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Original Post Date: March 5, 2013
By: Jim Puzzanghera
WASHINGTON — U.S. home prices rose 9.7% in January from a year earlier, the biggest increase since 2006, a real estate data analysis firm reported Tuesday.
Southern California was among the best performing regions in the country, according to Irvine-based CoreLogic.
Prices were up 12.2% in the Los Angeles-Long Beach-Glendale market and 12.1% in the Riverside-San Bernardino-Ontario market.
The only area of the country where prices of single-family homes, including foreclosure sales, rose more was Phoenix, where prices were up 22.7%, CoreLogic said. The data add to recent reports showing a housing rebound.
“With these gains, the housing market is poised to enter the spring selling season on sound footing,” said Mark Fleming, CoreLogic’s chief economist.
The January price increase was the 11th straight and the largest year-over-year increase since April 2006, before the housing market crashed.
Prices in January were up 0.7% from the previous month.
Overall, prices throughout Arizona were up 20.1% in January from the previous year, followed by Nevada at 17.4%, Idaho at 14.9%, California at 14.1% and Hawaii at 14%.
Only Illinois and Delaware did not show price increases in January from a year earlier, Fleming said.
Foreclosures are often great investment opportunities and thousands of investors in the country consider it to be as integral to their port folio as any other investment. While foreclosures do make for a lucrative investment, the trick is to find cheap foreclosures.
It is a perception that foreclosures would come at a whooping lower price than what the home is actually worth in the market. This is a myth and something that has no relevance in today’s market. There was a time when foreclosures invited shockingly low bids and homes got sold at unbelievable prices. The market has changed and today the only way you can get cheap foreclosures is by taking the ideal route.
There are many ways of going about foreclosures. You can walk into an open auction, keep a track of information about foreclosures in print and mass media or you can take the route of private auction, trustee or sheriff’s auction or buy directly from the bank. Many people avoid open auctions of foreclosures because bidding at such events may not always get you a good deal. At times, they can turn out to be very profitable. For instance, when multiple foreclosures happen and several properties are listed in a single auction, the first few homes do not often get sufficient bids. Every bidder takes a while to settle in and to get a feel. These first few homes can come at very cheap prices. However, many a times, open auctions would actually inflate the prices of foreclosures as more bidders aim for the same property.
Buying from a bank directly has only one advantage. It does away with all competitors bidding for the property. This reason is good enough for anyone to go through a bank. Furthermore, if anyone is extensively into investing in properties then multiple foreclosures may be of interest to him or her. In such a case, investing in more foreclosures at the same time can lead the bank to offer further reductions in the cost of each property. Other types of auctions that sell foreclosures such as the sheriff’s auction or the one hosted by municipalities are all of the same nature and one must guard against getting carried out, thus inflating the price.
Irrespective of the route taken, every investor must have an extensive knowhow of the property prior to investing in it. Some foreclosures that appear to be costly may not be so considering the location and the condition of the home. Thus it is necessary to look at several aspects other than just the price.
Most real estate companies or real estate brokers, property sellers and buyers, lenders or borrowers prefer to hire the services of an Orange County escrow company during buying or selling a property. There are several advantages of having an Orange County escrow company to cater to all the interim processes of a property being sold and bought. Despite the benefits, some might feel that the charges which have to be paid as fees of an Orange County escrow company can be saved as it is an avoidable requisite.
Given the benefits and how convenient the entire transaction can be, the charges to be paid as fees for the services of an Orange County escrow company, it is not only reasonable and justified but also virtually nothing in comparison with the assistance and peace of mind one attains.
The first major benefit of hiring the services of an Orange County escrow company is the fact that both, the property buyer and seller, lender or borrower, or the parties involved in the transaction can be completely assured that no money would change hands until all the terms and conditions of the agreement are met with. Typically, any property transaction involves large sums of money and the principal parties involved in the process would almost always have their own clauses that have to be met prior to the culmination of the transaction. It is rather difficult for two parties, more so when they are not acquainted and complete strangers, to have a unified approach. While one party may be prompt in acting on what it has to do, the other party may not be as prompt. There are many areas that leave ample room to create discrepancies and the transaction, especially the payments, cannot and shouldn’t be initiated unless both the parties are equally satisfied, having their requisites met. An Orange County escrow company can hold on to the funds, keep them secured and have a completely impartial take on the entire matter. It is only when both parties deliver what they have to that the funds are paid to the recipient.
The second benefit of hiring an Orange County escrow company is to get all the necessary documents in place in a proper manner. Real estate transactions require a lot of paperwork. Even some veterans get it wrong at times and have to put in additional legwork. An Orange County escrow company would know exactly what kind of documents need to be in place and this can make the task of the buyer, seller and intermediaries if any, extremely convenient and simple.
Many homebuyers and especially investors express keen interest in the REO process. Some people invest only in properties that are in the REO process. Albeit there are many advantages to do so and here we will look at the benefits of REO process for a homebuyer or investor. But nothing comes only with advantages and there has to be a few challenges, shortcomings or drawbacks of anything. Thus we also look at a few challenges of the REO process, things that you would have to face and overcome.
Advantages Of REO Process
The first major benefit of an REO process is the value at which a property is available. It has been traditionally seen, for many decades, that properties that have not sold right at the time of foreclosures and short sales, which have entered the REO process and have stayed there for a while, are extremely cheap to buy. They are almost always sold at a much lesser price than what a normal property in the same area, of the same type would be sold at. This creates a perfect opportunity for any homebuyer or an investor.
The second benefit of the REO process is that because the bank or a lending company is in control of all the proceedings, things are much more systematic and quick. Banks would want to dispose of the property and sell it to someone which is why they would quicken any process. Furthermore, the REO process is professionally handled and you do not have to deal with short sale escrow or individual homeowners. This makes for an ideal environment for investors or new homebuyers.
The third benefit is that since homes in an REO process have remained unattended and the lending company or bank is only interested in making up the money it has lost due to a defaulting mortgage, it is often priced lower than what the property is truly worth of. Thence, investors get a property that is more valuable than what it is priced at. At a relatively lower investment, homebuyers can get a much more valuable property.
Challenges Of REO Process
The first major challenge of an REO process is that it would draw many investors. Although the initial bid price or ask price may be low, there is a possibility of it surging northward rapidly. Getting there first and quickly closing the deal is what one must try to do.
Secondly, the property may not be well maintained and there may be a need of repairs and some patchwork. If one is happy to do such minor touchups then the capitalizing on an REO process can be very lucrative.
The REO Process can be a lengthy one for a bank or lender trying to sell off a piece of property that its previous owner defaulted on. It is part of a larger overarching system in which banks or lenders use collateral to ensure repayment or debt payment in the case of a mortgage. Because real estate isn’t a bank’s priority or its primary source of profit, it’s usually eager to get rid of it by selling properties at discounts. The initials stand for Real Estate Owned and originates from the term OREO (other real estate owned), used on the financial statements of institutions that own property though it is not related directly to their actual business. Banks’ primary business is that of making and returning profit on loans; having to manage and resell seized real estate is secondary to, though still often necessary for, managing their business. After all, this real estate is an asset to a lender but it is non-earning asset and therefore somewhat of a burden. Once the borrower begins to miss or make late payments the property in question is considered distressed by the lender. At this point the bank will perform or request an appraisal to determine the equity in a particular home. The house may qualify for a short sale, but if it does not sell or is not allowed to enter a short sale, the lender (or beneficiary) will continue with the foreclosure process. If a property doesn’t sell through foreclosure auction or a short sale, it becomes REO property and belongs to the beneficiary. The REO process now involves the bank attempting to either sell the property itself or hiring an REO assets manager. The lender will release all liens on the property so it can be sold at foreclosure auction, by itself, or through realtors that specialize in REO properties. Many real estate companies look to buy these properties up due to their relatively discounted price. Purchasing these properties can mean a huge savings for investors and since buying an REO property isn’t very different from buying any other property. The REO process is one that banks find necessary but trying and so are happy to move these properties out of their possessions as fast as possible; this is great news for real estate agents and for individual buys looking to buy a home at a big discount from their normal market price.
REO is the acronym for real estate owned and thus REO process stands for real estate owned process. Real estate owned is a term that is used to refer to a property that has been repossessed by the lender, bank, government agency or mortgage loan insurer.
When a homeowner has a mortgage running, he or she may default once or more in paying the installments on time. If there comes a time when the repayments have stalled for several times and the homeowner is unable to continue repaying the mortgage, the lending company looks at ways to either get their money back or they take possession of the property. If the homeowner is unable to get a refinance or offers no viable solution to the present problem of a defaulting mortgage, the lender has all the rights to foreclosure.
Some homeowners try to opt for short sales, which is mostly the case when loan to mortgage values are very high. In many cases, the market value of a property dips below the amount of money the homeowner owes to the lender. In such scenarios, foreclosures may not always work in favor of the lender because they would be losing a substantial amount of money which was supposedly due as mortgage repayments. Short sale happens to be the only viable solution in these circumstances.
Whether a property is subjected to foreclosure or short sale, the homeowner has to give up possession and the house becomes a real estate owned property. This is the beginning of the REO process. The REO process then takes either the route of foreclosures or short sales. With foreclosures, the REO process may involve open auctions, private auctions, MLS listing or some real estate asset manager or broker can be hired to sell off the property to a suitable buyer who agrees to the price set out by the lender. In case the property doesn’t get sold in any of the auctions, through any of the listings or through direct sales, the property becomes a nonperforming asset for the lender and the REO process is in effect in full swing.
The property may be sold at a later date using any of the available means of marketing or approach and it is then that the REO process ends. In a nutshell, the REO process is the entire phase beginning with a property being categorized as distressed and ending with the reselling of the property to a buyer.
An escrow is generally defined as a sum of money that is held by a third party or in an account which is deposited by a buyer and which shall be paid to the seller upon completion of the terms of the escrow. The terms of the escrow are conditions upon fulfillment of which, the seller or recipient of the funds becomes eligible to ask for the payment and if the terms are met then the escrow company or account releases the fund without the need of any confirmation from the buyer. An escrow company or an escrow account is thus considered to be a third party that acts as the interim guarantor of payment in any transaction.
Escrow is used in various industries. It is used in real estate, by businesses to pay the companies they hire for a certain service and often it is also used by employers to pay employees that are not directly on the company payroll. Escrow offers the desired security and makes the entire process of payment efficiently convenient. But most important of all, an escrow offers the assurance to the buyer and the seller that all conditions of the agreement they mutually put up would be met prior to any payment being made or funds being released.
Normally, escrow becomes a crucial element in real estate transactions. This is simply because the funds are substantial, there are many parties involved and there may or may not be any level of familiarity between two parties. In such a scenario, it is very important that the buyer and the seller decide to operate an escrow that is completely nonpartisan. In many cases, real estate companies or brokers advise the property owner or the property buyer as to which escrow company they should be dealing with. In reality, one should make an independent choice. Knowing for certain that the escrow company is not favoring any side is necessary for the buyer or the seller, and both.
Operating an escrow would typically involve giving out a lot of information. The buyer must provide details such as credit history and all financial details that are necessary including personal information and identity proofs. The seller must offer a transparent record of the property including details about liens if any and all matters related to the title and taxes. An escrow operates best when both or all parties offer accurate details and are prompt in corresponding with the escrow officer.
Homebuyers often have to hold an escrow while buying a home. While it is a very healthy practice, there are the odd instances when the entire experience can be disappointing and turn into an undesirable fiasco. Escrow doesn’t go awry on its own. In most cases, it is owing to unforeseen but important and unavoidable problems. It may be due to human errors, some casual approaches on the part of someone involved in the entire transaction or due to changed circumstances for you as the buyer or on the part of the seller or the lending organization.
Here are a few crucial factors that you must bear in mind to have a smooth ride with your escrow and to ensure that you can quickly close it and move in to your new home.
Closing The Escrow
The objective of having an escrow is to park your money safely with a nonpartisan third party as the intermediary between you and the seller. Most people set the closing date of the escrow just before the moving in date. You may have to move into a new home or move out of your existing home on a certain date but that date or a day or two before that cannot be the closing date of the escrow. An escrow should have a closing date at least a week or a fortnight before the day you have to move in. There can be several unforeseen problems during the closing or in the process of inspections, appraisals or getting the loans approved. Thus, if there is a delay due to any such problem, your escrow won’t be closed and you cannot move in to your new home.
When you set up an escrow, you should start to move quickly on every front. Get an appraiser to evaluate the property, hire a property inspection company to look for any damages or any untoward reality in the property and follow these up with the seller to be sorted out. If you do not move fast, you may end up with these issues when the closing date of the escrow is inching closer and you may have to draw up an entirely new plan of action.
Keep Your Finances Unchanged
Do not buy major items or change your finances, including savings, assets, employment status or available cash, during the escrow process. These changes may delay the approval of your loan which will have a direct impact on the escrow.