Published Date 7/6/2018

Today’s homebuyers can unwittingly become targets of scams, as evidenced by a report today by NBC in which it describes how a couple was robbed of their life savings. Citing this as a mere sampling of what can happen, real estate experts say everyone shopping for homes need to stay vigilant.

The news report spoke with multiple homebuyers who fell victim to the same scheme: hackers, intercept emails and pose as agents, conning buyers into wiring or sending their down payments to the thieves’ bank accounts. By the time these victims realize what just took place, the money, as well as the scammers, are long gone.

The story cites the example of a San Jose, CA, a grandmother whose rent was about to be doubled and decided she was to move from the San Francisco Bay Area. Focusing on moving to Ohio, where her grandchildren live and where housing is substantially cheaper, she found a new home for herself south of Cleveland with an asking price around $28,000 — not even a down payment on a property in much of California, but a typical asking price in the rural Midwest.

She offered slightly less to the listing agent and was elated that her price was accepted. She decided to pay cash for the property out of her retirement savings, thrilled to know she would at last live in her own home mortgage-free. Soon afterward, she received an email telling her where to wire her funds. She complied, transferring her $25,400 payment into the designated account. Just a few days later her life changed forever after her real estate agent told her to head to her bank ASAP. There, she found she had wired her money to a fraudulent account. The listing Realtor’s account had been hacked. The buyer was told to stop the transaction, and she did, thinking this nightmare was over. But it wasn’t.

After days of wrangling with her bank in California as well as the bank in which she deposited the funds, the buyer learned her money had already disappeared from the fraudsters’ account, leaving her less than $250 in life savings.

The report cited Dave Walsh, Treasurer for the California Association of Realtors, who says the problem of real estate wire fraud is growing and hackers are now targeting virtually every homebuyer, seller, and agent to capture the huge sums of money changing hands.

“When you realize that’s the depth of the thieves’ efforts to get into — to breach these data firewalls — it’s endless,” Walsh said. “There’s bots everywhere now, and they’re simply attacking any server, including the real estate professionals’ servers, for any kind of data they can get.” The report goes on to say that using the information they get from those private servers; scammers then fabricate documents that trick mortgage brokers, title agents, real estate agents, and consumers into wiring money to the wrong place.

How to protect yourself? The California Association of Realtors says home buyers need to (1) call and verify everything before sending any money. This included your agent, the seller’s agent, the escrow officer, and the title company. (2) Confirm account names and numbers. (3) Call everyone again immediately after the transfer.

The grandmother in question found herself fighting banks, brokers, and even police to no avail and decided to report her dilemma to local news sources.

Attorneys are now involved.

Semantics are alive and well with real estate. You either buy, or you invest. Right? Well, let’s admit there is a slight nuance here. You plan to live in what you “buy,” but the idea of investing carries the connotation of renovating and making a quick buck. Today’s consumers are much more interested than ever to try their hand at flipping. The problem is, many of them have not done their homework, making the path ahead fraught with potentially costly roadblocks.

These days of frantic buying have caused many a consumer to muster up a quick education about real estate, but it may not always be a complete one. In a galaxy not that far away, raising capital for a simple distressed single-family house fix-and-flip used to be met with negative reactions. As a result, the world of real estate investing was at a standstill, and golden opportunities were missed.

HGTV and its reality shows about flips put new steam into the idea of buying the worst property on the best street. Suddenly everyone had a dangerous knowledge about buying distressed real estate, distilled into 50 minutes of airtime. Even Wall Street has recognized the residential rehab craze, sustaining the longest bull market ever, since real estate is a great hedge against a Wall Street correction.

What we are left with is a market full of people doing flips, driving property values up, and fueling the demand for inventory. But someone is bound to get burned. So, how do you start playing the real estate investment game and NOT be the guy who got there too late for those $100 bills being handed out on that proverbial corner somewhere?

Forbes New York Business Council’s Melissa Shea, a 15-year RE investor, and educator, offers some tips, the first of which is to take to heart in the saying that goes, “If you think the price of education is expensive, try ignorance.”

A quality education is key here, but we’re not talking about buying a course from some TV real estate guru standing in front of his yacht while leaning on his Bentley. What he’ll tell you won’t come close to the true reality of a fix-and-flip. Shea’s advice is to “take the money you would pay a guru, buy a house, and flip it by yourself. You’ll lose less money and learn more. The best place to start is local real estate investment clubs and associations. You need local knowledge, not national programs.” She recommends finding local investment clubs and associations by going to CRE Online or to the National Real Estate Investors Association. Don’t let your education stop there, however, she recommends. There is a podcast, among others, called Bigger Pockets that offers real content, excellent education and follows the trends, according to Shea.

And then there is the emotional component. Shea warns you not to get attached to properties, causing you to overlook costly potential errors. “People rationalize, ‘It’s only $3,000 more,’ but you said that three times ago, so now it’s $9,000 more, and you aren’t going to make much of a profit. Don’t lie to yourself. Stick to the numbers; they don’t lie,” she says. She warns against allowing yourself to increase your purchase price and not deluding yourself that the rehab is going to cost less than the quote your contractors gave you. “It’s always more,” she says. “Don’t fool yourself into thinking the property will sell for a higher price than the last house in the area because yours will be ‘so much nicer.’ That’s a recipe for financial disaster.”

Shea also advises you not to be alone on that investment island. “Going it alone is one of the worst mistakes you can make. Personally, I love joint ventures.” Time was when you could be a complete rookie, purchase a property, wait a few months and, without touching the property except for mowing the lawn and emptying the house, make a tidy sum. Even then, it was more likely that you would have lost money or broken even. The real estate market crash, however, served as an expert professor, teaching investors to use reputable attorneys, seasoned Realtors, long-established title companies and reliable lenders, and to network with other investors, she says.

Real estate investing is still not an exact science, according to Shea. “There are plenty of dangers, but if you’re educated, keep a level head, don’t get emotionally involved, and work with an award-winning team, you can enjoy the pleasures real estate investing can bring.”

Source: TBWS

Published Date 6/26/2018

It’s not all that uncommon. You tried to fix something in your house using all the analytic skills you apply to other parts of your life, inspired by how easy it looks on HGTV. With all the best of intentions, however, what seemed simple turned into an obviously less-than-expert job. In fact, even your Realtor noticed it when telling you what to do when getting your house ready to sell.

Realtor.com’s Audrey Ference, in her article The Worst Mistakes You Can Make Before Selling Your Home offers us wisdom on why doing some things yourself is not always about saving money and could, in fact, cause you even more cash outlay and possibly a lawsuit when selling your home. Even National Association of Homebuilders’ remodeling chairman Dan Bawden chimes in, saying, “You have to ask yourself: Is it likely to do more harm than good?”

Here are some tasks recommended better left to a professional:

If your house just needs a fresh coat of paint, don’t sweat it. Get thee to a paint store and buy the paint, some brushes, a few rollers and some drop cloths. But if you have cracks in the drywall from a shifting foundation or a evidence of family members taking out frustrations on a wall, hire a pro. Texturing is a bugger and if you don’t get it right, it will look like a bad Bondo job on a car door. In other words, the cure will have been worse than the illness. Call a drywall repair person. Then use that paint.

Even professional contractors who have been in business for years don’t mess with anything inside a heating or cooling system, according to Bawden. These systems are complex and are often connected to both electrical and gas. You could blow out the entire system by doing it wrong, creating a much more expensive repair than if you had never touched it. Besides, any potential buyers of your home would most likely hire an inspector to go over the HVAC system and your goose will be cooked. According to Bawden, even something as simple as installing a smart thermostat can fry your wiring if done incorrectly.

It’s not like installing a fridge, a washer or a dryer when it comes to putting in a dishwasher. Installing it yourself is complicated, involving installing water and drainage lines under the kitchen sink cabinet or changing out existing ones. Doing it wrong could mean flooding your kitchen, ruining your floors, and getting a homeowner’s claim rejected because it’s obvious it was done wrong. Appliance stores offer installation at reasonable prices when buying new, and a plumber may charge around units, or a plumber can handle it for $150 to $500 — well worth the investment.

It may look easy, but it isn’t. “Popping” a new window into an old window opening is fraught with bad omens,according to Bawden. Water can seep into the walls if you don’t reseal the layers properly and it may not be discovered for a few years down the road, when mold becomes a creature instead of a word. Lawsuits get steam not only because of this along with trying to apply siding on your own — both of which deal with keeping moisture out of the walls of your house. Hell hath no fury like a homeowner who can produce medical bills related to a mold issue.

If it’s electrical and it’s more than just putting in wiring for a light fixture, draw the line at any electrical work involving the breaker box. “Not only could you hurt yourself, you could also create a fire hazard, especially if your home isn’t brand-new,” says Ference, who goes on to quote a handyman who talks about how older homes lack safety devices like GFIs (ground fault circuit interrupters). Running new wires or repairing faulty wiring should be left to a professional.

There’s a song from the ‘60s called Up on the Roof, but it shouldn’t be sung by you if you’re thinking about doing anything more than hammering down a shingle or two or replacing chimney pipe roof flashing. Even professional roofers wear harnesses in case of falls so they can keep singing ‘60s songs.

Lastly, we can’t tell you not to fix a running toilet or snake a drain. People do it every day. But when it comes to taking apart leaky or blocked pipes under a sink, you should run in the other direction. Pipes can be tricky to reassemble,particularly when they’re in close proximity to other plumbing components and machinery, such as dishwashers or garbage disposals, according to the article. What might look like an easy fix could actually be a symptom of a larger issue with your system. Even HGTV hosts discover things like this as they rehab what looks to be the worst home on the best street in town.

Source: Realtor.com, NAHB, TBWS

Published Date 6/25/2018

As the real estate market continues to sizzle, driving prices ever higher, it’s not unusual for appraisals to be a sticking point. Just because you’ve asked $300K for your home and got an offer at $320K doesn’t mean the appraiser can justify the value all the parties agreed to, however.

There may be limited comparable properties in your neighborhood because no one around you wants to sell. People are simply staying in their homes longer than they used to. So what can you do to make this deal work?

For one, your agent can compile as much market data as possible to challenge the appraisal. While an appraisal is not an exact science, most seasoned appraisers try hard to hit the sales price of the home right on the mark if they have enough data to justify it, so the better your Realtor can state his or her case, the better the chances are that the appraiser will be willing to make a few adjustments.

When an appraisal comes in short of the agreed-to price, however, there are a few reasons for it, including an artificially inflated price resulting from multiple offers. As we mentioned, rising market values due to limited inventory and few comps are a real bugger these days. But an appraiser might also have overlooked a pending sale data that could reflect higher comparable sales when closed. Or the appraiser may have selected comparable sales from the wrong neighborhoods. All of this can be brought to the appraiser’s attention by you or your Realtor.

Your agent should have a good feel for what is going with real estate values, having reviewed the comparable sales and listing and can offer information the appraiser might have missed. This includes amenities in those comparable listings that were included or excluded that affected that home’s value and ultimately the amount of the appraisal — all of which can affect how they view your listing. In very limited cases, the buyer’s lender may send out a second appraisal to get an additional opinion to get things through, because after all — lenders are still in the business of lending money. Their goal is simply to prove to their underwriters that the risk they are taking is justified.

In the case of a low number, the buyer can use the appraisal to negotiate a reduction in the purchase price. That is more common in balanced real estate markets, however. In today’s hot bidding environment, another buyer may be willing to buy the home even when the appraisal comes in a bit low by plunking down more cash to make up the difference.

According to the National Association of Realtors 2018 Confidence Index that was published in May low inventory, interest rates, and multiple offers were the major issues affecting transactions, with only 43% of properties sold at original (or net premium) asking prices.

Source: Washington Post, NAR, TBWS