What is my home worth?

June 2008

The most common reason people want to know is because they are thinking of selling, but there are other reasons. Perhaps you are being relocated and your company intends to assist you. Maybe you're thinking of a refinance. You may be intending to deed a portion of the property to a family member and need to place a value on it.

There are all kinds of reasons you may want to know your home's potential sales price.

A common questions is, "So where do I get an appraisal?"

You may not need an appraisal.

Appraisers define market value differently than real estate agents do.

Appraisers focus on recent closed and pending sales. In short, they are looking backward to use data they can document. An agent is looking to the future, taking into account comparable sales, pending sales, listed prices, the market, average sales time, and available inventory, in order to predict a future selling price.

For that reason, a qualified local real estate agent will generally outperform appraisers in anticipating the near-future market price of a particular home.

So how do you know the real "market value" of your home?

You can ask your real estate agent.

Agents know what the market is like "right now." They know if the market is hot -- they know if it is cold. They know if your home is over-improved for the area. They can look in the Multiple Listing Service and see what has sold but not yet closed.

They have the expertise to know what your home is worth and they are willing to share that knowledge with you for....free. No cost. No money.

Free.

If you need an agent at some point down the road, then you give them a call and give them an opportunity to tell you what they can do.

They help you up front to determine an acceptable worth, you give them the opportunity to earn your business. That's all they want in exchange for this free service...and most perform this service very well.

Just ask for a Competitive Market Analysis. Or...you could ask for a "CMA." Using jargon always makes you sound "savvy" and in the know.

For your FREE home evaluation, give me a call today! Our offices can be reached at (936) 588-4099 or visit us online at PattiShannonProperties.com Our website continues to to be a beacon for those searching for properties in the Lake Conroe area. People from all over the country (actually - all over the globe) are viewing properties for sale on PattiShannonProperties.com

Tips for Real Estate Investments

May 2008

Lower Your Taxes

Tax incentives for real estate investors can often make the difference in your tax rates. Deductions for rental property can often be used to offset wage income. Tax breaks can often enable investors to turn a loss into a profit.

For which items can investors get tax breaks? You could claim deductions for actual costs you incur for financing, managing and operating the rental property. This includes mortgage interest payments, real estate taxes, insurance, maintenance, repairs, property management fees, travel, advertising, and utilities (assuming the tenant doesn't pay them). These expenses can be subtracted from your adjusted gross income when determining your personal income taxes. Of course, these deductions cannot exceed the amount of real estate income you receive. In addition to deductions for operating costs, you can also receive breaks for depreciation. Buildings naturally deteriorate over time, and these "losses" can be deducted regardless of the actual market value of the property. Because depreciation is a non-cash expense -- you are not actually spending any money -- the tax code can get a bit tricky.

Have a Positive Cash Flow

There are two kinds of positive cash flows: pre-tax and after-tax. A pre-tax positive cash flow occurs when income received is greater than expenses incurred. This sort of situation is difficult to find, but they are usually a strong and safe investment. An after-tax positive cash flow may have expenses that outweigh collected income, but various tax breaks allow for a positive cash flow. This is more common, but it is generally not as strong or safe as a pre-tax positive cash flow.

Regardless of what kind of real estate you choose to invest in, timely collections from your tenants is absolutely necessary. A positive cash flow -- whether it be pre-tax or after-tax -- requires rental income. Be sure to find quality tenants; a thorough credit and employment check is probably a good idea.

Use Leverage

One of the most important factors in determining a solid investment is the amount of equity you are purchasing. Equity is the difference between the actual worth of the property and the balanced owed on the mortgage.

Benefit from Growing Equity

While investing in real estate is relatively complex, it is often worth the extra work. When compared to other financial investments, like bonds or CD's, the return on investment for real estate purchases can often be greater.

The key to real estate investing is equity. Determine an amount of equity that you want to achieve. When you reach your goal, it's time to sell or refinance. Determining the proper amount of equity may require the assistance of a real estate professional.

Information provided by Total Real Estate Solutions.

Foreclosure Rescue Scams

April 2008

Dear Patti,

This year our family has gone through some tough times. Because of this, our bills have overwhelmed us and we have had trouble making our mortgage payments. We have fallen behind and are fearful that we may lose the house. We received a letter in the mail from a company that says they can help us save our home……………..

I was told a long time ago, “When people are desperate, they will take desperate actions”. If you fear losing your home and someone reaches out to you to help you keep it, you may think that your problems are over and that help has arrived. I am all for people helping people, but with a bit of caution. Be aware that there is a growing problem that looks for the type of situation as described above.

Mortgage Foreclosure “Rescue” Fraud is costing people their homes across the country. These scams are expected to grow in popularity as more people default on large mortgages in the future. These scams involve thieves who steal people's homes and equity after promising to help save the home from foreclosure.

Foreclosure rescue scams usually fall into one of the following three categories

Phantom help - In this scam, the supposed rescuer charges very high fees for basic phone calls and paperwork that the homeowner could have done. Or, the rescuer will make promise to represent the homeowner but will not follow through. This is really a too little too late scam as in the helpless homeowner receives too little (or no) help too late to stop the foreclosure from taking place.
Bailout - Here the scammer bails the homeowner out by helping them get rid of the house. The way the scammers get the house varies, but each method ends with the homeowner surrendering the title to the house on the promise that they can stay on as renters and buy the house back once things have been "fixed." In the end, of course, the homeowner can't buy the house back and the supposed rescuers get most, if not all, of the equity.
Bait and switch - This is much worse than the bait and switch routines executed by unethical car dealers. At least with those scams you still get a car. The only issue there is that, you just get to spend more money for a different car than you wanted. The bait and switch with foreclosure scams involves signing away the ownership of your home.
The scammers will tell the victim that they are signing documents for a new loan that will solve their problems. In reality, they are signing forged documents that will give the crooks ownership of the home. To make matters worse, the victim will still owe for the mortgage but will no longer have the asset.

Perpetrators of foreclosure rescue scams prey on the desperate people in desperate situations.

As is the case with any scam, avoidance is the best medicine. This is particularly true with foreclosure scams as undoing the damage done will involve money for attorney fees, time, and intervention by state regulators. When people are desperate, they will believe just about anything if it involves much needed help. Just remember, if something sounds too good to be true, it probably is.

These scams are so new, and the laws are so vague regarding them, that law enforcement has so far been reluctant to intervene. Even if the con artists were prosecuted, it would probably not be enough to save the home that was being foreclosed on in the first place.

Foreclosure “rescue” scams usually begin with an offer too good to be true

A “rescuer” finds homeowners in need of "help" through local public-foreclosure notices. Believe it or not, there are actually companies that specialize in compiling and selling such lists.
The “rescuer” advertises their service by dropping a card or flier on the victim's doorstep or calls to offer their service. The “rescuers” have also taken to posting ads in public places. Ignore posters, fliers and especially handwritten notes offering help for your foreclosure.
A meeting is set up. At the meeting, the “rescuer” builds up the victim's hope and promises a fresh start. There are also empty promises made such as that they will sell the house back to the victim at some point. What typically happens is the “rescuer” sets the rental price at a level that the victim cannot afford, then they move to evict them for failure to pay the rent. What's even worse is that all it took for the “rescuer” to buy the property was to payoff the delinquency.
The “rescuer” will recommend that you break off contact with the lender and any counselor that you may have been working with. This is the exact opposite of what you should be doing. If you are in a foreclosure, you need to be in contact with your lender to find out what you can do to fix the problem.
The “rescuer” will do very little to help leading up to the actual foreclosure. They might make a phone call or have their prey sign some innocuous paperwork to make it look like they are really trying to help. Then, when it is too late to stop the foreclosure, the property is either taken when the scam is completed or sold to someone else at foreclosure. If the latter event happens, there is little if any equity left due to the “rescuer's” fees.
Homeowners who thought they had a deal to continue as renters can now be evicted from the very house that they owned. Even worse, because the mortgage was not paid off, the victims are without a place to live and owe the mortgage!

Foreclosure rescue fraud utilizes basic tactics and conditions to gain the victim's trust.

It seems like foreclosure scams would be too complicated to execute. At their most basic, however, they utilize some very basic tactics under favorable (to the con) conditions.

The use of lies, exaggeration, misinformation and pressure.
Blind trust in someone that the victim's think really want to help them.
Fraud, deception and forgery.
The desperation of the victim who feels his or her dream slipping away.

Foreclosure is difficult enough without scams being involved in the process. Follow these do and don'ts

Do not bury your head in the sand. The problem will not go away, and will only get worse if you ignore it.
Do make sure that you are in foreclosure. If you are behind in payments, you will receive what is called a deficiency notice. These letters notify you of your delinquency and give you a chance to resolve the debt. If you receive a Notice of Trustee's Sale, or similar document, you are in foreclosure.
Do speak with your lender. Try to work with your lender to restructure the payments or refinance the loan.
Do learn the laws regarding foreclosure for your state. It is important to know how much time you have to resolve the issue.
Do contact a counseling agency. This is often too big of an issue for a person to handle on his or her own. Make sure that the counselor is certified by the Department of Housing and Urban Development (HUD). Their website is www.hud.gov.

Be careful when choosing a counselor and pay attention to the certification requirement recommended above. Some counselors are scammers in their own right and will overcharge for services that they do not even provide. It's really very easy to tell a scammer from a legitimate counselor: You should not have to pay for legitimate housing counseling.

Do contact an attorney. You can find one through the National Association of Consumer Advocates ( www.naca.net ). Remember, you get what you pay for so you may be better off searching locally for a consumer protection attorney.
Do not sign a contract under duress. Always request to take time to review any documents on your own and at your own pace.
Do not enter into oral agreements. Get in any offers in writing and tell whoever is making the offer that you and/or your representative will review any and all offers.
Do not make payments to any party other than the lender.
Do not sign a home-sale contract where you are not released from your existing mortgage.
Do not sign a quit claim deed without being specifically instructed by your attorney or representative to do so. Do not agree to any deal that allows you to rent the property and then buy it back at a later date.
Do not accept an offer from somebody who wants to make good on your missed payments and take the house off your hands in exchange for documents that assign them the surplus from the foreclosure sale. Think about it, if you owe $200,00 on your mortgage, plus arrears of $10,000, and your house is worth $250,000, you stand to make money on the sale.
Do sell your home but only if there are no other options. It is not always possible to resolve delinquent mortgage payments. Selling a home and receiving the equity is much preferred to having your home stolen by thieves.

What to do if you get caught in a foreclosure rescue scam-

If you get caught in one of these scams it is imperative that you contact a consumer protection lawyer right away. An attorney can assist you as you navigate your way through hearings with enforcement agencies, eviction hearings and in lawsuits. Not a pretty picture.

If you believe that you are the victim of criminal activity, such as forged documents being presented for your signature, you should contact your local law enforcement agency. Unfortunately, these scams are so new that there aren't many resources available to fight them. Consumer protection groups are already advocating for laws to fight these types of scams.

Should I buy a home in today’s market?

April 2008

Dear Patti,

Give me some good reasons why I should buy a home today when all the headlines are telling me not to and interest rates are about as steady as my teenagers mood swings!

Wow! Excellent question! By the way, I have two teenagers and a pre-teen myself!

Well let me first say, when an opportunity presents itself, even if you are only a few weeks into looking, jump on it! There are deals to be had now more than ever! Some sellers recently have reduced so drastically in the last few months that these homes have been experiencing multiple offers and buyers are earning instant equity!

I know some of you are saying you would rather sit on the sidelines and wait and see. However, that may just find you missing out on some fantastic opportunities. My advice is to do some Real Estate homework and find an experienced REALTOR® that knows the market!

Call me and I will explain why I call today’s market “The New Deal!” Frankly, in Texas, and even more finite - Montgomery County, we have our own set of circumstances which makes our local markets fair better than most of the nation. Experts report that the population in Texas is growing at a steady rate, and thus increasing the demand for housing. You have seen it with your own two eyes, new construction popping up all around us! Montgomery County is still strong! Our state’s economic forecast is still positive with moderate increases in hiring, continued hikes in corporate profits, and annual salaries on the rise. It never hurts to have another reason to be proud to be a TEXAN!

Now that you understand that Texas Real Estate is not poison and still a great vehicle to invest in, you need to prepare. I encourage my clients to consider a few things that will allow you to move in a hurry when those “great opportunities” present themselves. I can’t stress enough that previous planning prevents problems.

Get Pre-Approved! A potential borrower who has good credit, also has cash for a down payment, has managed their debt and has the documentation to prove their income and assets won't have a hard time qualifying for a mortgage. Fall short on any one of those requirements these days, however, and things get a lot more difficult. Getting a home with low or no money down, meanwhile, is a pretty much a thing of the past.

Become familiar with the area where you may want to purchase your next home or second home. By doing this you’ll be ready when a seller reduces drastically, or a new listing or foreclosure arrives in your area you can give yourself permission to pull the trigger and not lose valuable time starting from scratch and re-evaluating whether this is a deal or not! When you have the information you need to make a good decision, your chances will improve of making a quick and successful offer on a property. Even when homes are not flying off the market, you should be prepared to make an offer quickly. Why? It only takes one other interested buyer to beat you to the punch.

Once again, I want to remind you the importance of finding an experienced REALTOR® who knows the local market and inventory! That experienced and successful REALTOR® will guide you to those locations and opportunities.

Now is the perfect time for buyers to think like opportunists and jump in and snatch up a bargain on a prime piece of property! Especially those that just a little over a year ago were unreasonably overpriced! Let me help guide you through to success in today’s buyers market! I understand market trends and know the neighborhoods where you are looking to buy. I can track sale prices in your shopping area and look at comparables to help you make an appropriate offer.

To view the current inventory of available homes and properties, visit us at PattiShannonPropeties.com Our offices can be reached by phoning (936) 588-4099 – Call us today! We appreciate the opportunity to earn your business.

Buyers versus Sellers Market

April 2008

Dear Patti,

Question: What does it mean when you hear of a "buyers" or "sellers" market? Are there set standards for determining this? Can you tell which properties move faster such as condos or town homes or single family?

Answer: While there are no set standards, a buyers or sellers market generally reflects local pricing and sale trends. When values are rising and unit sales are strong, that's typically seen as a sellers market. When prices stall and unit sales drop, purchasers have more leverage in the marketplace so that is generally regarded as a buyers market. Actually there is a way to break it down and research trends that occur locally. Currently, we are experiencing a buyers market on single family homes, town homes and condos. The Houston Association of Realtors provides a month by month breakdown of the last twelve months. Please feel free to contact me and I can inform you regarding the number of months of inventory we currently are experiencing. It varies depending on location. This is the time to pay particular attention to your list price and don’t add in “fluff” room if you want to sell in a desired time period. Selling is taking longer and your agent needs to do his/her due diligence and be an expert at pricing so you can meet your goals! Now is the time to decide to really polish your property and make it outshine the others so it shows better than your competition! Price sells homes!

There are currently some great “deals” out there. If you find the home that seems to be a perfect fit, give us a call and we’ll help you make your dream your reality. Our offices can be reached at (936) 588-4099. We appreciate the opportunity to earn your business.