Real Estate Information Archive

There comes a time in every person's life where they take the plunge to finance something, in order to make a large purchase.  One of, if not THE, largest purchases a person will make in their lifetime is buying a home.  Think about it, the amount of money put into paying for a home, the lengthy terms of most mortgages, the interest paid back for the privilege of borrowing money from a lending institution.  Buying a home is a HUGE investment.  One of the questions that one may have, when it comes time to have their credit "checked" is "How much does a credit pull effect my credit score?"  Most of us have heard that it is not a good thing to do, to have your credit "pulled" (as they say in the industry) very often.  We have asked a few of the lenders that we work with to help us uncover exactly how much a credit pull effects one's credit score.

What we have found is that this question is one that is difficult to find a solid, across the board answer to!  The fact(s) are as follows, the "exact" impact is really unknown, and the answer is a two part answer. FACT #1: EVERYONE's credit file is completely different.  Therefore, every little aspect is calculated differently.  FACT #2: The true value of the FICO scoring equation is "top secret".  If we knew the exact formula, we would all have perfect credit scores! (850 is a perfect credit score). 

Here is what we have been able to decipher, from what is going on "on average".  The effect of a pull on one's credit score is usually anywhere between 2-10 points for a "hard" inquiry.  Hard means the first time someone fills out a mortgage application and inquires about being qualified for a loan.  Anytime ANYONE looks at your credit to establish any line of credit, that is classified as a "hard" inquiry.  This could be for a mortgage loan, car loan, bank loan, credit union loan, etc.  Here is where some other aspects come into play, so being smart if you are shopping around for a better rate, will help you gain access to the most information with the least impact on your overall score---A mortgage "hard" inquiry, theoretically, is on file for 30 days and covers that time period.  So, technically, one could have their credit pulled for an initial inquiry and then shop around for a better rate and as long as the "shopping around" is done within 30 days, all of those subsequent pulls will only count as that ONE, initial "hard" pull!  A consumer could walk into a mortgage company, complete their application, walk out the door and go to another mortgage company, have their credit pulled again, and again, and again, over and over for the next 30 days, and it would only count as being pulled ONE TIME!  Something to keep in mind as you look for the best rate that you can get, when it comes time to financing a home.  Car loans are the same way but the time period is only 5-10 days, as opposed to 30 days for a mortgage.  A "hard" pull is also one that stores do when they entice customers to open a line of credit at a department store or something along those lines.  Those do affect your credit score and those pulls will show on your credit report and lower your score, if only by a few points.

There is such a thing as a "soft" pull as well.  A "soft" pull is one like a bank may do to open a checking account, or that an insurance company may do, just to make sure that the consumer is up to par and to check for credit card interest rates.  Those types of pulls are considered "soft" pulls, and do not affect your credit score at all.

"If it's too good to be true, you know the rest"

by: Aaron Edwards, All Stars Realty, Memphis, TN

Recently we have been hearing more and more feedback from our clients telling us about a suspicious phone call, e-mail, or even a letter that they have received regarding the purchase of their home.  These homeowners are, unfortunately, in "Short Sale" situations and are being contacted about a proposed "option" to avoid foreclosure.  Unfortunately the glimmer of hope for instant relief doesn't actually exist, and it is one of the most fraudulent practices going on in the real estate industry today.  With the holidays being upon us and sellers already being in desperate situations (having to short sale their home), con-artists are pulling on the heartstrings of the owners and their need for quick resolution to their plight and the opportunity to get money in their pockets.  

Here is how the scam works:

The homeowner is contacted by an individual/investor whom they have never met, we will refer to this person as the 'buyer' for the rest of this explanation.  The 'buyer' states that they have cash to pay the seller for their house and that they (the 'buyer') will negotiate the sale with the bank, on the homeowner's behalf.  In order for the 'buyer' to negotiate with the bank they will need the homeowner's personal information including bank account info, social security number, financial statements, pay stubs, monthly bank statements, all of the things required for a legal short sale.  This is where the fraud begins.  The 'buyer' makes the purchase of the property contingent on a few conditions.  (a)The 'buyer' submits a low ball offer to the bank, knowing full well that the property is worth far more than what they are offering.  Lets say that the 'buyer' offers the bank $50,000 for the subject property, that is easily worth $100,000 @ fair market value.  (b)While the bank is doing their due diligence to find out if the offer is acceptable or not, the 'buyer' is also marketing the property to new/real buyers at a higher price than what they have offered for the property, while they negotiate a LOWER price with the bank.  (c)The final and perhaps most crucial contingency is that the 'buyer' will ONLY purchase the property if BOTH of their sides of the transaction can close simultaneously (same time, same place).  So in essence, what the 'buyer' has done is that they have purchased the property for far less than market value while at the same time selling the property for much closer to market value.  They have given the bank $50,000, knowing that the house was worth closer to $100,000, they have then turned around and sold the property (at the SAME time) for $70,000, pocketed the $20,000 difference and ripped off the bank to the tune of $20,000.

How does this effect the original homeowner?

It is the duty and responsibility of the homeowner/seller and their agent to mitigate as much of the loss, to the bank, as possible.  If the house can sell on the market for $100,000.00, then it is the seller's and agents lawful duty to sell it for as close to $100,000 as possible.  Most everyone has heard the real estate term "Flipping" as it relates to buying/renovating/re-selling a property, and the negative connotation that now exists relating to that word.  The practice described in the fraud above is referred to, in the industry as "Flopping".  Flopping is the act of profiting from the devaluation of a property rather than an increase in value of the property. It effects the homeowner b/c they are "participating" in the process and have not made an effort to return the "highest and best" offer to the bank, thus limiting the amount of loss on the sale of the property. 

How does the 'buyer' contact the seller?

Sellers/homeowners are usually contacted via a letter in the mail, an e-mail, or even a phone call.  In the case of a phone call, all the 'buyer' has to do is perform a reverse-lookup for the phone number for the specific property.  Most of the information needed to make initial contact is a matter of public record.  Homeowners who will be foreclosed upon, soon, are published in classified ads in publications around the country.  It doesn't take a whole lot of effort to discover a property that is in jeopardy, or a homeowner in need of assistance.  The people who prey on desperate individuals know where to find potential takers for their 'bait'.  As a general rule, if you have your house on the market, as a "short sale" especially, always contact your agent about any letters you receive regarding the purchase, sale, or even foreclosure of your property.  A good agent is worth their weight in gold when it comes to keeping clients out of trouble.  Always check to see what advice they have for you if you think a solid, viable option comes along to help you sell your property.  Chances are, if the idea didn't come from your agent, it may just be "too good to be true".

CIAS is a designation given to real estate agents who have completed training to become Certified Investor Agent Specialist(s).  As of November 3, 2010 there are only about 100 CIAS' in the US and 3 of us are at All Stars Realty/The Driver Team in Memphis, TN.  We recently returned from a jam packed training session in Austin, TX where we learned the intricacies of working with the different types/levels of investors as well as how to get the most out of every property, for every investor, by doing things the smart/right way!

With the real estate market being what it is today, investment opportunities are at an all time high while purchase prices are at an all time low.  A side by side comparison of the real estate market to the S&P 500 shows that from 1969-2009 Residential Real Estate has shown only 3, out of 40, years with negative appreciation in value, while the S&P has had 11, out of 40, years of negative appreciation.  Add to that, that the max loss in Residential Real Estate was only 13% while the max loss in the S&P was 38% and you start to see why Investing in Real Estate is a smart move!

Don't be afraid to call us for expert advice in the short sale process.  Forelcosure is not the only choice to be relieved of the house debt that you may have looming over you each and every month.  Please, call us as soon as you realize that you may be in over your head.  You do not have to be behind on your mortgage to use the short sale solution.  call Bob or Rita Driver of The Driver Team of RE/MAX All Stars for your private and confidential consultation regarding your real estate needs.  We are the ONLY Certified Distressed Property Experts in Memphis Tennessee and the surrounding areas.  We have gone to great lengths to stay abreast of the information taht you will need to complete the short sale process and avoid the permanent damage of foreclosure on your credit.  Call us today!

There are some sellers in our area that are distressed and need assistance in marketing their home in a short sale attempt to mitigate the damages to themselves and possibly the lender they are currently financed through.  If you know someone who could use our experience and assistance to delay their foreclosure and attempt to sell their home on a short sale, please have them call us or visit our sites and request a free consultation.  We keep all calls confidential and private.

Hello visitors:  I just wanted to invite any distressed seller to give me a call and allow me the opportunity to speak with you privately and confidentially regarding your real estate needs.  I believe that some of the extra training and information that I can share with you may be able to assist you to avoid foreclosure and be on the road to recovery faster than you had hoped.