Commercial Realtor Bash

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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:

sallyplat@aol.com.

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,

http://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. "The

foreclosure company may promise to take care of it, but your title

company may find things that they didn’t."

Home inspector who is well experienced in vacant

properties.

A good one will give you a good idea about what you are getting into

and warn about major structural damage.

Buyer’s agent who coordinates and looks out for you. The

agent might be different for investment or live-in properties. To

"flip" properties (buy, rehab, and quick sell) you need a

particularly good market estimate, so a $2,000 mistake in market

information

doesn’t wipe out your profit.

Contractor. You need a reliable contractor to finish on

time, so as not to miss a market opportunity.

On the opposite end of the transaction, Witt works with sellers

to forestall foreclosure. She helps them to "short sell,"

to get the mortgage company to agree to take a lower price on the

house 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 $220,000

but is worth just $90,000 now, the owner should try to "short

sell." If it goes to foreclosure, the mortgage holder will net

even less.

Probably out of every 100 people that come to this class, only two

to three will be real estate investors. Says Witt: "It’s something

that a lot of people are interested in, but when they get into the

nitty gritty, and how long it might take to resell something, it turns

out to be not what they thought."

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Commercial Realtor Bash

Few holiday parties are rife with controversy, but this

one might be. At the TriState Commercial & Industrial Association

of Realtors luncheon, issues surrounding New Jersey Supreme Court’s

"Opinion 35" will be laid on the table. According to Opinion

35, only attorneys are allowed to prepare agreements for the sale

or lease of property. If commercial brokers draw up so much as the

simplest lease, they are breaking the law. Yet residential brokers

are allowed similar privileges for residential leases and sales

agreements.

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 610-239-7470

or 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 small

lease for a small retail store. Special guests Gloria Decker,

executive director of the New Jersey Real Estate Commission, and

Robert

Melillo, legal counsel to the New Jersey Real Estate Commission,

will be available for comment.

"I think a commercial broker should be given the same opportunity

as a residential broker," says Gati, vice president of the

organization.

"As a commercial broker you are not allowed to touch

anything."

"If it is not a complex contract, and either party wants to go

without spending the fee, they should be allowed that opportunity.

Either party would have three days to check with a lawyer and have

the contract voided."


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