Real Estate

Fortunes are made and lost in Real Estate Investment. The majority of us think of it as our home. The purchase of a home is to some, the most extensive investment they make in a lifetime. To others, the home or other real property is merely another investment. Either way, most need professional advice, unless we have already received training and experience in the field.

Over the years, I have used several so-called real estate professionals. Some were professional, most were not!

Although we have governing bodies designed to oversee those representing buyers and sellers, the licensing process is far from adequate to insure that the individual is a “professional”. The only things that make a true “professional” are desire, moral fiber and experience. Those traits are impossible to “license”!

I suppose, at this point, that is enough slamming of the “real estate professional”. We will offer solutions to this for your consideration closer to the end of this dissertation.

Approaching Foreclosure??

If someone you know has property approaching foreclosure, there is a good chance that one of the following conditions existed early on. They were:

1. duped by some unscrupulous shyster;


2. financially overextended in trying to get ahead; or


3. merely contracted poorly.

It is one thing to get in trouble. It is another to know what to do when trouble hits us right in the head. When this happens, many do not know what to do to try to salvage a bad choice. If one is in danger of foreclosure, there are still several avenues to pursue. We address some of these possibilities individually.

Renegotiate an Existing Loan

All lenders are in business to try to make a profit. The primary way this occurs when their money loaned is repaid with interest. If you have an astute lender and you have a good plan for repaying the amount borrowed, you have an excellent chance of renegotiating your loan. Caution: Make sure:

• Your plan is sound;
• You can convince your lender you can do it;
• Your lender can still make a profit by the new arrangement;
• You don’t whine or blame the lender for your situation!

Refinance

If you are unsuccessful in the renegotiation attempt, the marketplace is full of lenders. You first need to ascertain what you can, or are willing to pay. A simple calculation is all that is needed to determine the amount, term and rate on what you can borrow. If you do not know how to perform this calculation, you can get an assist from most lenders or a “professional real estate person”.

Trade

If you are unable to find any of the foregoing, it is time to consider a trade. Many think only of trading personal assets, or real estate, utilizing Section 1031 IRS Code for avoiding taxation. This is far from the practical truth! Real estate may be traded for:

• Like property;
• Up or down in value;
• Any asset, real or personal, of interest to the parties.

A trade can be a very effective vehicle, with or without a crisis. In most cases, the trade is win-win for both buyer and seller. Elsewhere in this website, we address the pros and cons of this approach.

Sell

Generally, there is a market for any property. The market may be lower than the seller would like, however, if the crisis is upon you, it is prudent business to consider selling at a loss. You can always lick the wounds, dust yourself off and move on. Many times this is the best choice, particularly if the 3 previous solutions are unavailable.

Bankruptcy

This is not a good choice. Occasionally, it is better than foreclosure. If you choose regular bankruptcy, it wipes out virtually all assets and liability. There is also reorganization which gives time and opportunity to restructure the debt. Either way, you need to be prepared to be subject to close supervision from an unwelcome court assigned trustee. Also, you will live with this on your credit record for 10 years.

Foreclosure

This is a case of last resort! The asset, with whatever equity exists, is lost. The long term ramifications on credit are serious. If this is your course of action, you could help your long term situation by negotiating a transaction with your lender called, “Deed in Lieu of Foreclosure”. This, at least, demonstrates a willingness to take care of your obligations.

The best way to avoid all of the above is

One of the prime ingredients in the Plan should be a real estate professional. As we recited above, this is a scarce commodity!

You wouldn’t, or shouldn’t, hire the first person off the street claiming to know what they’re doing – particularly if they are to be trusted with a sizable investment. The only way to find this professional initially is by the interview process. You will find some of the sales people you meet will be highly offended by an interview of their qualifications. When you encounter this person, get away from them NOW!

One way to at least get a lead to a pro (real estate) is to ask a pro (investor). Virtually all good investors cultivate a network of pros that they work with on a regular basis. They all have loyalty, ethics and experience, or they don’t work very long with the investor.

It is mandatory that a real estate buyer have a real estate professional representing him and his interests. The real estate agent that listed the property is employed by the seller. While that agent may represent both parties by law, rest assured the loyalty is toward the seller.

Please refer to other writings on this site where we go into details of searching for professional real estate network participants.

Please refer to our comments on Identity Theft, Surveillance and Justice

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