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Ask the Expert: Short and Foreclosure Sale Advice

Are you working with clients purchasing a short sale or foreclosure? David R. Leopold, Owner of Pillar to Post Home Inspection in Fairfield County, Conn., gives us insight into handling these situations.

Q: What advice should I give clients when purchasing a short sale or foreclosure?

A: Start by telling your clients two things: 1) a professional home inspection is recommended, and 2) don’t rush the process. If the transaction timing doesn’t allow it, move on to the next house.

Buyers get so overwhelmed by the emotional aspect of the purchase that they sometimes check their good sense at the front door, which is why a professional home inspector should be consulted.

Many bank-owned properties force homeowners to view the property without utilities in service, which is a waste of time and money. It’s also incredibly risky for the potential buyer. There are many reasons why showing a dormant house is a bad idea. If the pipes are frozen behind the walls, the buyer will never know it. If the angry former owner drilled pinholes in the supply pipes or put concrete in the drains, the buyer will never know it. With no water, home inspectors can’t tell if the boiler or water heater leak.

With no power, home inspectors can’t see or test anything. It seems obvious, but it’s a point often lost on over-eager buyers who want to rush forward with the inspection before they lose a great deal on a distressed property.

Additionally, a professional home inspector will find costly defects some would consider relatively routine. Take, for example, evidence of a buried underground oil storage tank.

Most potential homeowners also don’t have access to a moisture meter or an infrared camera. Home inspectors know how to find the saturated sheetrock walls in a basement that a desperate short-seller painted over. Beyond simple property damage and unexpected expense to waterproof a leaky basement, there may be threats to the buyer’s health, such as mold.

Home inspectors have the equipment to detect the problem and test the indoor air quality to make sure clients are safe. For example, clients may notice stains on the carpet and walls, but they haven’t been trained to recognize the remains of a drug factory.

Consider the sequence of events that takes place before a property goes into foreclosure or short sale. A buyer pays too much for a house. Like most people, they then want to make some improvements. Many are young and have relatively little home improvement experience or skills. Some are not particularly savvy when it comes to looking at a home as an investment. After over-paying for the property, they compound their mistake by over-paying for improvements. As the reality of their financial situation begins to sink in, they start taking shortcuts. Don’t subject clients to these types of properties. Be sure to recommend a home inspector so they feel safe and confident while making that emotional decision. Make sure the client knows what they are buying.

For more information, visit www.pillartopost.com.

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Homeowners Ignore Advice to Use ‘Complicated’ Good Faith Estimate as Mortgage Shopping Tool

RISMEDIA, May 16, 2011—Men and women may indulge in the joys of shopping, but when it comes to financing the biggest purchase of their lives, neither is a shop-a-holic. That’s because, according to a new survey from ING DIRECT USA, 56 percent of people buying a home do not use the Good Faith Estimate (GFE) for its original purpose—to shop around and compare mortgage offers.

Despite the federal government’s multiple revisions to the GFE to make it easier to understand and comparison shop for mortgage estimates, 70 percent of homeowners chose a mortgage provider without doing any personal research beforehand, the survey says. The GFE clearly states that consumers should “compare this GFE with other loan offers, so you can find the best loan.”

“The Good Faith Estimate is one of the most crucial documents a homebuyer will receive before making the biggest purchase of their life,” says Arkadi Kuhlmann, President and CEO of ING DIRECT USA, the nation’s largest direct bank. “If it is too complicated and not being used to help homeowners find the right mortgage for them, then the GFE is just a waste of three pieces of paper.”

New Look GFE Still Complicated
The Good Faith Estimate itself could be partly to blame for homeowners’ lack of enthusiasm to comparison shop for a mortgage. Even after the federal government’s attempt to streamline the GFE, more than one in three (36 percent) homeowners described the GFE as being “complicated” or a “waste of time.” Although some homeowners described the GFE as being “simple” or “easy to understand,” 68 percent of homeowners surveyed were unable to correctly identify, for example, the purpose of the Title Services charge on the GFE. Additionally, 53 percent of homeowners spent 30 minutes or less reading and reviewing the GFE. One in ten (11 percent) homeowners never reviewed the document.

Clear up Home Buying Confusion
To bring clarity to the mortgage process and help educate consumers about the value of shopping for a mortgage, today, ING DIRECT introduced Clear Orange —a website and online tool designed to demystify and simplify the Good Faith Estimate.

Clear Orange makes the costs associated with the GFE easier to understand by simplifying technical mortgage jargon, highlighting which mortgage costs are unavoidable and distinguishing between fees based on a home’s purchase price.

Visitors to the site have the option of printing out an easy to understand Good Faith Estimate explanation that they can use while reviewing their own GFE. This document breaks down the technical terms found in the GFE. Additionally, Clear Orange walks users through a step by step tutorial of closing costs that explains why they are charged and who charges for them.

“On average, homeowners ranked buying a home as being more stressful than changing jobs, getting married or having kids,” says Kuhlmann. “Buying a home should be exciting, not stressful. We hope Clear Orange will clear up some of the confusion about buying a home.”

For more information visit www.ingdirect.com.

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Sound Advice for Stretching Your Dollar in a Tight Economy

RISMEDIA, January 20, 2010—(MCT)—When it comes to New Year’s resolutions, thrift is in. Surveys show that in 2010, a majority of Americans want to skinny expenses as much as they want to whittle their waistlines. But living on a budget doesn’t have to mean doing without. A little buying savvy can result in big savings, if you know how and where to trim costs, stretch resources and find deals.

Shop local
Don’t assume that smaller businesses always charge more than big chains. Aside from the money you’ll save on gas by shopping close to home (and the free personal service you’ll receive), local stores have plenty of specials and sales. Check newspaper ads, ClipperMagazine.com, Valpak.com and ShopLocal.com for coupons, and sign up at stores for e-mailed notices and mobile alerts of sales. (If you’re worried about spam, set up a free e-mail account at Hotmail.com or Gmail.com).

Learn the value of a phone call
If you’ve made home improvements such as adding a security system or replacing your roof, you may be eligible for lower homeowner premiums. Give your insurance provider a call. Taken a senior driver refresher course? Joined a car pool and driving less? Call your auto insurance agent to see if you quality for savings. Cellphone plan up for renewal? Visit ClarkHoward.com for guides on switching providers and to compare plans and prices. Once you’ve found the best deal, call your current provider and see if they can match it.

Fix it free
Before you run up tech-support fees or call the Maytag repairman, check out free resources online. At TechGuy.org, close to a half-million users offer solutions to technology questions. Computer techies hang out at Computerhope.com and provide fixes for error messages, recalls and updates. “Check Engine” light on in your car? Visit 2carpros.com for how-to videos and guides for simple auto fixes. At RepairClinic.com, you can learn how to do appliance repairs on your own. Findhow.com and FixItClub.com list clear, easy-to-understand instructions for all types of projects. Be sure to check out Home Depot and Lowe’s hands-on home-improvement clinics.

Cut energy costs and get money from Uncle Sam
At HomeenergySaver.lbl.gov, a do-it-yourself energy audit tool shows how much you’ll save by buying energy-efficient appliances. EnergyStar.gov provides details on federal tax credits for energy-efficient home improvements. Lowes.com includes a home audit tool that helps homeowners save money on utility bills and find tax-credit-eligible products. You also can save by unplugging “vampires,” those small appliances that suck energy even when they’re off. Plug them into a power strip that you can turn off and on when needed. Still have those energy-eating incandescent light bulbs? Switch over to compact fluorescents.

Avoid credit card interest charges
At ShopDebtFree.com, make purchases from Web retailers without using credit cards. The site lets you pay directly from an online bank account.

Trim the fat from your grocery bills
Have some meals without meat. Try private-label and store-brand products. Most are made by the same companies as brand-name products. Shop discount grocers for low-cost staples. Combine sale prices with coupons for greater savings as often as possible. No time to clip and file coupons? Choose your top five most-purchased products (i.e., cereal, milk, eggs, laundry detergent and juice) and tear out just those alone. You’ll save as much as $20 each month. Take advantage of price matching. Bring in a competitor’s sale circular and ask if your store will match the deals. Check local store prices at CouponMom.com, always get a rain check for out-of-stock advertised sale items and don’t bypass organic goods. As more organic products have become available, prices have gone down, in some cases selling for less than regular items.

Cut prescription costs
Always comparison-shop (prescription prices vary from store to store) and go generic when you can. Walmart and other discount, grocery and pharmacy chains offer 30-day supplies of hundreds of generic drugs for $10 or less. At DestinationRX.com, find lower-cost options to expensive drugs and compare prices at thousands of pharmacies. Ask your health-care provider for samples and/or coupons. Check Optimizerx.com for special offers and coupons from drug companies.

Get social
Facebook and Twitter aren’t just for teens anymore. Stores, airlines and companies now use social networking sites to promote deals and specials and offer free samples of new items. You’ll also find local bargains posted by area deal hunters.

Research equals savings
Before heading to a mall or outlet center, check websites for discounts, specials and coupons. Sign up for loyalty clubs. Watch for coupons on grocery store shelves and on the back of register receipts. Check those blue envelopes that arrive in the mail for savings on dry cleaning, restaurants, car repairs and other services. If you’re purchasing something online, check for the best price at Shopzilla.com or PriceGrabber.com.

Buy and sell secondhand
Find new and gently used items at consignment stores, Craigslist.org and newspaper classified ads. Get rid of all that stuff in the basement and attic, and make some quick cash. Encourage your teens to do the same.

And last but not least, don’t buy anything you don’t need.

(c) 2010, The Hartford Courant

Distributed by McClatchy-Tribune Information Services.