reason, including renovation costs for your new house, apply for this after closing your property purchase.

5. Types of Credit Used -- 10%

The different types of loans taken out by consumers affect credit scores. Credit assessors view mortgage accounts more favorably than consumer finance accounts. Too many installment loans, auto loans, and department store credit cards affect credit negatively. To improve your credit score, pay off installment loans and consumer finance company accounts after you have lowered your proportional amounts owed. Then pay off your department store retail accounts. Keep balances as low as possible on home equity lines of credit because they often count as consumer finance accounts instead of mortgages. Achieve higher credit scores by having only mortgage accounts and a couple of major credit cards with low balances.

Note: In addition to credit scores, lenders consider length of time at residence and employment as well as income and education.

Do You Need a Credit Score of 700?

Don’t believe it! We have so many loans; our scores are in the mid 600s, but we buy and sell property all the time. Even with a perfect payment history, we can’t get our scores up because we have so many real estate loans with high balances remaining. We often need to get “B” loans instead of “A” loans, which means we pay higher tax-deductible interest, points, and fees.

Copyright (c) 2005 Jeanette J. Fisher. All rights reserved.
Real Estate Credit Help Center
Doghouse to Dollhouse for Dollars Books

Bloomberg News Radio

After Bloomberg News called me for an interview about "flipping houses" last week, Amazon ordered more Doghouse to Dollhouse for Dollars books than ever.

I was the one woman on the show between a US senator and Steve Forbes. Seems like the big guys want to know how to make money flipping fixers.

Also, we went to Philadelphia where I was on TV talking about flipping houses with Mary Caraccioli, Executive Producer and an Emmy Award-winning television journalist, for "Money Matters Today."

My husband and our son enjoyed at least five Philly cheese steak sandwiches during our vacation in Philly. If you've never been to Philadelphia, GO! You really feel like you're in America!

New Design Psychology Website

Check out the Real Estate section with articles, teleclasses, and information on home staging vacant houses. http://www.designpsych.com/realestate.htm

How to Buy Fixers for Profit

Do you dream of becoming a multi-millionaire real estate investor? Here's how to get started: find a bargain "fixer-upper" owned by a worried seller.

Why Home Sellers Accept Rock-Bottom Prices

Home owners' troubles often keep them from staying on top of their home's maintenance. Circumstances such as divorce, job loss, devastating illness, assorted addictions, or other personal problems quickly overcome distraught home owners, forcing them to sell. These home owners can't keep up with monthly mortgage payments and repairs because of financial or physical limitations. When these troubles arise, their home becomes a low priority and sometimes goes into foreclosure.

"Triple-D" Deals

Home sellers with three problems offer breaks to beginning real estate investors. A "Triple-D" deal is a Doghouse, involved in a Divorce, and in Default. The label "doghouse" comes from Southern California real estate agents who described the worst fixers this way. You may have seen ads for "ugly" houses. These houses maybe "tired" and need only cosmetic work in order to compete for resale with other homes in the area.

The hardest house for a homeowner to sell is a "doghouse," "dump," or "fixer-upper." These run-down houses scare off most buyers, who don't have the money to cover the down payment, closing costs, new furniture, carpeting, appliances, roof repairs, and other deferred maintenance required to bring the home back into top condition.

As you look through the classified ads or at real estate listings, keep an eye out for terms like "handyman special," "as is," "fixer," or other tell-tale phrase. Ask your buyer’s agent to list these words when scanning the Multiple Listing Service for you.

Once you've found a property that you can turn from doghouse to dollhouse, find out the seller's problem and then offer a solution. Distraught sellers commonly experience financial difficulties and need cash as soon as possible. Therefore, if you're ready to close rapidly, you'll be set to negotiate a lower sales price.

How to Complete a Fast Sale

Find an experienced lender and get yourself not only "pre-qualified," but also "pre-approved." Taking that second step assures worried sellers that you already have your loan in place for their property, and this puts you well ahead of other potential buyers. Sellers with problems love it when an offer to purchase says "close in 10-14 days."

Use a trusted closing or escrow agent who knows what they’re doing; one not over-worked. Even in today’s busy market, you can find an officer who can help you close in two weeks, when your financing is prearranged.

Real estate investing should be fun as well as profitable. Enjoy your property search!

Copyright (c) 2005 Jeanette J. Fisher. All rights reserved.

Investing in Real Estate Profitably: Eliminating the Need for Mortgage Insurance

In an earlier article, we presented various options for ensuring that you have positive cash flow when holding rental houses, by minimizing loan payments. One problem which we now can address is to how to eliminate the need for paying mortgage insurance.

Any loan with less than 20% down payment will include or require mortgage insurance. It may be included in the rate (which is called "Lender Paid Mortgage Insurance" or LPMI) or more commonly it is a separate itemized item, but in either case you must pay it.

If you want to pay less than 20% down, the best way to get around mortgage insurance is to finance your purchases with two loans, a first and a second mortgage. For example, the first mortgage is commonly 70%, 75% or 80% of the purchase price and the second mortgage makes up the difference to 90% or 95% of the purchase price. You can get both mortgages from the same lender, but usually you can find better rates on the second mortgage from a lender that specializes in second mortgages. An independent loan broker can put this together for you nicely.

Both mortgages typically close escrow at the same time and both lenders are fully aware of each other. For simplicity, put both loans in the same escrow and sign them both at the same time. If you want to be tricky and try to use two mortgages to get to 100% financing (i.e. no down payment), there are ways to do this, but we do not recommend it and it is not within the scope of this article.

The second mortgage is typically at a higher interest rate than the first, but not always. For example, there are some very competitive home equity lines of credit (HELOCs) with rates only a fraction above the prime interest rate. You have to have good credit scores to qualify, but if you do, they are very attractive. The problem with a HELOC based on the prime rate is that it assumes the prime rate does not get too high before you pay it off. As you may recall from the early 1980s, the prime occasionally does go sky high and it could happen again.

There is a particularly wide variation in the interest rates for second mortgages from various lenders. Moreover, if your credit, income, and assets are not ideal, you may not be qualified for certain second mortgage programs, so it may be more difficult to find a second mortgage at a good rate that you do qualify for. It is very important therefore to ask your independent loan broker to check out various options and to shop the rates. He/she should be comparing at least half a dozen different second mortgage programs.

When you use two loans as described above, it is usually advisable to have an interest-only or minimum payment loan for the first mortgage. This allows you to focus on paying down the principle on second mortgage over a period of say 5 years, if you can afford it. If you cannot do that, than obtain a second mortgage that also has a 5-year fixed period and an interest only option. You are then covered with predictable and low payments for at least 5 years.

This article has reviewed a strategy for improving your cash flow when purchasing investment rental homes -- namely, using two loans to eliminate mortgage insurance. There is much more to say on this topic. So keep an eye out for additional articles by the same authors on this and related topics.

Copyright (c)2005 Jeanette J. Fisher and Robert S. Kramarz. All rights reserved.

Jeanette Fisher, Design Psychology Professor, is the author of "Doghouse to Dollhouse for Dollars: Using Design Psychology to Increase Real Estate Profits," the only book to reveal interior design secrets on how to make top dollar investing in real estate. For real estate and interior design psychology books, articles, tips, and newsletters: http://www.doghousetodollhousefordollars.com.

Robert S. Kramarz is a loan officer for a major loan brokerage. He has over 20 years experience in finance and business management and comes from a family a long background in real estate investing and banking. He specializes in providing financing for purchase of investment real estate. He can be reached by email. Further information is available at the website http://www.sweetloan.info.

For Beginners: Three Tips to Help You Find the Perfect Fixer

If you're looking to get started investing in real estate by fixing and flipping houses, you'll want to know what to type of property to buy. Many real estate investors make millions turning ugly houses into dollhouses. On the other hand, some inexperienced investors lose money buying houses that just don't turn a profit.

1. Learn Your Market
Your first task, exploring your market, helps you know a bargain house when you see one. Look at houses for sale in your area. Keep track of sales and how long the houses take to sell. Ask about the terms of these sales because this helps you understand how sellers market their property. For instance, if a seller paid closing costs for the buyer, did the price rise from the listed price accordingly? Or, did the seller come down on the price and pay the buyer's costs, too. Examine the sales that sell quickly. What home features and financing options prompted the fast sale?

Also, look at model homes. Buyer often chose resale homes because they can't wait for a new home to be finished. But, these buyers like the amenities found in newer homes. When you transform your fixer, you'll know what buyers desire and you'll make informed makeover choices.

2. Know When "Bad" Can Be Good
When you first start out in your real estate "fixer" enterprise, you'll want to look for houses needing only cosmetic work. Look for houses that just need cleaning up, painting, and new flooring. Don't be afraid of stinky houses that show horribly; look for fixers with peeling paint, holes in the wall, stained carpeting, and trash in the yard. Remember, these houses won't look good to most buyers, but that other investors see them as gold mines. You need to use your imagination when viewing theses homes. Try to visualize the finished product.

3. Know When "Ugly" Means "Pass"
If the house has cat urine staining the carpet, the subflooring or concrete foundation may need replacing. Dog urine cleans up easier. If the walls have too many cracks and bumps, you may need to hang new sheet rock or hire a professional plaster refinisher. Look for signs of plumbing problems such as water stains under sinks and loose flooring. When you're new to real estate investing, always remember your limitations. Use caution when considering houses needing structural repairs. Some rehabbers replace walls, plumbing, structural beams, sub-flooring, and electrical systems, but they acquired those skills after years of experience or pay a professional.

If you find a house with structural problems, get estimates from reliable contractors to do the work. Experience teaches you how to do more over time. Until then, rely on experienced contractors to do the repairs. Take professional estimates into account before deciding whether or not to purchase an investment property.

Why would anyone want to do this? How much does the average investor make? In Philadelphia, real estate investors only make offers on houses they expect to make $30,000 on. In Southern California, many investors make $50,000 to $100,000 on each house.

You can make a fortune fixing ugly houses. Learn your market. Know when "ugly" means bad that can be good, and when stinky means pass.

Copyright (c) 2005 Jeanette J. Fisher. All rights reserved.

For more information about finding, financing, fixing and flipping houses, visit Jeanette Fisher’s Doghouse to Dollhouse for Dollars. Learn about decorating to attract buyers. Professor Fisher teaches Design Psychology college courses and professional real estate seminars. She is the author of Home Staging, credit for buying real estate, and other books. http://www.doghousetodollhousefordollars.com/.

How to Avoid Appraisal Problems in the Sale of Your Dollhouse

by Jeanette Joy Fisher

Before you sign a contract to sell your home, check to see if the purchase offer depends on financing. Look for the clause witch states that the offer is contingent on your home's appraisal done by the buyer's mortgage lender. This clause causes many home sellers to lose the sale or to lower the sales price later.

Appraisers draw on comparable market sales (comps) of local properties sold within the last six months to value your home. With today’s rapidly rising seller’s market, six-month-old information is ancient history. Appraised value does not always equal the true market value, or what the home will sell for on the open market.

Realtors will give you a comparative market analysis, an informal estimate of market value based on comparable sales. Lenders, on the other hand, will use the appraised value to determine a new mortgage amount. Some lenders require that the stated property value covers the mortgage amount plus their selling costs in case of foreclosure. For this reason, a sale may fall through if a home sells on the open market for more than the appraised value, which often happens in bidding wars over hot property.

We learned the importance of securing a sufficiently high appraisal when we sold a rental property in Lake Elsinore, California. We listed the house for $234,700 on Friday. By Monday morning, we had three offers: $245,000, $255,000, and $260,000. We accepted the one for $255,000 because the buyers had $80,000 down, reassuring us that they had sufficient funds.

As usual, the lender sent an appraiser to review the property. This busy appraiser didn't take the time to view all the upgrades we put into the custom-built home. Even worse, he used only comps from the local one-mile radius. Because this home is close to a shopping district, there were not many homes sold in this limited area during the six-month period.

The appraiser used comps six months old; during this time housing costs in Southern California appreciated around thirty percent. Sales from six months previous should have gone up in value by $30,000 on a $200,000 home. This means that our home should have been worth $250,000 to $260,000, especially since buyers are willing to pay this price on the open market. To increase the value of this home, at the time there was not another three bedroom home listed in the area for under $250,000 (excluding manufactured homes). However, the appraiser valued our home for only $230,000 -- and we would have lost the sale if the offer did not include a sufficient down payment.

Because a low appraisal can kill your sale, finding a buyer with a large down payment provides you with a safety net. You may also choose a buyer with strong credit who doesn't have to put a large percentage down. If you think that your home’s appraisal could become a problem, make sure you don't include a clause in your sale’s contract which states "subject to appraisal."

How to Avoid Low Appraisals

Hire your own appraiser before the sale. Then ask your buyer’s or lender’s appraiser to review your appraisal.

Retain the option to approve your buyer’s mortgage lender. Make sure that the buyer doesn't use a lender with a history of deliberately underestimating property values. A good real estate agent should know which lenders routinely under value homes.

Keep records of repairs and upgrades, including costs. Take "before" and "after" photographs. Create an organized journal with a listing of expenses and include pictures to show to the appraiser during the appraisal appointment. Stage your home for the appraiser like you do for buyers.

Secure your own property comparables to make sure the appraiser uses complete information. Call real estate agents with homes in escrow and get the sales prices. Make a list of these properties with the agent’s phone numbers and give it to the appraiser.

What to Do When Your Selling Appraisal Comes in Too Low:

1. Ask for another appraisal.

2. Protest the appraisal with documentation of your upgraded expenses.

3. Have the buyers make a larger down payment.

When you sell or buy real estate, remember that the certified appraisal is just one person’s opinion of the value of your home. The opinion that counts for you is the buyer’s: you want to be sure the buyer values your home above all others.

Copyright (c) 2005 Jeanette Fisher, All rights reserved.

Jeanette Fisher, author of Sell Your Home for Top Dollar--FAST, Staging Houses for Top-Dollar Sales, Doghouse to Dollhouse for Dollars: Using Design Psychology to Increase Real Estate Profits, and other real estate and interior design books, teaches Design Psychology and real estate investing seminars. For information on Design Psychology, visit: http://designpsych.com/. For help selling houses, articles, and home staging tips, see http://www.sellfast.info/.

Softening Your Walls with Color Wash

Copyright © 2005 Pamela Cole Harris
Home and Garden Makeover
http://www.homeandgardenmakeover.com

If you like the soft look of watercolors, why not try using a
color wash on your walls? In addition to a softer color, color
washing can accentuate the texture of your plaster or stucco
walls. And it’s so simple that even I, a faux-finish-impaired
decorator, can do it.

There are two techniques for color wash application: sponge
or brush. Each requires a slightly different glaze formula.

Sponge Technique:

Color Wash Glaze: Mix together 1 part latex paint and 6 parts
water in a bucket.

1. Mask off (using painter’s tape) parts of the room which will
not receive the wash. Its best to cover the floor with
plastic drop cloths (especially if you are as messy as I am).

2. Prime the wall with a low luster latex paint and allow it
to dry completely before the next step.

3. Dip the sponge into the color wash glaze and squeeze lightly.

4. Beginning in a lower corner, apply the glaze to the wall
in short, overlapping strokes. Change the direction of the
strokes frequently. Work on a small portion of the wall at
a time (3 foot by 3 foot is a good size).

5. Repeat moving upward until all the wall is covered.

6. Allow to dry completely.

Brush Technique:

Brush Color Wash Glaze: 1 part flat latex paint, 1 part latex
paint conditioner (available at your local home improvement
center), and 2 parts water. Mix in a bucket.

1. Mask off (using painter’s tape) parts of the room which
will not receive the wash. Its best to cover the floor
with plastic drop cloths.

2. Prime the wall with a low luster latex enamel paint and
allow it to dry completely before the next step.

3. Allow the paint to dry.

4. Dip a paintbrush in the glaze and remove the excess against
the side of the bucket.

5. Apply the paint in a criss-cross pattern.

6. Brush over the surface repeatedly to soften the look of
the paint.

7. Wipe excess glaze away, if necessary. (Better get the
industrial-sized package of paper towels!)

There you have it! A soft paint look perfect for your newly
decorated room...And since you have the technique down to a
science, why not come and do my family room? Powder room?
Closet?

---------------------------------------------------------------------
Pamela Cole Harris has been a writer and designer for 35 years
(Yikes, has it been that long?) Enjoy her tongue-in-cheek
approach to inexpensive interior design at:
http://www.homeandgardenmakeover.com and http://www.diy-homedecor.com

What do real estate newspaper classified advertising acronyms mean?

This is a partial list, in progress.

assum. fin -- assumable financing
dk -- deck
gar -- garage
gard-- garden
expansion pot'l -- expansion potential: may be extra space on the lot, or vertical potential for a top floor or addition. Verify potential by checking local zoning restrictions with county building department prior to purchase.
FDR -- formal dining room
frplc, fplc, FP -- fireplace
grmet kit -- gourmet kitchen
HDW, HWF, Hdwd -- hardwood floors
hi ceils -- high ceilings
In-law potential -- potential for a separate apartment. Sometimes, local zoning codes restrict rentals of such units; check for legality.
lsd pkg. -- leased parking area; may cost extra
lo dues -- ask how low these homeowner's dues are; compare to area.
nr bst schls -- near the best schools; who says so?
pvt -- private
pwdr rm -- powder room, or half-bath
upr- upper floor
vw, vu, vws, vus -- view(s)

What is the first step in finding a doghouse?

(Answer to Scott)

To speed up your real estate investing business, start with your loan approval first. You need to know what's on your credit report and your credit scores. Ask another investor for a great mortgage lender referral and get your credit reviewed.
If you need credit repair or to raise your scores, see the articles at
The Real Estate Credit Help Center.

Once you have your loan in place, you'll know what price range to look in. Then, you're ready to find a doghouse to turn into dollars. Become an expert on your chosen real estate market so you're ready to jump when you find a bargain. Great buys are still out there! We closed last week on a home in Southern California that appraised for $40,000 more than the purchase price.

Also, you can find more information on our real estate investor website.

How long does it take to fix up a home and sell it?

On 5/4/05, KIM wrote:
Hi Jeanette...My name is Kim and I recently started thinking of buying houses, fixing them up, and then selling them. I have a few questions for you. I have never purchased a home, so I am really new to all of this. How long about does it take to fix up a home and sell it? Really, I am just wondering if you could tell me a little bit more about all of this.

Thanks!

Kim

Hi Kim,

There are so many variables on fixing houses for profit. Where are you located? Can you paint and do minor repairs yourself? Or, do you need to hire out the work? Do you know how to choose decorating materials for your target buyer?

How long it takes depends on the house's condition. Some of our houses require little work; others need every surface redone--floors, walls, ceilings, kitchens, etc. We have done a house in a couple of weeks that only needed fresh paint and carpet. Keep in mind that ours is a family business--my husband and son help. I do shopping for materials, paint, and decorating, but my husband works on the houses full time. He likes this work better than teaching. We like the paycheck better, too!

Joy to you!

Jeanette

Types of Real Estate Bargains to Find

To make a good profit in real estate, you must buy right. Check out all property types available to find the best transaction for your specific situation. Consider fixers, distressed sales, repossessions, multiple listings, for sale by owners, and vacant properties just wasting away.

Distressed Properties

Recognize the difference between a fixer and a distressed property. Distressed properties may be fixers or just unwanted houses. Divorce, job loss or transfer, death, financial difficulty, and other problems often force a sale for less than market value. Just because an owner’s problem causes a distressed sale does not mean the house requires fixing.

REPOSSESSIONS

Although the repossession market seemed dried up last summer, houses are beginning to appear on foreclosed lists again. Lender Rob Kramarz with Nationwide Mortgage (www.seetloan.com) says that this may be the beginning of another real estate investor boom.

Look for great bargain properties for sale by HUD, VA, Freddie Mac, Fannie Mae, and Bank-REOs (acronym for real estate owned). Real estate agents try to discourage you from repos and switch you to multiple listed homes. Do not listen to negative remarks about how hard it is to find a good deal property. Find another agent. Even in the hot market at the time of this writing, when the average house sells in less than three weeks, we found two properties for at least forty thousand dollars under market value.

Paying a listing service to mail you lists of repossessed properties is a waste of money. Actually, by the time you get these lists, the houses are already sold. Many web sites listing foreclosures thrive on the web for no charge to you.

Take a flashlight with you to view a repossessed property. With no electrical service and boards covering windows, viewing dark rooms is tough. A good real estate agent will have her own flashlight, but you want to see what you want and not what she wants you to see.

HUD

In our area, new HUD listings post online late Thursday night or Friday morning. New “Daily’s,” homes previously sold which fell out of escrow, post Saturday morning. Properties not sold during the bid time stay listed as daily’s. Bids, due by the following Tuesday at midnight, must be submitted by a real estate agent who has completed HUD registration. Don't waste your time using a Realtor who is not familiar with selling HUD homes. Any mistake causes the bid to be rejected. Don't use an agent who says you must bid way over minimum bid. Find an agent specializing in HUD homes who wants to work with you on your terms. Many bargain HUD homes do sell for far more than the minimum bid. Hold out for the one property which doesn't get way overbid. (I bid about $40,000 under minimum on our second home owner-occupant mountain cabin.)

We submit many bids and win enough to make it pay us well. HUD only allows one repo purchase as an owner-occupant every two years from the date of closing.

Rely on your gut instinct and don't let your real estate agent unduly influence you. It is not a difficult process for your agent to make a computer bid. You need an agent willing to make a few bids to get a successful bid. This is like winning a lottery, with the odds in your favor.

Bids must have a lender’s loan commitment statement. Lenders unfamiliar with HUD requirements also waste your time. Any mistake causes you to lose the purchase. Not all lenders understand HUD’s bid, finance, and purchase process.

When placing a HUD bid, raise your offering bid to cover some of your closing costs. This means you get HUD to pay your closing costs and save out-of-pocket expenses. Also, the higher sales price impacts the market comparable sales in your favor for sale later. Your purchase price influences the values of the market area. Keeping prices higher for active sales during your renovation time protects your investment potential.

Don't get attached to one particular property. We placed a bid on a home I loved in Apple Valley and lost it by a few hundred dollars. The house came back on the list later, not at all uncommon for HUD repos. But, by this time, we had already purchased a better distressed property.

VA

Cleaner than HUD repos, homes owned by the Veterans Administration are also offered on a bidding system through real estate agents. The VA partially fixes up their repossessed homes. The VA sometimes offers vendee (seller) financing with few processing costs, low interest, and no prepayment penalty. You do not have to be a Veteran to buy these easy to qualify for homes.

As of this writing, the VA is changing the way these homes are offered for sale. This is another reason you need a real estate agent who stays on top of recently revised marketing procedures relating to government-owned properties.

Less known government agencies such as Fannie Mae, Freddie Mac, FDIC, SBA, the IRS, and GSA list repossessed properties on their individual web sites. These properties, rarer than HUD and VA, usually get cleaned and repaired before listing with real estate agencies with sale prices closer to market value.

REOs

Banks often offer their real estate owned—REO homes at bargain prices. Depending on the bank’s resale policy, conditions of the property, and available financing, REO opportunities vary widely. Several banks lend on their repos while other banks just want out. Great financing becomes possible through the banks who offer in-house terms. Ask for no points, minimal loan costs, and no prepayment penalties. Check with your local lending institutions and find out how they market their repossessions. Many of these bankers will give you their web page listing available property. Befriend real estate agents who specialize in listing bank-owned repossessions so they will notify you of a new listing immediately.

Multiple Listings

It is hard to find a bargain in multiple listings, but not impossible. Check out listings which have been on the market for awhile. Look for vacant houses, as these cost the seller money every month. Make an offer for much less than asking price with a quick escrow. Many anxious sellers jump on an offer if they think they will be out of their problem in only ten days. This is another reason you need a lender and an escrow officer who perform fast.

I follow the multiple listings in our area on the Multiple Listing Service. One of my agents emails me new listings daily. You need an agent who calls you the minute a new distressed property listing becomes available. Under-priced listings mostly get snapped up by the real estate agents and their investors before they hit the market.

Just like making many bids, make many offers. You never know when a seller’s problems reach a critical point causing abrupt action.

For Sale by Owners

Houses for sale by owner may not always be a great buy, but there is always at least one bargain out there. Many investors prefer buying directly from the owner. If you have ever tried to sell your home by yourself, you probably met some of these investors. Cruel, hard, and in some cases, fraudulent investors dream up all kinds of schemes to steal houses from distraught homeowners. Understand that the home seller most likely dealt with these callous investors before you and therefore may view you with suspicion. Earn their trust by working with them honestly and compassionately.

Seller’s Motivation

Let honesty and kindness guide your actions with sellers. Finding out the seller’s specific problem is the key to helping them and yourself. Uncover the seller’s particular need and find a solution. Because it is embarrassing for some sellers to let you in on their troubles, extra sympathy and relaxed timing helps you unearth their underlying motivation. Listen carefully, stop talking, and pay attention to details which lead to understanding the real reason they need to sell.

The seller may need a quick escrow, need to rent back the home for a while, or want immediate cash. You could give the seller a loan of cash with a note secured by the property. Ask an attorney about your state laws regarding this type of purchase advance. We offered a seller a $2,000 deposit outside of escrow, which went toward the down payment, to entice a money-hungry seller to commit to our low price.

Many sellers do not need all of their cash out. Owner financing is a great deal for you. Usually, you get a lower interest rate and you don't have to pay lender’s points or prepayment penalties. Also, these loans typically won't show on your credit report so you won't have these payments counted against you. If you have a good credit report, take a copy with you to show to the seller. This prevents more inquiries on your credit history and keeps your credit score from dropping.

Ready to Buy

Be prepared to make an offer immediately when you find a bargain. Make sure you are pre-approved with a great lender who can close quickly.

Distressed sellers and fixer houses offer you a great way to get into the real estate investing business.

(c) Copyright 2005 Jeanette J. Fisher. All rights reserved.

Professor Jeanette Fisher, author of Doghouse to Dollhouse for Dollars, Joy to the Home, and other books teaches Real Estate Investing and Design Psychology. For more articles, tips, reports, and newsletters, see http://www.doghousetodollhousefordollars.com/