OBX Real Estate Market Fall 2015

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1 Nags Head Real Estate Newsletter Outer Banks ~ Jan10, 2010 Volume 10, Issue 1 Real Estate Fall 2015 Of Interest: Looking for OBX real estate listed for sale? Then click on any of our websites: homes.com obxwhere.com homes4sale.com/ are ALWAYS your best choice for information and a search! Your Full-time, Overtime, Anytime Outer Banks REALTORS! SAVE A TREE!! Receive our monthly newsletter via , just HughWilley@SunRealty NC.com and we will put you on the list! OBX Real Estate Market Fall 2015 Come enjoy the beach all over again this fall with everything you love about the Outer Banks warm sunny days, refreshing ocean waters, fine dining, natural treasures, historic sites, local attractions with fewer crowds. The weather continues to stay warm long into September and October. In fact, these are the best two buying months on the Outer Banks. Whether you are looking to relocate here, second home, or vacation rental investment, give me a call. Let me put my expertise and knowledge of the Outer Banks real estate market to work for you. You can count on me to always work with your interests in mind, and to represent you and your wishes to the best of my ability! Got questions? Ask! hughwilley@sunrealtync.com or Hugh Scooter Willey Who do you know interested in buying real estate on the Outer Banks? We always appreciate your referrals! 0 P a g e

2 Meet the Willey Real Estate Group Your Full-time, Overtime, Anytime OBX REALTORs The Willey Real Estate Group is dedicated to providing the finest service available. As a team, they recognize that trust is earned, and they work to continue that tradition every day. Scooter, Gerri A combination of market knowledge and cutting edge technology combined with old fashioned customer service has put our real estate group ahead of the curve, as a top producing real estate sales group for the Outer Banks of North Carolina. We are successful in closing both short sales and REOs, are foreclosures specialists in Outer Banks, and have an exceptional listing-to-sale (LTS) ratio. Hugh "Scooter" Willey, kicked off his early career as a licensed NC builder by building and investing in multiple real estate properties throughout the Outer Banks since 1985 that has included new construction, acreage, rental properties, and resort and second home vacation investments. He has "walked the walk" of real estate investing with his own diverse real estate portfolio. This enables him to help prospective buyers understand the vacation real estate market and offer insight on how to maximize their investment. Recently, Scooter was one of the featured realtors in the series of BUYING THE BEACH. Be sure to tune in to the series premiering on Destination America to see Scooter showing buyers some of the sand dune steals available for sale in the Outer Banks of North Carolina. For Gerri Willey, the real estate side of her life began in 2006 when she became a licensed realtor. Watching her husband buy - - sell real estate in Virginia and North Carolina, provided subliminal background and education for her transition into real estate. Scooter and Gerri decided to marry his real estate investment knowledge of the Outer Banks with her strong technology skills. Gerri's forte is management of their websites, overseeing their real estate marketing, and escrow coordinator. Remember Samantha Stevens from the TV show, Bewitched? Whenever she wanted something, she simply twitched her nose and the item magically appeared. Well, that is why Scooter refers to his wife, as his secret weapon! She helps to keep everything organized to ensure a "smooth closing" for their clients. Empowering clients thru education, a stress free transaction, and an excellent service experience are our goals! Without you, our business would have no value as we depend upon your testimonials to your friends, acquaintances, and family to continue the stream of business contacts. That is the strongest advertising in today's competitive market. 1 P a g e

3 Table Of Contents Working With Real Estate Agent... 3 When is the Right Time to Buy... 4 Buying OBX Real Estate Using the BIG How Much Can You Afford... 6 Mortgage Lenders... 7 Outer Banks Towns and Villages... 8 Accessing Outer Banks Roads and Beaches... 8 Location Location Location Locations for Investments and Rentals Beach House Selection Tips Beginning Your Search Cash Flow / Proforma Analysis The Advantages to Owning a Vacation Rental House? Return on Investment What Makes the Best Vacation Rental Property? Managing a rental property Buy NOW! Expenses to Expect when Buying a Home Making An Offer to Purchase Offer is accepted, Now what? Buying Short Sales Buying Foreclosures / Bank Owned Properties What is a 1031 Tax Exchange? Why Choose Us? Testimonials Appendix A Working With Real Estate Agents Appendix B -- Preferred Providers Appendix C Transfer of Utilities Appendix D Estimated Buyers Closing Costs P a g e

4 Working With Real Estate Agents When buying or selling real estate, you may find it helpful to have a real estate agent assist you. Real estate agents can provide many useful services and work with you in different ways. In some real estate transactions, the agents work for the seller. In others, the seller and buyer may each have agents. And sometimes the same agents work for both the buyer and the seller. It is important for you to know whether an agent is working for you as your agent or simply working with you while acting as an agent of the other party. The North Carolina Real Estate Commission publishes a pamphlet titled "Working With Real Estate Agents" that explains the various agency relationships between a buyer or seller and their real estate agents. These agency relationships are: Buyers Agent Sellers Agent Dual Agent Designated Agent As licensed real estate agents in North Carolina, we are required by the North Carolina Real Estate Commission regulations to explain these various relationships to you and to have the pamphlet (refer to Appendix A) signed by you acknowledging that we discussed it with you before first significant contact. 3 P a g e

5 When is the right time to buy? Have you always dreamed of buying a beach house as a vacation home or primary residence for your retirement, but never felt you could afford one? "The time is NOW! With today s interest rates still low, competitive pricing and great selection, NOW is the time to buy a home. There s no reason to wait to make your move. Don t miss today s real estate buying opportunities. Nationwide economic conditions have forced a number of foreclosures and short sales on many beautiful waterfront properties in our local beach communities. For anyone in a position to buy, right now is the best time in over 30 years to make a truly once-in-a-lifetime deal on that dream beach home. Our goal is to closely work with you to determine your desires and goals, and then set out to determine if there is a potential property that best fits your objectives. Our relationship will start out with a quick consultation, over the phone or via , to determine the right potential properties for you. Just let us present the properties and investments that might work for you? From there, the avenues are endless!! You can be the captain and we will be the navigator. So please take the time to visit our website at or where you can do a MLS PROPERTY SEARCH 24 hours a day! You can view all Outer Banks properties and daydream of owning your very own beach property! Be sure to enter your contact information and search criteria.. 4 P a g e

6 Buying OBX Real Estate Using the BIG 3 What is the BIG 3? I bet you're guessing Location. Location. Location. Nope. Not it... but you did guess one out of three. Here's the magic formula to find your piece of Outer Banks real estate: Location Features Price The Big 3 are truly the key to finding that sanctuary, that dream, that special beach cottage you've always wanted Location of course covers what town, what part of town, which neighborhood. Then it takes another direction. Ocean front, ocean side, sound front, sound side, somewhere in the middle. Features takes us to a physical property. Number of bedrooms and baths. Neighborhood amenities. Private pool and/or hot tub. Second living area. Game room. Media room. Outside shower. Elevator. Wet bar. Price stands at the top of the list for most. It dictates both location and features. The more you want to pay, the more features you will have along with distance to water and neighborhood. You know, just 3 items sounds like an easy task when you are dreaming on finding your special place here on the Outer Banks. BUT... it really isn't as easy as it sounds. Why not allow my real estate team to help you decipher your want list and turn it into your do list? We know the Outer Banks real estate market and can guide you around pitfalls you may not even know are there. We work at your pace and have a team of trusted partners to make the buying process an enjoyable experience from start to closing. Contact me today to find your Outer Banks dream house!! It's fun to buy Outer Banks real estate using the Big 3. We will show you! Our Buyer Services are GUARANTEED! 5 P a g e

7 How Much Can You Afford? This is a very exciting time for you and we look forward to guiding you smoothly through this process, helping you to efficiently find the OBX home/property of your dreams. You should determine your budget when looking for property and estimate how much you can afford. One of the most important factors in figuring out your financial budget is getting pre-approved for a mortgage. With the current mortgage environment changing everyday it is more important than ever to contact a lender before you begin searching. To learn more about your mortgage options, please contact us for additional lender information. Documents Needed When you apply for a mortgage, you will need to furnish information regarding your income, expenses and obligations. To save time, have the following items available for each borrower: Two most recent pay stubs Federal tax returns for the last two years Last two months' bank statements Long-term debt information (credit cards, child support, auto loans, installment debt, etc.) Importance of Credit Examine the credit report thoroughly and make sure it's accurate. If there are mistakes on the report, then contact the credit report agency and ask them to remove the mistakes immediately. If your credit report is good, then you have an excellent chance of obtaining a mortgage. If not, then you must take the appropriate steps to improve your credit rating. Getting Approved Now that you ve examined your credit report and are confident that you re in good shape, you re ready to choose between getting pre-approved for a mortgage or prequalified for a mortgage. Here s the difference: Pre-approval uses basic information as well as electronic credit reporting to determine whether a lender will loan you money. If you are pre-approved for a mortgage, the lender has given you a commitment to support your new purchase. 6 P a g e

8 Pre-qualification is not a mortgage approval but simply an estimate of what you can afford. When you pre-qualify for a mortgage, the lender also collects basic information regarding your income, monthly debts, credit history and assets, and then uses this information to calculate an estimated mortgage amount. The lender has not yet committed to supporting your financial needs and, therefore, you have not received an actual guarantee of funds. Buyers who are pre-approved for a mortgage are more attractive candidates to the seller. You will be able to enter negotiations with strength and financial confidence. Lenders Working with a local lender that has many years of experience is recommended. They are most familiar with our real estate market unlike out-of-state lenders who many times cause delays in approval and/or added inconveniences for you. We have several local lenders that will be happy to discuss your options of having a second home versus a rental home loan. However, if you have a good relationship with someone in your area, and they are able to do business in North Carolina, please feel free to use them. Remember that it is always a good idea to get at least 2 quotes. 7 P a g e

9 Outer Banks Towns and Villages Each town and village on the Outer Banks offers its own unique feel. You can have a vastly different experience depending on which area you select. The 4x4 Beaches, Corolla, and Duck comprise the Northern Outer Banks towns. Central Outer Banks towns include Southern Shores, Kitty Hawk, Kill Devil Hills, Nags Head, and South Nags Head. Hatteras Island Villages include Rodanthe, Waves, Salvo, Avon, Buxton, Frisco, and Hatteras Village. Ocracoke Island lays at the southernmost tip of the Outer Banks, in Hyde County, a 45 minute ferry trip from Hatteras Island. It has just one village at the western tip, which is built around historic and scenic Silver Lake. It is the most remote inhabited island of the Outer Banks, and is owned by the National Park Service, except for the village. Accessing the Outer Banks Roads and Beaches Getting Around We often hear that it is difficult to discern driving distances and overall layout of these barrier islands, which is necessary information when choosing the location of your home/property. Let us explain the basics. Mileposts Take note of the green mileposts that count each half mile when you drive across the bridge from the North Carolina mainland on Hwy 158-S or across the southern bridge on US 64-E. Most direction-giving and business location information references the nearest milepost. MP 1 begins as soon as you cross the north bridge onto the island in Kitty Hawk. The mileposts mark ascending distance all the way to Hatteras, at MP 74 or so. They resume on the island of Ocracoke, but do not count the distance of the ferry ride. There are only two main roads, so it's hard to get lost. The By-pass (what locals call US Hwy 158) and the Beach Road (what locals call NC Rte 12, also named Virginia Dare Trail - North or South). These two roads run north and south, parallel to each other down the length of the middle banks. US Hwy 158 extends into North Carolina's mainland while NC Rte 12 extends to the northern and southern beaches of the Outer Banks. 8 P a g e

10 By-pass runs down the middle of the barrier islands from Kitty Hawk to Nags Head and eventually meets 64/264-E on the NC mainland. It is a five lane, 50 mph road. On a day of busy summer traffic it might take 35 minutes to get from MP 1 to MP 17. Beach Road runs parallel to the By-pass along the beach from about MP 2 to MP 16. It serves as an alternate to the By-pass. It is a two lane, 35 mph road. If traffic is heavy and everyone's head is turned toward the water, it may even be 25 mph. At MP 2 it turns north to serve as the only road to the northern beaches. At MP 16 it heads south to serve as the only road to the southern beaches. Drive time from one end of the beach to the other is longer, but for new, old or relaxed drivers the Beach Road offers a calmer and usually safer ride. It is heavily used by pedestrians, so please pay attention. Beach Access Location Beach Access Location is one of the most important criteria that a renter looks for when planning a vacation. Therefore, beach access should also be an important feature for buyers to consider. Not all beach accesses are legal and some are private. All of the beach accesses in Duck and Southern Shores and most of the beach accesses in Corolla and on Hatteras Island are private. Nags Head, Kitty Hawk, and Kill Devil Hills offer public beach accesses, parking, an some beach accesses have lifeguards and bath houses. Careful consideration of all the things that are important to you will help you decide which area of the Outer Banks is best for you. If you combine that with how much you are willing to spend, you can narrow your search to the homes that fit your criteria best. Then you can begin searching for your Outer Banks home/property! 9 P a g e

11 Location, Location, Location The Outer Banks, located in 3 counties of Currituck, Dare, and Hyde in northeast North Carolina, is a chain of barrier islands in the middle of the Atlantic Seaboard. It is bordered by the Atlantic Ocean on the east, Virginia on the north, Pamlico Sound on the south, and the North Carolina mainland on the west. It is surrounded by 900 miles of water, the largest estuary system in the world. The Outer Banks can be accessed by US Route158 from the north and US 64 from the west and south. The Chesapeake Expressway, US Route 168, links I-64 in Chesapeake to North Carolina and the Outer Banks. Ocracoke Island can be reached by ferry from Hatteras Village, Swan Quarter or Cedar Island. 10 P a g e

12 Locations for Investments and Rentals Below is a guide to the main areas on the Outer Banks and the lingo to describe these areas. Highlighted in YELLOW in the map below are the areas where you can search for your PERFECT vacation beach rental investment properties. Oceanside-the area between Hwy 12 and the ocean Between Hwys-the area between Hwy 12(Beach Rd.) and the Bypass(Hwy 158) Westside-the area on the west side of a main road 11 P a g e

13 Beach House Selection Tips For most people, a house by the beach is dream come true. Whether you are planning to purchase a beach house to relocate or for vacation, it is a worthwhile investment for you and your whole family. You get to enjoy the sand and the sun anytime you want. As with any other real estate investments, there are important things that you need to consider before making any purchase. There are so many variables from which to choose and every buyer has different needs. A list of priorities can be an invaluable tool when making final decisions. Prior to choosing your location, we recommend that you ask yourself a few questions about how you plan to utilize this home/condo/property at the Outer Banks:. Are you moving here for relocation/retirement? Will this be a 2nd home that you can escape to whenever your schedule permits? Is this real estate purchase for investment only? Do you require rental income? Do you have a boat and need to be close to a boat launch, or a canal? Do you want to be as close to the beach as possible? Do you want to be near a golf course? Do you want a new home or an older, quaint home? PRICE! 12 P a g e

14 Beginning your Search You can begin your search on our websites or From this site you can search any area of the Outer Banks! You can also access information through the QR code below. Use your smartphone and QR code reader app to access Outer Banks MLS information from anywhere. Our mobile site is, where you can: Do a search Save properties or searches Make notes about properties you like See what s for sale on a map view me directly for more information Call me directly to schedule a showing Search specifically for distressed properties (i.e., foreclosures & short sales) Cash Flow / Proforma Analysis The goal of successful real estate investment is a positive cash flow, while also realizing the other benefits of real property ownership and investment. These include appreciation in value, tax breaks and other benefits. Utilizing a cash flow analysis/proforma is useful way for real estate investors to evaluate an investment property's future cash flow performance. Please let us assist you with the preparation of a cash flow analysis / proforma for any Outer Banks income producing vacation house. 13 P a g e

15 Advantages to Owning a Vacation/Rental House There are several monetary advantages to owning a vacation/rental house. Tax deductions from interest and property taxes. Plus, you may be able to deduct other expenses related to ownership. Depreciation is another potentially deductible expense, you should talk to your accountant for information about how to depreciate a beach home, and how this will affect you tax liability. Appreciation of real property continues to be a strong investment. Properties on the outer Banks have dropped in previous years, so investing at the bottom of the market gives the potential for appreciation. Income producing properties help you offset the costs of owning a second home. A property held for investment must be rented or available for rent. The owner has the liberty to use the property for personal use, with some restrictions. Return on Investment (ROI) For most people, when they purchase a vacation rental beach home in the Outer Banks, the equity becomes a large part of their overall investment portfolio. Therefore, it is a good idea to evaluate your Return on Investment (ROI) to make sure your vacation rental property is as profitable as you need it to be. The following table may assist you in evaluating the ROI for your investment property: Current Equity $ Total Return Gross Income $ - Expenses $ = Net Operating Income $ - Mortgage Payments $ = Cash Flow $ - Income Taxes $ + Total Principal Payments $ = Total Return $ Calculate % Return Current Equity / $ Total Return $ % Return on Investment % 14 P a g e

16 What Makes the BEST Vacation/Rental House? A house with the most amenities! Pool Hot Tub All master Suites with king beds Elevator Walking distance to the beach Views Pet Friendly Game room/ theater room Professional décor Up to date electronics (flat screens and surround sound) Entry level homes will not have all of the above, so the rental income will reflect this. Regardless of your investment level, you want to make as many of these things available as you can to make your home desirable and you will have repeat rental income, and increased rental income every year. 15 P a g e

17 Managing a Rental Property Turning a vacation home into a vacation rental property is a great way to make owning a vacation home more affordable. After purchasing your vacation home, the biggest decision you need to make is about its management. You have two options in this regard. Either you can decide to manage it on your own or you can hire services of a property management company. How Much Does a Rental Management Company Charge? In the Outer Banks, most property rental management companies charges range from 15% to 21% of the gross rental income. A point worth mentioning is that these companies offer various packages. So it is possible to engage them for only certain type of tasks. When Am I Paid the Rental Income by Rental Management Company? When a reservation is made and a lease is signed, a 50% deposit is required. The second half of the money is due within 30 days of the vacation date. You as the owner get a percentage of the deposit money no sooner than Feb 1 st or when the initial lease comes in after that date. The balance comes in after the renters complete their stay. What Services do Rental Management Companies Provide? When you sign up with any such company, you do not have to spend much time in managing the property. They can handle every single aspect thereby making you free from any worries in this regard. They provide you all type of help whether it is welcoming the guests or asking them to leave if something wrong takes place. Not to mention that onus of cleaning and all type of repair work is done by the company you contract to maintain your vacation rental. So you can consider availing yourself of these services, if you are a busy person and unable to spare time to deal with many matters that will arise. However, there will be times when you may need to make sudden trips to handle unforeseen events. Some the services they provide are: Year round internet marketing Booking reservations by phone or online Owner and guest accounting and payment services Administering Security deposits and leases Linen service, spa service, pool service (if needed) Spring Cleaning, Fall Cleaning and Winterizing How Binding is a Rental Agreement? If you purchase a rental home already in a rental agreement contract, during the rental season, then you will have to honor the rental agreement in place at the time and are free to change companies or leave the program at the end of the season. Most agreements are renewed in the fall, and run from January 1 to December 31. When you purchase a home with an agreement in place, you are required to honor rentals already on the book for 180 days from the date of closing. 16 P a g e

18 BUY NOW! The current mega-low mortgage rates and reduced home prices are creating a timely opportunity for buyers of real estate. Not since the early 1950 s have Americans seen such a low average in 30-year fixed mortgage rates. Even Warren Buffett is advising that it will be the best opportunity to buy real estate in our lifetime! What does this mean? It means the time is NOW! The deals are sweet (especially in the Outer Banks of NC)! For first-time home buyers or those on the fence, it s a no-brainer. Also, there is a population who stands to gain mightily from the current situation. These are the individuals who have dreamed of owning real estate investment property! These individuals will miss out on good deals and profits, if they do not conquer their trepidation about starting. Know that without risk, there d be no success! When the legendary cheapskate, Warren Buffett, says it s time to pick up a second home, it s worth listening. 17 P a g e

19 Expenses to Expect When Buying a Home -Please Refer to Appendix D for a worksheet on closing Expenses -Due Diligence funds paid directly to the seller -Earnest money, which is held as good faith funds towards the transaction. -Application Fees and credit report -All home / property inspections -Surveys or elevation certificates -Loan Origination and discount points -Prorated share of yearly property taxes, property association dues, and other similar annual fees -Fees for a title search & duties performed by their attorney, title insurance policy, hazard & home owner's insurance for a year, down payment and lender fees, flood zone certification fees -Payments to escrow accounts for property taxes & insurance that will be paid by lender the following year Hopefully, the above costs will give you a baseline to go by. Not to worry however, just another reason to have a REALTOR on your side, and yes, we are shamelessly flaunting our services. 18 P a g e

20 Making an Offer to Purchase Once you find the home you want to buy, the next step is to write an offer which is not as easy as it sounds. Your offer is the first step toward negotiating a sales contract with the seller. Offer Price As your buyers agent, we will research the market value of the home that you intend to purchase, and we can help you decide on an appropriate price to offer the seller. Making an Offer In an offer to purchase, you include not only the price you are willing to pay, but other details of the purchase as well. This includes how you intend to finance the home, your down payment, what inspections are performed, timetables, whether personal property is included in the purchase, terms of cancellation, any repairs you want performed, which professional services will be used, when you get physical possession of the property, and how to settle disputes should they occur. Due Diligence Period The Due diligence period is defined by date in the offer to purchase. From the date the offer is accepted and up until the defined date, you agree to complete all inspections, surveys, and repair negotiations. Counter Offers It is a rare purchase contract that accurately addresses all of the concerns of the seller during the initial presentation. Often, the seller will give the buyer counter offer, to negotiate price, as well as some of the other variables. Making the offer to purchase requires the completion of some or all of the following paperwork: NC Working With Real Estate Agents Pamphlet-This is required by the NC Board of Realtors. It defines everyone s role in the coming transaction. Buyer s Agency Agreement-This defines the relationship between you the buyer and me, the agent, during the transaction The Offer to Purchase-When ratified, this becomes a binding contract NC Residential Property Disclosure Property Management Disclosure-If needed- Vacation Rental Addendum-If needed- Bill of Sale-If Needed- You will also need: The Earnest Money Check A Bank letter with proof of funds or pre-approval letter for the loan 19 P a g e

21 Offer Accepted, Now What? Now, we execute the terms of the terms of the contract! The Due Diligence Period The due diligence period is a timeframe built into the contract for the buyer to take care of investigating the property to assure that he is satisfied with the property. 1. Finalize the Mortgage and Appraisal You work with your mortgage firm and closing attorney. They will have final costs for you based on the negotiated price and concessions, and the bank fees. The lender will usually require an appraisal of the property to be included in the loan package. This helps the lender determine the value of the property and to confirm that the value of the property is within the loan-to-value ratios determined at the inception of the loan. 2. Home Inspections As your buyer s agent, we arrange for the home inspection, and we negotiate any necessary repairs on your behalf with the seller. A home inspection is intended to give the buyer a better understanding of the condition of the property, it does not insure that things are following building codes and is not a technically exhaustive evaluation. It is an evaluation taking into account normal wear and tear, and making sure things function as intended. If an inspector deems an item warrants further investigation, we can call in a professional to inspect. So, if needed, we can arrange for: Pest Inspection Pool/Spa Inspection Heating and Air, Plumbing, or Roofing professionals to inspect Structural Engineer Land Survey Septic Inspection ***Septic Tank Specifics*** In our area, most homes have a septic tank. Most buyers or renters are not used to septic systems and they have to be maintained properly. Within the septic tank, the household waste water flows into the septic tank, and in the course of a day the waste separates and the liquid flows into the drain field where it trickles into the soil. Septic tank maintenance includes being careful that nothing harmful is disposed of through the system, and having the system pumped regularly. 20 P a g e

22 3. Repair Requests If repairs are needed, we will contact contractors for the work needed to be done, meeting contractors and giving them access to the property 4. Insurance Coverage The National Flood Insurance Program provides for the availability of flood insurance but also establishes flood insurance policy premiums based on the risk of flooding in the area where properties are located. Due to recent amendments to federal law governing the NFIP those premiums are increasing, and in some cases will rise by a substantial amount over the premiums previously charged for flood insurance for the property. As a result, you should not rely on the premiums paid for flood insurance on this property previously as an indication of the premiums that will apply after you complete your purchase. In considering your purchase of this property you should consult with one or more carriers of flood insurance for a better understanding of flood insurance coverage, the premiums that are likely to be required to purchase such insurance and any available information about how those premiums may increase in the future. Flood Insurance is necessary throughout our area because any mortgage company is going to require you carry flood insurance if you are in a SFHA (Special Flood Hazard Area). SFHA are defined as the areas that will be inundated by the flood event having a 1-percent chance of being equaled or exceeded in any given year. The 1-percent annual chance flood is also referred to as the base flood or 100-year flood. The SAFA is mapped on a FIRM (Flood Insurance Rate Map). FEMA (Federal Emergency Management Association) determines standards for flood zones using a formula of a site's proximity to a water body and computer-generated water run-up models. In all construction within a designated flood zone, the first floor of living space must be constructed above the base flood elevation, if applicable. At the Outer Banks, the flood zones are: VE Zone-this is the zone directly on the oceanfront, at sea, base flood here is 11 Ft. AE Zone-this is most of the area of the Outer Banks, base flood is 10 Ft. X Zone-is an area on minimal hazard, no flood insurance required. Walk Through before Closing Before closing, we will walk through the property to insure all necessary repairs have been made, and that the home is in the condition you are expecting. Closing The closing process is complete when the title is deemed clear and the deed is recorded in the county office. You take possession of the property after the recording of the deed. 21 P a g e

23 Buying Short Sales When looking for Outer Banks Short Sale properties you need an experienced Realtor to help guide you through the process. Not all Short Sales are the best deals on the market. We are only a handful of Realtors on the Outer Banks to earn the National Association of Realtors Short Sale & Foreclosure Certification. Put our experience and knowledge to work as your Foreclosure and Short Sale Buyer's Agent. Short Sales Explained Real estate short sales have become more common in the tough housing market of the last few years. If you ve been house hunting over the last year, chances are you ve run across at least one piece of real estate classified as a short sale. A short sale is one where the net proceeds from the sale won't cover the total mortgage obligation and closing costs. The seller is hoping to complete the sale before they lose the home to a foreclosure. This sale can partially salvage the homeowner s credit rating and lift the stress of large mortgage payments. This is good for the seller as a short sale is less dramatic for them as it will typically not hit them on their long term credit as much as a foreclosure. A foreclosure means the seller won't be able to buy a home for much longer than a short sale as their credit is hit harder. Usually, the seller has started the process with their mortgage lender by sending in required paperwork. Then, they wait for an offer or several offers. Why would the mortgage lender do such a thing? They do it because they want to sell the home as quickly as possible to avoid losing any more money from the nonperforming loan. The mortgage lender also wants to avoid foreclosing on the home, because that means they will have to manage and sell the property (or pay somebody to do that for them). So the real estate short sale is a way to get the loan off their books quickly, without having to go through the extensive process of foreclosure, real estate auction, etc. Short sales can be a great opportunity to find your new home at a competitive price. They can also be a major headache that lasts for months. It is important to have a good understanding of the many factors that lead to a successful deal; or hire someone who does. The Offer Your offer will be written along with the various documents that you acknowledge the property will be sold in "As Is" condition. You will also be informed that the seller will not be making any repairs or be receiving any monies or paying any out of pocket expenses. Most likely the seller will not be disclosing any past repairs or changes made to the property. What does this mean to the buyer? You are probably buying a property for less than the same home would sell for if it was not a short sale so you can expect a bit more out of pocket repairs and a property that is not in "top notch" condition. Some sellers that simply want to make this process as painless as 22 P a g e

24 possible and get an offer prior to a foreclosure so they maintain the property beautifully. This is not typical, most sellers are distressed and have vacated the property and have left it a bit in disrepair. In short sales, the bank has all the power, and each one has a different idea of what the most appealing buyer is. One bank may prefer buyers with large down payments while another just wants the highest price. Most buyers want to know if the bank will give a lower price for an all cash offer. This is difficult to predict; buyers will not know until they make an offer. The Wait In many cases, short sales are not short. You must have patience and fortitude, this process is not a sure bet and it can be a long wait. You cannot be emotionally tied to this investment. If you absolutely need to be placed in a home within the next month or two you should consider a bank owned or individually owned property. Your offer gets faxed into the mortgage company along with a copy of the HUD and your proof of financing the property. Most mortgage companies are flooded with so many that waiting to get a response can vary anywhere from just a week or so to several months. Not only are you waiting to hear if they are even going to consider your offer you also may be competing with other offers that are either on the table or come in during the wait process. Sometimes you have no idea that you are not the only offer in or whether or not the mortgage company is prepared to take the lesser amount owed. Make low ball offers at your own risk. Remember the mortgage lender is typically unaware of the seller-set price during a short sale. When low ball offers arrive, they are often rejected, with little or no feedback for the prospective buyers. It may also take a considerably long time to hear back even on good offers due to the sheer volume of transactions lenders are overwhelmed with these days. Acceptance Assuming your offer has been negotiated and accepted the mortgage lender will then give a time-frame in which you MUST close by and the contract will become null and void if not closed by that date. Now is the time for you to do your due diligence and get a home inspection! Do not forego the inspection, you need to know the extent of the condition of the property before the end of the inspection period is over and you are now at risk of losing the earnest deposit if you do not move forward and close on the property. Most Important! You need to have your own representation with a real estate professional that has knowledge and a successful track record with short sales. They can be complex deals with their own rules and etiquette, and require knowledge of what's reasonable and customary. My team successfully closed over $5 million in distressed property sales in 2009 and Let us help you navigate your short sale buying opportunity, for a successful closing! 23 P a g e

25 Buying Foreclosures/Bank Owned Properties When looking for Outer Banks Foreclosures (i.e., Bank Owned Properties) you need an experienced Realtor to help guide you through the process. Not all Foreclosures and Short Sales are the best deals on the market. We are only a handful of Realtors on the Outer Banks to earn the National Association of Realtors Short Sale & Foreclosure Resource Certification. Put our experience and knowledge to work as your Foreclosure and Short Sale Buyer's Agent. Foreclosures (i.e. Bank Owned Properties) Explained With a record number of homes falling into foreclosure, many real estate investors and homebuyers are pouring their money into the foreclosure market. Foreclosure is a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. It begins when a borrower/owner defaults on loan payments and the lender files a public default notice or a lis pendens (Latin for "lawsuit pending"). Ultimately, the foreclosure process can end one of four ways: The borrower/owner pays off the default amount to reinstate the loan during a grace period known as pre-foreclosure The borrower/owner sells the property to a third party during pre-foreclosure, allowing the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history A third party buys the property at a public auction at the end of the pre-foreclosure period The lender takes ownership of the property, usually with the intent to re-sell. The lender can take ownership through an agreement with the borrower/owner during preforeclosure or by buying back the property at the public auction There are different stages in the foreclosure process, and each stage offers unique advantages and disadvantages for the buyer. Most buyers prefer buying bank-owned properties because they're uncomfortable dealing with distressed homeowners. Under this buying stage, the lender or bank has taken ownership of the property, either through an 24 P a g e

26 agreement with the owner during pre-foreclosure or at the public auction. REO means "real estate owned" by the lender and indicates the house has already gone through the foreclosure process and has been repossessed by the lender. The lender usually sells the property to recover the unpaid loan amount and typically clears the title for any buyer. At this stage of foreclosure, it's more likely the property will be listed for sale on the Multiple Listing Service (MLS) used by real estate agents. Take note that the bank's primary goal is to at least break even on all the costs that it has sunk into the property. That includes the unpaid balance of the loan, the expenses associated with the foreclosure proceedings, other liens and repairs to the property. Your goal as a buyer is to purchase the property below market value, minus any estimated repair costs (most REOs are as is properties). There is no set timeframe within which the banks must sell their REOs. However, banks often want to get REOs off their books rapidly. As a result, many REOs sell quickly. Here's an example of the type of language, one may find in a foreclosed/bank owned listing: "Pre-approval or Proof of Funds letter MUST be attached to Offer. Earnest Money must be certified funds and held with the listing firm. Home is being sold AS IS - SPECIAL WARRANTY DEED. Pre approval required before making an offer. Buyer may be required to use seller's attorney and pay transfer tax." You may also be required to have a pre-qualification letter from the lending institution that owns the property. This does not mean you are required to use them as a lender, but they will not accept any offers without this letter. Sellers Addendums come after an accepted offer. Often Buyers must use seller s attorney for closing and are often required to pay the transfer tax. This is common, and many times the agent has no control over what the bank is willing to disclose. The lenders have their guidelines in how the sell the properties they take back from their borrowers. It is very important that the proper path of investigation is taken for discovering all the facts about the property. Your real estate attorney (required by NC law to purchase property) will make sure that you understand the position the title is in, and if there are any liens or unknown encumbrances on the property. There is absolutely no cost to you to for our services as your Realtor to assist you in the purchase of your foreclosure property. We can help you negotiate, run CMA's, coordinate your closing, prepare offers, and other required paperwork related to any foreclosure properties listed in the Outer Banks MLS. Before you set sail on your foreclosure buying adventure, contact us to help you navigate the foreclosure market in the Outer Banks of North Carolina. 25 P a g e

27 What is a 1031 Tax Exchange? A 1031 tax exchange is used by someone who owns a piece of property, and wants to roll all of the appreciation into a new property. Once an investor has decided to pursue a 1031 Exchange, the process is fairly straightforward and will be carefully facilitated by a Qualified Intermediary (QI). This is done at no cost to buyer! Here is a typical timeline involving an exchange, presented in the traditional order of occurrence. This information is presented for informational purpose only. Consult a proper professional before making a decision. 1. Investor decides to sell investment property and do an exchange. Investor contacts a Qualified Intermediary (QI). 2. Investment property is put on the market. 3. Offer to purchase investment property is accepted. 4. Escrow for the sale is opened and preliminary title report produced. 5. The QI sends required exchange documents to escrow closer for signing at property closing. 6. Escrow closes with the Intermediary holding proceeds from sale. 7. Within the first 45 days after the close of escrow on the sale of the relinquished property, investor identifies replacement property as required by law. 8. Within 180 days after the close of escrow on the sale of the relinquished property, investor closes on replacement property that was identified by them. The exchange is completed. Frequently the most difficult component of a 1031 Exchange is identifying replacement property within the first 45 days following the sale of the relinquished property. The IRS is very strict in not allowing extensions. Many investors therefore carefully think about replacement property alternatives before closing on the sale of the relinquished property. 26 P a g e

28 Why Should You CHOOSE Us? Our philosophy is: MAKE IT EASY for clients and serve them extraordinarily well! What's in it 4U? No PRESURE, No SALES PITCH, and Our Services are FREE to buyers. It is not uncommon for us to spend several hours the first day viewing potential homes. And if you don't find one that day, we'll do it over the next day!... and the next... until you find your dream home. Most Realtors will show you 5 homes, and then pressure you to make a decision. NOT US. We provide service and that is exactly what we do. No long faces, no attitudes, no pressure! Buying a home is one of your most important purchases. We want you to feel right about it and not be pressured in any way. Being buyers and sellers ourselves, we have a list of the best, cheapest, and most reliable lenders, inspectors, and home insurance companies in the area. We will share these and much more info with you when you use us. Our services: After locating the perfect home, we will run comparables to show you what similar houses have sold for in the past few months. We're savvy negotiators and we'll use that information to our advantage to negotiate the best price for you. We have several different strategies. We'll tell you if the house is over-priced, under-priced or price just right. We negotiate any additional terms for you including strategies for closing and closing costs. We will be able to tell you the most common things to look for in a house, both inside and out. What to do if the house appraises above or below contract price, what your options are? Where and how you can lower your closing costs? We will save you money, and we will tell you exactly how, where, and why. Negotiation is the key and the leverage comes from having the tools and knowledge to do so. Best of all... IT IS FREE. Whether your dream is to buy a home for your family's personal use or to utilize as a vacation rental home, we can help you find the perfect retreat. You may envision purchasing your own piece of these barrier islands to use as a future building site or to hold onto and sell as the land appreciates. Whatever your vision, we are here to intelligently advise you of your options. 27 P a g e

29 Testimonials The happier you are, the more you'll brag about us Plus, we love free advertising! Hugh Scooter Willey went beyond what was expected of him. He showed dedication to his job and to us throughout the entire process. I don't think we could have made a better choice in agents. Alan Kee, March 2015 Hugh Willey is the go to real estate agent. We were very pleased with his expertise with the properties available to us and helping us find it so quickly. We were impressed with the short turnaround time to closing; as we closed within a few weeks. Mr. Willey was professional, knowledgeable and quick to respond to our every request. We would recommend him to our family and friends should they ever need an agent in his area. We appreciated his attentiveness to us. Sharon P., November 2014 Scooter's "Full time, overtime, anytime" slogan is not just words. I was kept informed and in the loop for the entire process. Selling your home is an emotional ordeal, but having an agent that is in front, behind and with you all the way makes the experience a positive one. My thanks and gratitude to Scooter and his team for being the "Best" agents that I could have ever chosen. Vickie B., October 2014 Last spring I inquired about a Currituck County, NC property and several agents responded; however Scooter was the most persistent agent (in a good way) in contacting me to see if he could help in anyway. I told him that's why I selected him to show us more houses and we are happy we worked with him. He is super knowledgeable about the Outer Banks and surrounding areas and also showed us a home in Knott's Island, NC. He kept in contact with us when I was discouraged and thought we'd never find our dream location and future retirement home. One day he called and said "Carol I think I found a house you might like" and sure enough it's the one we ended up buying. He always got back to us within a few minutes when we texted or ed. Scooter guided us through the whole process and since we live in Virginia Beach now and couldn't be at the new house, he even unlocked the house for the security technicians the day after the closing so they had access to install our new security system. If you are looking for a dependable, hardworking, honest agent who looks out for your best interests, please do yourself a favor and call Scooter! He gets results! Carol B., October 2013 Working with the Willey Team was a great experience. Our home went under contract within one week! Throughout the whole process, communication was smooth and immediate. When we faced an obstacle right before closing, we knew that Scooter was fighting for us and finding a solution for our problem. He really came through for us! I will definitely recommend Scooter and his team to my friends and family. Josh and Bethanny M., March 2012 It was our pleasure working with Scooter. He is very professional, detail oriented, prompt in replying s and easily reachable over phone. Thanks to Scooter for his excellent market knowledge and insight. Scooter showed us several properties, prepared a Cash Flow Analysis (CFA) document for all the properties we are interested in and provided rental history too. During the home buying process we changed our mind several times to decide on the property. Scooter did not put pressure on us and waited patiently to make our choice. Scooter, without your help and information you have provided, we would have never bought a beach house in OBX. Thank you Murali. April, P a g e