The Importance of Real Estate Education

Real estate is said to be one of the best investments that an individual can make, but if this is true, why do so many people fail at it? The truth is that an adequate real estate education is needed in order to help you out along the way because the real estate industry can truly turn on you in a real hurry if you are not prepared. Real estate investments are very likely to yield a generous return if the proper steps are taken, but too many people simply do not have the skills to make these deals happen. These are the people who did not take the time to get a real estate investing education and, therefore, will be more likely to fail when things do not go according to plan.

A proper education will prepare these investors for the problems that they will deal with along the way and give these people the skills that they need to work through these problems. In addition, this education teach innovative techniques that many more seasoned investors might not have, which will give these students an advantage in this very competitive industry. During the course, the real estate investor will also be introduced to lenders, builders, attorneys and bankers who can help them close the deals in an efficient manner. Having these connections could be the difference between succeeding and failing, so this is reason in itself to get a real estate education. These courses can even be broken down into specific types of investing, which can cut down on your classroom time and get you into the game even faster.

Even with a real estate investing education, there might be some bumps along the road, but this education will give the investor an idea of how to deal with these bumps without losing too much. There is so much more that goes into real estate investing than simply buying properly, developing it, and selling the finished product and all beginning investors need to know about these nuances before getting involved. Even more seasoned real estate investors are now taking these courses to refresh their memories and possibly even add new techniques to their knowledge base. All successful businesspeople will tell you to never stop learning and this education is one way to stay on top of things.

A real estate education is becoming almost mandatory for those who wish to become real estate investors because so many successful people have already been through these courses. Therefore, taking them can level the playing field somewhat because you will have access to the same techniques as people who have already made a lot of money. This field is not for everyone and it requires a great deal of risk when starting out, so it is extremely important that you are aware of these immense risks. This education will also help you make you aware of what you can lose during this process, which will allow you to make the best decision possible for yourself.

The Truth About the Real Estate Housing Slump

If you don’t have thick skin and don’t want to know the truth, you will not want to read this.

As a relocation specialist I get asked questions about the housing slump daily. In fact I have been interviewed 10 times the past 2 months. It irritates me how facts can be manipulated. Again, if you don’t have thick skin and don’t want to know the truth, you will not want to read this. My research is based on countless hours of pouring through real estate sales, foreclosures and interviewing many professionals related to the real estate industry. Although most professionals will not state the obvious and prefer to give some long winded explanation that doesn’t make sense, I’m going to give you the good, bad and ugly. I’m annoyed at all of the ridiculous reasons why the country is facing a housing slump and I’m going to tell the truth. Although there are some minor reasons causing the housing slump, one of the major reasons for the housing slump is abusive lenders. I will explain abusive lender have a huge part in the down turn in the real estate market.

To start, back in the 80’s a mortgage professional most likely worked for a bank had an extensive educational back ground and had many years of mortgage experience. The laws didn’t require experience and an education; the banks required their employees to have experience and an education. When the real estate market turned around in the early 90’s, a mortgage company opened up on every other street corner. In some cases, they opened up in garages and basements. Not all of the mortgage companies were bad and in fact some offered good mortgage products with good service. The abusive lenders hired employees with no mortgage financing experience. Most of these employees were lured into the easy money of the mortgage industry from their low paying sales job. A perfect employee for an abusive lender was a salesman who could sell ice to an Eskimo. The average mortgage professional went from having 15 years of experience in the 80’s to 1.5 years in early 2001. With the number of loan programs offered going from 20 to thousands and the number of wholesale lenders going from less than 50 to hundreds in the same time period, most mortgage professionals lacked the education to offer consumers the correct loan programs or the best advice. It was nothing for a higher risk borrower to be charged 6 points (1 point is equal to 1%) on a loan. In fact one lender bragged that they jammed a borrower at closing and charged 20 points on the loan. They said that they knew they would close because they were in a pinch. Borrowers looking for the best rate would settle for the lender who quoted the lowest rate not knowing that that lender would make up the rate somewhere else in the loan or change the rate at closing.

Abusive lenders knew that they all they had to do were advertise the lowest interest rate, whether it was true or not. They ran TV ads, radio commercials and sent junk mail. Most of these abusive lenders only cared about profit and the turnover with their employees was very high in their offices. Many of them folded within a couple of years and opened up under a new name the next day. In the late 90’s, the abusive lenders had to change their lending practices when real estate brokers started educating their real estate agents about the abusive lending practices. Real estate agents representing buyers changed the abusive lenders marketing. Soon after, many of these abusive lenders left the real estate purchase market and started going after the refinance business.

The abusive lenders were growing at unbelievable rates while mortgage interest rates it the 20, 25 and 30 year lows. It was easy to do mortgages, everyone wanted one. The consumers were borrowing at money at alarming rates. The abusive lender knew that the borrower was rate sensitive. You have seen their low interest rate advertising. They piled in the money and ran targeted advertising to draw more refinance customers. When borrowers got to closing and faced a switch and bait by the abusive lenders, the borrower closed because the lender had them over the barrel. A prefect referral to an abusive lender was a borrower who didn’t do their research and didn’t shop around.

In 2004 mortgage interest rates started edging up. In order to stay in business the abusive lenders had to change their business.

First the abusive lenders used good loan programs and bent the rules to lend the borrower more than what they could afford. An example would be a stated income loan program. In some cases these loan programs were good loan options. An abusive lender would take a borrower who couldn’t qualify with other loans and get them to state an unreasonable income. I have seen cases in which a cashier made $75,000 on a loan application. The abusive lender knew that the chances the borrower would default but they didn’t care because they got paid up front.

Next the abusive lenders offered vacations or some other type of inducement in order get more business. Some states, lately, have made inducements illegal; however, there are a few that say it is fair game to trick borrowers. To me, it is hard to believe that people still fall for inducements. These lenders make up the difference by creating another fee at closing. Abusive lenders started hiding the inducements by offering kickbacks to the people who referred them the business.

Lastly, the abusive lenders hoped to push borrower’s credit risk higher. A higher credit risk means a riskier loan. The abusive lender invented ways to charge more fees or raise the interest rate. They would tell the borrower that a trade line which had been paid pushed their credit risk higher or they would give bad advice to the borrower. The abusive lenders goal was to push the borrower’s credit risk higher so they could charge the borrower more points and fees, thus increasing their profits. If the credit risk couldn’t be pushed up, the abusive lender would find a way to lend more money. In some cases, the abusive lender would lend more than what the home was worth. What could a consumer do when they have a $175,000 loan on a $150,000 home? The consumer can’t sell their home and they can’t refinance their home. What options do the borrowers have to get them out of the mess?

The mortgage market seems to be correcting itself. Wholesale lenders have started educating the commissioned sales agent. Wholesale lenders are dropping abusive lenders, low rate abusive lenders are leaving the business and the government has been following up on unethical and abusive lending practices. Currently, real estate foreclosures are at a high and wholesale lenders are working to make changes.

Recently, many state and federal government agencies understand how abusive lenders have negatively impacted the real estate market. Abusive lenders are being investigated for mortgage fraud as pointed out on http://www.mortgagefraudblog.com. Every day in the media a new case of mortgage fraud is stated. Some states have enacted laws that lenders are required to get a mortgage license and pass a background test. Other states have stopped the practice of inducements and have required education and continuing education for lenders.

If you are looking to obtain a mortgage in the future there are some safe guards to protect yourself. First ask for referrals from friends and family. Next do a Google Search and search for lenders. If you are looking to buy a home also search for real estate agents. Many real estate agents have good lenders that they would recommend. I did several real estate searches in Kansas City and found 2 real estate agents in all of my searches. I contacted both real estate agents and asked them who the lenders they referred out to home buyers. Chris Dowell, of the Dowell Taggart Team of Infinity Realty ( http://www.DowellTaggart.com ) is very well familiar with the mortgage industry. In fact, Chris has been in the real estate industry for over 18 years and a past Vice President to a large Kansas City lender. Chris said that he does everything possible to protect his clients and will not use a lender who does unethical mortgage practices. The next real estate agent, Jason Brown of Keller Williams ( http://www.JBPRealtyGroup.com ) , stated that most of his clients are very well educated and typically don’t fall for poor mortgage practices; however, if a client would like a list of good loan officers he would be happy to provide them the list. Jason also pointed out that he doesn’t accept perks from lenders of any kind.

After you have formed your list of mortgage lenders. Interview all of them on the phone. Ask for references, how long they have been a mortgage officer, what type of loans they do and what type of loans they originate. Even ask how many loans they do a month and why you should do business with them. After you have narrowed your list, schedule an appointment in person with the loan officer. Ask for all possible loan options. Once you have narrowed down the list of loan options ask for a Good Faith Estimate (GFE). The GFE will show you the cost on closing day for your loan. Send a copy of the GFE to the other lenders on your list and see what they recommend.

Make sure you understand what kind of loan you are obtaining and how it works. Make sure you understand the true cost of the loan over the course of many years by examining a Truth and Lending Statement and you are aware of possible future changes.

With the market being a buyer’s market in most real estate markets, there is no better time to buy. In fact, many real estate investors interviewed are finding this is the best real estate market to buy a home in the past 25 years. Remember to do your research and you will most likely decrease your chances of falling prey to an abusive lender.

Online Real Estate – Educational Opportunities

There are a number of online schools and training facilities that are available to provide students with the real estate education they need to start an exciting career. Real estate professionals work to provide various resources to their clients. These clients utilize agents to build, sell, and rent properties such as offices, houses, and more. Students can obtain an education to become a broker or agent, appraiser, or manager, and learn to appraise and inspect properties, rent and lease homes, manage agencies, and more. With proper training students can obtain the knowledge and skills to become the real estate professional they desire while earning the degree or certificate they need.

  • Real estate degrees and certificates allow students to become educated in the specific area of their choice. Degrees are available at an associates, bachelors, masters, and doctorates level for students looking to become entrepreneurs. Students who wish to obtain professional certification can also train online for their career of choice. Students can prepare for the career of their dreams with coursework provided by online degree and certificate programs. Online schools provide the opportunity to earn professional certification or a degree from the comforts of home by enrolling in an online program. Curriculum offered by educational institutes will vary depending on the school and career level.
  • There are a number of courses in real estate that students are offered through online educational programs. Much of the coursework will be the same for most real estate professionals, but specialized areas of study are also included in training and will depend on the type of career. They will complete coursework such as listing and document preparation, advertising, and more. An online program geared toward appraisers will include areas of study like finance and law. Students training for a career in property management may learn business administration, leasing, and more. Online courses allow students to learn how the industry works, and provide students with information about various real estate professions.
  • There are a number of related professions to choose from including real estate broker or agent, appraiser, property manager, and more. Professionals in this industry are trained to carry out a variety of tasks. Theses tasks depend on the career profession each student chooses to pursue. Property managers are trained to run the daily operations for apartments, shopping centers, offices, and more. Their job description may include the upkeep of outdoor areas, resolving complaints and maintenance orders, and more. Appraisers work with various financial institutions and clients to appraise residential and commercial property, research data, write reports, and other tasks. Students looking to become brokers will train to work with buyers and sellers. Brokers or agents are in charge of negotiating prices, advertising properties, submitting client offers and other related tasks. With an online school students can prepare for the career of their choice.

A variety of employment opportunities are available in the field and students can choose to earn their certificate or degree in more than one area. With an education in real estate students can work for existing agencies or start their own business. A number of states require that real estate professionals be licensed in order to provide their services. Licensed professionals in this field may be able to choose whether they work full or part time, and so can you with an education in real estate. Not all programs are required to carry full accreditation so students should look into this prior to enrollment. Accreditation is provided by agencies like the Distance Education and Training Council ( http://www.detc.org ) to provide proof that a quality education will be received.

DISCLAIMER: Above is a GENERIC OUTLINE and may or may not depict precise methods, courses and/or focuses related to ANY ONE specific school(s) that may or may not be advertised at PETAP.org.

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