Boca Raton, FL Real Estate Agent: May 2010

Inspecting Homes for Chinese Drywall

The term "Chinese Drywall" refers to drywall imported from China from 2001 to 2007 which emits sulfur gasses which usually (but not always) create a noxious odor and corrode copper and other metal surfaces, thereby damaging your air conditioner, electrical wiring, copper plumbing, appliances and electronics.  Corrosion of electrical wiring can hamper the effectiveness of your smoke detection and can create a risk of fire. 

Chinese drywall is also very friable, which means it is in a state where small particles can easily become dislodged with little friction, thus enabling them to easily enter your lungs.  For this reason, even after Chinese drywall is removed, the toxic drywall particulate may remain unless property removed.

Hundreds of millions of sheets of Chinese drywall were imported from 2004 to 2006, but Chinese
drywall has recently been found in homes built or remodeled as early as 2001. Accordingly, this
phenomenon cannot be explained solely by the shortage of American-manufactured drywall.  The presence of Chinese drywall has been reported in 37 states, the District of Columbia and Puerto Rico is estimated to have been installed in over 100,000 homes in the United States.  Unfortunately, this does not paint an accurate picture as most affected homes have a mixture of safe and tainted drywall.

Chinese drywall is 1/2" in width, although Lori A. Streit, Ph.D., from Unified Engineering, the same compounds found in problematic Chinese drywall and the same gases released therefrom have also been found in drywall measuring 5/8" (which is typically used in ceilings).  Chinese drywall is typically mixed in with untainted drywall, which is why people should not assume that their home is fine if they find U.S. drywall.   Moreover, U.S. drywall may have been manufactured in China and rebranded.

Does your home smell like rotten eggs or ammonia (sometimes a sweetish smell)? Is it more
noticeable when entering your home and then seems to dissipate? The level of odor varies greatly in each home as does each person's ability to detect the odor. Of course, the strength of the odor also depends on how much drywall was used in the home. Significantly, some homeowners report no smell, but their home clearly has Chinese drywall. In short, do not rely on your nose alone, particularly since many develop olfactory fatigue after being exposed to Chinese drywall.

One of the telltale signs is corrosion/pitting of the air conditioner evaporator coils (which are located inside the air handler).  Many owners are first advised of a freon leak, and as the corrosion progresses, evaporator coils eventually need replacement.   An examination of the coils typically reveal a black sooty deposit, which may also appear on the freon line.  

Chinese drywall also corrodes electrical wiring.   Signs of an electrical problem include a circuit breaker which frequently needs resetting without an apparent cause (particularly a GFCI or AFCI); lights that flicker without any apparent cause; bright flashes or sparks anywhere in your electrical system (this may indicate arcing conditions in the wiring);  buzzing from electrical systems, switch plates, dimmers and outlet covers that are discolored from overheating; and a smell from overheating plastic.Personal property such as precious metals and mirrors also were affected. 

Many of the occupants of these homes complained of respiratory problems including sore throats, coughs, nose bleeds, and sinus headaches. 

The Consumer Product Safety Commission serves as the lead agency within the interagency task force that also includes the U.S. Environmental Protection Agency, the Centers for Disease Control and Prevention/Agency for Toxic Substances and Disease Registry, and the U.S. Department of Housing and Urban Development as well as the Florida Department of Health, the Louisiana Department of Health and Hospitals and the Virginia Department of Health, among others.

On April 2, 2010, The U.S. Department of Housing and Urban Development (HUD) and the Consumer Product Safety commission (CPSC) issued interim remediation guidance to help homeowners.  The guidance issued does outline a very common sense approach that simply entails removing the source of the problem (the defective drywall) and replacing the components that are affected.  Consumers are cautioned to be wary of companies and contractors offering these services.  Not only should consumers verify that the contractor is licensed and insured, consumers are encourage to hire a non affiliated third party inspector to oversee and document the remediation process.

Due to the dangers involved, consumers should exercise caution when inspecting components for symptoms of defective drywall.  Always consult a qualified technician or experienced Inspector to inspect air conditioning and electrical components. Equally important is that consumers should recognize that many homes do display symptoms similar to defective drywall.  Only a trained and experienced Inspector can recognize the distinct differences between components affected by gases produced by defective drywall and components affected by natural volatile gases that already exist in many homes.  

These are the following steps that a qualified Inspector should be doing when inspecting a property for Chinese Drywall.

Step 1:   Threshold Inspection

This is a basic visual inspection of the home's copper g round wiring and the air conditioning system's copper evaporator coils.  The Inspector must be experienced enough to determine if any corrosion of these components is caused by gases from Chinese Drywall or if the problem is caused by natural volatile gases that exist in the home.  If the Inspector does not have extensive experience and exposure to both types of situations, there is a much greater risk of the home being misdiagnosed. 

The second part of the threshold inspection (visual) is to confirm that the home had drywall installed between the years of 2001 and 2008.

If the threshold inspection determines the potential presence of Chinese Drywall your Selling Agent should ammend the contract and extend the inspection period required to determine any deficiencies with the property to at least a 60 day period.

Step 2:  Corroborating Evidence

It should be noted at this time that the steps described within step 2 are recommended by the CPSC and HUD ONLY if both parts of the Threshold Inspection are confirmed to be positive. 

Collecting corroborating evidence combines a visual inspection along with invasive examination of the home's installed drywall.  There are (6) items of corroborating evidence that are recommended to confirm homes that are considered positive through the threshold inspection.

If the home's drywall was installed between 2005 and 2008, only (2) items are required.  For installations between 2001 and 2004, at least (4) if the items must be met.  Consumers should note that these items may often require specialized instruments, laboratory testing, or completion by a trained professional. 
   
    (a) Testing by placing copper coupons in the home for a period of 2 weeks to 30 days or confirmation of the presence of sulfur in the blackening of the ground wires and/or air conditioner evaporator coils.  The risk of placing copper coupons in the home is that the copper coupons must be placed within the walls that contain defective drywall.  Most homes built during the time period were built with at least two and sometimes three different brands of drywall.  Positive identification of the wall must be confirmed for accuracy. 

    (b)  Confirmed markings of "Chinese" origin.  Please use caution.  Most markings found in homes that are positive for Chinese Drywall do have markings visible with specialized cameras, however an experienced Inspector must be consulted to determine accuracy when matching these markings with the brands of drywall suspected of being defective. 

    (c)  Strontium levels in samples of drywall core found in the home.  This may require laboratory testing for accuracy.  There are portable machines available to utilize, however consumers are cautioned to ensure that the person using these portable machine is properly licensed and that the machine is registered.  Care should be taken to examine every wall of the home in order to ensure accuracy (for the same reason noted above where multiple brands of drywall may be installed in the home). 

    (d)  Elemental sulfur levels in samples of drywall core found in the home exceeding 10ppm.  Again, this method is only accurate if the correct sample of drywall is taken.  Due to the high probability of multiple brands of drywall being installed in the home, multiple core samples may need to be tested.  This method is costly at a testing price range of $200-$500 per sample. 

    (e)  Elevated levels of hydrogen sulfide, carbonyl sulfide, and/or carbon disulfide emitted from samples of drywall from the home when placed in test chambers.  This method is much like item (d) explained above and also has the same risks of false reporting if the incorrect piece of drywall is chosen to sample. 

    (f)  Corrosion of copper metal to form copper sulfide when copper is placed in test chambers with drywall samples taken from the home.  This method is a duplicate of method (a), however is performed in a laboratory.  Again care is required to remove the correct sample of drywall in order to prevent false reporting.

Users should also be aware that the corroborating evidence items (c), (d), (e), and (f) often take weeks to obtain results.  For homeowners living in these conditions and buyers under contractual obligations for inspections may not be able to tolerate the turnaround time. 

In conclusion, a comprehensive visual inspection with the invasive, yet non destructive corroborating evidence is sufficient to identify homes that contain defective drywall (Chinese Drywall).

7 commentsKim Bregman • May 13 2010 09:11AM

Florida's Existing Home, Condo Sales Up In 1Q 2010

ORLANDO, Fla. - May 11, 2010 - Salesof existing single-family homes in Florida rose 24 percent in first quarter 2010 compared to the same period a year earlier, according to the latest housing statistics from Florida Realtors®. A total of 38,846 existing homes sold statewide in 1Q 2010; during the same period the year before, a total of 31,410 existing homes sold. It marks the seventh consecutive quarter that Florida has seen higher existing year-to-year home sales, according to the state association.

Statewide sales of existing condominiums in the first quarter rose 67 percent compared to the same time the previous year. This marks the sixth consecutive quarter for increased statewide sales in both the existing home and condo markets compared to year-ago levels.

"The first quarter data release from the Florida Realtors paints a picture of a housing market continuing down the long road to recovery," said Dr. Sean Snaith, director for the University of Central Florida's Institute for Economic Competitiveness. "Transactions in the single family market have extended quarterly year-over-year gains for nearly two years, and condo sales have also risen sharply. Median prices in most areas of the state continue to fall; however, the rate at which they are falling has diminished significantly and this is indicative of a bottom approaching.

"How long prices stay at the bottom and when price appreciation will reappear will depend in a large part on the improving fundamentals in the economy and credit markets."

The University of Florida's Bergstrom Center for Real Estate Studies' latest quarterly survey of real estate trends also notes positive signs of recovery in the state's real estate industry. The survey polls market research economists, industry executives, real estate scholars and other experts.

"Results indicate that the real estate market in Florida has hit bottom and is in the process of stabilizing across most property types," said Timothy Becker, the center's director. Private capital - both foreign and domestic - continues to enter the state in search of quality investment deals, he added.

Seventeen of Florida's metropolitan statistical areas (MSAs) reported increased sales of existing homes in 1Q 2010 compared to the same three-month-period a year earlier, while all of the MSAs showed gains in condo sales.

The statewide existing-home median sales price was $133,800 in 1Q 2010; a year earlier, it was $140,900 for a decrease of 5 percent. According to industry analysts with the National Association of Realtors® (NAR), sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is a typical market price where half the homes sold for more, half for less.

Inthe year-to-year quarterly comparison for condo sales, 16,897 units sold statewide for the quarter compared to 10,131 in 1Q 2009 for a 67 percent increase. The statewide existing-condo median sales price was $95,800 for the three-month period; in 1Q 2009, it was $110,000 for a decrease of 13 percent.

Low mortgage rates remain another favorable influence on the housing sector. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 5 percent in 1Q 2010; one year earlier, it averaged 5.06 percent.

© 2010 Florida Realtors®

2 commentsKim Bregman • May 12 2010 07:09AM

2010 Hurricane Preparedness Guide

hurricaneHistory teaches that a lack of hurricane awareness and  preparation are common threads among all major hurricane disasters. By knowing your vulnerability and what actions you should take, you can reduce the effects of a hurricane disaster.  Hurricane hazards come in many forms: storm surge, high winds, tornadoes, and flooding. This means it is important for your family to have a plan that includes all of these hazards. Look carefully at the safety actions associated with each type of hurricane hazard and prepare your family disaster plan accordingly. But remember this is only a guide. The first and most important thing anyone should do when facing a hurricane threat is to use common sense.



Know Hurricane Terms:  

Hurricane Watch - A hurricane is possible within thirty-six hours. Stay tuned for additional information.


Hurricane Warning - A hurricane is expected within twenty-four hours. You may be advised to evacuate. If so, evacuate immediately.

Storm Surge - Storm surge is simply water that is pushed toward the shore by the force of the winds swirling around the storm. This advancing surge combines with the normal tides to create the hurricane storm tide, which can increase the mean water level 15 feet or more.

Ask your local emergency preparedness office about evacuation plans. Learn evacuation routes. 

  • Plan a place to meet your family in case you are separated from one another in the hurricane.
  • Assemble a disaster supplies kit ( See information below) 
  • Board up windows. Permanent storm shutters offer the best protection. Also, you can use 5/8" marine plywood. Tape does not prevent windows from breaking.
  • Know how to shut off utilities.
  • Make a record of your personal property( take digital photos or video tape the contents of your home and/or business and keep in a waterproof with you along with your homeowners insurance policy) 
  • Be sure trees and shrubs around your home are well trimmed.
  • Clear loose and clogged rain gutters and downspouts.
  • Determine how and where to secure your boat.
  • Consider flood insurance and purchase it well in advance.  

30 Days To Hurricane Season: Time For Flood Insurance

The Atlantic hurricane season starts June 1 - 30 flooddays from now. Since flood insurance takes 30 days to become effective after a homeowner applies, today marks your last chance to get flood insurance by the June 1 debut.

"Past hurricane seasons have shown that storms can form as early as the beginning of June, so property owners can't afford to wait to buy flood insurance," says Ed Connor, acting federal insurance administrator and acting assistant administrator, FEMA Mitigation Directorate.

Many homeowners still wrongly believe that their property insurance policy will cover all damage from a hurricane.

"Homeowners insurance doesn't cover flood damage and, without flood insurance, property owners may have to absorb the financial losses on their own," says Connor. "Just a few inches of water can cost thousands of dollars in repairs and, in this economy, few can afford that potential drain on their savings."

Flood insurance is available through about 85 insurance companies in approximately 20,600 participating communities nationwide. National flood insurance is available to renters, business owners and homeowners, even if it is not required by the terms of a mortgage. While the average flood insurance policy costs about $540 a year, homeowners can protect their properties in moderate-to low-risk areas with lower cost Preferred Risk Policies (PRPs) that start at just $119 a year.

Individuals can learn how to prepare for floods, how to purchase a flood insurance policy and the benefits of protecting their properties against flooding by visiting Floodsmart.gov (http://www.floodsmart.gov) or calling (800) 427-2419.

Preparing Your Pets for Emergencies Makes Sense.
Get Ready Now.
 petsIf you are like millions of animal owners nationwide, your pet is an important member of your household. The likelihood that you and your animals will survive an emergency such as a fire or flood, tornado or hurricane depends largely on emergency planning done today. Some of the things you can do to prepare for the unexpected, such as assembling an animal emergency supply kit and developing a pet care buddy system, are the same for any emergency. Whether you decide to stay put in an emergency or evacuate to a safer location, you will need to make plans in advance for your pets. Keep in mind that what's best for you is typically what's best for your animals.
If you must evacuate, take your pets with you if possible. However, if you are going to a public shelter, it is important to understand that animals may not be allowed inside. Plan in advance for shelter alternatives that will work for both you and your pets.
Make a back-up emergency plan in case you can't care for your animals yourself. Develop a buddy system with neighbors, friends and relatives to make sure that someone is available to care for or evacuate your pets if you are unable to do so. Be prepared to improvise and use what you have on hand to make it on your own for at least three days, maybe longer.



Disaster Supply Kit:    I personally prepare a hurricane closet in May with all the needed supplies and materials so that there is never a last minute rush to the store when the shelves have been cleaned out. 


   Water :

  • Plan on one gallon of water per person per day for at least 3 days, for drinking, washing, cooking, and sanitation. Extra water for pets
  • Store as much as possible in plastic containers such as soft drink bottles.
  • Avoid using breakable containers, such as glass bottles or mason jars.
  • Fill bathtubs with water for bathing and washing dishes

Food :

  • Store at least a three day supply of non perishable food.
  • Choose foods that do not require refrigeration or cooking.
  • Choose foods that are healthy and high nutrition type.                                                 (Canned meats fruits and vegetables,protein or fruit bars, dry cereal or granola, peanut butter, dried fruit, nuts, crackers, canned juices, non-perishable pasteurized milk, high enery foods, vitamins, food for infants and pets, comfort/stress foods)

Supplies and Equipment:

  • A battery operated radio with extra batteries
  • NOAA Weather Radio with tone alert and extra batteries
  • A flashlight with extra batteries
  • Blankets or sleeping bags ( store in trash bags to keep dry)
  • Paper plates and utensils, including a non electric can opener
  • Candles and matches in a waterproof container
  • Plastic sheeting and duct tape to shelter-in-place
  • Toothbrushes, toothpaste, soap, moist towelettes, and other personal grooming items
  • Paper towels and toilet paper
  • First aid kit and medicines ( ask your pharmasist or drug supply company for a one month hurricane supply and store in water proof container)
  • Fire extinguisher
  • Wrench or pliers to turn off utilities
  • Cell phone and plug in battery operated charger
  • Infant formula and diapers
  • books, games and toys to keep kids occupied ( remember those batteries)
  • Important family documents such as copies of insurance policies, identification and bank account records in a waterproof, portable container
  • Complete change of clothing including long sleeved shirt, long pants and sturdy shoes
  • Insect repellent and sun-screen
  • Paper and pencil
  • Local Maps

Useful Links:  

General Hurricane Information:  
National Hurricane Center

 NWS Hurricane Awareness site

NOAA Hurricanes site Frequently Asked Questions

FEMA Hurricane Info

FEMA for kids NCDC: Hurricanes


Hurricane Safety Information:

American Red Cross

FEMA EPA - Drinking Water, Waste Water, and other Hurricane Hazards

2 commentsKim Bregman • May 07 2010 10:26AM

America's Top Places to Live for 2010

RISMEDIA, May 5, 2010-The three most important things to remember when moving and buying a new home are: location, location, location. As potential home buyers start looking for new homes, RelocateAmerica.com, a leading website in providing relocating consumers access to resources for their upcoming relocation, has released its 13th annual list of "America's Top Places to Live for 2010."

The "Top Places to Live" list features several breakout categories such as the Top 10 Recovery Cities, Retirement Cities, ‘Earth Friendly' Cities, Recreation Cities and Small Towns.

New for this year, the Top 10 Recovery Cities focused on areas poised for swift economic recovery. Many of these communities did not see the massive real estate bubble that formed in other areas and have a more diverse economy.

To be considered for the list, a community is nominated at RelocateAmerica.com. From the thousands of submissions, RelocateAmerica.com's editorial team reviews the nominations and selects the top places to live, as well as the Top 10 for each smaller category, based on interviews with local leaders; feedback from residents; and economic, environmental, education, crime, employment and housing data for the past year.

"Given the tough economic times our nation is facing, home buyers have re-evaluated their priorities and are looking to relocate to communities that offer plenty of perks, but minimal hassle and cost," said Peter Meyers, Vice President, Research and Content Development, at RelocateAmerica.com. "While some cities are facing a road to recovery that could take years, others are poised for a quick rebound - and already have seen growth. We wanted to highlight those cities that are on the road back to economic health."

Top 10 Overall Cities:

  1. Huntsville, AL
  2. Washington, DC
  3. Austin, TX
  4. San Diego, CA
  5. San Antonio, TX
  6. Tulsa, OK
  7. Charlotte, NC
  8. Raleigh, NC
  9. Boulder, CO
  10. Minneapolis, MN

Top 10 Recovery Cities:

  1.  Huntsville, AL
  2. Austin, TX
  3. Las Cruces, NM
  4. Washington, DC
  5. San Antonio, TX
  6. McAllen, TX
  7. Billings, MT
  8. Albuquerque, NM
  9. Everett, WA
  10. Boulder, CO

Top 10 Retirement Cities:

  1. Ashville, NC
  2. Bella Vista, AR
  3. Green Valley, AZ
  4. Sarasota, FL
  5. Prescott, AZ
  6. Tampa, FL
  7. Greenville, SC
  8. San Antonio, TX
  9. Hot Springs Village, AR
  10. Colorado Springs, CO

Top 10 ‘Earth Friendly' Cities:

  1. Portland, OR
  2. Boston, MA
  3. Madison, WI
  4. Boulder, CO
  5. Austin, TX
  6. Chicago, IL
  7. Minneapolis, MN
  8. Fort Worth, TX
  9. Ann Arbor, MI
  10. Huntsville, AL

Top 10 Recreation Cities:

  1. Boulder, CO
  2. Santa Cruz, CA
  3. Flagstaff, AZ
  4. St. George, UT
  5. Ithaca, NY
  6. Corvallis, OR
  7. Salt Lake City, UT
  8. Stevens Point, WI
  9. Wilmington, NC
  10. Portland, OR

Top 10 Small Towns (<40K pop.):

  1. Grinnell, IA
  2. St. Augustine, FL
  3. Fairhope, AL
  4. Stillwater, MN
  5. Summit, NJ
  6. Ashland, OR
  7. Batavia, IL
  8. Ithaca, NY
  9. Peachtree City, GA
  10. Trumbull, CT

For more information, visit www.RelocateAmerica.com.

7 commentsKim Bregman • May 05 2010 07:23AM

Tips For Buying a Foreclosure Property

The current market conditions make it a perfect time for an investor to purchase one or more foreclosure properties for their private residence, rental or resale.  First, you have to decide at what stage of foreclosure you want to buy; pre-foreclosure , also known as a short sale, sheriff's auction, or repossession, called REO (for real estate owned by the bank).

For most consumers, however, the foreclosure process can prove daunting, Reed says. Good buys are available, but they require research, preparation, patience and persistence.

Pre-foreclosure(Short Sales): These homes are in the foreclosure process, but they have yet to be sent to auction. Owners are typically trying to unload them because they are "underwater," owing more on the homes than they are worth.

As a result, potential buyers must negotiate a deal with the lender as well as the owner. That makes buying at this stage of foreclosure complicated and slow. But, you have the advantage of being able to inspect the home before purchase -- which isn't the case in other types of foreclosure sales. More often than not, these properties sell for a higher price than if the bank were to take it through the foreclosure process and sell it as an REO.

Sheriff's auction: These sales yield the lowest prices, but they are the riskiest investments. The foreclosure process starts when a property owner falls behind on mortgage payments. Many owners of homes that go into foreclosure have been struggling financially for almost a year before they give up, which usually means that the house has not received needed repairs or general maintenance for a while. Often the house is unavailable for inspection, leaving buyers with a long list of expensive repairs -- and much larger bill than they intended. The buyer gets the property "as is", caveat emptor (let the buyer beware) and that may include any liens or taxes due on the property. 

There is no guarantee of clear title when you purchase a home through a Sheriff's auction and you may need to clear the liens on the property to sell if in the future.  Make sure you have a thorough understanding of the condition of the property, the liens, and the cost for repairs.  These are all out-of-pocket expenses and will need to be added to the purchase price of the property to get a true assessment of what you are paying for the property.

Repossession ( REO): This occurs after the home has gone through a sheriff's auction but does not sell and the bank gains possession of the property. Homebuyers may not get the best bargains during this stage, but they can nearly always perform a thorough inspection before closing, minimizing costly surprises. Plus, the property comes with a clear title.

An REO is the least risky way to buy a foreclosed home. Before a bank hangs a "For Sale" sign, it pays off all the existing debts and taxes, and in many cases, repairs the home to bring it up to the standards of the neighborhood. Best of all, you should be able to buy a bank-owned property with a traditional mortgage. In addition, the banks selling these places may extend preferential financing terms to the buyers. 

"You can buy foreclosures for as cheap as 30% or 40% below market, but most foreclosures sell for 5% below market," said John T. Reed, editor of Real Estate Investor's Monthly, a newsletter based in Alamo, Calif.  Banks order appraisals on the properties once they agree to a short sale or take the property back as an REO.  The banks are fully aware of the market value of the property and tend not to discount too far off the appraised value. 

Even in this safer stage, though, homes are still usually sold in "as is" condition. "That means the bank won't pay for cosmetic issues," said Adam Wiener, a spokesman for the Redfin, the online real estate marketer. "Although, they will often pay for some or all of repairs that are health and safety issues. That makes the home inspection even more critical."

Making an Offer.......
Usually the offer amount is somewhere below the market value but above the total outstanding liens and estimated repair costs. If the property is a pre-foreclosure or bank-owned, you could prepare an offer similar to a typical purchase offer, contingent on a full inspection and title search ( paid for by the buyer).

If the property is selling at auction, you will need to make your offer, or bid, at the auction. In many states, bidders are required to pay in cash in the form of a cashier's check at the auction. You probably won't be able to conduct a full inspection and title search when you buy at an auction, so it's important to do careful research beforehand.

Once you've decided which type of home to buy, there are several common mistakes foreclosure buyers should take care to avoid. These include:

Getting caught up in a bidding frenzy: The banks often under-price repossessions, hoping to generate excitement, attract multiple bids and sell them quickly. The problem is, as in any auction-type sale, bidders get excited and pay too much.

Underestimating repair costs: Take full advantage of the home inspection and don't delude yourself about much the repairs will cost.

Not knowing what comparable properties cost: This is important in any market but especially in this endeavor. In high foreclosure areas, prices can be eroding very quickly. You want to have the latest homes sale prices on repossessed properties and try to keep your bid comparable or lower.

Buying in a neighborhood flooded with foreclosures: This is most important for people buying for the short-term. Any neighborhood saturated with REOs and foreclosures may be headed for further price falls. If you're planning to relocate within a few years or buying a bigger house, that could mean selling at a loss. A better bet, if you can find it, is to buy the only foreclosed home in an otherwise stable community. That's more likely to hold its value.

Banks want to know that you have already secured the financing to purchase the home or that you are paying cash.  Offers contingent on financing or selling your existing home are often summarily rejected by the bank.  Individuals with a large amount of equity in another home may get a line of credit from their bank to purchase a foreclosure. When they  convert the line of credit to a mortgage, no down payment may be required.

Whether you use cash, a home equity line of credit, resources from other investors or mortgage products, secure the money for your purchase in advance. Sellers only want to work with serious buyers who are ready to buy quickly. You could miss an opportunity if you don't have your financing in place.

Foreclosure homes bought in good areas at below market values that appreciate annually can be a sound investment strategy for many investors. The appreciation of the homes is tax-exempt until the home is sold. If the home is a primary residence, the appreciation may be tax-free.

Homes used as rental properties give most investors valuable tax deductions while the house increases in value and builds equity. Real Estate investment is a good way to diversify your portfolio.

0 commentsKim Bregman • May 04 2010 09:35AM