I received a phone call today from a gentleman in New York who had a very good question.  He had contacted a Realtor® that showed him a few properties.  He did not have a “Buyer’s Agency” or agreement with the Realtor®.  A “Buyer’s Agency” is a signed agreement between you and an Agent or Realtor® that they will find you a home and they will receive payment or commission for their services once you close on a home.  He had found a home that was a “For Sale By Owner” or FSBO as is known in the real estate world.  He was appreciative that his Realtor® had shown him properties, but he found this one on his own and was not sure if she should receive some sort of compensation.  My advice is this…and I have done this.  I have had clients that have found a FSBO and I contacted the seller and we negotiated a deal.  I would write up the contract, handle inspections, survey, the buyer’s lender, coordinate the closing and make sure things went smoothly for a nominal fee.   The situation with my clients was a win-win for everyone, especially since the day before closing, someone broke in to the home, did some damage by kicking in a window.  I was there with my contractors, got the damage repaired and passed my contractor’s discount on to the seller.  Realtors® do provide a very valuable service when it comes to buying and selling real estate and I recommend working with one in all facets of buying or selling, even if it is a FSBO.

The Importance of an Appraisal

An appraiser is a professional person who is licensed by the State and can tell you what your home is worth. The appraiser will come to your house and list the number and size of the rooms and any extras, such as a fireplace, porch, pool, or garage. The appraiser will compare your home and property to other homes that have sold recently with similar features. The appraiser then estimates that your home might sell for approximately the same amount of money as similar homes. This is called an “appraisal.” In short, an appraisal is the estimated amount of money your home may sell for.

What is a Real Estate Appraiser?

A real estate appraiser is an impartial, independent third party who provides an objective report on the estimate of value of real estate. The appraisal is supported by the collection and analysis of data.

A real estate appraiser values real property (land, houses, buildings, etc.), not personal property (cars, jewelry, furniture). The appraiser determines the physical characteristics of the property to be appraised and estimates value based upon three common approaches to value:

Sales Comparison Market Approach

Cost Approach

Income Capitalization Approach

A state licensed real estate appraiser meets nationally established standards for education and experience, and successfully passes a comprehensive examination. A state licensed appraiser conforms to national ethical and professional standards, which establish the standards for ethics, competency and confidentiality governing professional appraisal practices.

When Should I Use An Appraiser?

You will likely need the services of a real estate appraiser whenever an estimate of the value of your real estate is required. Most commonly, this occurs when you apply for a real estate loan, either to purchase or refinance your home. You may also need a real estate appraiser to assist in the appeal of your property tax assessment, for insurance purposes, for probate and estate settlements or other reasons.

What’s My Property Worth?

It is common to ask the appraiser this question as soon as the appraiser has inspected the property. The truth is at that time the appraiser doesn’t yet know. The inspection is the first step of many that the appraiser must complete before a value is determined.

The appraiser measures the house from the outside to determine square footage. The appraiser takes notes concern- ing the features of your house such as room layout, number of bedrooms, baths, etc. The appraiser also makes a determination of the general condition, appeal and functional layout of your house. All of these items are taken into consideration in the appraisal report.

How Long Does an Appraisal Take?

The physical inspection of a typical property usually takes about twenty to forty-five minutes. Sometimes an inspection can take longer if the house is difficult to measure or has some unique features that require additional investigation by the appraiser.

After the initial inspection of the property the appraiser spends time examining or analyzing the neighborhood or area. The purpose of this is to search for other properties that are similar to the property being appraised that have sold recently and examine neighborhood influences. When the fieldwork is finished, the appraiser completes the report at his office.  Average time for an appraisal to be completed is 7-10 days after the inspection of the property.

What Does The Appraiser Need to Know?

To help the appraiser complete the appraisal, you can provide some information that is helpful. Please tell the appraiser of any previous sale on the property within the last 12 months. Indicate if there is a pending contract to purchase on the property. Does the property have any right of way or other easements? Is there structural damage, or water leakage in the house? Is the property in a flood zone? Basically, inform the appraiser about any hidden features or detriments to the property.

How Do I Choose an Appraiser?

Although federal and state laws usually require that the lender must hire the appraiser when the appraisal is to be used for a real estate loan, some lenders will allow you to select an appraiser from their list of approved appraisers. For all other appraisals, you are allowed to select your own appraiser.

Licensed real estate appraisers can be found on the internet or by talking to your friends who have previously used an appraiser. Be sure to interview the appraiser carefully to determine if he or she is licensed and experienced in appraising your type of property.

Most licensed appraisers will provide an advance estimate of the cost to perform the appraisal, and many will commit to a fixed fee for the appraisal. It is always wise to obtain a written contract for services which includes a description of what is to be appraised, the scope of the assignment, the anticipated delivery date, the fee and terms of payment.

 

I recieved an email from Dianne.  First of all, thank you for the email Dianne. 

 She asked,  “How do I deduct my yearly taxes each year if my place is paid off.  Is there a minimun of some kind??
Thank you in advance for your help.”

This is a very good question and unfortunately one that I cannot answer.  The best person to ask would be your CPA or person who prepares your taxes.  The rules and laws are forever changing and each situation is unique.  Sorry I could not be of further assistance and again thank you for your email…and a shout out to any CPA’s that may be out there reading my blog, I would be delighted to post an article.   

Buying vs. Renting Your Home

Provided by Sharper Agent

Is now the right time for you to buy a home? You have many options to consider and choices to make. Buying a home is a big responsibility, financially and emotionally, but, most people want to own a home. Homeownership often is referred to as “the American dream.” Why is it so special? Among the reasons: Real estate often is an excellent investment, perhaps the number one source of wealth-building for families.

Owning a home has many benefits. When you make a mortgage payment, you are building equity - and that’s an investment. Owning a home also qualifies you for tax benefits that may assist you in dealing with your new financial responsibilities - such as homeowners’ insurance, real estate taxes, and upkeep - which can be substantial. But given the freedom, stability, and security of owning your own home, they are definitely worth it! Owning your own home also can be a great source of pride and stability.

But homeownership may not be for everyone. It’s a big financial commitment - starting with the initial shock of your purchase (including a “down payment” and fees paid to a real estate agent, the lender and others) followed by years of monthly mortgage payments, real estate taxes, property insurance and maintenance costs. When you decide to purchase a home, you accept responsibility for paying for these expenses. They are additional costs to your monthly mortgage payment and should be included in your budget estimates: Property Taxes and Special Assessments, Home/Hazard Insurance, Utilities, Maintenance, Home Owner Association (HOA) Fee if applicable.

One of the advantages of renting is being generally free of most maintenance responsibilities and the flexibility of moving almost as soon as you decide. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for your housing needs. There are many considerations in choosing between renting and buying:

• Do you want to spend several years in a house and in a neighborhood?
• Do you enjoy lawn and garden work?
• Might you need to move suddenly to care for family?
• Do you want to keep your assets accessible in the bank, or do you want to invest long-term in a home?

There are tax advantages to homeownership in both the short and long terms. The mortgage interest and real estate taxes are tax deductible, which allows you to subtract part of your housing-related expenses from your taxable income, which could reduce your tax bill. In many cases, the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage. With the tax benefit for homeowners, the savings can be significant.

There are many reasons when you are ready to buy, sell or lease a home you should talk to a Real Estate professional. There are different types of Real Estate Agents. It is wise to make sure they are a member of the National Association of Realtors®. Only Real Estate Agents that are a member of the National Association of Realtors® or (NAR) can call themselves a Realtor®. Realtors® adhere to a strict Code of Ethics, know the market and know what to look for. Advice is always free.

I had a client whos home was not selling as quickly as he thought it should. He showed me a card he had received from “Bob” a few years ago (read the Killeen Daily Herald article below). It was a nice bright yellow card, very professional looking. I told him it was a scam. “Bob” is NOT a Realtor®. He is NOT even a Real Estate Agent. He does not have to adhere to a Code of Ethics and ANYONE can have a professional business card printed. My client’s home did sell and everyone was happy.

When thinking real estate….Always call Karen for honest free no obligation advice!
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More residents worry about mortgage fraud Posted on: Sunday, November 16, 2008, 6:19 AM

Jesus Gutierrez, wearing a patterned two-pocketed work shirt, dirt-marked jeans and a Texas flag cap, sat on the edge of a bed in his living room Thursday. Only an old TV and two small couches were in the room. His grandson’s baby swing hung from the entryway.

Gutierrez wrung his hands in the air asking himself what happened to the $7,000 he and his wife saved – he working in construction and her cleaning bedrooms in a local motel. It was a down payment, or option fee, given to Robert “Bob” Alford III of “Bob Buys Houses” in June to rent-to-own a home on the 200 block of East Voelter Avenue in Killeen.

Gutierrez was skeptical and nervous when he and an English-speaking friend met with Alford in June, he said Thursday night through a translator, Herald sportswriter Evan Mohl.

Gutierrez did not understand all of what was in the more than a half dozen pages of contract talk written in English. He signed them anyway because it meant more space for his wife, four children and infant grandson.

“I wanted a bigger house so my family could live more comfortably. And I wanted it to be our own, not somebody else’s. At the time I had my suspicions, but the gringo (Gutierrez’s partner) seemed to trust him. It seemed easy, convenient,” he said.

Now Gutierrez wants to see an attorney. A neighbor showed Gutierrez the Nov. 9 Killeen Daily Herald where several renters and homeowners said Alford wronged them. Gutierrez worries he will be next. Alford said that will not happen to him.

It happened before to Kimberly Thomas in 2007. Thomas, a former Fort Hood soldier, paid Alford $8,000 up-front in 2006 to rent-to-own a home. Thomas said Alford forced her out in 2007 and denied her the option to buy.

She won a $34,068.98 judgment against Alford because he never showed up in court. Alford declined comment except to say an out-of-court agreement was reached. Thomas said no agreement exists and Alford has paid no money.

One of many bad deals

Since the Nov. 9 article in which six people said Alford damaged them in real estate deals, four individuals contacted the Herald saying they were scammed.

Several homeowners said they were anxious to leave the Killeen area – in some instances because they were re-stationed away from Fort Hood or were going through a divorce – so they went to Alford. He was supposed to make mortgage payments until he profited from the home’s sale.

However, the six homeowners involved, said Alford defaulted on payments, damaged their credit and or pushed the home close to foreclosure. Only one person contacted said Alford sold the home.

Three renters said they have completed or are trying to reach separate agreements with the original homeowners. Still they believe Alfred owes them back the down payment. Also, several individuals said it took weeks and months to contact Alford, if they were even able to.

The property Gutierrez rents is not behind on payments. However, learning about what happened to others aggravated Gutierrez’s past anxiety.

“Sometimes, I can’t sleep at night thinking about it. I just want my $7,000 back. I feel like I got robbed,” he said. “My wife and I don’t have anything left. We spent it all on the down payment.”

Gutierrez immigrated from Querétaro, Mexico, to Bonita Springs, Fla., in 1985. He left behind his wife and family. He picked oranges and tomatoes on farms to make a living. Then he worked in a Georgia meat factory. In 1997, he followed a friend to Killeen to be closer to Mexico.

His wife and four children came to the United States three years ago. They lived in a small house on Dean Street, a high-crime area, before moving to East Voelter Avenue.

The business model

Alford said he formulated his business plan from Internet articles and library books in 2006.

He intended to help people buy and sell homes. Homeowners contacted him through a sign posted on streets or a local ad. Alford became trustee to several homes. He agreed to make mortgage payments, manage the homes and profit when he sold them.

Alford said homes became harder to sell soon after his business started. The housing market began to collapse. People were not buying homes. He could not sell the homes he acquired.

Alford fell behind on the mortgage payments for different reasons. He rented the homes in lease-to-own agreements to people, like Gutierrez, whom he expected to be in a position to buy the homes after a year when their credit improved.

He asked for thousands of dollars in option fees, which Alford said went to repair the homes. If they decided to buy, the fee was to be taken from the home’s price.

When subprime loans given to people with bad credit defaulted across the nation, those loans became harder to get. Alford’s renters were not in a position to obtain a loan they were expected to be eligible for after a year of rental payments. Also, other renters stopped paying or moved away, which left him with a mortgage to pay and no income. Then the mortgage companies threatened foreclosure against the homeowners.

Alford said he never intended to defraud anyone.

However, his business model resembles scams documented by the FBI and mortgage lenders in the past. The scam operates by a person agreeing to take on mortgage payments on a property to sell. Instead of selling the property, they rent the property, ask for a large up-front down payment, stop paying the mortgage and leave the homeowner or lenders to clean up the mess.

Alford said the “downfall” of his plan was that the mortgages remained in the homeowner’s names, so he was not responsible when payments were not made.

He said that even though his operation resembles a scam, he is not a scammer.

“The difference between me and them is I’m not running. I’m not filing bankruptcy and I’m still working tirelessly to put the situation to bed and to put people in position to purchase houses,” he said.

Alford anticipates at least $30,000 debt from 2008. He still plans to help the people he has hurt. Alford said he has returned several homes and caught up mortgage payments for several homeowners. However, how much the situation has been resolved depends on which homeowner you ask.

Inconsistencies

Alford originally referred to “Bob Buys Houses” with words such as “we” or “our company” but said he worked alone. However, Alford said Friday he worked alone with the help of silent investors who provided money to paint and re-carpet homes. Alford said parts of the down payments also went to fixing the homes, which is why he does not have the money.

Alford ran his business “Bob Buys Houses” out of an office he rented in a suite along the Central Texas Expressway. Alford said the media attention led to him being unable to operate at that office.

When calling the 800 phone number listed for “Bob Buys Houses,” a recorded message from Alford plays. It says the business is Centex Home Buyers Inc. and prompts the listener to press a number “if you have trouble selling your home or just want a quick cash sell” to speak to a representative. Alford said Centex Home Buyers Inc. is his business. The name is similar to reputable local businesses.

On Gutierrez’s lease, Alford listed himself as an “Officer of the Coyle Group LLC.” Alford initially said the Coyle Group ran out of the same building along the Central Texas Expressway. Alford said later he could not detail what he does for the Coyle Group, other than that he does not own the business and they were based in Nevada. He declined to provide a contact person or owner for the business. The Coyle Group was not found in Killeen or Nevada phone listings during an Internet search, other than a Nevada company that coordinates mystery shopping programs. However, a real estate appraisal company in Pennsylvania goes by the same name. A representative with the company said they had never heard of Alford. A LinkedIn.com profile for Robert Alford of Killeen/Temple area listed Alford as the Coyle Group’s owner with an interest in real estate.

Where to turn?

Special Agent Matthew Gravelle is an experienced fraud investigator in the Austin office of the FBI’s San Antonio Division. During the last five years, mortgage fraud cases have piled up because of the collapsing mortgage market.

Gravelle said he could not comment specifically about Alford’s situation without seeing the documents signed. Although, Gravelle said he has heard of similar situations to what Alford is described as doing, but in other states and not in Austin.

Gravelle said fraud often occurs when people are under financial or time pressure, such as impending foreclosure or needing to move quickly. The pressure makes them blind to a scheme that is probably too good to be true.

“It’s difficult for people to see this because the folks upon whom these scammers prey may not be as sophisticated,” he said.

Gravelle said the FBI typically prosecutes cases where mortgage companies have been defrauded by a group of people. Gravelle said a situation where a federally-insured mortgage company is shorted on mortgage payments could lead to an investigation.

Gravelle urged anyone who feels they have been scammed to contact the FBI.

Texas Attorney General Spokesman Thomas Kelley said anybody who feels they were scammed should file a complaint with the Attorney General’s office.

Seeking a resolution

Several people involved with Alford said they have already or intend to file complaints with the FBI and the Texas Attorney General concerning Alford.

Several renters are considering a small claims lawsuit against Alford.

Gutierrez wants an attorney so he can understand better the contract he signed. He has spent too much money and worked too hard to get this home for his family in America. He wants to protect it.

Contact Victor O’Brien at vobrien@kdhnews.com or (254) 501-7468.

Evan Mohl contributed to this article.

To report a potential scam

Office of the Attorney General, Consumer Protection Division.

Call (800) 621-0508 or (512) 463-2100 or go to www.oag.state.tx.us/consumer/complain.shtml.

FBI Mortgage Fraud Offices, white collar crime supervisor in San Antonio. Call (210) 225-6741.

Texas Office of Consumer Credit in Austin. Call (800) 538-1579 or (512) 936-7600.

Where to get help

Texas Real Estate Commission in Austin, www.trec.state.tx.us/ or (512) 459-6544.

Better Business Bureau Central Texas, 445 Central Texas Expressway No. 1, Harker Heights, TX 76548. Call (254) 699-0694.

Mortgage Fraud Quick Stats

Fraud losses are estimated at between $4 million and $6 million.

31 percent more reports of mortgage fraud were filed in 2007 than 2006.

1,569 pending FBI mortgage fraud investigations as of August 2008.

At least 2.2 million foreclosure filings were reported in the U.S. on 1.29 million properties in 2007, a 75 percent increase from 2006.

Tips from the FBI

Get referrals from real estate and mortgage professionals.

Check licenses with state, county or city agencies.

Beware of strangers and people who contact you.

Be skeptical of loans that promise no down payments.

Never make false statements on loan applications, especially about income or down payments.

Never sign blank documents or documents with blank lines.

Review title histories for properties considering buying.

Source: FBI’s Mortgage Fraud Report, 2007

Do you want to buy a house but know that you don’t have very good credit?  If so, don’t assume that all is lost.

Contact a lender to see if you can get pre approved for a mortgage.  You might even try a couple of lenders, since some are more flexible than others.  If you have someone that is willing to co-sign with you, ask if that would help qualify you.

If you are turned down, get into a credit repair program and set a goal to qualify for financing.