Why is Mold Testing Necessary?
Testing for mold is important because mold spores can cause or aggravate many illnesses, including asthma and allergies. Some molds can cause very serious lung infections.

When should Testing Take Place?
Mold testing should be done if anyone in the household is feeling effects associated with fungal contamination. Symptoms include headaches, dizziness, difficulty paying attention, and lack of concentration.

What should I Look for?

The following are signs that mold could be growing in your home and needs to be eradicated:

1. High humidity – areas that are prone to high levels of humidity retain moisture for longer amounts of time, fostering mold growth.
2. Pipe or water leaks – surfaces that are consistently wet provide a home for mold, and leaks can be difficult to detect
3. Flooding – large scale water damage to a home is very conducive to mold growth
4. Musty, moldy odors – odors are a good indication that mold is present
5. Increased respiratory problems or allergies – a Mayo Clinic study, completed in 1999, found that most chronic sinus problems were caused by mold in the home
6. Symptoms of toxic poisoning – signs that family members are being affected include dizziness, headaches, and difficulty concentrating and maintaining an attention span
7. Leaky Roof – the attic will show signs of water damage
8. Damp basement or crawlspace – moisture in dark environments encourages mold growth
9. Rusting or condensation – can be signs of a leak
10. Discoloration or water stains on walls – water stains will indicate locations of leaks, while discolored spots may indicate locations of mold
11. Peeling paint – the mold could have had a chance to grow before the wall was painted, causing the current peeling
12. Warped wood – this is a sign that moisture is present in sufficient levels to allow mold to grow
13. Growth of mold in bathroom tile areas – this is a very good indication that mold is growing in other areas of the house
14. Visible mold growth – indicates a strong presence of mold elsewhere in the house
15. Poor ventilation – if moisture from the home, including appliances, isn’t vented, it can facilitate mold growth
16. Wet materials inside the house – any areas of carpet or flooring that are wet frequently can also house mold.

While being unsightly and sometimes difficult to clean, mold should be removed from the home. It causes damage to the home itself, but the most intense effects are upon humans. Breathing mold spores can be very dangerous, especially for the very young or those who are advanced in years or adults with compromised immune systems. If you locate any of these signs in your home, it’s time to conduct testing for mold to see how extensive the problem has grown.

To get my FREE 48 page eBook titled “Understanding Mold” . Simply fill out the form below, and I’ll rush it to you.

Related posts from Indiana's USDA Home Loan Expert:

1. Minimum Property Requirements for a USDA Home Loan
2. Private Well and USDA Home Loan
3. REO Properties and USDA Loans

Here are the top ten mistakes made by real estate investors, according to bankrate.com. Bankrate has put together the top ten mistakes after speaking to established, full-time real estate investors and other professionals involved in real estate investment such as bankers. Read on to know them and avoid them.

1. Not planning. Lack of a proper plan is the biggest mistake made by novice investors. Finding a house after forming a proper investment strategy is the right way instead of looking for a house to fit the plan. Many make the mistake of buying a house because it seems to be a good deal and then trying to see how they can fit it into their plan. Instead of buying a house and thinking one can plan in due course, investors should rather concentrate on the numbers and try to make offers on multiple properties. This will ensure a good property that not only matches their investment model but also works out well with the numbers they had planned for.

2. Thinking you will make money quickly. The second major mistake that real estate investors make is to think it is very easy to get rich in real estate. This is only a myth and the reality is that investing in real estate is a long term project.

3. Doing it single-handedly. For becoming a successful real estate investor one needs to build a team of professionals who would assist the investor in his deals. This would ideally include a real estate agent, an appraiser, a home inspector, a closing attorney and a lender.

4. Making excess payment. One another reason that investors in real estate goof up in their investment is by paying too much for the properties they buy. Paying too much and locking up all the funds in the erred property deal will leave you with no money to redeem yourself.

5. Leaving out the groundwork. Not doing your homework could be a costly mistake if you were a real estate investor. Every field of business needs sufficient amount of homework to be done, and real estate investment is no exception. Learn the fundamentals and then venture into investing in properties.

6. Throwing caution to the winds. Investors have to exercise a certain degree of caution and take earnest efforts while making a deal. New investors often fail in this regard and sign a deal without doing adequate research on the property.

7. Miscalculating money flow. Investors whose strategy is to buy, hold and rent out properties need to ensure sufficient cash flow for maintenance. Property managers could be expensive and the owner has to incur more expenses such as mortgage, taxes, insurance, advertising costs etc. Investors have to allocate their budget such that all these expenses are taken care of, or end up having their asset turn into a liability.

8. Lowering the volume. A larger volume of deals or transactions helps in increasing the profits by reducing the impacts of marginal deals.

9. Getting trapped in your own deal. Having more number of options at hand for the property you buy is a wise strategy. This helps one to be prepared for fluctuations in the real estate market. Plans to rent out the house could go awry when the rental market slumps. Having alternative plans helps you cut down losses and tackle unexpected situations.

10. Making incorrect estimates. People who plan to rehab their house need to check if they will still reap the benefits at double the time that they had estimated. This ensures they do not miscalculate and lose money on the deal.

Related posts from Indiana's USDA Home Loan Expert:

1. What You Need to Know About the Real Estate Appraisal Process
2. Why You Need to Use a Buyer’s Agent when Purchasing a Foreclosure
3. Before You Buy a Foreclosure, Do Your Homework

One of the most overlooked and underestimated expenses involved in the purchase of a home is the cost of repairs. Whether the problem is a defective part in an appliance, a structural problem overlooked by the home inspector or just Murphy’s Law making its presence felt, it’s rarely the case that someone can buy a property and move in without spending at least a few dollars to fix, repair or replace something.

While these types of expenses are generally minimal in new homes and well-kept resale properties, they can be fairly significant when the home in question is a foreclosure property.

As housing prices have escalated over the past few years, more and more people have started to look at foreclosure properties as an affordable alternative to more traditional real estate purchases. It’s not unusual for a buyer to acquire a foreclosure property for 10 – 20% less than full market value, and sometimes at much more dramatic discounts of 40 – 50% or more. And online sources such as RealtyTrac make it easier than ever to find foreclosure properties. But while the savings possible on foreclosure properties are real—and really attractive—there are sometimes hidden costs involved.

One of these hidden costs is the cost of repairs. Foreclosure properties come in all shapes and sizes—from run-down mobile homes to palatial estates overlooking the ocean. But they all have at least one thing in common: their owner was in some state of financial difficulty. Generally, this means that a property in foreclosure may not have been kept up as well as a home buyer might like. It’s nearly a certainty that the typical foreclosure property hasn’t benefited from the type of pre-sales “fix-ups” that many homeowners perform to increase the sales price of their homes. And, as a rule, most foreclosure properties are offered “as is,” leaving it up to the buyer to find anything physically wrong with the property.

Is it worth saving 1% on a home purchase if it means doing extensive repairs? Probably not, for most people. On the other hand, saving $20,000 on the purchase may make it worth your while to invest in home repairs.

Determining the degree of disrepair can be something of a challenge as well. Early in the foreclosure process, when an owner is in Notice of Default (NOD), he or she may not be interested in discussing the sale of the home, making it impossible to do a thorough inspection. At the auction, or Notice of Trustee Sale (NTS) phase, bidders are generally required to buy the property as is, at the courthouse. And once the home has been foreclosed on by the bank, becoming a Real Estate Owned (REO) property, arrangements to inspect the property often need to be made with the lender.

“Foreclosure properties certainly present an attractive bargain, and often the amount of money needed to repair a foreclosure home is inconsequential compared to the possible savings. In fact, many successful investors have made a career buying, rehabbing and then selling these types of properties at a significant profit,” says Jim Saccacio, chief executive officer for RealtyTrac, the leading online marketplace for foreclosure properties. “But buyers do need to be diligent about determining the repair costs that will be incurred after the purchase. A property isn’t really a bargain if the cost of repairs equals or outweighs the savings on the purchase.”

Many investors routinely budget 10% of the purchase price of a foreclosure home for repairs. In a typical scenario, where a property with an estimated market value of $150,000 might be sold during the foreclosure process for $120,000—a 20% discount—that would amount to a repair budget of $12,000. In this scenario, the homebuyer still saves $18,000 on the purchase price, and likely increases the value of the home by doing the repairs. Each property, and each situation, is different. But it’s important to note that a difference of 10% in either the discount or repair costs would dramatically alter the financial outcome.

Example 1

Estimated Value: $150,000

20% Discount: $ 30,000

Purchase Price: $120,000

10% Repair Budget: $ 12,000

Total Cost: $132,000

Total Savings: $ 18,000

Example 2

Estimated Value: $150,000

10% Discount: $ 15,000

Purchase Price: $135,000

10% Repair Budget: $ 13,500

Total Cost: $148,500

Total Savings: $ 1,500

Example 3

Estimated Value: $150,000

20% Discount: $ 30,000

Purchase Price: $120,000

20% Repair Budget: $ 24,000

Total Cost: $144,000

Total Savings: $ 6,000

If you’re interested in buying a foreclosure property, the following tips should help ensure that you’ll really get your money’s worth.

1. Physically Inspect the Property

It’s imperative to physically inspect the property if at all possible. In some cases, such as auctions, there is little or no possibility of an inspection. However, if you are able to negotiate a deal with the property owner directly during NOD, or pre-foreclosure, it may be possible to set up a walk-through prior to conducting the sale. During the pre-foreclosure period, the owner has a chance to sell the property or pay off the amount owed before the property is sold at public auction or repossessed by the bank. You’ll also be able to set up a physical inspection if you purchase the property directly from the foreclosing bank after the property has been repossessed. You can locate pre-foreclosures, auctions and bank-owned properties by checking with the local recorder’s office or through online services like RealtyTrac, which maintains the nation’s largest database of foreclosure properties.

If you’re not able to physically inspect the inside of the property, assess the property’s condition as much as possible by driving by and looking at the exterior. Add extra padding into your repair budget for unexpected problems. When there is no physical inspection of the interior, most experts recommend that you cap your purchase price at no more than 70% of the property’s estimated market value. You can determine a property’s estimated market value using Comparable Sales, which are available through MLS listing from your real estate agent or online through RealtyTrac.

You should never assume the property is in move-in shape simply because the owner says it is. Even if the home owner is being completely honest, he or she probably isn’t as accurate or objective in assessing the condition of the home as most real estate professionals would be. And an owner may be completely unaware of a major problem with the home. The bottom line is that you need to do your own research and be as thorough as possible.

It’s wise to hire a professional inspector to come along with you. The trained eye of a professional inspector is priceless in this case because, regardless of how diligent you are in previewing the property yourself, you will undoubtedly miss items an inspector would catch. Make sure the inspector checks the electrical wiring and moisture levels, as well as asbestos, lead and carbon monoxide levels, especially in homes built prior to the 1990s.

2. Note Every Detail that Needs to be Fixed and the Estimated Cost for Each Repair

Have your inspector provide a list of all necessary repairs and, if possible, a ballpark estimate for what each of the repairs might cost. You can also ask the inspector for professional referrals for each individual problem area (roofing, plumbing, etc.). You can check with those professionals for approximate costs. Either way, you’ll know the true cost of the property you are buying.

If you find that your repair list is quite lengthy, you may want to reconsider whether the property is actually worth purchasing. If you’re dealing with home owners in default, you can’t expect them to have the resources to pay for any repairs before they sell the house, but you can use the cost of repairs to negotiate a lower purchase price. That’s why it’s imperative that you accurately document every single repair cost.

If you buy a bank-owned property, the bank will have the resources to make repairs, but they will roll their repair costs into the price of the house. And the bank may not be as motivated as you to get the best prices for the necessary repair work. If you want the best bargain, you’re often better off agreeing to buy the house “as is” from the bank.

3. Distinguish Between Cosmetic and Structural Repairs

While you may be completely correct that the property could use a new coat of paint and some fresh carpeting, your first concerns should be structural. For most people, this can be tough because it’s inherently difficult to look beyond a home’s aesthetic appeal when deciding whether or not to purchase it. Beyond that, most people don’t really know how to determine the structural integrity of a property, unless the defect is so obvious that the home probably shouldn’t even be considered for a purchase. This is yet another reason why it’s imperative to hire the services of a professional inspector: to keep you on task when determining what repairs the property actually needs to make it suitable for living.

Especially with older properties, another point to consider is that homes do require a certain amount of ongoing maintenance. It’s expected that any home will at some point need a new roof or appliances. Don’t let this cloud your judgment or turn you off. Instead, focus on signs of necessary repair such as leaks in the roof or other damage. Make sure all appliances are at least in working order and not emitting dangerous fumes. Overall, you should be more concerned with damage than age.

This is not to say that cosmetic repairs shouldn’t be taken into consideration. However, they should be prioritized properly, so that any repairs that make the property safe and livable are taken care of first. Your goal should be to prioritize a list of repairs from most to least crucial. You can use the information for negotiation and keep yourself on track for what should be handled first when you purchase the property.

The bottom line: know what your priorities are. Remember, while that gold-colored crown molding might be an eyesore, replacing it won’t make you sleep any better on a rainy night under a leaky roof.

4. Get as Much Information from the Owner as Possible about the Property’s History

Aside from the tips mentioned, it’s a good idea to get some history on any home you are thinking about buying. Actually talking with the owner of a property about what has been done to it over time is a great way to learn about potential flaws or concerns to look out for. You should ask what repairs have been made and when, as well as whether any structural changes have been made and whether these changes were permitted under the local building codes. Inquire whether the seller has paperwork to back up repairs that have been made. This information may alleviate suspicions you have about repairs that have supposedly been made and may also be helpful when applying for home insurance for the property.

Of course, you’ll only have the opportunity to talk with the owner if you’re purchasing pre-foreclosure. If you buy at the auction or from the bank, you’re buying from a third party who has no knowledge about the history of the property.

It’s important to estimate the cost of repairs when you purchase a foreclosure property, but your strategy for estimating those costs will vary depending on the status of foreclosure. You’ll usually have the most accurate estimate when you buy directly from the owner during pre-foreclosure because you’ll be able to conduct a complete physical inspection and find out information about the property’s history from the owner.

If you buy a bank-owned property, you’ll still be able to perform a complete physical inspection, but you should allow for a little extra room in your repairs budget because you won’t be able to find out about the property’s history. You’ll need to pad your repairs budget even more if you purchase a property at public auction, where you usually won’t be able to physically inspect the inside of the property.

When you properly account for the repair costs when buying a foreclosure, you’re much more likely to realize a great bargain on your next home or investment property.

Related posts from Indiana's USDA Home Loan Expert:

1. Before You Buy a Foreclosure, Do Your Homework
2. Why You Need to Use a Buyer’s Agent when Purchasing a Foreclosure
3. REO Properties and USDA Loans

Graph from Metropolitan Indianapolis Board of Realtors data as of Oct. 2009

As you can see from the above graph overall the Supply has dropped when looking at 2007 and 2008.  Actually in about half of the 13 county area.  This is good news if you are a home seller, because it shows you have less competition.  One key point is that while this doesn’t appear to the bottom with the supply decreasing it shows that pace of decline is slowing and that we could be poised for an increase shortly.  Let me point out that trying to time the bottom is like trying to catch a knife, we’ll never know the exact bottom until prices begin increasing consistently.

The Federal Reserve is set to stop buying Mortgage Backed Securities on February 2010.  The purchase of mortgage backed securities has kept mortgage rates low.  After the Fed stops buying mortgage rates could rise as much as 1% very quickly.

An increase of 1% in interest rates will decrease your purchasing power by 10%

Example of Your Purchasing Power with a 1% Increase in Rates:

Rates are presently at 4.75%, so if you presently qualify for a $200,000 house.  If rates jump 1% to 5.75% you would now only be able to qualify to purchase a house of $178,777.

When you’re ready to start the pre-approval process head over to LakewoodLenders.com

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3. The Good Faith Guarantee – What You Need to Know as a Borrower and a Realtor

By Rick Sharga, Vice President of Marketing for RealtyTrac

There are two words that give pause to the most motivated real estate buyer or investor, especially during the busy holiday season: property research.

In the past, property research equated to extensive legwork — often involving a trek down to the local recorder’s office — and expense that was spent evaluating a property’s market value and all the debt encumbering the property. But now a few clicks of the mouse on RealtyTrac will get you that same information for properties nationwide:

• Comparable Sales: provides up to 15 recently sold properties in the neighborhood so you can pinpoint the property’s true market value.
• Lien & Loan History: provides a list of all liens and loans (mortgages and trust deeds) against the property so you can calculate the total debt encumbering the property.

These reports are available for hundreds of thousands of properties found on RealtyTrac, the nation’s most comprehensive and convenient online marketplace for homebuyers, investors and real estate professionals, with more than 550,000 properties updated daily. You can also order individual property reports for any property nationwide.

Thorough research has always been crucial to determining a property’s investment potential. But the tools and resources needed to do that research are much more accessible now than ever before.

“When buying a property, the right examination and due diligence on the part of buyers can significantly improve their ability to make a strong investment,” explains James J. Saccacio, chief executive officer at RealtyTrac, which also maintains the nation’s largest database of pre-foreclosure, auction and bank-owned properties.

RealtyTrac can help investors and homebuyers tap into the previously hidden foreclosure market by providing access to property data formerly available only to professional real estate brokers and investors. Today, homebuyers can use these services to identify and research potential home purchases, as well as to find the tools and professional resources they need to help them close the deal.

It makes sense to give any property under consideration — foreclosure or otherwise —an in-depth examination. First, check the Lien & Loan History for all debts secured by the property. Subtract the total amount owed from the estimated market value, based on the Comparable Sales, to determine the potential bargain. After making contact with the owner or real estate agent, arrange a walk-through of the property to evaluate its condition. Factor estimated repair costs into your purchase offer. Before you close the deal, hire a professional home inspector to inspect the property and enlist a title company to run a final title check.

If you purchase a property at a public foreclosure auction, you won’t have a chance to inspect a property before buying, which makes this type of purchase more risky. But if you’ve researched the title and determined the amount owed is far less than the market value, you’ll have some margin to cover unexpected repair costs. Before you go to the auction, set a maximum bid based on your research and stick to that bid at the auction.

Although you’ll be able to inspect the property if it’s bank-owned, the bank typically knows little about the property and will sell it in “as is” condition. This means the bank will disclose all the needed repairs it knows about, but is not held responsible after the sale for any repairs it did not know about. Factor the known repairs into your purchase offer and have a professional inspection conducted before closing the deal. You should also have a title company run a final title check before closing, although most banks will make sure the title is clear before selling.

No matter what type of property you’re planning to buy, good property research will help you recognize which properties represent smart investments and which do not. And that research is now much more convenient thanks to the extensive property research tools available online through RealtyTrac. Remember, a little preparation before the sale can help you reap huge benefits. So, it’s worth your time and energy to do a little homework!

Related posts from Indiana's USDA Home Loan Expert:

1. Why You Need to Use a Buyer’s Agent when Purchasing a Foreclosure
2. A Foreclosure Buyer’s Guide to Property Repairs
3. 10 Mistakes Made by Real Estate Investors

Whether it’s the first time or the tenth, buying a home can be both an exhilarating and overwhelming experience. As with any major purchase, there’s a significant amount of pressure to make the right decisions about such matters as where and what to buy, and ultimately how much to spend. How can you make sure you get the best deal possible on a property that suits your needs, or find exactly the right property to fit your budget and your lifestyle? Increasingly, many homebuyers are doing this by secure the representation of a Buyer’s Agent.

Most people hire a real estate agent to sell their home, but overlook the importance of having an agent when buying a property. While in some cases it’s possible to negotiate your purchase through the seller’s representative, make no mistake: these seller’s representatives are charged with making the sale and negotiating the best deal for their clients — the sellers! With that in mind, it’s best to secure your own representation as a buyer, in order to minimize potential conflicts, and make sure your interests are represented.

In the more complex foreclosures market, a Buyer’s Agent can be even more valuable. The agent can help you negotiate with the owner before a property comes on the market and can also act as a buffer during the negotiating process to make sure you’ve completed all the necessary steps before closing. Done right, it’s like having your own personal tour guide to help you find your way through the foreclosure buying process.

For buyers looking to uncover substantial bargains in real estate, the foreclosures market does offer a treasure trove of opportunities. Foreclosure properties are some of the best opportunities in real estate today with savings of 10-30 percent below market value. Some properties offer savings of up to 50 percent or more! But like any investment offering a high return, there are sometimes higher risks involved in buying a foreclosure than in buying more traditional real estate. One of the ways to maximize the value while minimizing the risk is to work with Buyers Agents who specialize in this market, with specific experience navigating the twists and turns that come with purchasing a foreclosure.

“If you’re in the market for a foreclosure property, you should really take some time to look for an agent with actual foreclosure transaction experience,” explains James J. Saccacio, chief executive officer at RealtyTrac, the leading online foreclosure marketplace. “The nuances of this market make it a different animal from conventional real estate, so buyers owe it to themselves to secure a seasoned agent who’s familiar with the foreclosures process, and has knowledge of local, regional and state laws.”

RealtyTrac’s National Agent Network connects prospective buyers of foreclosure properties with local agents who specialize in foreclosures. Homebuyers can go to www.realtytrac.com to identify and research potential home purchases, as well as to find all the tools and professional resources they need to help them close the deal.

Of course, it’s also important to consider the agent’s knowledge of the area where you wish to purchase property, their ability to close a deal, and their access to other professionals such as attorneys, lenders, and title companies. It’s often a good idea to interview two or three agents to ask about their credentials and to test out chemistry, just as you would when selecting any valued business partner. Ask for references from previous buyers to see what people who have been in your shoes have to say about the agent’s credentials and demeanor. Ultimately, your agent should make you feel confident that they know how to steer you correctly through the foreclosure buying process.

Here are some questions to ask a prospective buyer’s agent if you’re buying a foreclosure:

• Are you a licensed, full-time an agent?
• Are most of your clientele buyers or sellers?
• How long have you worked with foreclosure real estate?
• How many clients are you working with presently?
• Do you have former clients I can contact as references?
• How will you help me contact owners in default?
• Are you familiar with the foreclosure laws in this area?
• How much commission will I pay as a buyer?

Once you’ve selected an agent, you’ll need to set up some ground rules for how you want to work together, such as times you are available to view homes, expectations regarding the agent previewing properties on your behalf, and courtesies expected by both parties.

Keep in mind that even the most intuitive agents are not mind readers. You need to make your preferences, priorities and spending limits clear up front, so neither party wastes valuable time looking at properties that don’t meet your needs.

Finally a word about etiquette: While you don’t necessarily have to commit to working exclusively with a single agent (unless you’ve signed an exclusive agreement with them), it’s most proper to ultimately extend your loyalty to an agent who spends a significant amount of effort helping you find a property. Remember, real estate agents work on commission, so the time they spend working on your behalf amounts to nothing if you don’t ultimately make a purchase through them. If for some reason, you find that your needs are not being met by a particular agent, it’s best to set the record straight early in the process, either to correct the problem or to retain alternate representation.

Working with a Buyers Agent can often result in a net savings on property purchases—whether traditional resale homes or foreclosure properties, and can also help inexperienced home buyers from making costly mistakes in negotiations, contract terms and property research.

Related posts from Indiana's USDA Home Loan Expert:

1. Before You Buy a Foreclosure, Do Your Homework
2. A Foreclosure Buyer’s Guide to Property Repairs
3. 10 Mistakes Made by Real Estate Investors