The Subprime Primer

Today's must read: The Subprime Primer. A total hoot, and informative to boot. Wow, I'm rhyming, without even trying!

Apologies to anyone offended by offensive language.

Steve Cook LIVE!

Sorry this is so long in coming. Sometimes life intervenes. Good thing I took notes!

Anywho, the other night Steve Cook and friends from flippinghomes.com did a free, open to the public conference call. The topic was "5 ways to assign non assignable deals." If you don't know who Steve Cook is, you can find lots o info on him via flippinghomes.com.

Steve does personal coaching of other real estate investors. And he started out with a story about a student of his who was worried about the non-assignability clause on an REO property she wanted to wholesale. In case you didn't know, in Maryland, all real estate contracts are assignable unless they specifically say they are not. And virtually all REO contracts are specified non assignable. So this student was stumped. Steve coached her to dwell not on the problem, but on the solution. Good advice in all areas of life, IMHO.

He says he assigns non-assignable deals all the time. Here are 5 ways he does it. I won't bore you with the details, but if you do any wholesaling, this should be enough to stoke your fire.

1) Just do it. Show up at closing with your end buyer. With the funds sitting in escrow, and a buyer at the table, what are they gonna do, nit-pick over contract language? More likely, they'll settle.

2) Have your title company submit an assignment addendum expressly allowing assignment to the seller. This works best if done a day or two before settlement, because they really really really want to sell this property...

3) Add a second buyer to the contract with an addendum. A week or so later use a second addendum to remove the initial buyer. (not sure if the Hud1 shows the assignment fee in this case. Use with caution if expecting your buyer to pay you outside of closing.)

4) Create an entity, sell the entity. (You might want to get your lawyer involved in this one, at least the first time)

5) Double close. The most controversial of all! But he says he does them all the time.

Steve said at the start of the call that he had just thought of a sixth one! Unfortunately, after he got through the five above, he couldn't remember what the sixth one was. Oh well. Maybe next time!

If you want to listen in on the three upcoming calls, go here and get all the info.

Real Estate Investors, Listen Up! Hear Steve Cook for 4 hours for FREE

While I understand that this is a promotion for a real estate investing bootcamp, which ain't cheap (although compared to others out there, it ain't outrageous either!), I have to recommend it for its content. Anything from Steve Cook is going to be valuable to you if you currently invest in real estate, or hope to soon.

I have nothing but respect for Steve Cook. He is a real estate investor and instructor to pay attention to. And he will be leading 4 one-hour teleconference calls, complete with Q&A afterward, starting Monday, Feb 25. I plan to be on the calls, and will report back here what I learned for those of you who miss out.

Go here to learn all about it and register. Again, it's free. And it's Steve Cook. Really, nuff said.

Cass

Good, Fast, Cheap: Pick any Two

As a title agent marketing my services to loan officers and realtors, I often hear that so-and-so title company turns their title work around in a day, or even within a day. My response has always been something like "So what? Are the loan docs going to be ready tomorrow?" Of course not. It takes anywhere from a week to a month to get a loan approved. So what's the big rush for the title work?

Now with off-shoring of abstracting, we have reached the epitome of fast and cheap. But good? You can't have all three.

Thankfully, some quality assurance is coming down the pike. Thanks to the education committee of The National Association of Land Title Examiners and Abstractors (NALTEA), we now have a certification test for abstractors. Check out Robert Franco's review from Source of Title Blog:

Perhaps these results will make the industry realize that abstractor
selection should take into account more than just price and turn-around
time.

Exactly. I urge everyone in this industry to ask if their abstractors carry NCA or NMA designations. I'll take good over fast any day of the week.

Cass

Real Estate Auctions on RSS! Capital idea!

Kudos to A.J. Billig & Co. Auctioneers, for putting out an RSS feed so interested parties can get the scoop on upcoming real estate auctions in "real time." Apparently they just set it up in the last month or so, and from what I can, they're the first. Watch all the other guys jump on the bandwagon soon. Just go their website and look for the link in the lower right with the RSS button.

If you're new to RSS and don't know why or how to use it, I recommend Bloglines. It's a free service, all you need is a web browser. Click on "About" for more info.

Cass

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Stats R Us

Jamie Smith Hopkins from The Sun summarizes data from MRIS as it pertains to Baltimore in "2007 in the rear-view mirror."

Examples:

--Average prices in the Baltimore metro area rose 2.3 percent to about $316,900. That's very close to the preliminary figure.
--Median price (impossible to calculate from the monthly reports) was $273,000, up almost 2 percent.
--Sales fell almost 18 percent, also a minor change.
--Reported average days on market rose from 60 to 92.

Interested in your own area in Maryland? Go to MRIS and run your own report, on the county of your choice. (Virginia and WV in addition to Maryland)

- Cass

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How long is too long?

You knew this was coming. Houses sitting too many days on the market? Change the way "days on market" is determined:

Metropolitan Regional Information Systems,
which manages a database for 60,000 real estate professionals in the
Washington area and parts of West Virginia and Pennsylvania, is
changing an element of its "days on market" listing for homes.

It involves decreasing from 180 to 90 the number of days a property
is required to be off the market before MRIS resets that number to zero
when it gets back on an active listing for "days on market."

Read the whole story here.

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What costs more: Title Insurance, or No Title Insurance?

Seems to be a big topic these days. Reports of consumers being overcharged. Industry annual totals like $16 Billion dollars. Excess Fees. Charging for services not rendered. Kickbacks.

Hmmm. I will be digging into this more. For starters, here's some background:

Perpetuating A Myth from Source of Title blog


More soon.

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Now that's a bummer...

Home Sales Fall A Record 40%

Home sales in the Baltimore metropolitan area opened the year with a record 40 percent nose dive, falling to a new low as price declines swept through most of the region.

Story here, from baltimoresun.com

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Foreclosures, git yer foreclosures here!

I, too, wonder who the hell is doing the foreclosure title work!? Great post from radicaltitletalk.

Just watch who you're dealing with is all.

Cass

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Hey bud, wanna buy a cheap title search?

My new favorite online community is Active Rain
Where people are hashing out the "hot topics" in real estate. For anyone not in real estate, such discussions may seem as exciting as watching paint dry. But for those of us in the trenches, even talk about title work gets our blood boiling!

For example, did you realize our industry is trending toward outsourcing title searches to vendors on the other side of the globe? Yes, as more and more municipalities put all their records online (ah, progress!), the offshoring of title searches and abstracting as an effort to save money (or is that to increase profit?) is gaining traction. But as Lenn Harley, a RE broker covering Maryland and Virginia, points out, this may be a foundation not to be built upon:

The title search is one of the most important transactions involved in
buying a home. It's isn't the place to begin an economy drive. As a
person who has never really been comfortable with poorly written
abstract reports that look like a physicians prescription, how on earth
are we to depend on an abstract performed by an offshore vendor who
cannot go to the office of land records to verify a suspicious entry in
the county computer record[?]. Or, follow the trail of a incomplete
record entry[?].

Film at 11
Local title guru Ed Rybczynski put together a cute little video clip summarizing the comments. Do YOU "get it?"

Cass

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No time like the present!

Even though Chris Schulz is in St. Croix Valley, when he says now's the time to invest in Real Estate, I think he's SPOT ON! Everything he says in his post called "8 Reason to Invest in Real Estate in 2008" applies directly to the market here in Maryland.

Check it out!

Cass

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Is the Sky Falling for Short Sale RE Investors?

Be a fly on the wall, you might hear the F word
Shaun McCloskey and Cory Boatright and friends over at FlippingHomes.com have released to the public a recent "private" (student's only?) con call in which they discuss how the short sale business model for investors is threatened by title insurers who either don't get it -- or don't want to get it. One regional manager of a national title company told Shaun to take his business elsewhere, because what he was doing -- the proverbial "double close" or "simo (simultaneous) close" -- was fraud! But is it?

What's wrong with a double-close?
Fascinating call. As a title insurance producer myself, I listened closely, trying to decide on which side of the fence I should stand. On one hand, if someone is so close to foreclosure that the lender is willing to sell the house short (for less than the amount owed), they should be happy to get it off their hands. The bank should be happy they don't have to go through the foreclosure process, then try to sell the house through normal channels, taking the risk it might sit. The homeowner should be happy they don't get the black smudge of a foreclosure in their credit history. So what's the problem?

The problem is that on the same day Shaun buys the house at a discount from a lender and homeowner who just want out of the deal, he turns around and sells the same house to someone else for significantly more money. The difference is his profit. Buy low, sell high--the American way, right? The potentially fraudulent part? That he does this with back to back closings. If the lender financing the end buyer is working off a different appraisal, for example...that could be trouble.

Caveat Emptor, wot?
Presumably the seller and the seller's lender aren't privy to the fact that in the next room are a buyer and a new lender ready to pony up a bunch more cash for the same piece of property. They might get a bit annoyed at that. And the end buyer writing a much bigger check for the same junker Shaun just bought, like five minues ago? If they knew what he just paid for it, they might storm out! But Shaun says, no, usually they are aware, but even it they're not, it's still not fraud...right?

Don't know yet, because they broke the call into two parts, and so far only part 1 is available. Watch for the second half soon...I hope! Listen to the call there, then come back here and tell me your thoughts.

I can tell you the title insurer's point of view. Tomorrow...

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Yes, you CAN sell a house around here!

Everyone seems to agree that this is a buyer's market. What about the sellers, then? Well, according to Rebecca Giacobba in the Business Monthly, it's not all doom and gloom:

In 2007, 6,283 homes were sold in Anne Arundel County and 3,341 homes
in Howard County, which is less than 2006 (when 7,456 sold in Anne
Arundel and 3,926 sold in Howard), but still indicative of a healthy
market.
While there is a higher inventory of homes on the market today, people in our area still need and want to purchase homes.

I agree. Buyers can't buy without sellers. So chin up, buckaroo!

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Homesteaders Tax Credit Flip Flop?

The Sun reports that Sen. Edward J. Kasemeyer, a Howard County Democrat and the Maryland Senate majority leader, has sponsored a bill to repeal the recently enacted law that forces homeowners to apply for a tax credit they used to enjoy automatically. This would be good news for homeowners, also for those "bad apples" who own multiple properties (real estate investors) and try to get the tax credit on more than the house they live in.

Kasemeyer said that the effort to weed out tax cheats was well-intentioned. But doing it now is "bad timing," he said, given the many Marylanders' struggle to cope with rising costs of various types and homeowners' complaints about the applications.

Full story here:

http://www.baltimoresun.com/news/local/politics/bal-md.tax31jan31,0,191067.story

Call your public officials in support of the repeal!