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We Can Help You Buy a Home After Foreclosure, Short Sale or Bankruptcy

Many of our Rent To Own / Lease Option customers have experienced a Foreclosure, Short Sale or Bankruptcy in the last few years and are well on track to rebuilding their credit and owning a home but aren’t quite sure when that will be.  If you’ve experienced one of these events the chart below will help you determine how long it will be before you can qualify for financing to purchase another home.  Obviously, the loan approval will depend on whether you’ve worked to repair your credit and if you have increased or replaced your income.

REsolutions Real Estate Services specializes in helping people recover from these unfortunate financial situations and getting back on track as home owners.  To learn more about our program and to get started back on the track of home ownership visit our Rent To Own page.

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Nearly 30% of Roanoke, VA Homeowners are Underwater or Have Negative Equity in Their Home.  REsolutions Real Estate Services Can Help.

In May 2012 I posted an article on the negative equity problem in our market.  Although the real estate activity has picked up since then prices have only increased slightly and only in certain areas.  Many Roanoke home owners and Sellers cannot sell their homes because they have no equity and cannot afford to pay REALTOR commissions or even to sell at market value.

As you can see by the Zillow.com heat map and the summary table I’ve made below, some neighborhoods have been hit harder than others due to the high number of foreclosures and short sales in the market as a result of buying at the peak of the market and having a reduction in income, job loss or an increase in the mortgage payment that lead to a foreclosure.

Roanoke, VA Negative Equity : Upside Down : Distressed homes

Negative Equity / Underwater Homes in the Roanoke, VA Market as of 3/25/13

Underwater Homes Roanoke VA

There are Options for Owners with Little to No Equity Who Need To Sell a House

If you are Selling a house in Roanoke but have not been able to sell using a REALTOR or For Sale By Owner please take a minute to familiarize yourself with our Rent To Sell Program.  We can buy your house even if you are one of the unfortunate owners who cannot sell conventionally because you have no equity.  Be sure to review the Benefits of our program as well as the Frequently Asked Questions and How the Process Works.

The only way to be sure of what your home is worth is to have a professional run a market analysis to see.  If you’re interested in learning more about the value of your home and the options available to you please Register Now so we can schedule a FREE consultation and review your home value and options for selling your home.

Here is a Seller Testimonial From a Salem, VA Seller who was 20% Underwater on His Home but was Able to Sell to a Great Buyer and Get His Payments Covered Quickly.


Would you rather sell your house for full price + rental income or pay a Buyer $5,000 to take your house?  If you own a home that is “underwater” or have little equity read this story.

Underwater House

As many of you know, in addition to owning REsolutions Real Estate Services I am also a REALTOR who focuses on Commercial, Luxury and Investment real estate transactions (check out www.PortfolioPropertiesRE.com).  Conventional residential real estate is not the core of my business but at times it’s a better option for Buyers or Sellers who raise their hand for our Rent To Own or Rent To Sell program.  I want to share a story that highlights just how beneficial a Lease Option transaction can be to a seller.

I recently got a call from a great couple who wanted to buy one of our Rent To Own homes but it had sold in a matter of hours to another great retired couple who are just a few months from qualifying for a VA loan and closing.  After talking to this couple I realized that they were closer to qualifying than they thought so I recommended they speak with our preferred lender and pre-qualify.  Sure enough, they qualified for a conventional loan so I recommended we look at some conventional listings on MLS to see if we could find a suitable home for them.  We found a great house in Salem that had been on the market for nearly a year with only a small price reduction.  We looked at the home and they absolutely fell in love.

When it came time to make an offer I ran a Comparative Market Analysis and made an amortization table to see about what the Seller owed on the property and it was apparent they were “underwater” or had negative equity in the home.  The loan was originated in 2007 and because the market dropped (Salem is a lot better of than many neighborhoods) they owed more on the house than they could sell it for.

We made a fair offer which was countered at the top of my Buyer’s price range but well below the market comps.  After only a small concession from the Seller we firmed up a contract with a 30 day closing.  When its all said and done the Seller will have paid brokerage commissions, closing costs, etc. and will still have to bring over $5,000 to closing in order to pay off the debt on the house. 

Had this Seller known about our Rent To Sell program and been educated on the benefits of Lease Option transactions we could have bought their home for full asking price and not only would they not have to pay commissions, they would get to keep 100% of the rental income to pay down their own debt until the Tenant Buyer closed. 

 

Side by Side Comparison of Selling to Lease Option

Selling Traditional Route Lease Option
List Price $159,900 $159,900
Less negotiated discount (3%) ($4,797) $0
Less Realtor Commission (6%) ($9,306) $0
Buyer asks to pay for closing costs (3%) ($4,653)
Misc Costs – fixing inspection items, carrying costs (2%) ($3,102) $0
Option Deposit  (3%) $0 $4,797
Investor Profit ($4,797)
Credit the Dep Back to Buyer @ Closing ($4,797)
Less 30% Rent Credits ($1,300 rent) $0 $0
Net Cash Flow ($100/mo) $0 $900 DIFF
Subtotal $138,042 $156,003 $17,961
Net Present Value after year 1 NA $152,883 discounted 2%
Net Present Value after year 2 NA $149,825 discounted 2%
Additional Money in Seller’s Pocket After Two Years Using Lease Option $11,784

 

If you’re selling a home but you don’t have much or any equity please go to www.Rent2SellVA.com and learn more about our services.  Don’t bring a check to closing. 

Chad Corbett

President – REsolutions Real Estate Services  www.REsolutionsVA.com

REALTOR – Portfolio Properties, Wainwright & Co. REALTORS  www.PortfolioPropertiesRE.com


Many of the Tenant-Buyers we work with in our Rent To Own program here in Roanoke are previous home owners who had the unfortunate experience of a foreclosure due to the market collapse.  This is a very encouraging article about how we’re starting to see many of those folks re-enter the market as Buyers.

If you have a foreclosure on your record don’t let that discourage you.  There are about 4 million people in your shoes nationwide and many more to follow.  We typically have a 2-3 year option period on our Rent To Own homes which allows you enough time to work with our team to repair your credit and get you qualified for a new loan at a historical rate.  For full information on our Rent To Own program be sure to visit www.Rent2OwnVA.com.

Chad Corbett

President, REsolutions Real Estate Services

 

Home Buyers With Foreclosures On Their Credit Get Back In The Game

There’s an interesting phenomenon happening in the real estate buying cycle.

Now that most of the country is five to seven years out from its real estate peak, and most major cities are actually into the upswing of home prices, distressed homeowners of yesteryear are becoming the home buyers of today.

Rules for qualifying for a mortgage vary widely between lenders and loan programs, but one of the most-often used loans today is the FHA mortgage.

Today’s FHA mortgage requirements for foreclosures and bankruptcies (see your lender for exact details):

  • A foreclosure that was discharged three years ago
  • A bankruptcy discharged two years ago

The initial reaction by many to this situation is: Again?  We’ve certainly all seen enough shoddy lending and lax credit practices during the last boom-bust cycle and, on the face of it, this seems like an invitation to more.

However, the details of how these home buyers must qualify diverges widely from the way sub-prime home buyers were qualifying for loans in the past.  The new practices, while still generous to the buyer, create far greater protections for the lender and the American public who, in the long run, foot the bill for defaults.

Home buyers with foreclosures and bankruptcies on their records need to show a consistent history of pristine credit since the time of their foreclosure.

Additional FHA requirements (there are more, refer to a lender):

  • On-time bill payment on all credit accounts since the foreclosure/bankruptcy
  • A 640 credit score (responsible credit use is absolutely essential to gain this score 3 years out of foreclosure)
  • A verified down payment (3.5% or higher, depending on the borrower)
  • Upfront and ongoing mortgage insurance (which protects the lender from debts in case the buyer defaults)
  • Significantly lower debt-to-income ratios (ensures the buyer has ample discretionary income to make payments long-term)

Underwriters scrutinize these borrowers’ loan applications far more than an average home buyer.  In contrast, during the real estate boom, a buyer could be approved for a mortgage with very little credit history to support it.

Sub-prime mortgage approvals at the height of the real estate boom:

  • 580 credit score
  • 100% Financing or 80/20 1st/2nd mortgages (no money down)
  • Foreclosure 2 years out
  • Bankruptcy 2 years out
  • No income verification
  • Total debt ratios up to 60%

While the changes in lending to borrowers who have past foreclosures and bankruptcies may not satisfy all critics, there are also mitigating factors that underwriters take into consideration.  Remember that even though a home buyer’s past foreclosure may have been closed as of three years ago, the banks sometimes take up to a couple of years to push a foreclosure through.  That person may have essentially handed the home back to the bank five years ago and been repairing their credit ever since.  Underwriters can take this into account.

Moreover, there are many different situations that lead to foreclosure.  Certainly some buyers overspent, got in over their heads, and walked away from a bad investment.  Those are going to be viewed less favorably by a lender.  Others have lost their homes due to job loss, divorce, deaths in the family, and a host of other reasons.

When an underwriter can see that home buyers have been responsible with credit in every instance of their lives except for under one unforeseen loss of income or spouse, there is great reason to believe that these people, under the newer, more restrictive lending guidelines, are a good credit risk.  The lender and the public are protected by these buyers paying for mortgage insurance, and their re-introduction to the housing market in a new economy will allow them to re-establish a long-term credit track record and keep the housing market moving.

Sam DeBord is a Realtor® and Managing Broker at Coldwell Banker Danforth & Associates. Find him on SeattleHome.com.


 

 

What's in it for me?

 

 

Rent To Own serves both Buyers and Sellers equally and provides a much-needed alternative to the conventional market when values are down and lending guidelines are strict.  Read on to see the benefits to Roanoke home Buyers and Sellers.

Buyer Benefits

  • You don’t need 10% – 20% to move into your new house.  Only a small amount of cash is required up front.

  • Qualify with minimum credit requirements.  We realize bad things happen to good people and we have credit repair experts to help you build your credit while you’re in your home.

  • Move into your new house NOW.  No more moving, changing schools, having yard sales, etc. until you can buy a home conventionally.

  • Establish yourself in the community while you pay down debt, establish credit, build employment history, etc. to qualify for a loan and close.

  • Lock in a fair market rent and price for the full Option Term.  If prices go up you still pay the price you agreed on up front and you get the appreciation!

  • Ability to make improvements to make your house your “home”.  Unlike a traditional lease, our program allows you to make repairs and improvements to your house even before you close.

For more information on our Buyer services please visit:  www.Rent2OwnVA.com

 

Seller Benefits

 

  • Immediate Debt Relief – Your payments are made by the Tenant-Buyer as soon as you approve them and we have a formal closing.  This can take as little as 1 week.

  • You Have No Maintenance – The Tenant-Buyer is responsible for all maintenance and repairs after 30 days so you can get on with your life and not have to worry about all of the “what ifs”.

  • Sell for Full Price – Because you’re flexible on terms buyers are willing to pay full price for the privilege of living in their home while having time to qualify for a loan to close.

  • Sell your House Fast – There is a very high demand for Rent To Own in today’s market.  By being flexible on terms you’re marketing to a whole new group of Buyers who are looking to move in today.

  • No Commissions – You pay nothing.  We collect our fee from the Tenant-Buyer’s Option Consideration.

  • You Hold Title – The house remains in your name until closing.

  • You Retain the Tax Benefits – Because you hold title you still reap the tax benefits of home ownership.

  • We Pre-screen all Applicants For You – We have a specific process for screening our applicants including employment verification, character references, landlord references, criminal background check, credit check, eviction history, etc.

  • Our Tenant-Buyers Have Coaches – We work closely with Lenders, Credit Coaches and even Financial Counselors.  If our Tenant-Buyers need assistance at any point along the way we provide the resources they need to close on your home.

  • It’s NOT Like Renting – Tenant-Buyers make a financial and emotional commitment up front resulting in a homeowner mindset so you’re not likely to have typical Landlord/Tenant problems as you would if just renting.  The home is cared for, the rent is paid on time and you don’t hear from the Tenant-Buyer until it’s time to close.

For more information on our Seller services please visit: www.Rent2SellVA.com

 

–  Chad Corbett, President REsolutions Real Estate Services


RENT OR BUY

 

As a real estate Agent/Investor/Consultant I have a lot of exposure to several markets across the country.  One thing that I see in every US housing market is low equity for homeowners due to the recent market correction and difficulty qualifying for homebuyers due to the same.  In my career it has never been harder for Sellers to sell or for Buyers to buy and it will not change until markets have recovered and banks have less foreclosures and more liquidity for borrowers.

If you are one of these Buyers you don’t have to continue moving from rental to rental and uprooting your family.  If you’re one of these Sellers you don’t have to just keep making payments on a house you don’t want/need.  REsolutions Real Estate Services can help you reach your real estate goals in ways other companies simply cannot.

Not only are we helping individuals, we are helping the overall Roanoke real estate market by selling homes that would otherwise sit on the market with no activity or even worse, go into foreclosure and drag home values down even further.  At the same time we are putting families into homes they can own and establishing them in the community rather than continuing to rent and move.

 

 

Learn more about Rent To Own for Buyers

 

Learn more about Rent To Sell for Sellers