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Home Buying Tips – What to Expect at the Foreclosure Auction

One of the most important aspects of buying real estate foreclosures for business reasons is that it is a closed auction. Prior to the auction, you as a buyer have to be able to present a certified check made payable to an escrow or third party as a deposit to be used for the down payment and the cost of the house. The bidding tactics used in particulars are different in each of the states where foreclosures are available, but in all states, bidders must prove through their financial statement that they are capable of paying for the going price of the real estate.

The first participants are those who are not physically present. These are often “mortgage brokers, real estate agents, and title search people”, who attempt to wind you up and make you spend more. They are not bidding on behalf of the property owner and are not bound by a sealed contract. They are drawing lots to see if they can feel one step ahead and possibly walk away with an overbid. You being the over bidder well aware of what a kickback looks like and are not accepting the assistance to purchase the property. The second type of bidders will be those who realize that they stand to make a pretty penny and Semi-professional can put together some pretty slick games that can tip the balance in their favor. It’s in your best interest to be adept at this particular part of the bidding process.

The second type of bidder is those who are at this auction to snatch up a particular property at a really good deal. They are reasonably likely to see the property come up for auction feet-saving up to a far more comfortable 100% of the normal market value price. The third type of bidder is those who know the value of the property could make a nice profit and have their goal to still purchase the property, repair it, and resell it to a potential buyer who can not afford the normal market value.

How is this information that is being offered to those who are not physically present? If you know where you are, you can avoid this information if you are having your second round of biddings. If you are bidding on a property that has already been identified as a foreclosure, it should be as clear as day that those bidding for the foreclosure have to stick with the bid price unless the bank drops their price. If that occurs any other way, you are subject to the bank set a higher or lower price.

These secret bidding tactics used by the banks cannot be used in foreclosure auctions due to the intense experience or expertise or experience of the people bidding at the auction. They “may” be able to get a property for higher or lower than you are willing to bid and based on the experienced or “higher” bidding tactics. They might be able to pressure you to pay more or less if you have not bid already and feel that you can bid higher in all circumstances.

What is the danger of these secret bidding tricks? Consider this example:

Let’s suppose a bank was offering property for what was being called an “owner-occupied” loan. It turns out that the bank was willing to hold the property for another 120 days (at a time frame set by the bank to keep their loan from being “sellable” but not giving you a higher price than what they were already asking). However they weren’t willing to lower their price to the $2,000 above their cap rate, so they were offering it for $2,000 below the cap rate. You bid $2,000 higher for the same property, but now you are facing a higher risk of bidding too high, beating out by an over bidder, or not being able to complete. That is your bad, but the bank’s good.

However, this same bank was willing to drop the price a couple of times to get more money. Their idea was to get $15,000 over their desired cap rate to turn around an 11.4% money deposited into the bank.

They are essentially gambling you can negotiate with the bank and get the bank to drop your price. Don’t get caught up in the emotion of the game and base your costing to win your bid on whether the bank is going to dump the property or not. It’s important that you know that there are other ways that you might bid on the same property.

What if you have a bidding war and every participant agrees to start at $2,000? Well, the bank can afford to lose $4,000, so now you’re at a $4,000 drawdown and you’ll get nothing.

How much more does that cost you? An $11,000 home for $10,000 less?

Some of the pitfalls are the ones we’ve seen in the news lately, that the bank who had the foreclosed property wasn’t willing to at least see the property.

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HOA: The rollercoaster to Real Estate Community

When you visit a community, you visit one of a community. It is important to know that every community has a board of directors who are responsible for the community’s 24-hour cleanliness and regular community activities (i.e. neighborhood pool maintenance, neighborhood barbecue events, etc.)

For residents to become involved in the HOA, board members must be involved in the HOA. The community is then committed to these two things through its board members and the community as a whole.

The Homeowner’s Association (HOA) is typically formed when a specific homeowner wants to rent out a portion of his property as an HOA property. The HOA board (or association) is responsible for the property.

In many ways, bank regulations of the property do not affect the HOA. The HOA is concerned with the repair of shared spaces such as walkways, driveways, and paths. The association is responsible for these costs and maintenance.

In some ways, the HOA looks after the property. The responsibilities of the HOA board include hiring a contracted electrician to replace the faulty circuit breakers in the neighborhood and maintaining an on-site property manager. The board will also maintain common property, such as the tennis courts, pool, and meeting rooms, as well as insurance for that property. In addition, they will represent the community to contractors and vendors so that these interests can be served as best possible.

The Association as a whole is responsible for the maintenance of the community property and the community itself. For example, the board should keep the neighborhood exterior in good shape for several reasons: they need to have an inviting look for the neighborhood and they need to increase the value of the community by making sure its residents are secure and satisfied with the community.

An HOA is implemented when the deed for the property is transferred. When someone purchases the property, he or she becomes a member of the community. He is also named on the HOA documents as a member.

Another factor in determining association longevity involved four factors: design and planning, cost engineering and finance, and management.

Design and planning involve the way the community is laid out and how the HOA will maintain common areas. For a neighborhood with houses on it, the HOA should ensure that the houses are fit for housing and that they have no structural defects that would affect their resale. Along with homeowners association documents, the association should have a reserve study and an operating budget.

Cost engineering considers the cost of maintaining the community property as compared to its original value. A reserve study will show how much the association will need to set aside for maintenance over a period of time. When budgeting, the board should include an extra contingency fund to cover unexpected expenses. This may include a problem with the pipes at one house that would cost $2,000 to repair. The HOA should have the reserve study done by a professional.

Management involves various tasks that ensure that the association is able to provide neighborhood association services for its residents. They include getting a manager to supervise the association help residents by providing 24-hour emergency services as needed.

The association will collect fees from its members through their HOA. These fees are used to pay for association maintenance and services.

The HOA board will have some decision-making authority on expenditures, but it is important to remember that the board is only allowed to collect these fees after taking into account several factors, including interest and inflation factors, assessment rights, and property taxes. The board will make its budget and will likely try to make as much as possible for last year’s financial statement.

Once the board begins collecting fees, it should take several items into consideration. Some examples are taking care of contractual obligations, choosing a contractor, hiring a management company, and paying the homeowner association insurance premium. Some requirements should be easy to manage and should be scheduled in time so that costs can be accomplished beforehand.

Fees are truly only worth receiving if the association and its owners – the homeowner – are satisfied with the services provided. The service providers are responsible for many things, but only with the community’s approval. If the HOA is not satisfied with the services provided, the board and association would need to provide more specific reasons why.

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