As a Cincinnati real estate agent, one of the most common questions I get is “There’s this foreclosure in my neighborhood and no one has touched it for months. How can I contact the bank to buy it?”

Well in order to really accept the answer of this question you have to first dismiss the belief that the large banks are acting in a responsible manner. Here’s as short of an explanation I can provide of the mortgage mess that has played out over the past 7 years:

1. The government decided that homeownership is a “right” not a “privilege” and pushed banks with financial pressure and incentives to issue loans that made no sense to people who should never of owned property.

2. Small banks and financial institutions popped up out of nowhere to take advantage of this financial heaven and everybody got really rich.

3. The market crashed, small banks/financial institutions were absorbed and mortgages got passed through this MERS system which tracked mortgage ownership as loans and companies were sold over and over.

4. Eventually some assets got lost in the mix or wound up belonging to companies who aren’t prepared to handle them or really don’t even know they are owners.

5. As a result, homes tend to get lost in the mix and no action is taken on these properties until a situation presents itself where the bank decides to take action.

So now to answer your question- How can you buy this Cincinnati Foreclosure? Well, it’s practically impossible to buy directly from the bank and here are a few reasons why.

1. The smaller, local banks are generally well aware of any loans that are behind on their payments since bad mortgages hit them harder then they do at Bank of America. So you are probably dealing with a bank from a different part of the country and tracking down the person responsible for this sale may be quite difficult.

2. Even if you were to write this bank a check for $100,000 – the bank likely wouldn’t know if they are getting the deal of a lifetime or being robbed! They have never been in this home and will not agree to a sale without doing their own due diligence. This likely comes through the support of a local real estate agent.

3. Bank typically follow a standard procedure when they sell their homes. They promise a listing to a local real estate agent in order for that agent to handle several duties before and while the home is up for sale. These duties include negotiating the removal of occupants, overseeing any possible repairs, marketing the home for sale and negotiating/overseeing the closing process. They likely won’t deviate from this process since so many steps are necessary to protect their interests during the sale. You’ll likely need to wait for the home to hit the MLS.

Now here is what you CAN do if you come across a property that appears to be a foreclosure – contact your local Cincinnati real estate agent (me) and they can do a foreclosure search for you to find out if it has been foreclosed or is on track to be foreclosed. They can also determine the bank handling the foreclosure.

Next – you can keep your eye out for a “No Trespassing” sign taped to the front door or window. This is the first step a real estate agent takes when they are assigned a foreclosed property and this agent will be the most knowledgeable local party. Follow up with them and you will be given an idea of when the home will come onto market and eventually, a possible list price. This will allow you to get a jump on buying that foreclosure in your neighborhood.

Hope this helps and don’t bother to reach out to me with any questions or to discuss YOUR Cincinnati neighborhood foreclosure.

More and more underwater homeowners are asking how their credit scores will fare after a short sale or foreclosure — and how the two outcomes compare. It’s a good question, since the homeowner will have to live with the consequences of this decision for at least seven years, the length of time “derogatory” information remains on a credit report.

Whereas you can expect a loan in foreclosure to appear on your credit report as a “foreclosure,” there is no such single, universally accepted description for short sale on credit reports, such as, well, “short sale.” Instead, a loan paid via short sale tends to be labeled as either “charge off,” “deed-in-lieu of foreclosure,” “settled for less than the full amount due” or “foreclosure” — all having about the same negative impact on your score as a foreclosure.

Does this mean then that a foreclosed mortgage loan appearing on your credit report will always have about the same impact to your score as a short sale? As with many credit scoring issues, the answer is both yes and no, depending on other information being reported about the loan — in this case, the balance and the past due amount. Generally, the higher these dollar amounts, the lower the score.

To dig a little deeper into the specifics, when a foreclosure is reported by a lender to the CRA (credit reporting agency), the balance appearing on the credit report for that item consists of the entire unpaid loan amount as of the date it went to foreclosure. For a short sale, the reported balance should be made up of the outstanding loan amount as of the date of the short sale, less the sale amount received from the buyer and agreed to by the lender. If the difference between the reported balances under each of these two scenarios is substantial — and it should be — the negative impact to the score will be less for a short sale than a foreclosure regardless of whether the mortgage is reported as a foreclosure, charge off, or other derogatory notation.

Past due amounts reported for a mortgage loan will impact the score similarly, as a higher past due amount leads to a lower score. Typically, when a loan in foreclosure appears on a credit report, the entire outstanding balance also appears as the past due amount. For a short sale, there should not be any past due amount reported — another plus on the short sale side of the equation.

But before future short sale sellers get too excited about this seemingly good news, they should also understand that any scoring benefits resulting from a short sale/foreclosure comparison are not likely to be either significant or long lasting. Such advantages tend to dissipate within a short period of time, as other, more recently reported information begins to have more of an impact on the score.

Nor is it a good idea to base a short sale vs. foreclosure decision strictly on the anticipated impact to a credit score, when other factors, such as the ability to qualify for a mortgage in the future, are likely to affect your finances and general well-being long after your credit score has begun to recover. For example, despite the fact that a short sale resulting in a “foreclosure” status should not impact a score quite as negatively as an actual foreclosure, a consumer with a foreclosure on her credit report — whether from a short sale or foreclosure — could be prevented from qualifying for a new mortgage for up to seven years by Fannie Mae and other sources of mortgage lending.

Credit.com By Barry Paperno | Credit.com

Every homeowner must pay for routine home maintenance, such as replacing worn-out plumbing components or staining the deck, but some choose to make improvements with the intention of increasing the home’s value. Certain projects, such as adding a well thought-out family room – or other functional space – can be a wise investment, as they do add to the value of the home. Other projects, however, allow little opportunity to recover the costs when it’s time to sell.

Even though the current homeowner may greatly appreciate the improvement, a buyer could be unimpressed and unwilling to factor the upgrade into the purchase price. Homeowners, therefore, need to be careful with how they choose to spend their money if they are expecting the investment to pay off. Here are six things you think add value to your home, but really don’t.

1. Swimming Pools

Swimming pools are one of those things that may be nice to enjoy at your friend’s or neighbor’s house, but that can be a hassle to have at your own home. Many potential home buyers view swimming pools as dangerous, expensive to maintain and a lawsuit waiting to happen. Families with young children in particular may turn down an otherwise perfect house because of the pool (and the fear of a child going in the pool unsupervised). In fact, a would-be buyer’s offer may be contingent on the home seller dismantling an above ground pool or filling in an in-ground pool.

An in-ground pool costs anywhere from $10,000 to more than $100,000, and additional yearly maintenance expenses need to be considered. That’s a significant amount of money that might never be recouped if and when the house is sold.

2. Overbuilding for the Neighborhood

Homeowners may, in an attempt to increase the value of a home, make improvements to the property that unintentionally make the home fall outside of the norm for the neighborhood. While a large, expensive remodel, such as adding a second story with two bedrooms and a full bath, might make the home more appealing, it will not add significantly to the resale value if the house is in the midst of a neighborhood of small, one-story homes.

In general, home buyers do not want to pay $250,000 for a house that sits in a neighborhood with an average sales price of $150,000; the house will seem overpriced even if it is more desirable than the surrounding properties. The buyer will instead look to spend the $250,000 in a $250,000 neighborhood. The house might be beautiful, but any money spent on overbuilding might be difficult to recover unless the other homes in the neighborhood follow suit.

3. Extensive Landscaping

Home Buyers may appreciate well-maintained or mature landscaping, but don’t expect the home’s value to increase because of it. A beautiful yard may encourage potential buyers to take a closer look at the property, but will probably not add to the selling price. If a buyer is unable or unwilling to put in the effort to maintain a garden, it will quickly become an eyesore, or the new homeowner might need to pay a qualified gardener to take charge. Either way, many buyers view elaborate landscaping as a burden (even though it might be attractive) and, as a result, are not likely to consider it when placing value on the home.

4. High-End Upgrades

Putting stainless steel appliances in your kitchen or imported tiles in your entryway may do little to increase the value of your home if the bathrooms are still vinyl-floored and the shag carpeting in the bedrooms is leftover from the ’60s. Upgrades should be consistent to maintain a similar style and quality throughout the home. A home that has a beautifully remodeled and modern kitchen can be viewed as a work in project if the bathrooms remain functionally obsolete. The remodel, therefore, might not fetch as high a return as if the rest of the home were brought up to the same level. High-quality upgrades generally increase the value of high-end homes, but not necessarily mid-range houses where the upgrade may be inconsistent with the rest of the home.

In addition, specific high-end features such as media rooms with specialized audio, visual or gaming equipment may be appealing to a few prospective buyers, but many potential home buyers would not consider paying more for the home simply because of this additional feature. Chances are that the room would be re-tasked to a more generic living space.

5. Wall-to-Wall Carpeting

While real estate listings may still boast “new carpeting throughout” as a selling point, potential home buyers today may cringe at the idea of having wall-to-wall carpeting. Carpeting is expensive to purchase and install. In addition, there is growing concern over the healthfulness of carpeting due to the amount of chemicals used in its processing and the potential for allergens (a serious concern for families with children). Add to that the probability that the carpet style and color that you thought was absolutely perfect might not be what someone else had in mind.

Because of these hurdles, wall-to-wall carpet is something on which it’s difficult to recoup the costs. Removing carpeting and restoring wood floors is usually a more profitable investment.

6. Invisible Improvements

Invisible improvements are those costly projects that you know make your house a better place to live in, but that nobody else would notice – or likely care about. A new plumbing system or HVAC unit (heating, venting and air conditioning) might be necessary, but don’t expect it to recover these costs when it comes time to sell. Many home buyers simply expect these systems to be in good working order and will not pay extra just because you recently installed a new heater. It may be better to think of these improvements in terms of regular maintenance, and not an investment in your home’s value.

The Bottom Line

It is difficult to imagine spending thousands of dollars on a home-improvement project that will not be reflected in the home’s value when it comes time to sell. There is no simple equation for determining which projects will garner the highest return, or the most bang for your buck. Some of this depends on the local market and even the age and style of the house. Homeowners frequently must choose between an improvement that they would really love to have (the in-ground swimming pool) and one that would prove to be a better investment. A bit of research, or the advice of a qualified real estate professional, can help homeowners avoid costly projects that don’t really add value to a home.

Investopedia – Sunday, May 12, 2013

In case you haven’t heard, we are experiencing quite a run in real estate sales in Cincinnati.  It has drastically swung from a buyer’s market to a seller’s market in only two years.  Home sales are selling 18% faster and properties are going into multiple offers on a regular basis.  If you are a seller, how long do you think the good times will last before you test your own luck in this market?

Personally, I think we are experiencing a short window of opportunity for sellers where inventory is extremely low, buyers plentiful and low interest rates.  It’s only a matter of time before all the distressed inventory that hasn’t hit the market in the traditional manner we are all accustomed (foreclosure sales) starts popping up and is being handled by professional, private enterprises.

Enjoy this video and let me know if you or anyone you know could benefit from taking advantage of the market.  It may not be like this much longer!   – Brett, your local Cincinnati Real Estate Agent

How long until you retire? A rental property can take a few years to generate a stable positive cash flow. Some locations are better than others, and you might be able to generate some income right away in some markets. However, it can be much more difficult in higher cost states where the cost of owning far outpaces the cost to rent. The good thing about a rental is that it is an inflation hedge. Rent goes up and your mortgage payment remains the same. If you have five or more years before retirement, then it’s a good bet that a rental property can turn a profit in that time frame.

Do you have the funds? You need quite a bit of money to start investing in rental properties. Nowadays, banks generally require a 20 to 25 percent down payment on investment properties, and this is beyond the reach of many middle class investors. You will also need to pay the closing costs and save up plenty of money for maintenance and vacancies. If you don’t have a lump sum to invest at once, maybe a real estate investment trust (REIT) would be a better option.

Repair bills can be high. Can you pay $5,000 immediately for exterior paint or roof repair? A rental property inevitably will need costly repairs. One big repair can push you into negative territory for the year. Many new investors underestimate the repair bills and are surprised by these big items.

Poor liquidity. Rental properties are not liquid assets. If you need a large amount of cash, it will be difficult to get it quickly with rental properties. The housing market has long up and down cycles, and if you need to sell during a down cycle, you might have to settle for less than you’d like.

Do you have other types of investments? Do you have stocks, bonds, annuities, and other types of income-generating investments? It’s a good idea to be diversified. When one asset class is down, others might be up. While rental real estate can be a great investment, it’s also a good idea to invest in stocks and bonds. Income from dividend stocks and bonds can cushion the blow of vacancies and other problems.

Being a landlord isn’t for everyone. Rental properties can be a good way to generate income in retirement, but being a landlord isn’t for everyone. If you are young and have many years until you retire, then you should try your hand at rental properties. You’ll be able to figure out if being a landlord is the right move for you, and you will have a lot of time to turn the property cash flow to positive. As an experienced Cincinnati Real Estate Agent who both owns and sells rental property on a regular basis, feel free to contact me so we can discuss if adding homes in Cincinnati to your portfolio makes good financial sense.

This article was adapted from Joe Udo blogs at Retire By 40 where he writes about passive income, frugal living, retirement investing, and the challenges of early retirement.

Watch my brief video to see where the Cincinnati Market is heading for Spring and Summer of 2013. You might be surprised that all that talk about a “housing recovery” may be a reality. We are almost in a balanced market! Feel free to contact me if you have interest in putting your home on the market as this may be a short window of opportunity to sell for a high price before the potential 2nd wave of foreclosures hits the market and short sales replace the dwindling foreclosure inventory.

For an electronic copy of those graphs I used in the video, click HERE.

TREO Realtors, based in Cincinnati Ohio, is the first brokerage to offer interactive floorplans as another one of it’s savvy marketing tools to help sellers market their homes to potential buyers. Check out a quick demo by Brett Keppler, Cincinnati Real Estate Agent, as he provides an overview of this amazing new service.

Several changes were made on an income tax level and several previous rules that benefited homeowner’s and especially those going through a hardship will remain in place for another year. Below is a great article that touches on the benefits of doing a short sale, how you can still protect your capital gains, and the mortgage interest deduction will be around for another year!

http://www.housingwire.com/news/2013/01/02/mortgage-industry-fares-well-fiscal-cliff-deal-debt-forgiveness-law-survives

Washington DC and Hawaii were the most expensive states with average payments of $1641 and $1536. DC homeowners put 31% of their income towards those payments while Hawaii paid 30% of their income to live on the beautiful island (which I completely understand).

Ohio was the 10th most affordable state with an average of $791/mo mortgage payment. Kentucky ranked 9th with an average payment of $788/mo. But the average mortgage in Ohio only made up 21% of an owner’s income whereas the average Kentucky mortgages made up 23%.

So although living in Kentucky will give you a slightly more affordable mortgage and provide you with some cheaper property taxes, Ohio will pay you a higher average income.

To see the full report, go here: Report

And if you are looking for a great Cincinnati Real Estate Agent to help you with your search, give me a call!