Category: Real Estate

Basic point

• Square footage of lot incorrect
• Lineal footage of lot incorrect
• Land restrictions (wetlands, building moratoriums, etc.) incorrect or not accounted for
• Style or usage (residential vs. commercial) incorrect
• Age of structure incorrect
• Condition of property – more worn out or obsolete than indicated – kitchen or baths are outdated
• Square footage of structure incorrect
• Square footage of air-conditioned areas incorrect
• Number of total rooms incorrect
• Number of bedrooms or bathrooms incorrect
• Size of the garage (one vs. two-car garage) incorrect or carport listed as closed-in garage
• Amenities (pool vs. no pool) incorrect
• Window air-conditioning units vs. central air-conditioning
• Major damage not accounted for (fire, wind or flooding damage)
• Septic tank vs. sewer connection
• Type or quality of roof incorrect
• Flooding issues not accounted for (flooding of the street during rain storms)
• Nearby conditions not accounted for (rental apartment buildings, malls, dumpsites, airports, etc.)
• Zoning restrictions or easements not accounted for
• Statutory guidelines not followed
• Increase of assessment greater than allowed by law (homestead exemption limitations)
• Valid comparable ignored or eliminated from valuation
• Computation of tax amount incorrect

CAUTION:

Be wary of arguing that the property is in disrepair or has deteriorated substantially.  When arguing that the property is in disrepair, damaged or otherwise not in the same condition, but worse, as the properties surrounding it, bear in mind the risk involved in doing so.

The municipality’s Property Appraiser’s office (or Property Assessor’s office) may alert other agencies or departments of the condition of the property.  By forcing the repair and following its progress to completion, the Property Assessor may then be able to reassess the property and arrive at a higher assessment at that time.

Of course, if the property is damaged by some calamity such as fire or windstorm, the Property Assessor should be able to understand the circumstances and not follow suit with a reassessment once the repairs are completed.  Another issue to consider is when an addition or improvement is done to the property.  The Property Assessor will inevitably want to reassess the property at a higher value.

The Three Appraisal Methods

Property Assessor may use three different approaches to evaluating your property.

The most common approach is the Comparable Sales Market Value Approach.  Here, the subject property is compared to similar properties (also known as comparable) recently sold within a one-mile radius.  Any differences between the subject property and the comparable are taken into account by making adjustments to the comparable’ sale prices.

The resulting sales prices (after adjustments) of the comparable are then averaged to come up with a value.  This value is presumably the Market Value of the subject property.  This is the method used by the Property Assessor’s office to value and assess residential real estate (less than 9 units).

A second approach is called the Cost Approach.  This value analysis is based on the cost of the land plus whatever it costs to rebuild the structure.  Adjustments (or depreciation) are made based on the age of the structure.

The resulting figure is the value of the property.  This approach is not always accurate, which is why it is not as commonly used.  This method, however, may be effectively utilized when appealing taxes on new residential properties.

Finally, you have the Income Approach.  This method takes the rental income of the property and analyzes it as an income stream annuity, taking into account all expenses of the property (for example, electricity, water, insurance, etc.) and the inherent risk of the investment.  Obviously, this method works best with rental properties, whether residential or commercial.  This method does not work well with single-family homes, even if it is income-producing property.

There have been recent reports about property owners in foreclosure that are stripping down or vandalizing their homes just before the sheriff’s sale.  Appliances, including air conditioning units and pool pumps, are being sold for pennies on the Dollar.  A television news reporter recently interviewed a woman that was actually selling her toilets.

She felt that she should get every penny out of her home before losing it to the lender.  Whether the housed is stripped for profit or otherwise intentionally vandalized, the wrong-doer might just later learn to regret it.

When the lender forecloses on real property, it obtains a final judgment for the total amount due on the mortgage, including interest, costs, and attorney’s fees.  When the property is worth less than the judgment, it is very unlikely that an investor third party will bid on and buy the property at the public auction.  When there are no bidders, the lender then takes the title to it.

Lender owned property (also known as “Real Estate Owned” or “REO’s”) will later be listed with a real estate agent and sold at market value which, during these times, will most likely be less than the final foreclosure judgment.   In addition to the real estate agent’s commission, the lender will also incur closing costs which will reduce the amount of money they will receive at closing.

The difference between the final judgment and the amount of money the lender recovers when it sells the property is referred to as the “deficiency.”  And the lender is then free to seek a “deficiency judgment” against the borrower (the party that lost the property in foreclosure).

Should the lender be required to remodel, repair, or purchase appliances in order to sell the property, the deficiency will only grow and therefore the deficiency judgment will be greater.  The same is true when the selling price reflects the property’s poor condition.

Aside from the ethical issues raised when one destroys or strips the home before losing the property at public auction, it is or can be, financially detrimental to do so.  Currently, it seems, most lenders are so inundated with foreclosures that they have yet to pursue deficiency judgments against those they have foreclosed upon.

It is only a matter of time, however, before the number of foreclosures is reduced to the point where the lenders can then focus on collecting on these deficiency judgments.

As an attorney, I have yet to see lenders pursue these judgments.  Indeed, no one has come to me for help for protection under these circumstances.  But I believe that it is all a matter of time before it happens.  Obviously, there are other alternatives to allowing the property to be sold at public auction.

In previous posts, I have discussed other options such as short sales and deed-in-lieu as possible alternatives to foreclosure.  Albeit, the lenders are not always agreeable to forgiving the deficiency when accepting a short sale or deed-in-lieu, but when they do, this is the best course of action for the property owner to take when in foreclosure.

Property owners that ignore or neglect a foreclosure will only face deficiency judgments later on when they incorrectly assume that the public auction is the end of the road for the lender.  There could be a no bigger mistake for the property owner assuming that stripping or vandalizing the home is a way to get the last “jab” in against the lender.

They could, more likely than not, be faced with a judgment that includes amounts for the items stripped or damaged – much more than what they were able to get during the fire sale or the short-lived and misguided satisfaction they received in damaging the home in the first place.

Rental property owners often find themselves in the unfortunate predicament of having to evict a tenant.  More often than not, they learn expensive lessons that could have been avoided in the first place.  Giving little value to a lawyer, they proceed to rent to tenants without the advantage of having one draft and review the lease and provide other valuable advice

The worse yet, try to evict a tenant by themselves.  By the time landlords are able to remove bad tenants, they often lose considerable time and months of rent plus the costs of the eviction.  Further, should the landlord want to pursue the tenant for the money owed, more money in legal fees must be spent?

While there are no fool-proof ways of avoiding bad tenants, certainly there are steps that can and should be taken to minimize the risk.  Below are some steps to take and things to consider when renting your property.

Perform credit and criminal background check on potential tenants

Potential tenants will never tell you about their financial difficulties.  Nor will they tell you that they recently were evicted from another unit for failure to pay rent or any other reason (e.g., noisy or destructive pets, more occupants than they originally let on).

Criminal activity may also because you trouble with the county or municipality, not to mention a homeowner’s association or neighbors.  Once a tenant moves in, it could take many months to remove them – so be sure there are no obvious red-flags by checking their financial and criminal background thoroughly.

A search in your county’s public records or civil dockets may reveal whether or not evictions were previously filed against the tenant.  It is also a good idea to perform the same background checks on spouses and other occupants.  While this does not guarantee that you will be getting a good tenant, it will certainly avoid the bad ones that could have easily been detected.

 Start the eviction process early and swiftly

Bad tenants always have, it seems a good reason for not being able to make the payment on time.  In fact, there are books written that provide them with a slew of good reasons to give.  Tenants frequently assure landlords that payments will soon be made and landlords have a tendency to believe them, rarely questioning them.

Before long, bad tenants are several months behind and landlords are then forced to dip into their own savings to make mortgage payments due on the property.  Many times, landlords are hesitant to start eviction proceedings against tenants early on, hoping that they eventually pay and fearing that the posting of demand notice for rent is too adversarial and may cause the situation to worsen.

 Allowing a tenant to fall too far behind in rent will inevitably result in an eviction

Once the Tenant falls a few months behind, the financial burden of bringing the rent up to date is too burdensome and they often make the strategic decision not to pay at all.   When having financial difficulties, people naturally make the conscious decision to pay bills that will result in service interruptions if otherwise not paid.

In other words, the squeaky wheel gets the oil.  If the tenant can string the landlord along, but not other essential services, it is an easy decision for them to make.  And before long, past-due rent becomes so high that it becomes almost impossible for the tenant to ever catch up.  Soon, the tenant decides to simply stay as long as the eviction process allows – all at the expense of the landlord.

Use Properly Drafted Notices

Each jurisdiction has its own notice requirements.  Thorough research must be conducted to determine whether or not your notice complies with your specific jurisdiction.   It is highly recommended that you hire a lawyer to draft your notice.  Our law firm, for example, will draft the notice at no additional cost if we are hired to file the eviction.

If a deficient or improperly drafted notice is used, you might later find that the judge dismissed your eviction complaint even though the tenant did not respond to the eviction complaint (this is particularly common in Broward County).  Even if the judge does not unilaterally dismiss the case, should the tenant hire a lawyer, the eviction will easily be defended and the case dismissed when the notice is defective.

Also, be aware that there are serial bad tenants – referred to as “professional tenants” – that know the law well and go from unit to unit anticipating an improperly filed notice or eviction and use it to their advantage.

Be very leery of forms found on the internet – there is an abundance of inaccurate forms and information on evictions.  Although this form is statutorily adequate in Florida, it may not comply with other state jurisdictions.  And calculating dates and rents due without the assistance of a lawyer can be extremely risky.

 Hire a Lawyer

Why go it alone?  An attorney can draft and review air-tight leases and, should the need arise, file the eviction compliant – all at affordable prices with the expertise to gain quick results.  A landlord can unknowingly prolong the eviction process by entering into a badly worded lease agreement, improperly filing an eviction or filing court paperwork (pleadings) at the wrong time.  Although a seemingly self-serving statement, the hiring of a lawyer cannot be stressed enough.

Case in point, I once went down to my local courthouse and asked the clerk to provide me with the last 30 evictions filed that day.  After looking through them all, I found that only four of them were properly filed.  And those four were all filed by lawyers!  Had a tenant in any of the other cases hired an attorney, the case would have been dismissed.

To add insult to injury, the landlord would have also been required to pay the tenant any attorney’s fees spent – before refilling the eviction again.  When all is said and done, an experienced eviction attorney can be relatively inexpensive considering the potential for losing a considerable amount of time and money.

Many are experiencing difficult economic times, and some of you have fallen behind on your credit card bills.  When the calls start coming in, you answer them and cooperate with the debt collector feeling as though you’ll be able to catch up with the payments soon enough.

You also don’t want your credit score to suffer in real estate.  You’re thinking that if you cooperate with the “nice” debt collector, he won’t rush to report you to the credit bureaus and ruin your credit score.

You may have been able to make the next month’s payment or even catch up, but then you fall behind again and possibly miss payments on other credit cards.  And eventually, those collectors start calling too.

Whatever and however you ended up here, you never meant to fall behind.  And you swear that you want to pay them back, but can’t.  Unfortunately, the calls do not stop.  What at first were friendly reminders and requests for payments turn into persistent and menacing calls for immediate payment?

Once the calls become undignified and insulting, the debtor’s collectors may have crossed the line and violated the FDCPA.  We’ve covered this law extensively in our other tutorials and recommend that you listen to them if you believe they may be misleading you, or if they begin to use profanity or other tactics that are harassing in nature.  If they do these things, you may have a claim.

Now let’s suppose that the calls are respectful and, while firm, do not insult, threaten you or violate the FDCPA in any way.  But they are consistent. You’re tired of asking for more time, more understanding.  They give you time but ask for some sort of payment.  You eventually stop answering their calls.

Now the ringing of the phone itself becomes the constant reminder that you’re behind on your payment.  When the phone rings, you’re thinking “I hope that’s not a 1-800 number”.  When you check the caller ID, if it is a debt collector, you may let it ring and may even delete the messages without even listening to them.

Well, it doesn’t have to be this way.  Simply answer the call and get the person’s name, their business name, and business address and mail them a letter asking that the phone calls stop and that all communication is in writing.

Now, there are a lot of things you could have done better.  For example, you could have asked that they validate the debt.  This would have ceased all communication until they validate the debt.  Sometimes they may never be able to.  These calls will stop until they do.

Either way, send the letter, whether it is a letter asking that they validate the debt (which I recommend you do first) or a letter asking them to stop calling, but send the letter certified so that you can later prove that the letter was sent and received.

If the calls continue, they have violated the FDCPA and you have a claim against them.  You may never be able to pay them, but if you ever negotiate with them, be sure to know that a lawsuit for an FDCPA violation will certainly give you the leverage you need to get the terms that work for you.

Have you ever been up late at night?

If you have, then more than likely you have seen Carlton Sheets and his famous commercial for his No Down Payment Real Estate Program. For years his TV commercials have been airing all throughout the U.S. making the promise that you can buy real estate with no money down. The commercial also shows many of Carlton students who have found success using his program.

All of them start with stories of being broke or running low on luck or faith. Then they see the Carlton Sheets program and decide to make a purchase. A few months later most of them are damn near millionaires. Many investors claim they got their start with his program. Many claims that it works and many claim that it doesn’t. So what is the real answer behind his No Down Payment Course? Does it work or is it a flop?

The answer to that question is quite easy. It is entirely based upon you and your actions. Before I cover this point let me say a few things. The No Down Payment Course was one of the first courses I ever read on real estate. It is actually the first course on real estate I ever read. I saw the commercial once while on vacation and said to myself. Real estate is what I was meant to do. I never could understand where the feeling came from.

I just knew after I saw his commercial that day, which I had seen thousands of times before that I was meant to become a real estate investor. So I asked my father if he wanted to become partners if I ordered the course. Well, it turns out he ordered the course a few months before and tried his hand at real estate. He was not able to make the No Down payment program work for himself. He tried for a few months and after no success, he just placed the course in the closet.

I was surfing the Internet this morning as I usually do when I ran across an interesting article located on the MSNBC website. After reading the article it inspired me to write this post. As many people have been hearing on the news lately there has been a lot of talk on the rising foreclosures and sub-prime loans.

Many lenders are coming under fire for providing these loans to credit-challenged buyers. Many groups are claiming that Lenders have been irresponsible in providing these loans. I read this article and thought to myself could this be the beginning of change within this industry or is it just another method of damage control by certain lenders.

We rarely hear about lenders that actually try to help people avoid foreclosures. There are some lenders that do provide the borrower with help in avoiding foreclosure. Still many of the lenders just sit back and watch it happen. If you take the time to think about this action, it just doesn’t make much sense.

Lenders make money off of the spread between the interest rates. They basically borrow money from the government at let’s say 3% and loan it out at let’s say 6%. Without getting too technical this is how the lenders and banks make their money.