5 Real Estate and Mortgage Urban Legends

Entire feature films, websites and hour-long cable specials have been devoted to debunking urban legends, those modern fables that circulate at the speed of the internet. And real estate is not immune; modern-day myths of easy-peasy seller financing, distressed sellers practically throwing their properties at buyers, and cosmetic fixers that can be had for pennies are just that - fairy tales which, if believed, can result in some not-so-happy endings. The real deal is that real estate is much more affordable than it used to be, but the barriers to entry are higher, and the days in which you could get something for nothing are over. Here are five real estate and mortgage urban legends, and the truth which lies beneath. Urban Legend #1: Got bad credit? Get seller financing. Does seller financing exist? Of course. Is it as easy to get - or desirable - as they make it seem in the infomercials? Not even close. Here's the real deal: most sellers who have a mortgage they obtained in the last 10 years or so also have a due on sale clause which requires them to pay it off when they sell the property. Financing the sale themselves, vs. requiring the buyer to obtain mortgage or other financing to pay for the property, prevents them from having the cash to pay their mortgage off, as required. And the vast majority of those who don’t have a mortgage of recent vintage need the proceeds from the sale of their homes to buy their next home or invest in their next property. What’s more, even the few sellers who don’t need the cash often don’t want to take on the long-term risk and hassle involved with having to collect payments from a buyer for 10, 15, or 30 years. The sellers who can and will agree to seller financing usually want a premium price and interest rate for it - and the smart ones will require some type of credit check and a deeper down payment than a traditional lender. And seller financing, as sweet as it sounds, poses risks for buyers, too. If the seller keeps a bank mortgage on the property and fails to make the payment, the seller-financed buyer could end up losing the home they’ve paid for to foreclosure. Best targets for seller-financing are investor sellers who are looking to avoid capital gains, and best practice is to get a local real estate attorney involved in drafting and recording the transfer and financing documentation. Urban Legend # 2: Buyers save big bucks on cosmetic fixers. Sellers aren’t stupid - and neither are their agents. There might have been a day and time in which you could find listings that were deeply discounted because they needed a little cosmetic refresh. But those days are long gone - even in today’s down market, sellers expect to invest a little cash into paint and carpet to stage and spruce up their biggest asset and get as much as humanly possible for it. Today’s sellers also know that homes not in tip-top shape may not sell at all these days, so they go to great lengths to do make their homes shine. (And those who can’t afford to aren’t slashing tens of thousands off their homes’ list prices, though some will offer buyers a credit at closing.) That’s not to say you can’t get a discount on a place that needs some work. But the meatiest discounts are on the places that need the most work; roof leaks, old windows and laundry-list long pest inspection reports are much more likely to get you a big price break than scuffed walls and grungy carpeting on a home in otherwise sound condition. Urban Legend #3: 100 percent financing for first-time buyers. Most of the national first-time buyer programs are mere figments of our collective mortgage memory. But during the subprime mortgage era, 100 percent financing was available to pretty much everyone, not just first-timers. And the post-bubble first-time buyer programs tended to be tax credits that could defray some of the up front investment required to buy a home, rather than zero-down home loans. FHA loans, which are extremely popular with first-time buyers, are available to any buyer who can qualify, whether or not they have owned homes before or own one now. Most of the state and local first-time buyer programs that still exist involve some level of down payment or closing cost assistance, but the vast majority also require that the buyer put some of their own cash into the transaction. The prevailing theory today is that homeowners who have put their own hard-earned cash into their homes are less likely to walk away from it later, whether or not they are first-time buyers. It has also become clear that the financial management skills and discipline it takes to save up for a down payment or closing costs are skills and habits that stand prospective buyers in good stead for the rest of their lifetimes as homeowners. Long story short, while virgin homebuyers can and should seek out the assistance programs available to them (local real estate and mortgage pros often know the ins and outs), they should also tuck their pennies away and expect to have to put some of their own financial skin in the game. Urban Legend #4: Nearly free foreclosures. We've all heard the line that banks don't want to be in the business of owning homes. That may be true, but they are in that business, whether or not they want to be. As a result, they're not giving houses away at pennies on the dollar. In fact, bank-owned homes, as a rule, must be sold at as close as possible to their fair market value. Banks and their Wall Street mortgage investors do this by exposing the property fully to the market, rarely accepting lowball offers, and only lowering list prices in fairly small increments after a listing fails to sell after 60 or 90 days (plus) at the pre-reduction price. While foreclosed homes do sell for less, on average, than their "regular" sale counterparts, they are also often in worse condition. And banks are virtually always less negotiable on pricing, repairs and other terms than individual sellers. The fact of the matter is that some of the best deals on today's market are to be had via negotiations with realistic owners of non-distressed properties who are ready, willing and able to make a deal. Urban Legend #5: Distressed owners who will sign their home over to you, gratis. This one is fantasy of the highest level. First off, very few assumable home loans even exist anymore; most mortgage are due on sale, which means that new buyers have to qualify for and secure their own loans. Secondly, many mortgages that ARE assumable have much higher interest rates than today's home loans. Third, most homeowners who are in a distressed position on their home are in that position because their home has declined in value and they now owe more on it than it's worth, which stops them from pulling off a traditional sale or refinancing it at today's lower rate. Ask yourself: why would you, a buyer, want to assume a mortgage balance vastly greater than the property is worth, even if you could? It's just not worth it, even if you think you're getting a shortcut around the mortgage qualifying rigmarole. Add to that the fact that many states have consumer protection laws dramatically limiting the sort of 'bailout' that is even legal to propose to a homeowner who is in some stage of the foreclosure process. In addition, many homeowners who have received foreclosure notices are in the process of trying to work out their distress with their lender or staying put without making payments as long as possible before losing their homes. These folks might be slightly miffed at your intrusion, to put it politely, if you ring them up, send them a note or knock on their door trying to pitch yourself (and your signature) as their mortgage distress solution. Article courtesy of Tara Nicholle Nelson at Trulia

Water damage: Better to prevent than to repair

Burst pipes, exploding water heaters, overflowing commodes, the hidden drip of leaky appliance hoses … before you know it, your home’s got water damage, perhaps thousands of dollars of water damage. The key is to find problems before they cause damage; here are some ideas that may help. Recognize the signs Much of the trouble that water causes often goes unseen until too late. Use your five senses as you try to find signs of potential trouble, such as: •musty odors •rusty stains around light fixtures •damp, sticky floors •mildew along ceiling, wall and baseboard edges •dripping pipes •condensation on windows and cold surfaces •mold and mildew growth If you discover interior water damage, make the repair yourself or hire a qualified repairperson. But do it immediately; don’t put it off. Use preventive maintenance When it comes to water damage, prevention is better than intervention. Preventive maintenance is cheaper and easier than repairing or replacing damaged floors, subfloors, walls, appliances and so on. Here are some tips: •Avoid condensation. Use vents and fans to keep air circulating in your bathrooms and your laundry area. Make sure your dryer is vented to the outside. Use storm windows to keep condensation from forming on windows and to help conserve energy. •Repair leaks. Look for and fix leaky faucets and dripping toilets. In cold climates, water flowing down the drain under your home may freeze causing water to back up through the drain lines into your home. •Control humidity. Use a portable dehumidifier that shuts off automatically when the collector pan is full. •Listen and look for any signs of leaks, such as unusual hissing sounds under floors or in walls; stains, dampness or discoloration in hard-to-reach spaces around water heaters, under sinks and behind clothes washers. Again, if you discover interior water damage, find the source and correct the problem immediately. If you can’t make the repair yourself, hire a qualified repairperson. Keep your home dry When it comes to water damage, your energy and your money is best spent on prevention. If you’re not vigilant, water can do thousands of dollars of damage to your home — silently and quickly. Your home is your largest investment; insure it with coverage you can tailor to meet your needs. Article Courtesy of Gabe Paola/Farmers Insurance 480-753-5800

2011 JDRF Promise Ball

On Saturday, January 29, 2011, Juvenile Diabetes Research Foundation held it's 11th annual Promise Ball at the JW Marriott Desert Ridge. This years theme, "The Greatest Cause on Earth" set the stage for contortionists, aerialists and a collection of avant-garde cirque presentations. The evening's main entertainment was The Groove Merchants, voted "best live band" by Readers Choice Awards. This elegant black tie event attracted many of the valley's elite philanthropists and corporations as well as concerned relatives and friends of people with type 1 diabetes, all who have joined together with a commitment of time and effort to help realize the promise of a cure. In addition to the live auction, this years guests participated in a themed vignette raffle with exclusive items valued up to $5,000. JDRF Promise Ball Photos It was a very successful night for JDRF thanks to all the generous guests, auction donors, sponsors and volunteers dedicated to help in the search for a cure.

Lilly and the Juvenile Diabetes Research Foundation Partner to Fund Regenerative Medicine Research in Type 1 Diabetes

Eli Lilly and Company (NYSE:LLY - News) and the Juvenile Diabetes Research Foundation (JDRF) today announced that they have signed an agreement to fund early-stage research that could enable patients with type 1 diabetes to regenerate insulin-producing cells destroyed by the disease. "The goal of this research agreement is to understand how selected cells can be reprogrammed in order to convert them into insulin-producing cells in the body," said Philip Larsen, M.D., Ph.D., chief scientific officer for diabetes drug discovery at Lilly. "This research is an example of regenerative medicine, a new frontier in science that replaces or regenerates new cells, tissues or organs, and while this particular research is early stage, it may ultimately lead to new approaches to treating type 1 diabetes." Type 1 diabetes is an autoimmune disease in which the body's immune system attacks and destroys the beta cells, stopping a person's pancreas from producing insulin. Insulin is a hormone that enables people to get energy from food. According to JDRF, in the U.S. alone, as many as three million people have type 1 diabetes.(1) One research approach to finding novel treatments for type 1 diabetes may be to restore insulin production by regenerating insulin-producing cells within a person's body. This involves triggering the body to grow its own new beta cells, either by growing existing ones – some are usually still active, even in people who have had diabetes for decades – or by creating new ones by reprogramming, which involves converting one type of cell in the body into a different type. If a therapeutic is developed that will allow for the regeneration of beta cells, it could potentially eliminate the need for insulin. The JDRF-Lilly agreement will support a three-year, $1.4 million pre-clinical research effort to be led by Dr. Pedro Herrera of the University of Geneva. Previous research by Dr. Herrera showed that alpha cells in the pancreas can spontaneously, and without genetic manipulation, convert into beta cells. This suggests that alpha cell reprogramming could be a viable strategy for regenerating beta cells in people with type 1 diabetes. Building on this research, Dr. Herrera will collaborate with Lilly researchers to better understand these findings with the goal of translating them into potential drug targets and eventually, perhaps, even new therapies. "As part of JDRF's focus on regeneration research, we see this collaboration as a critical opportunity to nurture new strategies to restore insulin production in people with type 1 diabetes. Previous efforts to reprogram non-beta cells into insulin-producing cells without genetic manipulation have not easily translated into therapies for type 1 diabetes," said Patricia Kilian, Ph.D., JDRF's Director of Regeneration Program. "Collaborative research efforts like this can help address critical gaps to accelerate potentially promising research to patients," added Karin Hehenberger, M.D., Ph.D., senior vice president of Strategic Alliances for JDRF. "We seek partners who can help us deliver on our commitment to people living with diabetes, and Lilly has a long and productive history in the diabetes therapeutic space." The agreement between JDRF and Lilly comes on the heels of a separate announcement in which Lilly and Boehinger Ingelheim said they will jointly develop and commercialize a portfolio of diabetes compounds currently in mid- and late-stage development. About JDRF JDRF is the worldwide leader for research to cure type 1 diabetes. It sets the global agenda for diabetes research, and is the largest charitable funder and advocate of diabetes science world-wide. The mission of JDRF is to find a cure for diabetes and its complications through the support of research. Type 1 diabetes is an autoimmune disease that strikes children and adults suddenly, and can be fatal. Until a cure is found, people with type 1 diabetes have to test their blood sugar and give themselves insulin injections multiple times or use a pump - each day, every day of their lives. And even with that intensive care, insulin is not a cure for diabetes, nor does it pre-vent its potential complications, which may include kidney failure, blindness, heart disease, stroke, and amputation. Since its founding in 1970 by parents of children with type 1 diabetes, JDRF has awarded more than $1.5 billion to diabetes research, including $107 million last year. More than 80 percent of JDRF's expenditures directly support research and research-related education. For more information, please visit www.jdrf.org. Press Release Source: Eli Lilly and Company On Thursday February 3, 2011 Yahoo