Tuesday, April 1, 2008

Seller Financing Coming Around Again

Tight mortgage money makes seller-financing, not a silver bullet to shoot down stiff underwriting standards, but an option to consider in a tight mortgage market.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - If you can't find a bank to approve your home loan, ask the seller to consider being your mortgage lender.

Only a fraction of sellers are willing to take on the role of financier, but that fraction is likely larger than it was a few years ago when lenders had plenty money to lend.

That's because today's home buyers are having a tough time finding mortgage money and sellers are having a tough time finding buyers.

Seller financing isn't an option for every transaction, but it can be a win-win situation for those who can strike a deal, says Greg Winfield, who runs the web listing service OwnerWillCarry.com.

Winfield says seller financed mortgages can come in a variety of formats with all terms negotiable between the buyer and seller.

The best seller-financing comes with properties that are mortgage free and clear. The seller simply accepts a note -- a legally binding loan contract -- from a qualifying buyer.

Such a seller, who finds a qualified buyer, likely can move the home faster than waiting for the current hard money market to yield an approved buyer.

If the seller offers relaxed terms and other incentives, he or she can get a fair price for the home, a higher investment return than other investments, tax breaks due to reporting the sale as installment payments, monthly income, and a shorter listing term.

Benefits to buyers typically include less stringent qualifying, down payment requirements and flexible, tailored rates, closing costs and loan terms and rates.

Elizabeth Weintraub, with Lyon Real Estate's downtown Sacramento office, says because buyers and sellers aren't waiting for a lender to process the loan, closing is faster.

Weintraub says the deal gets more complicated when there's an outstanding mortgage, a fixer-upper home, lease option or land contract involved.

Whatever flavor seller-financing you choose, you will also need a real estate attorney or other seller-financing proficient professional to draw up the papers.

Weintraub says the types of owner financing include:

• Land contracts don't pass title to the buyer, but gives the buyer what's called "equitable title," a sort of temporarily shared ownership. The buyer makes payments to the seller for a term and after the final payment or payoff, the buyer gets the deed.

• Promissory Notes and mortgages are carried by the seller for the entire balance. Also called an "all-inclusive mortgage" or "all-inclusive trust deed" (AITD).

• The seller can carry a junior mortgage, the buyer receives the deed, but gives the seller a second mortgage for the balance of the purchase price, less the down payment and first mortgage amount.

• Lease purchase or lease option. The seller gives the buyer equitable title and leases the property to the buyer for a contracted term. When the buyer fulfills the lease purchase agreement, the buyer receives title and typically obtains a loan to pay the seller. Some or all of the rental payments are a credit against the purchase price. Numerous variations exist.

More DeadlineNews.Com seller financing and creative financing stories.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.


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Is There Room For DotHomes?

Already a two-time top award-winner, a new, British-made home listing search engine for The States has been dubbed "The Google Of Property."

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - Is there room for yet another real estate listings Web site?

You bet, if it's packing a search engine as powerful as Google's.

That's what Douglas de Jager was counting on when he launched an American-version of DotHomes .

DotHomes uses super-powered search algorithms to pump out listings of homes as fast as you can type in a ZIP code.

And the real estate industry won't have to lift a finger or pay a dime to add listings.

Instead of relying upon brokers, agents and multiple listing services to supply listings, often for a fee, DotHomes has its own search machine to reach out and grab listings from wherever they appear online.

Just type in a city, ZIP code, street name, price range or other search terms and the listings, as well as rental units, pop up in an instant. The search is amazingly fast. You can narrow your search by the number of bedrooms, baths, how long the home has been for sale and other factors.

Each listing comes with a photo, a brief description, a Google locator map and a link directly to the original listing on the real estate agent's or broker's Web site.

The site has been dubbed "The Google Of Property" because it appears to be the property of Google.

It isn't, but there actually is a nod to Google in DotHomes' "I'm Feeling Wealthy" button. Click it and you get the most expensive listing in a city or neighborhood.

London-based BytePlay launched DotHomes in the U.S. after successes with other DotHomes sites in Great Britain and South Africa.

With approximately 1.5 million U.S. listings, DotHomes competes with Web sites like Zillow.com, Trulia.com and other alternatives to Realtor.com.

So how will DotHomes pay the dotbills?

De Jager hopes to persuade the real estate industry -- recently suffering declining commissions -- to advertise with Dot-Homes. He says a new business model is just what the market needs.

Last summer Brit newspaper The Guardian said DotHomes was one of its Top 10 dotcoms to watch. Late last year, Esquire magazine gave DotHomes the nod as a Best New Idea at its Man at the Top Awards.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.


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Wringing Out: Inspecting Home Systems After The Flood

As soon as you can get back into your home after a flood or rain driven storm, get or give your home a once over determine what professionals you'll need to help dry out.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - After a flood, chances are, you'll have to call in the appropriate expert or two or three to clean up, wring out or otherwise return your home to its proper arid state.

Left unattended, rain storm and flood-related problems pose an insidious threat to the structural integrity of your home, especially its foundation and roof.

After you are sure it's safe to reenter your home and before you get started on the clean up, be sure to photograph, video tape or otherwise document the damage for insurance purposes.

Working from the ground up, here are the major problem areas the experts say warrant inspection and some tips on how to correct the problem should you find damage. Again, storm-related damage almost always requires a professional's touch.

Foundations, structural damage

Look for ceiling and wall buckling, a roof that's askew. Watch for falling plaster. Examine the foundation and supports where the walls meet the ground to check for undermining. Walls can be checked with a level or plumb bob.

Be very careful if you elect to inspect the foundation areas by digging along the side of the house. Saturated ground could cave in. Look for ponding around the foundation of your house. Pilings, common to some homes in coastal regions, should also be checked by a structural engineer for settling or shifting. A soils engineer may be necessary to check to ground. Also check any wood bracing beneath the house to make sure it's not soaked.

Severe buckling or shifting in the walls requires immediate attention by a structural or foundation engineer or general contractor familiar with foundations.

You should always maintain a slope of 1/2 inch per foot for three to five feet (like an apron all around the building) all the way around the perimeter of the building. Even concrete walks and patios should have a similar drainage pitch away from the home. The slope allows the water to flow away from your home. Also well-maintained roof gutters and a downspout fitted to direct rain away from the house help accomplish the task.

Flooding, standing water

Experts say 70 to 80 percent of all homeowners will experience some flooding or standing water at some time, but standing water often indicates poor drainage around the foundation. Once you've checked for structural damage look for standing water.

Pump it out to the drainage sewer slowly and carefully. In many cases, more damage can be caused by pumping too quickly. As the basement fills with water, it acts as a brace to water pressing against the outside walls.

Pump it out too fast and the walls could buckle and cave in. Pump in stages, about one-third of the water each day and watch the walls to make sure they aren't caving in from the outside pressure.

A long-range solution is to install a sump pump.

Roof leaks

Just where the roof is leaking is often the least revealing facet of a water-logged home. Water or moisture on a sloping roof won't leak down in a straight line, but drips along the rafters to some point away from the actual leak.

Begin your search by looking for discolored ceilings or walls. To find the source, go into the attic with a flashlight. The source may be noticeable during a rain, but not so obvious afterward. If it isn't raining, someone may have to spray the roof with a garden hose while you are inspecting in the attic. Once you locate the leak, mark it with chalk. You will need to patch it from above. In order to find the same spot when you go up on the roof, drive a nail or pass some wire up through the leak to the roof. Venturing up on the roof is for professionals or do-it-yourselfers with know-how. While you are up there, look for missing or damaged shingles and clogged, broken or rusted gutters.

Replace defective shingles or seal the leak with patching cement. Use plastic sheeting as a temporary covering for any large areas of damage and call in the professional later.

Also check for leaks in the flashing around the chimney, vent pipes or windows. If the metal flashing has been blown off, replace it with flashing that is 16 inches wide with a crimp or rib down the middle.

Seal it with asphalt roof patching cement. Use the asphalt roof patching cement to repair leaks around chimneys or pipes, where metal flashing is sound. It helps to leave the can indoors overnight to warm up the cement so it's easier to work with.

After a flood or rain-driven storm, once you've examined your home's large structural components, take a closer look at other systems you'll need to dry out.

Soaked hardwood floors, carpets, rugs and other flooring

Depending upon the length of time its been soaked, a hardwood floor and its connecting components may become warped and rusted creating squeaky floors. More damage could warrant refinishing and replacing part or all of the floor boards.

Turn nylon or other synthetic carpeting upside down to expose the backing to circulation. Place outside in the sunlight, or spread out in a warm room on an improvised drying frame of old chairs or sawhorses. Wool or cotton carpets are vulnerable to mildew. They should be dried more quickly, using clotheslines, large dryers or professional cleaners. Pull up the carpet pad to ventilate the floor. Rubber and foam pads can be dried out and saved. Jute and horsehair are difficult to dry.

Electrical outlets, gas valves

Flood waters come with debris, including silt that clogs and ruins gas valves and renders electrical outlets inoperable and dangerous. Any electrical outlet clogged with even a bit of silt or other object will short circuit.

Do not turn on electrical equipment until you've had a professional evaluation. Be careful in moving any electronic equipment to avoid further damage. Switch off all equipment and disconnect backup batteries. If possible, disconnect fuses.

Replace any gas valve recovered from flood waters. Disassemble and clean or replace all electrical outlets that have been submerged.

Soaked wall materials

A week or two of drying out and a fresh coat of paint may be all that is necessary. If so begin with a fresh undercoat of primer before painting. Otherwise, stains from water and rusted nails will bleed through the final coat.

It's likely water damaged sheet rock will have to be removed and replaced, particularly if water has been trapped in wall cavities.

Doors that stick

Shifting foundations can cause doors to stick. If you shave the edge of the door when the soil is wet, you may have an airspace when the soil dries and the foundation shifts again.

Instead, install weather stripping or an adjustable threshold under the door that will adjust to the movement of the door.

Windows that leak

Caulk leaks around window frame. Butyl and silicone caulks are recommended for longer wear. Be sure that the surfaces are dry and clean. If necessary, build an eave or overhang above the window so it is not exposed to a direct downpour in the future.

You can also install metal flashing above the window trim to help divert the rain. Use galvanized nails every inch or so, and apply caulking between flashing and wall.

Soggy insulation

Replace soaked insulation. Cellulose that has been treated with fire- proofing and vermin-proofing solutions can become acidic and corrode electrical wiring, nails, and other metal devices. Fiberglass becomes matted and ineffective.

Don't overlook DeadlineNews.Com's Storm Warning section and other Disaster Stories.

© 2008 DeadlineNews.Com

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Get news that really hits home for your Web site or blog from DeadlineNews.Com.

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.


DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime


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