Appraisals are often viewed as the end-all for determining the value of your home. It doesn’t matter whether you’re looking to find the value of your chalet, traditional home, cabin, land, or other type of real estate from the mountains of Murphy, North Carolina all the way to the sandy shores of the coast, fact is, that’s not necessarily the truth.

Appraisals are usually for honest, genuine reasons. Don’t be confused though – an over inflated appraisal of your real estate won’t help sell your property for an inflated value. Then on occasion, they’re for fraudulent reasons. If you’re considering selling your real estate and would like to know if an appraisal would help, you should read this article.

Although con artists and fraudsters have dozens of schemes to steal property and money, numerous schemes rely on inflated appraisals – appraisals that claim the property is more valuable than it really is.

Some homeowners use inflated appraisals to pull more equity out of their home than they have in it. For example, say the owners owe $180,000 on a home that’s worth $200,000, and they want to borrow $40,000 to redo their kitchen. Most lenders will be reluctant to approve a $40,000 loan, because the owners have only $20,000 equity in the home. To get around this problem, the homeowners (and perhaps their loan originator) may hire a "cooperative" appraiser to appraise the home at $240,000, so the loan can be approved.

This may seem like an innocent "white" lie, because the kitchen rehab will probably raise the value of the property, the lender will make a larger loan and earn more interest, and the loan originator will earn a commission. On the surface, everybody wins. However, this is a form of mortgage fraud – it misleads the lender into approving an overly risky loan. It also artificially inflates property values, property taxes, and insurance, making housing less affordable.

Con artists also use inflated appraisals to rip off home buyers and investors. In a recent case in Florida, a company was converting apartments into condominiums and selling them to (mostly out-of-state) investors. The company hired an appraiser from hundreds of miles away to appraise the properties without ever seeing them; the appraiser had no idea what similar properties in the area were selling for. The company fed the appraiser the information that was used to write up the appraisals, usually indicating that the properties were worth anywhere from 30 to 100 percent more than their true market value.

Many of the investors assumed that if the lender (or bank) was willing to loan them the money to purchase the properties based on the values stated in the appraisals, the appraised values must be accurate. Unfortunately, this assumption was wrong. The loan originator was in on the scam with the company that was selling the properties. Together, they were pulling all the strings, misleading both the lender and the investors through the use of inflated appraisals.

For an appraisal to be valid and reliable, it must be unbiased. If you are buying a property and have no clear idea of what similar properties in the same neighborhood are selling for, then order your own appraisal. Hire a reputable appraiser who is familiar with property values in the area and instruct the appraiser that you want an unbiased appraisal. Don’t rely on what the seller or loan originator (or their appraiser) is telling you. That person’s view could be the most biased of all.

Ralph R. Roberts, GRI, CRS is a real estate and mortgage fraud forensics expert and author of Protect Yourself from Real Estate and Mortgage Fraud: Preserving the American Dream of Homeownership (Kaplan Publishing). If you’re interested, you can find out more in his book.

 We’re fortunate here in Murphy that we rarely see fraudulent activity as a result of false appraisals. If you would like a reputable appraiser, please don’t hesitate to ask us to find an appraiser for you. It’d be our privilege to help.

John Poltrock, Certified Residential Specialist – www.MyMurphy.com – Call Toll Free (866) 687-7496 and demand The POLTROCK TEAM!! – JohnPoltrock@gmail.com

Investing in real estate became a national pass-time about a few years ago. Now that we are in a different market, investors must be more wise and disciplined to make their investment yield the results they’re looking for. We’ve sold many spec homes for clients, including a chalet we built and sold ourselves in Glenn Oaks.

Most real estate investment gurus will tell you that “Anybody can do it.” “Anybody can flip houses and earn a hundred thousand dollars in their spare time, buying, fixing, and selling run-down homes.” Well, that’s not exactly true. If it were as easy as these gurus claim it is, everyone would be doing it. Unfortunately, the sheer number of people who have tried to become wealthy real estate investors and have failed proves that not everybody has what it takes to succeed.

The following list describes the most basic qualifications you need to get started:

•           Nights (or days if you work the night shift) and weekends off: Flipping houses is like moonlighting at another job. Part-time flippers, often called weekend warriors, can succeed as long as they are committed to treating flipping as another job.

•           Financial stability: You should be paying all of your bills on time, including the mortgage on your primary residence, before you consider taking on another financial burden. Don’t look at flipping as a way to solve your financial difficulties – you may end up digging yourself into a deeper hole.

•           Energy: Couch potatoes need not apply. You need plenty of energy to work on a home while fulfilling the responsibilities of your day job.

•           Ability to function in a crisis: Flipping a house is more complicated than it seems and always more of a challenge than it looks on TV. If you commonly feel overwhelmed already, taking on another burden may not be prudent.

•           Organizational expertise: With flipping houses, time is money, so you need to execute the flip as quickly as possible. This requires an organized mind. You have to act as contractor to make sure all materials are delivered on schedule and that your subcontractors aren’t tripping over one another.

•           Basic math skills: To be relatively certain that you will earn a profit, you need to be able to crunch some numbers. Overestimate expenses and underestimate profits to give yourself a safety buffer.

•           A supportive family: If you’re married, make sure your spouse supports this new venture. Otherwise, you will not only be fighting the world to flip houses for a profit, but you will also be fighting your partner. This often leads to failure both with the new venture and with the relationship.

You may notice that some skills have been omitted from the list, such as the ability to rehab a home or the ability to list and sell the home yourself. You do not need to have all the skills required to flip a home yourself. However, you do need to be able to fill the gaps with people who have the essential skills. For example, if you are not very good at estimating the costs of repairs, you may want to hire a contractor or professional home inspector who is aware of repair costs to inspect the home and provide you with detailed estimates. A real estate agent can often be indispensable in assisting you in determining how much to pay for a property and how much you can eventually sell it for.

Although many people who flip houses fly solo, you do not have to take that approach. In fact, you can often flip more homes and do a better job of it by building a team, complete with an agent, home inspector, mortgage broker, attorney, and handyman/contractor. This approach is particularly beneficial for those who are just learning the ropes.

Ralph R. Roberts, GRI, CRS is an experienced real estate investor and consultant and the author of Flipping Houses For Dummies (John Wiley & Sons).

Finding investment homes like the ones you need to turn a profit seems easy to a lot of folks, and finding the right property is often half the battle. If you’re looking for a property like this, be sure to subscribe to our blog – especially to Beat the Street! I’ve only had two houses that were perfect "flippers" in my personal inventory (I also find more other agents have listed), so when I do come across them, they sell fast! Both I sold in 10% of the average market time.

Long story short, if you’re looking to invest in flipping a home or even long term, you need The POLTROCK TEAM on your TEAM. Call us today and begin searching for your property in our listings or search the MLS.

John Poltrock, CRS - The POLTROCK TEAM at RE/MAX Mountain Properties – www.MyMurphy.com – JohnPoltrock@gmail.com – Call Toll-Free (877) 837-3002 and demand The POLTROCK TEAM!

When you buy a home – whether its your primary home or a vacation home - most folks need to apply for a loan to finance a portion of their investment. When you’re going through all the documents, it is important to understand exactly what you’re saying.

The real estate and mortgage fraud cases that dominate the headlines usually have to do with fraud for profit. A ringleader conspires with industry insiders – usually a real estate agent, appraiser, and loan officer – to obtain mortgage loans they have no intention of ever repaying.

Another form of mortgage fraud is also common – fraud for housing. According to an FBI source, "Fraud for housing represents illegal actions perpetrated solely by the borrower. The simple motive behind this fraud is to acquire and maintain ownership of a house under false pretenses. This type of fraud is typified by a borrower who makes misrepresentations regarding his income or employment history to qualify for a loan."

Fraud for housing may include any of the following attempts to deceive the lender into approving a mortgage loan:

•           Claiming on a loan application that you earn more money than you actually earn.

•           Presenting counterfeit paycheck stubs to verify employment or income.

•           Intentionally overestimating the value of your assets on a loan application.

•           Claiming on a loan application to work for a particular employer when you do not.

•           Adding someone to the loan application as a co-borrower who does not intend to live in the home with you or assist you in making payments.

•           Signing a loan application that contains blanks you know the loan officer will fill in for you later with false information that will help you qualify for the loan.

•           Getting a friend or relative who owns a business to say that you work there.

•           Fudging the numbers on a document, such as a tax return, to make it look like you earn more than you do.

•           Applying for a loan in excess of the sale price paid to the seller, so you can obtain the surplus proceeds in cash back at closing.

Whenever you apply for a mortgage loan, you must sign the application – technically referred to as a 1003 (ten-oh-three) or Uniform Residential Loan Application. Just above the space for your signature is a statement worded something like this:

I/We fully understand that it is a federal crime punishable by fine or imprisonment, or both, to knowingly make any false statements concerning any of the above facts as applicable under the provisions of Title 18, United States Code, Section 1001, et seq.

In other words, it is a felony to lie on a loan application, whether for profit or housing.

Some people argue that fraud for housing is a victimless crime. After all, the person applying for the mortgage loan really wants to keep the house and has every intention of making the monthly payments and paying off the debt. However, that’s beside the point. The real issue is that when people commit fraud for housing, they mislead the lender into approving a loan that is riskier than the lender would otherwise consider. It contributes to increases in foreclosures and the cost of mortgages to all consumers.

Knowing what constitutes fraud for housing can help you avoid committing it or becoming an accomplice if a loved one tries to make you complicit in their plans. Remain on the lookout for mortgage fraud of any type, and do your part to reduce fraud and make mortgage loans and housing more affordable for everyone, including your neighbors.

 Ralph R. Roberts, GRI, CRS is a real estate and mortgage fraud forensics expert and author of Protect Yourself from Real Estate and Mortgage Fraud: Preserving the American Dream of Homeownership (Kaplan Publishing).

During the real estate bubble, this type of loan fraud was sadly prevalent. In fact, many professionals agree this very issue caused a large portion of the inflated prices and has now left many would-be flippers and investors "holding the bag." Laws are in place for a reason, and its very important we follow them and banks enforce them.

If you’re looking for a primary home or a vacation home and are unsure of your financial situation, let us know! We have experience in both conventional and unconventional financing that will put you in your new home without putting you in a dangerous situation.

John and Jessica Poltrock – The POLTROCK TEAM at RE/MAX Mountain Properties – www.MyMurphy.com – JohnPoltrock@gmail.com – Real estate in the Mountains of North Carolina – Call Toll-Free (877) 837-3002 and demand The POLTROCK TEAM!

Many people look at investing as a tricky. Fact is, it’s great! Many of our most successful investors use debt to further their influence. Whether they’re buying homes or land tracts here in Murphy, real estate gives you the best returns when you use leverage.

When it comes to debt, most consumers fall into either of two camps – those who fear debt and those who embrace it. Let’s call the first group the debt-o-phobes. To these folks, debt is to be avoided at all costs. They don’t carry a credit card and refuse to buy anything, except a home perhaps, on credit. We’ll call the other group debt-thusiasts. As long as they can have whatever they want right now and can afford the monthly payments, they don’t care how much debt they are in or interest they will pay.

Neither extreme is healthy. The debt-thusiasts are constantly paying too much for goods and services, because in addition to the purchase price, they are usually paying a hefty amount in finance charges. They never get ahead and have little chance of building wealth.

The debt-o-phobes, on the other hand, can save a considerable amount of money in interest, but they have less money available to fund revenue-generating investments. Because they refuse to take on debt, the only money they have to invest is the money they have squirreled away.

Financially healthy, wealthy, and wise individuals are not opposed to taking on debt, but they are very proactive in limiting bad debt and maximizing the power of good debt.

Bad Debt

What exactly is bad debt? Bad debt is money you owe on something that 1) does not increase your earning potential and 2) depreciates – decreases in value over time. Generally speaking, if you go on a spending spree with your credit card, you are taking on bad debt.

Some experts would claim that a loan taken out to purchase a new car is bad debt, because as soon as you drive the car off the lot it depreciates. While that may be true, financing the purchase of a nice car could increase your earnings potential, allowing you to drive to a workplace that offers a higher salary. A nice car could also improve the earnings potential of someone in sales who must drive clients around.

Good Debt

Good debt is money you owe on something that either 1) increases your earnings potential sufficiently to pay back the debt, and then some, or 2) enables you to invest in an appreciable asset – an asset whose value increases over time sufficiently to cover the debt.

Experts generally agree that a mortgage loan used to purchase a home represents good debt, because while you are paying the interest on the mortgage, your home is appreciating in excess of the percentage interest you pay. In addition, your home mortgage is tax-deductible, assuming you can and do itemize your deductions.

Most people also consider education loans to be a form of good debt, because an education generally improves your earnings potential – although that may depend on what you study in school and how much debt you graduate with.

Exchanging Bad Debt for Better Debt

Although you may not be able to trade bad debt for good debt, you may be able to decrease your amount of bad debt. If you have a large amount of credit card debt, for example, and some equity in your home, you may benefit by refinancing your mortgage loan to pay off your credit card debt. (Equity is the amount of money locked up in your home – if you sold your home today and paid off the mortgage, the amount of money you would have left represents the equity.)

Refinancing your home mortgage to pay off your credit card debt could benefit you in two ways:

•           Decrease the amount of interest you’re paying. A mortgage loan usually carries a significantly lower interest rate than the rate charged on credit card debt.

•           Makes the interest you are paying tax-deductible. Home mortgage interest is tax-deductible. The interest you pay on your credit card balance is not.

Caution: Consult with a trusted and qualified accountant or loan specialist before refinancing your home to pay down your credit card debt. Refinancing too often can cost you a considerable amount of money in loan origination fees and other expenses related to taking out the loan.

Caution: Refinancing to pay off credit card debt converts the unsecured credit card debt into secured debt. The debt is now secured by your home, which allows the lender to foreclose if you are unable to make payments. Credit card companies cannot seize your home if you fail to make payments. In addition, if you file for bankruptcy, secured debts have priority over unsecured debts, so if you think you might have to file for bankruptcy later, converting unsecured debt into secured debt may not be a good idea.

Investing with Other People’s Money

One of the secrets to maximizing the return on your investments is to use borrowed money (other people’s money) to finance your investments. For example, say you have $100,000 to invest in real estate, knowing that you can buy and fix up a home for $100,000 and then turn around and sell it for $120,000. If you could pull it off, you would earn a 20% profit, which isn’t bad.

But what if you took that $100,000 purchased and fixed up five properties? For each property, you would use $20,000 of your own money as a down payment and $80,000 of borrowed money – other people’s money. Now, you buy, fix, and sell five homes, earning $20,000 per home for a total of $100,000 in profits – a 100% profit!

That’s what you call leverage, and you gain leverage by using other people’s money.

When you are ready to begin building your own wealth in real estate, talk to your loan officer or mortgage broker about leveraging the power of other people’s money. He or she will know exactly what you’re talking about.

 See more from author Ralph R. Roberts, GRI, CRS is an experienced real estate agent and investor and author of Mortgage Myths: 77 Secrets That Will Save You Thousands on Home Financing (John Wiley & Sons).

If you’re looking for an investment, now is the perfect time to contact us or start searching online. Be sure to subscribe to our blog so you can beat the street! If you’re looking to refinance and stop paying so much interest on things like credit cards, we have some of the best mortgage brokers in the industry working with us!

John and Jessica Poltrock – REMAX Mountain Properties – The POLTROCK TEAM – www.MyMurphy.com – JohnPoltrock@gmail.com – Call Toll Free (877) 837-3002 and demand the POLTROCK TEAM! to start investing successfully in real estate!

Foreclosure means a whole lot of things to a lot of people. For a buyer, it means an opportunity to buy a property at a, hopefully, substantial discount. To a property owner, it means their world has been turned entirely upside down. It’s a major loss and invasion to have someone you don’t know come in and take away the place you call home.

In a majority of foreclosures, one of the homeowners hides it from the spouse. Usually, the partner keeping the secret is the person responsible for paying the bills and is (or feels) responsible for causing the problem and fixing it. This partner may feel like a failure for not properly managing the finances or for overspending, or the person may be using the family finances to support an embarrassing and costly habit.

Attempting to sweep the foreclosure under the rug can compound the problem in any or all of the following ways:

·         Makes you more susceptible to becoming a victim of foreclosure rescue scams. One of the con artist’s most powerful strategies is divide and conquer. They will offer ways to avoid foreclosure so your partner “never has to know about it.” They are afraid that the more people “know about it,” the more likely they will get caught.

·         Removes one of your pillars of support. As a couple, you have a much better chance of improving the outcome than by acting alone. Your partner may have some excellent ideas and resources to help save your home.

·         Wastes time. The longer you try to keep the secret without taking positive steps to resolve the problem with your lender, the less time you have to save your home, sell it, or pursue other options.

·         Leads to distrust with your partner, who will eventually find out anyway.

Remember, your partner is going to eventually find out about the foreclosure. It’s always better if your partner finds out earlier from you rather than later from a stranger… like when the sheriff shows up to evict you and your family from your home or the person who purchased the home at auction shows up at the front door.

If you and your partner can’t have an honest discussion about household finances and troublesome behaviors, then your entire relationship is already at risk. Look at the foreclosure as an opportunity to become open and honest and build intimacy. Either your relationship will not survive, meaning it was not worth trying to save in the first place, or it will deepen and become more rewarding over time.

What is equity? Equity is the amount of money that you get to keep after you sell your home and pay back the debt you owe on it.

Adding communication back into the equation gives you and your partner a much better chance of addressing the underlying financial shortfall and ultimately saving your home or selling it to cash out enough equity to make a graceful exit.

Whether you’re currently facing foreclosure or have just missed one or two mortgage payments, tell your partner immediately. Losing your home in a vain attempt to avoid an uncomfortable discussion with your partner is the wrong approach.

The worst option in foreclosure is to try to sweep the problem under the rug. Well, actually there are three “worst” options:

·         The absolute worst option is to deal with a con artist who’s out to steal your home through some foreclosure scam or strip you of the equity in it.

·         The next worst option is to do nothing. When you do nothing, the lender forecloses, the property is sold, and you’re evicted. You can say “so long” to both the property and any equity you built up in it.

·         Another bad option is choose a solution that puts you right back on the path to future foreclosure. Some people, for example, borrow money to reinstate the loan – that is, bring the payments current with the bank. This is a viable solution if the financial setback was temporary and you will have sufficient income to start making payments on your mortgage and on the money you borrowed to reinstate. However, if you are unable to make the monthly payments, you will probably be better off selling the home and finding more affordable accommodations.

If you are afraid of telling your partner, then ask another family member, a close friend, a financial counselor, a marriage counselor, or someone else that you and your partner both feel comfortable talking with and that you both trust to help you break the bad news.

An unbiased third party can act as an intermediary, laying out the facts more rationally, so arguments do not get in the way of a full disclosure. You want to come clean and lay all the facts and figures on the table so you and your partner know what you are dealing with.

Remember, what has happened is in the past. You and your partner can do nothing to fix what has already happened. You can only make things better now and for your future together.

About the Author: Ralph R. Roberts, GRI, CRS and his team of foreclosure experts regularly assist families facing foreclosure and have authored Foreclosure Self-Defense For Dummies (John Wiley & Sons).

Although we don’t face foreclosure very often here in Murphy and the rest of Cherokee County, it does happen. In fact, I have a great buying opportunity with one of my clients in foreclosure right now. If you’d like more opportunities, email me.

If you’re faced with a financial crisis and would like a consultation on what options and opportunites you have, call us and let us know. We’d be happy to help any way we can.

John and Jessica Poltrock – The POLTROCK TEAM at REMAX of Murphy, NC – Homes and Land in the Mountains of North Carolina – www.MyMurphy.com – JohnPoltrock@gmail.com – Call Toll-Free (877) 837-3002  and demand the POLTROCK TEAM!!!