Corrections or additions?
These articles were published in U.S. 1 Newspaper on December 15,
1999. All rights reserved.
Foreclosing on Christmas?
Tis the season to be merry — and kind to those less
fortunate. Yet just one week before the day when Tiny Tim’s family
gets a free turkey with all the trimmings from Scrooge, the Learning
Studio in Langhorne is giving a course in how to buy foreclosed
property.
What’s happening here, lessons on how to be Scrooge?
Not at all, says Sally Witt of ReMax Platinum, a family real
estate business in Morrisville, Pennsylvania (E-mail:
She teaches the course on Thursday, December 16, at 7 p.m. at the
Learning Studio in Langhorne, Pennsylvania. Cost: $29 or $49 per
couple.
Witt repeats this class on Wednesday, February 23, and Monday, April
10. She will also teach how to buy a property with no money down on
Monday, January 3, and how to buy income generating properties on
Monday, January 24. Call 215-752-5657.
Witt strongly believes that the buyer of distressed and foreclosed
properties can perform an excellent public service. For instance,
she will show how to do “Section 8” rentals for families who
are on government assistance. “It is a great service to the
communities,
and there is a 2 1/2 year waiting list for these properties. We have
one client renting to a person with eight children, and part of the
agreement is that the Department of Youth and Family Services will
help train the clients in how to be good tenants.”
Just to buy a foreclosed property is in itself a good deed for the
community, says Witt, a former Girl Scout leader. “Most of the
time, by the time we see a foreclosed property, it has been trashed.
It is sad how it drags down the neighborhood.”
In these cases, she believes, the house is the victim, not the owner.
“In this system, people live one year and two years in the house
without paying the mortgage,” says Witt. “Sometimes the owners
take out their anger on the house. The water is left on so the carpet
is moldy. I’ve been in houses where all the cabinets were removed.
The house didn’t deserve this — I feel sorry for the house.”
In her two-hour workshop Witt will cover the time cycles of distressed
properties, how you find them, how to do research on the Internet,
and the risks and benefits of purchasing foreclosed properties. She
majored in theater at the University of Connecticut, Class of 1979,
and has a master’s degree in educational psychology. She and her
husband
have a family business in Morrisville and work in Bucks and Mercer
counties. He does residential and commercial properties, and she does
residential and investment properties (215-736-8000,
https://www.remax-platinum-morr-pa.com)
Buyers of foreclosed properties can range in age from 21 to senior
citizens, but they must have a bank account with at least $10,000
to $15,000 to cover the down payment and closing costs. The rule of
thumb is to try to buy at 65 percent of market price. “Most of
the value will usually be in the land,” says Witt. “The rehab
costs plus marketing costs must then be within your tolerance level
of profit.”
Some clients are happy if they can make several hundred dollars, she
reports. Others, if they can’t make $500 on a house, they don’t want
to look at it. Still others want to do a “flip” (fast resale)
for $15,000. Some are doing it for the tax benefits.
“For an investor, it is a business. They’ve got to think in a
different way,” says Witt. Investors can expect to make a profit,
but too many of the people who come to her workshops assume they will
strike it rich, and the naive ones often find their property is a
money pit. As Witt notes, “It’s one thing to find a bargain,
another
to keep finding layers of damage and defects that you are not prepared
to deal with.”
Also, prospective investors often want to move faster than is legally
possible. “People get excited when they see a house where the
grass is long. That may not necessarily mean that the house is ready
to be purchased. It might be a year from the time people start getting
behind in the mortgage before the house goes to foreclosure, and
another
year before it is legally available for sale.
Those looking for their first home should be especially cautious,
because, she says, “if they have never been in an foreclosed
property,
they can be pretty nasty.” The buyers may not understand that
no one is guaranteeing anything, and that they are responsible for
everything, including the surprises that may come when the utilities
are turned on. The buyer is also responsible for the expenses that
the seller normally pays, such as the transfer tax. “Unless we
get them a rehabilitation loan, they have to have cash to repair
defects
before they can move in. The foreclosure company will take no
responsibility,”
says Witt.
“Make sure you have a team of professionals to give advice so
when you are making a decision, you are as well prepared as possible
to make that decision,” says Witt. As a realtor, she puts together
a team that includes the following players:
Title company to protect you from title defects. “Theforeclosure company may promise to take care of it, but your titlecompany may find things that they didn’t.”Home inspector who is well experienced in vacantproperties.A good one will give you a good idea about what you are getting intoand warn about major structural damage.Buyer’s agent who coordinates and looks out for you. Theagent might be different for investment or live-in properties. To”flip” properties (buy, rehab, and quick sell) you need aparticularly good market estimate, so a $2,000 mistake in marketinformationdoesn’t wipe out your profit.Contractor. You need a reliable contractor to finish ontime, so as not to miss a market opportunity.On the opposite end of the transaction, Witt works with sellersto forestall foreclosure. She helps them to “short sell,”to get the mortgage company to agree to take a lower price on thehouse so the owner won’t have a foreclosure on his or her record.For instance, if a house was somehow refinanced to a peak of $220,000but is worth just $90,000 now, the owner should try to “shortsell.” If it goes to foreclosure, the mortgage holder will neteven less.Probably out of every 100 people that come to this class, only twoto three will be real estate investors. Says Witt: “It’s somethingthat a lot of people are interested in, but when they get into thenitty gritty, and how long it might take to resell something, it turnsout to be not what they thought.”Top Of PageCommercial Realtor BashFew holiday parties are rife with controversy, but thisone might be. At the TriState Commercial & Industrial Associationof Realtors luncheon, issues surrounding New Jersey Supreme Court’s”Opinion 35″ will be laid on the table. According to Opinion35, only attorneys are allowed to prepare agreements for the saleor lease of property. If commercial brokers draw up so much as thesimplest lease, they are breaking the law. Yet residential brokersare allowed similar privileges for residential leases and salesagreements.The holiday luncheon is set for Thursday, December 16, at 12:30 p.m.at Mastori’s restaurant on Route 130 in Bordentown. The cost is $20,and there will be an open bar. Call the association at 610-239-7470or the state president, George Gati, at 609-419-9100.Louis W. Ross, SIOR of Louis Ross Associates in Cherry Hill,will tell what transpired when one of his agents filled out a smalllease for a small retail store. Special guests Gloria Decker,executive director of the New Jersey Real Estate Commission, andRobertMelillo, legal counsel to the New Jersey Real Estate Commission,will be available for comment.”I think a commercial broker should be given the same opportunityas a residential broker,” says Gati, vice president of theorganization.”As a commercial broker you are not allowed to touchanything.””If it is not a complex contract, and either party wants to gowithout spending the fee, they should be allowed that opportunity.Either party would have three days to check with a lawyer and havethe contract voided.”Previous StoryNext StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
