Auctions: An Exciting Way of Selling Your Property

auction1Auctions are an age old phenomena. People have been selling their properties through the process of auctions for centuries. But the popularity and respectability of auctions has experienced a great hike in past few years.

Jeff Adams, one of America’s top real estate consultants and is going to pull out some interesting tips and tricks of the trade for you, from his vast pool of experience in this field for many years.

Real estate auctions – a rising trend
In the earlier times auctions were not seen in a very favorable light. More often than not they were considered to be the last resort for selling a property when none of the other traditional means of liquidating it have worked in favor of the seller.

In recent times, however, this perception has been gradually changing. Many sellers are now voluntarily choosing to put their lands and houses for auctions. Many are opting for the services provided real estate brokers to help them get maximum rates for their properties through auctions.

So what is a real estate auction?
A real estate auction is just another effective way used for selling a property such as a house or land. This process is different from its traditional counterparts in some ways. Unlike the other methods, an auction is always a faster and more intense method of selling a real estate involving public sale of a property. The various methods used under the process of an auction include open cry, competitive bidding, etc.

Important features of a profitable real estate auction
A property can be put on an auction if the owner of the property wants to do so in the hope of getting a fair price for his property. However, he should have a good equity position of auctioned properties in which case he can avoid paying for the sales commissions.

The timing is another important factor. Auctioning a property while the market for those properties is on a rise is important.

A real estate auction can be a win-win situation to all the parties involved in the sale. Following are a few benefits you can expect when you put your property on an auction whether you are a seller, buyer or a realtor. Let’s see them one by one.

Benefits of a real estate auction to the seller
When auctioning a real estate, you have the freedom of setting a price which is higher as compared to the value in the going market. This will be the minimum price you will be expecting to get. By setting this minimum desired amount, you avoid any risk to buy the property back in case it fails to fetch the set price.

Additionally, by opting for a direct auction, you will avoid the need to pay sales commission to auction houses which is normally about 8%-10% of the property value.

Auction a property that is not in use can save a lot of maintenance expenses. Also, being a quick method of disposal of property, it saves you long-term costs including taxes and maintenance.

You get a huge exposure for the property as a large number of pre-qualified buyers attend an auction.

Not only that the sale of the property at its real value in the market is assured, but the competition created by an auction among the buyers can also benefit you greatly by fetching a much higher price for the property than its true market value.

Benefits of a real estate auction to the buyer
It is a smart way of investing. Through the process of competitive bidding, the properties are usually bought at a fair market value.

In a multi-property auction, you get a great variety of properties on display at the same time giving you a wide range of choice for investment.

You as a buyer have the choice of deciding the purchasing price.

Long negotiation periods and time of purchase can be avoided in auctions.

You are aware of the purchasing and closing dates and that you are involved in a fair competition on equal terms as other buyers in the market.

Benefits of a real estate auction to the realtor
Through an auction, you are offering your customers a new and exciting way of selling their properties. This increases their interest in your services and its perceived value.

It helps you develop your market niche and increase your revenue and share in the market.

Not only does an auction make the property visible to a great number of potential buyers but it also brings a large number of people to you property listings which include other types of property deals as well. This gives your business an overall increased exposure.

An auction is an interesting and entertaining way of selling or buying a property. For an experienced buyer or a person with reasonable research and understanding of the process, it can certainly fetch exciting deals.

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Jeff Adams Real Estate: Understanding Foreclosures from Each Player’s Point of View

re-success-3Foreclosures are not a very recent phenomenon. Even in earlier times, when the term was not coined, foreclosures occurred; however, with a few alterations in the process as we know it today.

When people borrowed money or anything that had monetary value from a lender and were unable to pay it back, the asset that was used as a security deposit would get taken away from them. This asset was usually land, which would then either be kept by the lender for personal use or he would sell it off to recover his money and maybe make a profit.

In today’s scenario, the basic structure of foreclosures has remained the same; however, the term and process has gained quite a few different dimensions, especially the point of view of each player involved in the process of a foreclosure. Although a foreclosure is quite an unfortunate occurrence, looking at one today, you will notice that it has gained more of a profitable angle to it.

Foreclosures are now a legal process and understanding the different steps of the process is quite essential if you are stepping into the world of foreclosures.

The Process of a Foreclosure
For starters, it is necessary to understand what precedes and what succeeds a foreclosure; let’s take a simple example.

You have been working at company X for a few months now and you wish to buy a home. Your salary from company X falls short to buy one and hence you decide to solicit a loan from a bank. Your loan gets approved, you buy a home and you keep making your monthly loan payments towards the bank.

You have been paying off your loan for months now and you still have some more to go, but unfortunately, you lose your job and have no source of income to repay your loan anymore. You also have no savings and neither are you able to find yourself another job.

What now?

As stated legally, the asset that you deposited for security, in this case your home, will be taken away by the bank since you stopped making payments towards your loan. Your real estate property now belongs to the bank and it gets termed as “foreclosed” property.

The bank now puts up your property on public auction so that they can recover the loan money from the person who buys your property.

So you can see the three major players involved in the process of a foreclosure are:

– The defaulter who couldn’t pay back his loan
– The lender (bank)
– The buyer

The Defaulter
The defaulter is the most unfortunate player in the foreclosure game because he only faces a loss. Quite a number of people in the United States have been suffering from foreclosures because of the current economic scenario.

However, there are ways in which foreclosures can be avoided, such as:

Selling off your property before it is foreclosed and using the money to pay off your loan

Renting your property and using the money to pay off the loan (Both of which can be done if your family/relatives or friends can put you up in their homes till you pass your financial crisis)
Inviting a paying guest into your property.

If none of the above three options are possible for you, facing a foreclosure is inevitable.

The Lender
The lender is in a no loss, no gain situation because he is able to recover the money that he lent. However, at a public auction, it is possible that there will be a marginal difference between the money to be recovered and the money at which the asset is sold, thus, leading to a marginal profit.

The Buyer
The buyer undoubtedly makes a profit because he buys the asset at a much lower rate than its market price, since the loan amount usually never exceeds the market price. It is this fact that is being taken as a basis to make a profit.

Big hedge fund companies that are entering the real estate market in the United States have been using foreclosures as a base to make their profit. They scan the market for foreclosed properties, make sure they are present at every public auction and with a good bid, they buy the property. After observing the real estate market conditions, they sell the property to an interested client for its market value, thus making a good profit on the deal.

An individual buyer, not associated with any real estate company, may also buy the foreclosed property and he may either use it for himself, or sell it or put it up for rent. Either way, buying a foreclosed property is a profitable deal, even if it means dealing with the emotions of those who have lost the property.

For a thorough understanding of foreclosures, the legalities involved and how you can avoid your own property getting foreclosed or making the most from a foreclosure, you may refer to the book Foreclosure Profits System by Jeff Adams.

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Real Estate Investment : a sure shot way to beat inflation

re-profits1An ordinary investor is often confused and confounded where to put in his hard-earned savings for good returns. According to Jeff Adams, a veteran real estate investment advisor, buying real estate property is “the most priceless investment”.

Investing in real estate can be done by buying housing properties or pieces of land at strategic places. Individual preferences come into play if the property is bought for self occupation or use. In such cases the assistance of real estate agents is sought in identifying a property that meets specific requirements.

The properties bought and retained for investment purpose, however, do not have such constraint. What matters most is that such property should have a future demand and should fetch a good price.

Appreciation in the Value of Real Estate Property
According to the data gathered by the U.S. Census Bureau, the value of real estate has consistently increased during the period from 1940 till the year 2006. Thereafter, it dipped temporarily for two years before rebounding again. This shows that investment in real estate is the best option in the long run.

Rental Income out of Real Estate Holdings
The biggest hurdle in holding real estate for investment purpose is the amount of time, botheration and the cost involved in maintaining it. It is a good idea to rent out such property in order to raise the funds for periodic mortgage payments, maintenance cost, tax liability and marginal profit. Eventually, after the mortgage is paid off, the property becomes self-owned and, all the while, steadily appreciating in its value.

However, the paucity of tenants can compel you to keep the property idle and might strangle you for funds required for recurring pay outs. Some irresponsible tenants can also be destructive to the property.

Real Estate Investment Groups
These groups buy, build and manage large real estate complexes collectively, thus freeing the individual investors from the hassles of being direct landlords. The individual real estate investors can own one or more self-contained living spaces in such complexes.

The group managers charge the investors a percentage of the rent receivables as fees for their service. Some groups have an arrangement to pool a portion of the rent as a safeguard against some units remaining vacant, thus hindering mortgage payments.

RETTs
A Real Estate Investment Trust (RETT) is a trust incorporated for the purpose of using investors’ money to buy and operate real estate properties. RETT units are bought and sold at major exchanges just like any other stock. This is an innovative way of turning real estate into an invisible exchange traded instrument accessible to common public.

Housing Loans
Investing in real estate needs to raise huge funds, which is beyond the capacity of small, fixed income group of investors. Fortunately, they need not wait till they accumulate the required funds, by which time the prices might further escalate. They can take advantage of various types of home loans that are available upon 10% to 20% down payment against the mortgage of property, such as:

  • Fixed Rate Mortgages where the interest rates remain constant.
  • Adjustable Rate Mortgages where floating rates of interest are applied in consonance with the money market.
  • Hybrid Loans: These are a combination of the above two.

 

The Interest Rate Cycles
The interest rates depend on the overall state of a nation’s economy and corresponding money supply with the public. The central monetary body of the government too regulates the interest rate in order to direct the money supply into developmental activities. The current low interest rate regime is favorable for investing in real estate with borrowed funds.

Foreclosures
The recessionary period affects real estate market along with other economic activities. The defaults on mortgages become common resulting into foreclosures or confiscation of the property by the lenders. The lenders auction the foreclosed properties in order to recover a part of the outstanding dues.

This throws open great opportunities to buy cheap properties at such auctions. Of late, hedge funds have increasingly started entering into the real estate market because of this opportunity to make quick profits.

Hedge Funds
The hedge funds constitute a group of high net worth investors aiming to make quick money out of their investments. The availability of technology and well-researched information enables them to concentrate on lucrative properties and they buy them en-bloc precluding the access to small investors.

They usually do not hold on to those properties for long and avoid blocking their investors’ money. They offload them as soon they are able to get expected returns and move on prospecting new opportunities elsewhere.

The arrival of hedge funds is an indication that the property market is lucrative under the current circumstances. The small real estate investors can take a cue from them and buy reasonably priced good properties still available within the same or adjacent areas. Unaffected by the limitation of the hedge funds, they can hold those properties longer for better returns.
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Jeff Adams Real Estate: Five Smart Moves for Buying a Foreclosure

foreclosures_3Investing in a foreclosed house is not always a good idea. The owners may have already vacated most of these houses and there is a good chance that the house is in dire need of repair. There might be squatters in the house and you might even land up paying more than the market rate for the house. To prevent this from happening, it is necessary to research the foreclosure market as much as possible.

We’ve listed the five smartest moves for investors considering entering the foreclosure market.

Smart Move # 1 – Always Check the Home before Purchase
Owners or squatters may have ripped everything from the home and there is a chance that you will be buying a huge fixer-upper or a partially demolished home. Instead of wasting your money, take the time to view the foreclosed home before purchase.

Smart move # 2 – Know the Market Value
Before you invest in an area, take the time to research the local rates and the market value of a home in the area. Remember that the market value will always be more than the value of the foreclosed home. If you are buying at the auction, keep this figure in mind and bid well below the market value.

If you can, use a local real estate agent to find out the exact value of homes in the area or use an online expert source like Zillow to ascertain the value of the area. However, use these sources just as a guideline as foreclosed homes will usually require repair.

To protect yourself, put in a ‘subject to’ clause in your purchase contract. In case your bid is too high and the market value of the house is low, this clause allows you an escape route out of the purchase.

Smart move # 3 – Estimate Repair Costs
Good foreclosed homes are available; but, they are few in number. Many foreclosed homes require extensive refurbishment. Before purchase, estimate how much you will require for repair. It is a good idea to apply for buying and refurbishing financing to cover the repair costs.

The loan will cover the purchase and closing costs and it will also provide cash for repairing the house. Once you rent or flip the house, you can then pay off the loan quickly.

Smart move # 4 – Plot Your Moves before Setting Out
Buying foreclosed property is simple but make sure you plot your purchasing strategy well in advance. Have a budget ready and make sure you stick to it to ensure a profit.

Smart move # 5 – Consider an HUD Home
The Department of Housing and Urban Development has approximately 20,000 homes ready for sale. These foreclosed homes are in slightly better shape as the HUD has been taking care of these properties. You should start checking out these properties for investment.

The Bottom Line
It is not all bad news though! If you do your research carefully, you can easily find wonderful properties in a great price range. Just take the time to do the legwork properly before you go ahead and invest in the market.

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How to Make a Wise Choice in Real Estate Investment

home-pricingInvesting in real estate is one of the most popular and most followed investment strategies today. Some years ago, real estate investment took the backseat as it was considered too risky and people wanted to play safe with their money. But today, real estate has come to the forefront of investments all over the world.

Investing either in property like high rises, buildings, homes and offices or just land that can be used to further generate capital is the process of real estate investing.

Today, one doesn’t buy property just to live in. Property is bought to sell, lease, generate more capital and sometimes even to provide a way out of heavy taxes.

Return on Investment
Return on Investment or ROI is the profit a real estate investor receives on investing in the said investment, in this case, real estate. Real estate gives a higher rate of return as compared to the average investment in the stock market.

On investing in real estate, one can get returns of a recurring nature by leasing the property. This is one of the smartest ways of generating returns. And after a while, when you realize that a huge amount can come from selling the property, then you may do so, thus surrendering your recurring returns for the sake of one big return.

Making a Smart Investment Choice:
When you decide to invest in real estate, it is important that you do your homework or conduct the necessary research into the property. Understand the topography and the potential the area has to provide you with the best returns on investment.

Listed below are two simple real estate ideas that Jeff Adams, your real estate guru, suggests you keep in mind while choosing your real estate investment.

Self Sufficient Townships or Mini Cities
Townships or mini cities are specific acres of land that are purchased by builders and have been turned into residential areas that have all the basic facilities like a school, a hospital, a playground, gardens, sports clubs, party houses and restaurants within the said land premise. This makes the area self sufficient and anyone living in this area need not travel much to avail of such basic amenities.

If you’re a big real estate player who goes ahead and purchases land to build townships or if you’re a small player who purchases rooms within townships, both are a good investment opportunity as buyers look for homes that come with easy access to schools and hospitals.

Fast Developing Regions
Choosing a property in a region that isn’t fully developed but shows the potential of becoming a high rise is one of the biggest investments you can make in real estate. This is because you can buy at a low price and sell at a high one when its market value increases with the area’s development.

Choosing this property requires a lot of speculation, for one can never say for sure how fast or whether at all the area will see any infrastructural development, which is why intense research into the area and the surrounding property is a must.

Jeff Adams truly believes that returns from any property that was bought in its developing stages and sold or leased at its ready market value is a profit to the seller/leaser.

With these points in mind you can never go wrong with real estate investing.

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The Do’s and Don’ts of Investing in Real Estate

tips1Real estate investment involves the sale, purchase, management, rental or ownership of real estate property for profit. This arena has outdone most of the investment avenues. A large amount of information can be collected, studied and mastered about real estate. Hence, small time investors seem to have a good run, too.

It is important to understand two concepts when it comes to real estate and investment therein.

Real Estate is Capital Intensive
This refers to the ratio of capital requirement to labor requirement. A capital intensive industry involves a large sum of money. It is subject to depreciation and could result in a high amount of fixed assets as per the balance sheet.

Real Estate is Cash Flow Dependent
The growth of real estate is essential for the economic growth of a nation. However, real estate growth mainly depends on the quantum of cash / ready money in an economy since most of the transactions in this industry are carried out against cash.

If you are sure about investing in real estate then the following sources of investment properties could come in handy:

  • Market listings
  • Real estate agents or brokers
  • Banks
  • Governmental agencies
  • Auctions
  • Direct sales by property-owners
  • Real estate investors

Real estate guru, Jeff Adams, believes that real estate investment offers benefits like none other. These include substantial earnings, capital appreciation and tax benefits. However, he strongly recommends a thorough understanding of the pros and cons before the final nod.

The Do’s and Don’ts to Bear in Mind

DO

Get the Right People
Create a team comprising reliable members including an accountant, lawyer (real estate and broker), realtor and long-term investors.

Set the Right Expectations
Real estate is a long-term investment with no immediate results. Unlike the stock market which has daily movements, real estate has slow and steady fluctuations. Be patient.

Understand Geography
Research your location or the one you are interested in.

Upstream Cash Flow
Be sure to have ready money since real estate transactions require substantial cash flow.

Ask and Seek
Ask questions and seek advice from the regular players. Successful real estate investors have a treasure of knowledge to share.

Don’t

Involve Emotions
Get rid of the inherent inertia. If you have had a good run, don’t get your hopes high. If you have hit some lows, don’t lose hope.

Speculate
Avoid building castles in the air. Successful real estate investment is based on strong research and facts.

Purchase Hastily
If you find someone selling off a property at low rates, do not say yes at once. Get all the inspection checks in place, understand the history and conditions of the property and take a look at all the legal documentation.

Ignore Tax Planning
Always consult an accountant to manage the taxes. This will set the right foundation when investing in real estate.

Over Leverage
If you are thinking of giving up your entire cash flow, think again. It is never wise to have more debt than what the property is worth or can maintain.

Jeff Adams maintains – Invest in a second home and rent it out. That way you don’t give up everything and stand a chance to bring in a lot.

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Tips to Remember when Buying an REO Property

re-profits4Wondering what all the talk about REO is? Jeff Adams helps you acquaint yourself better with REO properties.

What is an REO?
An REO is a real estate owned property usually owned by the government or bank. If a borrower defaults repayment of a loan, the lender may have the right to auction the asset that was used as collateral against the loan. This process is called a ‘foreclosure’.

However, at times, the auction may turn out to be unsuccessful. For instance, there may be no interested bidders. The auction usually begins with an amount that is equal to the debt. However, if this amount is more that the market value of the asset, it may not find bidders. In such cases, the lender lays claim on the asset which gets listed as an REO or a non-performing asset.

Why Invest in an REO?
One of the most trusted names in real estate, Jeff Adams, believes that investing in REO properties is an extremely wise option considering the prevailing market scenario. These properties are a good buying option since they have already been foreclosed and the owner, more often than not, wants to sell it off as soon as possible. A foreclosed property implies tied up capital rather than a gained asset. Financial institutions like banks want to free this capital and use it in the form of other loans. Hence, the chances of negotiation are better and brighter.

Tips to Remember
Jeff Adams is a front runner when it comes to understanding REO properties and cracking good deals. The following are some tips that he suggests keeping in mind before you make up your mind about buying that REO home:

Insurance: You need to make sure you are covered sufficiently before investing.

Check permits: Contact the municipality and check if all the permits of the property under consideration are in place.

Transfer of title and tax information: Make sure to complete all the formalities that are required to transfer the utilities to your name. It is also essential to get in touch with the tax department and have all the information transferred.

Eviction: If there are tenants involved, be sure to have all the eviction plans and procedures in place. Tenants need to be dealt with empathetically. Your eviction procedure must be legal and peaceful.

Safety: Address all the security, safety and maintenance measures pertaining to the property at the earliest. Electrical concerns are priority followed by structural and hygiene issues.

Knowledge: Educate yourself with the state law to understand the rights of redemption and real estate investing.

Paperwork: It is important to bear in mind that the property does not belong to you until the entire payment is made and all the necessary documentation has been completed. Seek constant advice from your attorney to make sure the paperwork is flawless in order to avoid any legal complication in future.

An REO property could turn out to be a pocket-friendly option. However, it should not be a hasty decision. Make sure to consult the right people and seek appropriate legal assistance before you take the leap.

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