It looks like the CEMA posts are getting the most attention on this site and so I wanted to direct new visitors to my post of September 2, 2008 for a concise tutorial on the NY CEMA process and its benefits to both buyers and sellers.
As mentioned, on refinances of residential properties, CEMAs have been the norm for years for anyone dealing with a reputable mortgage broker. However, most buyers did not pursue this option on purchases even though it would have saved thousands on closing costs.
Comments and questions are welcomed from visitors to this site.
October 20, 2008
October 16, 2008
REO listings
I across this website that has direct links to several banks' REO listings including Fanny, Freddie and Countrywide. I skimmed through them and there are some well priced houses (at least well priced for now). Again from, my experience, you should be able to get a substantial reduction from the listed price.
If you make an offer and your offer is accepted, make sure an attorney reviews the contract. The REO contracts are very tough on purchasers in that often the bank wants the purchaser to pay transfer taxes (which are a seller's charge). Brokers will tell you that this is how it is but you must negotiate this point. The bank will not kill a deal over $3,000.00.
Anyone needing further advise may contact me via email or phone.
If you make an offer and your offer is accepted, make sure an attorney reviews the contract. The REO contracts are very tough on purchasers in that often the bank wants the purchaser to pay transfer taxes (which are a seller's charge). Brokers will tell you that this is how it is but you must negotiate this point. The bank will not kill a deal over $3,000.00.
Anyone needing further advise may contact me via email or phone.
October 14, 2008
REO houses
Due to the rotten state of the real estate market, REO houses, houses owned by banks after the foreclosure have become very attractive buys. I have seen banks accept offers as low as .50 cents on the dollar meaning, if the bank foreclosed on a loan of $450,000.00 and no one purchased the house at the foreclosure auction, the bank will sell that same house at $225,000.00.
You can get listings for REO properties on various websites or through brokers. Some banks have their properties listed on their websites (for example EMC Mortgage's properties are at here). My advise is if you see a REO house that interests you, make whatever offer you want without any shame. What will probably happen is that the lender will negotiate a price with you and maybe you will get a steal in this market. Remember, the bank may very well sit on the house for years and years to come and have already taken a loss on their books.
You can get listings for REO properties on various websites or through brokers. Some banks have their properties listed on their websites (for example EMC Mortgage's properties are at here). My advise is if you see a REO house that interests you, make whatever offer you want without any shame. What will probably happen is that the lender will negotiate a price with you and maybe you will get a steal in this market. Remember, the bank may very well sit on the house for years and years to come and have already taken a loss on their books.
How to make an intelligent lowball offer.
Many houses have been lingering on the market for many months and the sellers are desperate to get rid of them. Many of these sellers would probably like to just pay off their mortgage, closing costs and broker and walk away. If you have the time, you can try to figure out what price point would accomplish just that.
For houses in the five boroughs, you can go on the ACRIS website online (click here) and find out whether there is a mortgage on the house and what the original mortgage amount was. With that information, you know approximately how much money the seller needs to be at a break even point (assuming its a fairly recent mortgage) and you can make an intelligent offer. Outside the five boroughs try logging on to Propertyshark.com. You never know the situation of the seller until you make an offer.
A recent popular trend is for sellers to apply for a "short sale" with their lender. This means that the seller will try to convince the bank to accept a lower amount of the balance due on the mortgage. If the lender agrees, then the seller will be able to sell the house for less than the amount due on the mortgage.
I will post more about this in the future but for now, buyers should know that they should not be afraid to make low ball offers.
For houses in the five boroughs, you can go on the ACRIS website online (click here) and find out whether there is a mortgage on the house and what the original mortgage amount was. With that information, you know approximately how much money the seller needs to be at a break even point (assuming its a fairly recent mortgage) and you can make an intelligent offer. Outside the five boroughs try logging on to Propertyshark.com. You never know the situation of the seller until you make an offer.
A recent popular trend is for sellers to apply for a "short sale" with their lender. This means that the seller will try to convince the bank to accept a lower amount of the balance due on the mortgage. If the lender agrees, then the seller will be able to sell the house for less than the amount due on the mortgage.
I will post more about this in the future but for now, buyers should know that they should not be afraid to make low ball offers.
October 1, 2008
The Credit Crisis = buy a house for cheap
I think its time to discuss whats going on in the market right now. Due to the current climate on Wall Street and the coverage that the "Credit Crisis" has received on the news over the past few weeks, it is probably not a great time for everyone to look for a house. Its also probably not a great time for anyone to sell a house.
What I am seeing is that there are plenty of people just casually seeing what available as far as inventory but not pulling the trigger. Obviously this is a good decision as we wait and see the direction of the market in the coming months.
However, there are two pieces of advise I can give those looking for a house: (1) don't be afraid to make a low offer, and (2) get listings of REO properties (properties owned by the bank after foreclosure).
Above I will discuss both.
What I am seeing is that there are plenty of people just casually seeing what available as far as inventory but not pulling the trigger. Obviously this is a good decision as we wait and see the direction of the market in the coming months.
However, there are two pieces of advise I can give those looking for a house: (1) don't be afraid to make a low offer, and (2) get listings of REO properties (properties owned by the bank after foreclosure).
Above I will discuss both.
September 18, 2008
Lawyers and Brokers
This post is not necessarily about closing costs but I think it is important - and maybe obvious.
Brokers are a great source of referrals for lawyers. Personally, I very much appreciate brokers who refer clients to my office because (although it goes without saying) there are many lawyers out there and therefore, the referral must mean that the broker has had clients who were happy with my representation in the past.
After an offer is made, or accepted, a reputable broker will always advise his client that they should retain a lawyer who specializes in real estate. When referring a lawyer, a reputable broker should do nothing more than provide the lawyer's contact information to the client with a recommendation. I have seen some brokers actually drive their client to a lawyer and sit in on the meeting between the lawyer and client. Many buyers or sellers, especially first time buyers, go with the flow and probably do not think anything of it. Unless the broker is a friend or family, this is a sure sign that you should not be working with that broker (and probably not with that lawyer).
As mentioned in past entries, the attorney client relationship should be one where the client feels absolutely comfortable and that the communications are confidential. The broker's role is to put a deal together and once there is a deal, to expedite certain matters (such as helping with purchase applications in the case of a condo, coordinating home inspections and appointments). The lawyer's role is to protect the client. Sometimes, the interest of the broker may be different than the interest of the client such as when the deal could potentially fall through (and a commission is lost). A reputable broker will recognize when to step back and allow the client and the attorney to do what is in the best interest of the client regardless of the broker's commission.
Neither the lawyer or the client (buyer or seller) should ever be pressured by a broker. If you feel that a lawyer is more concerned with the broker rather than your interest, get another lawyer. There are plenty who would be happy to have your business.
Brokers are a great source of referrals for lawyers. Personally, I very much appreciate brokers who refer clients to my office because (although it goes without saying) there are many lawyers out there and therefore, the referral must mean that the broker has had clients who were happy with my representation in the past.
After an offer is made, or accepted, a reputable broker will always advise his client that they should retain a lawyer who specializes in real estate. When referring a lawyer, a reputable broker should do nothing more than provide the lawyer's contact information to the client with a recommendation. I have seen some brokers actually drive their client to a lawyer and sit in on the meeting between the lawyer and client. Many buyers or sellers, especially first time buyers, go with the flow and probably do not think anything of it. Unless the broker is a friend or family, this is a sure sign that you should not be working with that broker (and probably not with that lawyer).
As mentioned in past entries, the attorney client relationship should be one where the client feels absolutely comfortable and that the communications are confidential. The broker's role is to put a deal together and once there is a deal, to expedite certain matters (such as helping with purchase applications in the case of a condo, coordinating home inspections and appointments). The lawyer's role is to protect the client. Sometimes, the interest of the broker may be different than the interest of the client such as when the deal could potentially fall through (and a commission is lost). A reputable broker will recognize when to step back and allow the client and the attorney to do what is in the best interest of the client regardless of the broker's commission.
Neither the lawyer or the client (buyer or seller) should ever be pressured by a broker. If you feel that a lawyer is more concerned with the broker rather than your interest, get another lawyer. There are plenty who would be happy to have your business.
September 17, 2008
CEMA and HELOCS
Many homeowners have taken advantage of Home Equity Credit Lines (HELOCS) in the past few years. The rates, while adjustable, have been extremely low. Right now I have a HELOC at prime minus .75% which is $4.25% (I think) and I have seen some banks offering prime minus 1% HELOCS.
When refinancing, you should know that in addition to doing a CEMA on the first mortgage, a CEMA can also be done on the HELOC. This is true even if you are getting one loan to pay off your first mortgage and HELOC. Just make sure that the additional costs of doing the CEMA on the HELOC do not outway the gain. For example, Citimortgage charges $600 to process the CEMA documents so it would not make sense to do a CEMA unless your HELOC is sizeable.
When purchasing a house or Condo, do the same math if your Seller has a HELOC. Doing a CEMA on a HELOC is the same as on a first mortgage so please refer back to my prior posts.
When refinancing, you should know that in addition to doing a CEMA on the first mortgage, a CEMA can also be done on the HELOC. This is true even if you are getting one loan to pay off your first mortgage and HELOC. Just make sure that the additional costs of doing the CEMA on the HELOC do not outway the gain. For example, Citimortgage charges $600 to process the CEMA documents so it would not make sense to do a CEMA unless your HELOC is sizeable.
When purchasing a house or Condo, do the same math if your Seller has a HELOC. Doing a CEMA on a HELOC is the same as on a first mortgage so please refer back to my prior posts.
CEMA blogs are getting attention
I am happy to say that based on my site traffic metering, the CEMA blogs have been getting some hits in Brooklyn and the City. I hope that the info is helpful and that you keep checking in.
September 11, 2008
What are your closing costs? Part 1
As I mentioned in my early posts, the reason I started this blog was to let people know about the CEMA possibility and other ways to save some money in the closing process. Now that I got the CEMA discussion out of the way, its probably a good idea to discuss the various costs associated with a closing.
Closing costs are broken down into several categories, bank closing costs, title charges, recording, escrows, to name a few. First however, I will discuss what I consider to be the most important fee that buyers and sellers pay, the legal fee to their own attorney. While it may sound self serving, I really believe that this is true. As a buyer or seller, you deal with many different "professionals" in the course of the transaction - real estate brokers, mortgage broker, appraisers, insurance agents, engineers - to name a few, and they all stand to get paid somehow from your transaction. While they may all be competent and nice people and do the right thing, your lawyer is the only person who you are paying to look out for your interest.
For this reason, it is very important to hire a lawyer who you can speak to directly and feel comfortable that he (or she) is personally on top of your file. A real estate transaction is a very personal matter and you are entitled to competent representation by an attorney, not a paralegal. Certain very competent law firms have their clients deal only with a paralegal during the entire closing process. While getting standard information or updates from a paralegal is ok, I am of the opinion that private homeowners or buyers should have access to the attorney at all times. In addition, the client should review the contract with the attorney personally and the attorney should be present at the closing. I always recommend that the real estate broker not be present when you meet with your lawyer. Much more on brokers in later posts.
As far as legal fees go, I charge a flat fee. If the specific transaction requires extraordinary work (estates, post closing issues, etc.), than additional fees would apply. Some attorneys charge hourly fees but I think a flat fee is more practical. I have found that attorneys in Manhattan charge more than attorneys in the outer boroughs or Long Island. This does not mean that they do a better job (contrary to what a broker may tell you).
What you should always keep in mind is that your lawyer's job is to look out for your best interest and explain to you different options available to you and the possible consequences of the decisions you make regarding those options. A good and thorough lawyer will be able to save you money (by suggesting a CEMA as discussed in earlier posts or in other ways I will discuss in future posts) and make the closing process less stressful by keeping you informed.
Closing costs are broken down into several categories, bank closing costs, title charges, recording, escrows, to name a few. First however, I will discuss what I consider to be the most important fee that buyers and sellers pay, the legal fee to their own attorney. While it may sound self serving, I really believe that this is true. As a buyer or seller, you deal with many different "professionals" in the course of the transaction - real estate brokers, mortgage broker, appraisers, insurance agents, engineers - to name a few, and they all stand to get paid somehow from your transaction. While they may all be competent and nice people and do the right thing, your lawyer is the only person who you are paying to look out for your interest.
For this reason, it is very important to hire a lawyer who you can speak to directly and feel comfortable that he (or she) is personally on top of your file. A real estate transaction is a very personal matter and you are entitled to competent representation by an attorney, not a paralegal. Certain very competent law firms have their clients deal only with a paralegal during the entire closing process. While getting standard information or updates from a paralegal is ok, I am of the opinion that private homeowners or buyers should have access to the attorney at all times. In addition, the client should review the contract with the attorney personally and the attorney should be present at the closing. I always recommend that the real estate broker not be present when you meet with your lawyer. Much more on brokers in later posts.
As far as legal fees go, I charge a flat fee. If the specific transaction requires extraordinary work (estates, post closing issues, etc.), than additional fees would apply. Some attorneys charge hourly fees but I think a flat fee is more practical. I have found that attorneys in Manhattan charge more than attorneys in the outer boroughs or Long Island. This does not mean that they do a better job (contrary to what a broker may tell you).
What you should always keep in mind is that your lawyer's job is to look out for your best interest and explain to you different options available to you and the possible consequences of the decisions you make regarding those options. A good and thorough lawyer will be able to save you money (by suggesting a CEMA as discussed in earlier posts or in other ways I will discuss in future posts) and make the closing process less stressful by keeping you informed.
September 9, 2008
When is a CEMA not an option?
Unfortunately, there are several types of transactions in which a CEMA is just not possible or practical. Specifically, it is not practical when the costs of the CEMA (legal, bank fees, etc) are more than the savings. My rule of thumb is that if you can save more than $300.00 and without costing any additional time, then go for it. When was the last time someone gave you $300.00 for nothing.
Its is not possible to do a CEMA in the following transactions: When the seller has no mortgage; when you are buying a coop; when you are buying a new construction condo (in most cases); and, when either of the two banks will not allow it.
Other than coops, it does not matter what type of property you are buying. Whether its a single family house, multi-family building, condo or townhouse, a CEMA can save you lots and lots of money.
On that note, on the one week anniversary of this blog (more or less), I hope that visitors to the site recognized that the CEMA is a great way to save a substantial amount of money on closing costs. Make sure to ask your lawyer or real estate broker or mortgage broker about it when making the offer to buy.
I think that I will give the CEMA posts a rest for a while and move on to other topics but I will revisit the issue at a later date as a reminder.
Its is not possible to do a CEMA in the following transactions: When the seller has no mortgage; when you are buying a coop; when you are buying a new construction condo (in most cases); and, when either of the two banks will not allow it.
Other than coops, it does not matter what type of property you are buying. Whether its a single family house, multi-family building, condo or townhouse, a CEMA can save you lots and lots of money.
On that note, on the one week anniversary of this blog (more or less), I hope that visitors to the site recognized that the CEMA is a great way to save a substantial amount of money on closing costs. Make sure to ask your lawyer or real estate broker or mortgage broker about it when making the offer to buy.
I think that I will give the CEMA posts a rest for a while and move on to other topics but I will revisit the issue at a later date as a reminder.
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