Austin Real Estate Blog

Over the last three years there has been sharp downswing in housing prices. In many markets the prices dropped out quickly, not stabilizing until only recently. As foreclosures rose, many didn’t believe they housing market was going to stabilize any time soon. This thankfully, has not proven to be the case. Recent reports and studies have revealed that in 2009, specifically since the second half has begun the housing market in stabilizing and reestablishing solid markets where a loss was drastic previously. Home sales are up creating the most stable market since the mortgage crisis began.

The 8 thousand dollar tax credit is being given some credit for easing the decline and initiating the incline in single family home purchases. This tax credit will expire on November 31st, 2009, this crucial deadline combined with lower interest rates have become the saviors of the housing market.

In May of 2009 the OFHEO or Office of Federal Housing Enterprise and Oversight announced the first of a steady increase in home prices, over previous months. It edged up that first month with .09% and has continued every month since. In one area of significant concern with the mortgage crisis, the pacific coast has registered one month with an increase of 2.7% showing significant improvement.

As the market continues to stabilize, buyers come out of the woodwork, and housing prices are starting to inch back up to more anticipated levels. This proves real estate and the economy as a whole has entered a state of recovery.

In real estate, as with any investment, the last thing you want to find is that you are on the wrong end of the deal that should have been equal. There are ways to avoid common pitfalls and simple misunderstandings.

The first thing to keep in mind when approaching the investment, regardless if it is a private home or otherwise, is to investigate the terms and options applicable to you. The second is to move through the investment process logically. Lastly double check what information you find against what you know and consult with your real estate agent, or representative. The agent will be able to tell you if there are better options applicable to your needs.
One common problem that homeowner encounter in the investment process is receiving the wrong information.

This can often be attributed to misunderstandings or not asking questions when something appears to be difficult to understand. It is important to make sure you are getting all of the information applicable to your situation. You do not need to sign papers that lock you into a loan with a payment schedule you do not understand, or that turns out to be the wrong form of financing for your needs. Understanding the terms and possibilities associated with your loan is important from the start. Ask questions, and consult often with your representative or lawyer.

The second common pitfall that people encounter is ‘falling in love’ with a property or area before they are aware of all of their options. This creates a sense of urgency instead of a mood of understanding and evaluation. This urgency will often cloud judgment and create an obstacle. Approach each aspect of the investment process with an open mind and rely on your real estate agent to provide you with every suitable option, before you settle on which investment you will make.

Approach this investment with ears, eyes and mind wide open and the possibilities will come. As questions with every aspect related to the investment, and you will obtain the best information. Ask the questions that sound insane to you, because those are easily misunderstood. This can be and often is a lifelong investment, so approaching it correctly the first time will provide the foundation of the future.

Once you have established you are the owner of the foreclosure property, have reviewed it with your agent and lawyer you are faced with a significant choice. Should you evict the current tenants or should you continue with the lease they have already? Do you want to initiate a new lease with the current tenants? Those are crucial choices that must be made.

Rental properties purchased through the foreclosure auction process are often one wrought with choices. Typically, a foreclosure purchased rental does not require the current lease be honored, like when it is sold prior to foreclosure. Generally speaking, the new owner has the opportunity to evict the current tenants. This also allows for the new owner to establish a new lease with the current tenants.

Should you chose to accept even one rental payment while still under the previous agreement; you are, in effect, honoring the lease they are in. This means that you, as the new owner, would be bound by those terms until the lease expires and a new one is drawn up. Eviction after such an accepted payment would be difficult if they do not violate the rules of that lease.

By taking some time to understand the rules of the process, you are protecting yourself and the tenant. Should you desire to purchase a property like this, it is prudent to discuss all of your options with a real estate attorney and a real estate agent prior to purchase.

A new law means there are some caveats! Here is a summary from the Legal Aid Society of Cleveland

Upon a Foreclosure Sale of Residential Rental Property,
the Lease or Tenancy Continues with the New Owner

1. Issue. Upon a foreclosure sale of residential rental property, what is the effect of the sale on the tenant’s lease or month-to-month tenancy?

2. New federal law. Protecting Tenants at Foreclosure Act of 2009. S. 896, Pub. L. No. 111-22, §§ 701-704.

3. Effective date. May 21, 2009 (or, more precisely, May 20, 2009, at the time that the
President signed the bill).

4. Application of effective date. The federal law applies to any existing bona fide lease
or tenancy for residing in a property when the property is sold at a foreclosure sale, if
the sale occurs on or after the law’s effective date.

5. Bona fide lease or tenancy. The federal law applies only to bona fide leases and
tenancies, which means:
• The tenant is not the child, spouse, or parent of the mortgagor (former landlord);
• The lease or tenancy was the result of an arms-length transaction; and
• The rent is not substantially less than the fair market rent (or the rent is reduced
or subsidized due to a Federal, State, or local subsidy).

6. Tenants with a bona fide lease. Upon a foreclosure sale, the lease continues with
the new owner as the landlord and, absent cause for termination, it continues until
either (i) the end of the lease term or (ii) the new owner elects to use the property as
a primary residence and provides the tenant with a 90-day notice of termination.

7. Tenants with a bona fide month-to-month tenancy. Upon a foreclosure sale, the
tenancy continues with the new owner as the landlord and, absent cause for
termination, it continues until either (i) the new owner provides the tenant with a
90-day notice of termination or (ii) the tenant provides the owner with a state law
30-day notice of termination.

8. Tenants with a Housing Choice Voucher (aka Section 8) lease. Upon a
a foreclosure sale, the voucher lease (which may be a written month-to-month
tenancy after the first year) is treated the same as other leases (see item 6, above) and
other month-to-month tenancies (see item 7, above). In addition, upon a foreclosure
sale, the housing assistance payments (“HAP”) contract continues, with the new
owner subject to the terms of the HAP contract. The new owner may not terminate
the voucher lease on the “other good cause” business ground that it will assist in the
sale of the property.

If you’ve conducted meticulous investigations on a foreclosure home and effectively placed the winning offer at public auction, it may still take time to be able to move in or start making repairs. There’s a possibility the previous owners of the newly purchased property may yet be living there, making it complicated to take possession. If you’re not equipped for that possibility, you may possibly be in for an arduous as well as messy eviction. Properties arrive on public foreclosure auction platforms at the conclusion of a pre-foreclosure phase, after property owner’s failure to pay the monthly mortgage expenses.

A hectic eviction procedure can be avoided with careful research in addition to effective planning. Though regulations and procedures differ from state to state, these procedures can be of assistance in learning the eviction process and how to avoid a lengthy eviction process.

First – establishing ownership

At the conclusion of the auction, make sure you are given every one of the essential documents from the auctioneer to prove you have made the purchase and are the new owner. At that time speak with the auctioneer and a real estate attorney concerning further steps that have to be taken before taking custody of the property. In several states the auctioned sale is confirmed by the court within a specified period of time, potentially up to 3 months. Verify as soon as the auction is completed.

For some locations and states there is a redemption period. This is designed to allow the original owners to purchase the property from you for the price paid at auction, plus applicable fees. In some states this period is as brief as one month or as long as one year. Review your state here: Applicable State Laws to identify if and how your state fits into this. This is often a reason given by the previous owners for not vacating the property..

Understanding the eviction process

Every state, and at times every county has a different eviction law and process. It is vital that before you enter the auction, you contact a local real estate attorney or the county sheriff. They are best equipped to prepare you for the eviction process in the location you are reviewing for purchase. By doing this you will be protecting everyone involved with the sale and purchase of the home, every step of the way.

The court process often takes months, so knowing your rights and the rights of the previous owner are vital. Contacting the court system for the eviction process should occur at the soonest possible moment, to assure everything is handled correctly and fairly. As the case comes to an end, the judge will give you are writ of possession and order the local sheriff to evict the occupant. AT this time the sheriff will serve the notice and remove the occupant 24 hours later.

Obviously this is general, so verify locally to make sure you are aware exactly what the process is.

Refinancing is on the minds of many, even today. There are several options available and we’ve worked out a short list to assist in determining what would be the best choice for you.

First list your goals for the refinance. This includes even the most simple or obvious reasons. It is a crucial step to choosing the right refinancing product for you and your needs. Some of the common reasons people will refinance include:

• Reducing monthly payments
• Debt Consolidation
• Lower interest rates
• Achieving equity sooner

These popular reasons are not necessarily the only reasons a person would want to refinance. The above short list is a good way to get started thinking about what you need and what your goals are for the refinance of your most fiscally valued asset, your home.

The next step is to contact and consult someone who is an expert in refinancing mortgages. They are versed in products and options available. They undergo several levels of training and receive updates steadily regarding market numbers, financing options and new banking strategies. Together with the homeowner it is their job to identify the best fitting product, obscure or popular, for you.  Meet with the expert regardless of the level of research you have done personally. Markets can change in the blink of an eye. It is the job of the refinancing expert to achieve the best possible results for you.

The next step in this process is to keep your mind open to the possibility that refinancing is not the best choice for you. As you initially begin to research you will learn many options available, however until you have sat down with your refinancing expert, and evaluated all of your options, you will not know if refinancing is the correct choice for your situation.

Many small businesses find that sharing a facility with other companies, while receiving the same benefits available to many large corporations, to be an economical and reasonable solution for their business needs. Which benefits are used here? The option to share copy costs, energy pricing and in some cases, phone or secretarial services as well. This offers the cost cutting over head choices and still allows for the prestige of having an office for your business.

Business Office Centers can be used by start-ups and small businesses, or organizations. Historically speaking, when a larger corporation has used them, it has been as a remote office for sales teams or investment holding. Now they are the alternative to their real estate holdings. This means that this design of office building is becoming more in need. For Austinites this equals the most efficient use of green resources for large corporations. There is no need for new building construction or major upgrades. There is also the opportunity for the Virtual Office bundle, which often includes a bill for the office and covers all the major services required to present the major corporation image.

The Office Centers are both cost effective and green, making them an ideal commercial location for many businesses. It enables a company to know they are creating the basis for a successful growth while helping the environment, and bettering Austin along the way.