August 17, 2010—Real estate professionals nationwide are calling 2010 “the year of the short sale,” where homeowners who owe more on their properties than what they are worth sell at deeply discounted prices—with the blessing of their lender.
Here is how to go about successfully buying a short sale:
1. Search for short sale propertiesMost short sales are listed by real estate agents. You will find these listings on local websites and in MLS feeds. Some lenders have complained about advertising that identifies the home as a short sale, because the lenders feel it puts them at a disadvantage when it comes to home pricing. This is accurate, as buyers generally offer less when the property is advertised as a short sale.
Read the listing carefully. Agents slip in words that identify the listing as a short sale. Look for the following terms:
• Subject to bank approval• Pre-foreclosure• Notice of Default• Give the bank time to respond• Preapproved by bank• Headed for auction
2. Select a real estate professionalProfessionals with short sale experience can help you navigate the short sales process in your local market. The buying process is often far more complex—and far longer than typical sales–so a trained ally on your side can make your experience successful.
3. Investigate the mortgage and liens on the propertyHere’s where a good short sale real estate agent is worth his or her weight in gold. Uncover how much the mortgage is worth. Find out how much the current owners paid and when. Find out how many liens are on the property. Find out which lender is the primary lien holder. Research comparable sales in the area.
4. Have a home inspectionShort sales are typically sold “as is,” with no contingencies allowed. That short sale is no bargain if you discover—after the closing—that it requires major, unexpected repairs. A thorough home inspection will provide a clear view of the home’s condition, allowing you to make educated decisions on whether or not to purchase.
5. Write a complete offerRemember, the lender—not the owner selling the property—is calling the shots and decides whether your offer will be accepted, rejected or countered. Helping the lender, whose agents may be overloaded with a glut of short sales, fully understand the financial picture will support your bid. Include the following materials with any short sale offer:
• Cover letter• Signed owner/borrower short sale purchase agreement• Seller hardship letter• Seller payroll stubs• Two years of seller tax returns• Market comparables• HUD-1 closing net sheet• Repair cost estimate• Pictures of property
6. NegotiateLike any real estate transaction, successful negotiation is required to strike a deal. If the lender rejects or counters your written offer, you’ll have to negotiate with the lender by making a higher offer. Be prepared to offer more money to close the deal, or to walk away if it doesn’t make financial sense.
7. Be PatientShort sales, which have increased in volume and frequency, are overloading some lenders. Be aware that processing and decision-making times for some lenders can be quite long—up to a year or more. Decide if you have flexibility in your timing, and if so, know that you may be waiting for awhile.
[1]RISMEDIA, July 7, 2010—With so many homeowners facing tough decisions about their mortgages in or approaching default, questions abound about how to best handle the complex situation with the bank lenders they’re indebted to. To help clarify such confusion and shed light on optimal homeowner options, real estate finance expert Marian Anthony, author of Short Sale RUSH, sheds light on the five most common questions homeowners in default are asking.
1. Should I intentionally default on my home mortgage?Today, many people are ‘intentionally’ or ‘strategically’ defaulting because cash is more valuable than credit. Because many of the banks were unethical, some borrowers don’t feel the ‘moral obligation’ to pay, especially when the banks are being less than cooperative as buyers try to work things out. Rather than defaulting, the best thing to do is use the Section 702 program of the Obama act, which allows a qualified third-party buyer to take possession and make a ‘bona fide’ offer to the bank. This helps show the debt ‘settled’ on your credit and can eliminate the second mortgages completely. Walking away and allowing the bank to foreclose still allows the second lender to render a judgment—and possibly garnish your wages. You may also have to file for bankruptcy to recover from the credit nightmare.
2. As a borrower, what are some ways I can gain leverage with my mortgage holder?One way to gain leverage with a lender is to establish a ‘substitute mortgage’—a security pledge that is offered to the seller’s lender, with a third party (lawyer or Escrow company) for a lesser amount of the current payment. Over time, this will result in a significant amount of collected funds that can be used as negotiating leverage to release the borrower from the debt, or dictate terms for a loan modification in the borrower’s advantage.
3. Why have loan modifications and foreclosures become the predominant answer for so many in distressed property situations, and why can this be problematic?The reason why loan modifications and foreclosures have become the answer for so many is because many real estate professionals erroneously consider the short sale process to be too complex. Not knowing how to orchestrate the transaction and not having the correct forms and contact information with all the different parties is overwhelming for many Realtors, so they forego an option that would otherwise be in the owner’s best interest. The result is unnecessary spending of tax payer’s funds that are being used for the alternative solutions, when capital contributions from the ‘street level’ can be used to offset the losses and payoff the delinquencies without requiring such taxpayer contribution.
4. Why is a short sale strategy more advantageous than a loan modification or foreclosure approach?The reduced payoff in a short sale can release you from the debt obligation. This allows you to re-establish your credit faster and re-enter the market much wiser. A loan modification actually builds a debt trap around the borrower who is emotionally attached to a property, milking the borrower for every last nickel. A foreclosure ruins a homeowner’s credit and takes a much longer time period to recover from.
5. I’ve heard borrowers in default need a ‘General Public Disclosure?’ Why?Many people are not aware of the ‘alternatives’ when facing foreclosure. The state and the federal agencies do not provide any literature to default borrowers as a ‘preventative’ measure. Knowing your options, as detailed on a General Public Disclosure document, can make all the difference in establishing a deal that’s in the homeowners’ best interest.
About Marian AnthonyReal estate finance expert, author and speaker, Marian Anthony is the President of Anthony Realty Group (ARG)–a San Diego-based consumer advocacy agency that helps educate real estate professionals throughout Southern California to better assist home buyers and investors. Anthony is also founder of the California Default Mortgage Hotline—a non-profit public interest group availing financially-stressed homeowners in mortgage default with validated information and industry resources.
[1]RISMEDIA, July 3, 2010—FHA Pros, LLC, a national FHA condo approval service, has developed a list of facts speaking to the top misconceptions associated with FHA loans in order to help home buyers better navigate an already confusing market. FHA loans are mortgages issued by qualified lenders and insured by the Federal Housing Administration (FHA).
“We have seen home buyer interest in FHA loans go from practically zero three years ago to upwards of 87% today,” said Christopher Gardner, founder and president of FHA Pros, LLC. “Despite this rapid rise in popularity, many buyers still do not fully understand the benefits of these loans, and we believe it’s time to change that.”
1. FHA loans are not only for lower-income borrowers. FHA loans are available to everyone. There is no maximum income restriction associated with FHA loans, but borrowers do need to substantiate income and assets by submitting proper documentation. This requirement ensures that borrowers are well-vetted and truly able to afford their future homes.
2. FHA loans are not only for first-time buyers. Many people believe FHA loans are available only to first-time home buyers, but this is not the case. Whether borrowers are making their first home purchase or their fifth, they can look to FHA loans as a home financing option.
3. FHA loans are not just small loans; in fact, loan amounts can be as high as almost $800,000. The government recently raised the maximum loan amount from its original cap of $362,790 to $793,750 as a way to help stabilize the housing market. The amount a buyer can borrow varies from county to county though. Later this summer, condo buyers interested in FHA loans can visit www.checkfhaapproval.com [2] to instantly identify FHA-approved condo associations and review maximum loan amounts for a given location.
4. FHA loans are not affiliated with the section 8 housing program. While both programs are administered by the U.S. Department of Housing and Urban Development (HUD), FHA loans have nothing to do with low-income subsidized housing. FHA loans are simply mortgages insured by FHA. This insurance provided by the federal government allows lenders to lend more freely by assuring them that they will be repaid in the event of default. Most traditional lenders, including Wells Fargo & Co., JP Morgan Chase and Citigroup are able to provide FHA loans to their customers.
5. FHA loans are often more affordable than conventional loans. While FHA loans typically offer the same interest rates as other loans, borrowers benefit from a much lower down payment of as low as 3.5%.
6. FHA-approved condo developments are more desirable to buyers. With 87% of home buyers indicating that they plan to use FHA loans, condo associations that are not FHA approved are missing out on a significant pool of prospective buyers. Under rules in place since February 2010, an entire condominium development must now apply to HUD and be granted FHA approval before a buyer can purchase a unit in an association with an FHA loan or before an existing unit owner can refinance into an FHA loan.
Due to the general unwillingness of today’s lenders to extend credit with respect to conventional loans, many borrowers find that FHA is their best bet. Lenders don’t mind lending when the federal government (FHA) assures them of repayment.
Homeowners associations (HOAs) should note that although FHA-insured mortgages might be easier to obtain, they are not “risky” loans, due in large part to the strict “full documentation” requirements placed on borrowers. Individual buyers or sellers can initiate the approval process or current owners can encourage their HOA to apply.
7. FHA loans are assumable. In addition to lower down-payment and credit-qualifying requirements as compared to conventional loans, FHA loans are assumable. This means that when a seller with an FHA loan sells his or her property, the loan and its financing terms (interest rate) can be transferred to the new buyer. This unique feature will certainly make a property more valuable in times of rising interest rates.
“Now, more than ever, buyers and sellers need to understand the options available to them when it comes time to buy a home,” continued Gardner. “At FHA Pros we have worked with countless HOAs, attorneys and individuals to easily and efficiently navigate the historically tricky FHA-approval process.”
For more information, visit www.checkfhaapproval.com [2].
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com [3].
[1]RISMEDIA, July 1, 2010—(MCT)—The House of Representatives introduced and passed a proposal to extend the original June 30 closing deadline for home buyers who want to get up to $8,000 in tax credits.
The Home Buyers Assistance Act of 2010 would push the deadline to midnight September 30, 2010 on contracts that were signed by the midnight April 30 deadline. The vote was 409 to 5, with 18 not voting.
First-time buyer Juan Martinez of Hicksville had prayed for such a reprieve. “That’s awesome,” said Martinez, whose chosen home in Hempstead Village is ready to close except for one thing—a delay in up to $110,000 in down payment assistance grants. He added, “It’s like a roller-coaster ride until the bill is signed. I’d rather not get too excited about it.”
The bill will now be forwarded to the Senate, where the Democrat-controlled chamber had attached the same proposal to versions of the jobs and economic stimulus bill, which failed twice this month due to lack of support from Republicans expressing concern about the deficit.
The National Association of Realtors estimated that up to 180,000 people would bust the existing deadline, including almost 9,200 in New York State. A spokesman for the trade group said the proposal might not have to go through the usual House-Senate talks over bill differences.
“We think this has a good chance, but I don’t want to build up too many hopes,” spokesman Lucien Salvant said with a laugh, “because anything can happen in the hallway between the House and Senate.”
Veronique Bailey, a Brooklyn, N.Y. resident and teacher, had signed a contract for a six-bedroom Amityville, N.Y. house in September, but was delayed by, among other things, permit and code problems in her chosen home. “It makes you vulnerable and it’s not in your control.”
Even with an extension, some home closing deals might fall apart. Some contracts say the deals must close by the end of June 30. That gives sellers a chance to walk away.
But financial consultant Greg Rende of Massapequa, N.Y. has no worries, even though he’s busting the deadline. The developer of a new Amityville condo complex has not finished his unit, he said, but Rende got a backup clause in the contract. “If we weren’t closed by June 30 and the builder was not ready,” Rende said, “he would have to pay me the $8,000 I don’t get for the first-time home buyer credit.”
In normal times, two months to close would be doable. But these are not normal times, and Rende thinks Congress did not consider how swamped lenders and lawyers would be.
Copyright (c) 2010, Newsday, Melville, N.Y.
Distributed by McClatchy-Tribune Information Services.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com [2].
Copyright© 2010 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.
Home Buyers Who Missed 8,000 Dollar Tax Credit Coming Out Ahead
Posted By susanne On June 28, 2010 @ 4:10 pm In Home Buying 101, Home Value News, Luxury Real Estate, Real Estate, Real Estate Information, Real Estate News, Real Estate Trends, Today's Marketplace, Today's Top Story, Today's Top Story - Consumer | Comments Disabled
[1]RISMEDIA, June 29, 2010—(MCT)—Home shoppers who missed the April 30 deadline for a housing tax credit might have the last laugh. For a variety of reasons, they could end up saving more than the $8,000 they could have received from the tax refund.
In some neighborhoods and price ranges, sellers are dropping their prices because buyers are harder to find now that the credit has expired. Builders and real estate companies began offering promotions after the tax credit ended that, in many cases, are worth more than the credit.
Interest rates have dropped enough since the credit deadline that, over the life of a loan, a homeowner could easily save more than the value of the credit. “I think some folks possibly could have benefited from waiting until after the tax credit,” said Joe Jackson, a real estate agent with Keller Williams Capital Partners. “It would depend on the price point they were buying in and the market they were looking in.”
Home sales leapt in March and April during the waning weeks of the credit, especially for homes priced at less than $200,000, which appealed to first-time home buyers. Since the credit expired, home contracts and building permits have tapered off, leaving sellers with fewer buyers and, in some cases, little choice but to cut their price.
According to real estate website Trulia.com, which tracks price reductions, 30% of central Ohio homes for sale on May 1 had reduced their asking price—more than in April or March. Buyers hope they can take advantage.
Karen Kosnikowski learned days after the tax credit ended that she would have to leave her Victorian Village apartment June 30 because her landlord wanted the place. Her initial frustration at missing the tax credit changed when she started seeing price declines. “I would say five or 10 times a day, something comes in, and half of those are price drops. Sometimes, they are down several thousand,” Kosnikowski said. “So places I’ve seen before are starting to drop, or others are coming into my price range.”
A home in the Clintonville neighborhood she has toured twice, for example, dropped in May from $185,000 to $167,900. Another Clintonville home on her radar dropped from $179,900 to $167,000 after the credit expired, while a Downtown condo she visited went from $189,900 to $169,500.
“None of these went anywhere during the tax credit,” said her agent, Terry Penrod of Real Living HER. “So Karen can just wait to see how low they go.”
Kathy Shiflet, an agent in the Dublin-Hilliard office of Coldwell Banker King Thompson, has found the same thing. She represents a buyer looking for a two-story home in Hilliard. After the tax credit expired, one of two homes under consideration dropped from $156,900 to $149,900 while the other dropped from $154,900 to $149,900.
The tax credit might have something to do with it, but Shiflet thinks the season is a greater factor. “There have been reductions in prices, but traditionally, prices start to come down in June anyway,” she said, “because everyone wants to move in time for school.”
Those shopping for new homes are finding a different kind of bargain as some builders roll out incentives to keep traffic moving.
After the credit expired, Dominion Homes and Fischer Homes launched promotions for free finished basements and/or other upgrades. Either deal would be worth well above the $8,000 credit. “We expected a drop in traffic after the tax credit expired, and we saw that a little bit,” said Jon Jasper, who manages the Columbus division of Fischer Homes. “We anticipated that, and we had strategized to offer some incentives to bring people back. That promotion we’re offering with the free basement is huge in this market.”
Other builders are offering free appliances, trade-in programs, rebates and “sweat-equity” discounts that allow a homeowner to drop the price by painting, landscaping or otherwise helping to finish their home.
Mike Marshall, an agent with Buyer’s Resource Realty Services, said he represented one buyer who deliberately passed on the tax credit to wait for a better deal on a new home. “They found a new build that was so much better in price with the discounts that they gave up the tax credit,” Marshall said.
Real estate companies are also getting into the act. To compensate for the vanishing tax credit, Coldwell Banker launched its Buyer Bonus Program that awards up to $8,000 back to buyers from participating sellers.
Finally, interest rates have dropped nearly half a point since the end of April, saving buyers thousands of dollars over the life of a loan. Buyers of a $180,000 home who borrowed $173,700 in mid-April at an interest rate of 5.125% would have paid $377,442 over the next 30 years—$15,000 more than they would pay if they borrowed last week at an interest rate of 4.75%.
“I know it’s not money in your pocket right away,” said Barb Wilson, the head of mortgage lending at Newark-based Park National Bank, “but the value of the interest rate today is really better than the tax credit.”
Some real estate experts see the central Ohio housing market now settling into a normal rhythm in the absence of the stimulus, which so far has cost taxpayers $18.7 billion.
“At the end of the day, we don’t believe the tax stimulus will put us any further ahead than we would have been otherwise,” said Jerry White, executive vice president with Coldwell Banker King Thompson.
Copyright (c) 2010, The Columbus Dispatch, Ohio
For more top headlines on RISMedia.com, be sure to see:Signs of Stabilization in U.S. Real Estate Market – Home Price Reduction Levels Drop 26 Percent [3]The Real Advantage – Creating a Mobile Culture from the Top Down [4]
With foreclosure rescue scams widespread as more homeowners fall behind on mortgage payments, be smart if you seek help. Read
The Making Home Affordable program offers at-risk homeowners a chance to modify mortgages to avoid foreclosure on their homes. Read
Visit houselogic.com for more articles like this.
Copyright 2010 NATIONAL ASSOCIATION OF REALTORS®
Raleigh took the No. 8 spot among the 100 U.S. municipalities nominated for the award. The rankings were based on interviews with local leaders, feedback from residents and a compilation of data related to the community’s economic, environment, education, crime, employment and housing stability.
Charlotte also cracked the top 10, coming in just ahead of Raleigh at No. 7.
Durham was not included in the rankings.
Huntsville, Ala., claimed the No. 1 spot, followed by Washington, D.C.; Austin, Texas; San Diego; San Antonio, Texas; Tulsa, Okla.; Charlotte; Raleigh; Boulder, Colo.; and Minneapolis.
RelocateAmerica.com also compiled top 10 rankings in other categories.
Asheville was ranked at No. 1 on the Top 10 Retirement Cities list, and Wilmington ranked No. 9 on the Top 10 Recreation Cities list. Other breakout categories that did not include cities in North Carolina were rankings for top recovery cities, ‘earth friendly’ cities and small towns with populations under 40,000 people.
“Given the tough economic times our nation is facing, homebuyers have re-evaluated their priorities and are looking to relocate to communities that offer plenty of perks, but minimal hassle and cost,” said Peter Meyers, vice president of research and content development at RelocateAmerica.com, in a statement.
“While some cities are facing a road to recovery that could take years, others are poised for a quick rebound - and already have seen growth. We wanted to highlight those cities that are on the road back to economic health.”
Click here to see the full RelocateAmerica.com Best Places to Live list. http://www.relocateamerica.com/north-carolina/cities/raleigh
RelocateAmerica.com is operated by trueV New Media Group of Brighton, Mich. It has been publishing the top cities relocation lists annually since 1998.
That’s one of the surprising findings in a study of household spending habits released Wednesday by Bundle.com.
The Web site’s “How America Spends” report found that Raleigh households spent an average of $53,398 a year on items other than rent and mortgage – the sixth highest average among the nation’s 100 largest cities.
Durham households spent, on average, a total of $51,114 on items including food and drink, shopping, gas, travel and entertainment. That placed the Bull City 10th in the rankings, one spot ahead of Washington, D.C.
Austin, Texas, has the biggest spenders, with households there spending an average of $67,076 per year.
New York and L.A.? Nowhere to be found in the top 25. Los Angeles placed 42nd with average household spending of $39,422. New York was 53rd at $37,435.
"We always hear about 'Carrie Bradshaw' types spending big in New York City, but when you remove housing costs from the equation, it's not just the stereotypical cities where residents spend big on items like shopping, dining out, groceries, or travel," says Janet Paskin, veteran personal finance writer and Bundle's managing editor.
The biggest difference between the spending habits in Raleigh and Durham came in the shopping category. Raleigh households spent an average of $15,800 on shopping in 2009 – more than 50 percent higher than Durham’s average of $10.208. Bull City households spent 33 percent more on health and family costs such as doctor’s visits (but not health-care insurance premiums) child care and education.
To see how the City of Oaks and the Bull City compare in each of the Bundle categories, click on the image to the right.
The big spending in the Triangle stands in contrast to the relatively frugal nature of the state as a whole. North Carolina ranked 32nd among the 50 states and the District of Columbia with average household spending of $34,869, less than the U.S. average of $37,782.
The lowest spending U.S. households were found in Detroit, which has been hit hard by the recession and the woes of the auto industry. Motor City households spent only $16,446 last year.
CitiGroup (NYSE: C) one of several big name investors in Bundle, tapped its credit card records to compile much of the data used in the report. For more on the methodology, click here.
Listings of spending at the city and state level follow.
1. Austin ($67,076).
2. Scottsdale, Ariz. ($64,687).
3. San Jose ($59,022).
4. Arlington, Va. ($52,085).
5. Plano, Texas ($56,738).
6. Raleigh. ($53,398).
7. Nashville ($52,964).
8. Tucson ($51,857).
9. Irvine, Calif. ($51,286).
10. Durham ($51,114).
11. Washington, D.C. ($49,431).
12. Dallas ($47,920).
13. Seattle ($47,336).
14. Reno ($47,273).
15. Corpus Christi, Texas ($46,311).
16. San Antonio ($46,122).
17. Honolulu ($46,087).
18. Oklahoma City ($45,449).
19. San Francisco ($45,291).
20. Madison, Wis. ($45,275).
21. Henderson, Nev. ($45,220).
22. Wichita, Kan. ($44,810).
23. St. Paul, Minn. ($44,579).
24. Chandler, Ariz. ($44,470).
25. Lubbock, Texas ($44,122).
1. Detroit ($16,446).
2. Hialeah, Fla. ($19,397).
3. Chula Vista, Calif. ($21,424).
4. Toledo, Ohio ($26,962).
5. Boise, Idaho ($28,006).
1. Connecticut ($57,331).
2. District of Columbia ($49,430).
3. Hawaii ($46,518).
4. California ($42,962).
5. Texas ($42,623).
6. Arizona ($41,752).
7. Illinois ($41,627).
8. New York ($40,783).
9. Maryland ($40,538).
10. Washington ($40,480).
11. Virginia ($40,282).
12. Oklahoma ($40,103).
13. New Hampshire ($40,081).
14. Massachusetts ($39,792).
15. Minnesota ($39,682).
16. Missouri ($39,462).
17. Kansas ($39,418).
18. Nevada ($39,262).
19. Colorado ($38,916).
20. Rhode Island ($38,867).
21. New Jersey ($38,634).
22. New Mexico ($38,509).
23. Delaware ($38,020).
24. Wisconsin ($37,815).
25. U.S. Average ($37,782).
26. Michigan ($37,330).
27. Florida ($36,455).
28. Vermont ($36,435).
29. Utah ($35,558).
30. Iowa ($35,445).
31. Indiana ($35,327).
32. Arkansas ($34,995).
33. North Carolina ($34,869).
34. Nebraska ($34,639).
35. Alaska ($34,474).
36. Tennessee ($34,334).
37. Louisiana ($34,251).
38. Ohio ($33,921).
39. South Dakota ($33,557).
40. Oregon ($33,377).
41. Maine ($32,839).
42. Pennsylvania ($32,452).
43. Wyoming ($32,272).
44. North Dakota ($31,179).
45. South Carolina ($31,080).
46. Georgia ($29,752).
47. Alabama ($29,337).
48. Kentucky ($28,870).
49. Idaho ($28,537).
50. Mississippi ($27,740).
51. Montana ($27,032).
52. West Virginia ($24,517).
Mortgage bond prices fell last week pushing mortgage interest rates considerably higher. The bond market took a hit as inflation concerns emerged after the stronger than expected producer price index data. Producer prices surged in January amid higher energy costs to almost double expectations. The Fed made a surprise rate hike to the discount rate that also resulted in mortgage rate increases. The only positive was the tame consumer inflation reading Friday morning but we were unable to rebound from the earlier losses. Unfortunately rates rose over a full discount point for the week.The consumer confidence data Tuesday will set the tone for trading this week. New home sales, weekly jobless claims, and the gross domestic product data also may move the financial markets. The Treasury will auction $118B in 2/5/7-year notes starting Tuesday. The additional supply may cause interest rate volatility.
Fed Action Causes Uncertainty
The Federal Reserve caught market participants by surprise with their 25 basis point discount rate hike last week. While analysts were split on whether the Fed would raise rates this year, that question has now been answered. The move resulted in volatility in most of the US financial markets.The discount rate is the interest rate charged to commercial banks on loans they receive from the Fed. The rate hike is an effort to pull back the aid provided by extraordinary low rates amid the global economic decline. The Fed specifically noted the move was needed "in light of continued improvement in financial market conditions." Many analysts noted the earlier warnings from Fed Bernanke that rate hikes were coming but very few, if any, expected the move this soon.While the rate hike resulted in mortgage bond price weakness in the short-term, the long-term outlook is less certain. Most analysts believe inflation remains in check, but at the same time the Fed purchasing of MBS will soon be over. A cautious approach to "float" and "lock" decisions is prudent taking the current market conditions into consideration.
[1]RISMEDIA, February 22, 2010—As a first-time home buyer, Jessica Garcia was excited last April to officially begin her home search. She found a home within her price range, completed the lengthy paperwork and paid for the appraisals, only to later be told after four months that the deal would not close.
Out of luck and out of money, Garcia was frustrated, but not defeated. She went back to her Realtor to start the search again. It was then that she found the home she would later purchase. Upon first glance, Garcia liked the home and saw its potential, but didn’t have the upfront money it would take to rehab the home the way it needed to be done.
After some discussion, Garcia’s lender, Kevin Roy with Wells Fargo, realized that she might be able to take advantage of HUD’s 203k program, specifically designed to rehabilitate and repair single-family homes. The 203k is a single mortgage loan that provides funds to purchase a home and make repairs and improvements.
“The home needed a lot of work,” explains Garcia, of North Port, Florida. “The previous owners had pets that had really torn up the carpeting and destroyed the blinds.”
Indeed, the home needed new flooring, carpets and, most importantly, a water softener for its wellwater system. So, when the opportunity arose to take advantage of the 203k program, Garcia was game.
“In the end, it worked out great,” she says. “The credit goes to Kevin because if he hadn’t told me about the 203k program, I would not have had the money to fix the home. All of the money I had was put into the appraisals and fees for the first home that I couldn’t close on.”
Once the transaction was set in motion, Garcia turned to Lowe’s North Port (Florida) store to help her bring her 203k projects to fruition.
“The people at Lowe’s were really great,” lauds Garcia. “I had dealt with a different home improvement retailer in the past, but never had very good experiences. I went to Lowe’s because the people who work there are always friendly and I had heard good things about working with them. The people there really were great—they provided explanations to all of my questions and made my experience easy.”
From the 203k paperwork to guiding her through the program, Garcia credits the Lowe’s team with a job well done. “The team at my Lowe’s was very helpful,” she says. “A couple of people—including manager Mike Cabana—helped me tremendously.”
Prior to closing, Garcia went to the North Port location and chose her products for the 203k projects. Once closing happened in late September, the Lowe’s team prepared for Garcia’s projects, ordering her new carpeting, wood flooring, a water softener and new dishwasher.
“It was amazing,” says Garcia. “The day I closed, I called them and they immediately started ordering the materials and products. Within a few weeks, everything was done.”
According to Garcia, the timing couldn’t have been better. In addition to the improvements she made with her 203k loan, Garcia also took on a few DIY projects herself—including repainting the entire house.
“I decided to put the 203k money into quality carpeting, flooring and, of course, the water softener. I also really needed a dishwasher—the house didn’t have one,” she explains. “The little bit of time I had between ordering the materials and installation was perfect. It gave me just enough time to get all of the painting finished.”
Despite months of worry, confusion and stress, Garcia is now thrilled with her home—and her experience with Lowe’s.
“I am very happy,” says Garcia. “Everyone involved did such a great job and helped me so much…Lowe’s helped me choose exactly what I wanted for my home. I love this house!
“A lot of money goes into buying a home,” she adds. “The 203k program is a great option. It allowed me to do far more than I would have been able to do on my own. As a first-time home buyer with a limited amount of money, it allowed me to do a lot and get exactly what I wanted. Working with Lowe’s was perfect, too. From their affordable prices to the customer service, it was a great experience overall. I would highly recommend both the 203k program and Lowe’s to anybody.”
For more information on the 203k loan program, visit www.hud.gov [2] or www.re-buildusa.com [3].
It’s easy pickings out there for many potential homebuyers. Housing prices are at their lowest in more than a decade, inventories are high, analysts are predicting a new wave of foreclosures and the government is offering two substantial tax credits for which many homebuyers qualify.
But bargain buyers beware, warns Vince Mastronardi, whose property preservation business has been busy preparing foreclosed homes for sale.
“Buyers need to educate themselves about the potential pitfalls of purchasing distressed property,” says Mastronardi, president of On-Site Specialty Cleaning & Restoration. “It’s not so much what damage occurred, but the source of that damage and how long before the problem was addressed.”
These 10 signs may indicate that trouble is around the corner.
1. Unheated house in winter months. If the home has been properly winterized, there’s no need for heat. But if the home has not been properly winterized, pipes will burst and cause water damage.
2. Missing sinks, toilets and other fixtures. Make sure they’ve been properly removed and not ripped from walls and floors.
3. Peeling, bubbling, and discolored paint; swelling in walls or ceilings (especially around kitchens and bathrooms) or a musty odor all indicate water damage and, potentially, the presence of moisture and mold.
4. Fungus growth inside cabinets, behind drawers and built-ins. Fungus could mean that there has been water damage. Since water falls down, look for the source above the mold.
5. Blocked drains or pipes will cause future problems and may have already created sewage backups.
6. Black cobwebs, greasy gray residue on walls and/or a strong oily odor. This could point to potential soot damage or a malfunctioning furnace.
7. An older home with extensive renovations. Check with the city for pulled permits in order to get remolding details. If asbestos is present and has been disturbed, be sure it’s been remediated by a certified specialist.
8. Excessive painting of every nook, cranny, door and floor may mean that the seller is covering up mold.
9. Discolored subflooring. From the basement, check the subflooring above for stains and small holes, both caused by mold.
10. Air Quality. The air quality within a home tells a lot about the home’s condition. Be sure to include air and surface testing in your home inspection. It’s a few hundred dollars well spent.
“Time and technique are the most important factors of effective clean-up and preventing future problems like mold or contamination,” Mastronardi explains. “Ideally, professional cleanup begins within a few days of the damage; technicians are trained, certified or licensed; and equipment is specialized and up to date.”
Ask the seller to explain how the damage was fixed. Plus, check out the company that performed the repairs to ensure it has industry-recommended certification. If needed, follow-up with the seller or repairing company for specific repair details.
Mortgage bond prices rose last week pushing mortgage interest rates slightly lower. Reignited fear of a global economic meltdown sent money into the mortgage bond market in flight to quality buying. The news reports were permeated with worries about European debt payment defaults. Greece and a few other countries were noted as specific concerns. The employment report Friday morning was mixed with unemployment not as bad as expected but a larger than expected drop in payrolls. For the week interest rates fell by about 1/4 of a discount point.The record debt issuance continues with billions of dollars worth of notes and bonds set for auction this week. Strong foreign demand will likely help the entire bond market. With the recent "revisions" to employment data the weekly jobless claims data will carry a bit more weight than usual. Retail sales figures will be the headline figure this week.
Employment Revision
The employment report is one of the biggest, if not the biggest, data releases each month. Last week's employment report came with more twists than usual. Unemployment came in at 9.7%, a sharp drop from the expected 10% mark. Payrolls fell 20,000, weaker than the expected 15,000 increase. This divergence happens from time to time with the data derived from two completely different surveys. One piece of the report that caused major concern was the annual benchmark update, which showed the economy lost 930,000 more jobs than previously estimated in the 12 months ended March 2009. The revised number was very large and basically indicates 2009's employment situation was worse than most thought.A few things that called into question the accuracy of the data influenced the report. Some analysts argued the hiring of temporary census workers threw the figures off. The data was received with a lot of uncertainty and resulted in some wild market swings immediately after the release. The initial reaction sent bond prices lower and interest rates higher. However, the bond market rebounded a bit after digesting the data for an hour or so. This was a prime example of the volatility that often occurs with major data releases.
Study: Raleigh-Cary ranked No. 3 in five-year jobs growth
The number of jobs in the Raleigh-Cary area grew 10.3 percent during the five-year period that ended in December – the third best performance among the 67 U.S. metros with a population of at least 750,000.
A study of U.S. Bureau of Labor Statistics data conducted by G. Scott Thomas of Buffalo Business First, a sister paper of Triangle Business Journal, found that Wake, Johnston and Franklin counties added 47,600 jobs between December 2004 and December 2009, bringing the area’s total number of jobs to 508,300.
Raleigh-Cary ended up on the positive side of the jobs ledge despite losing nearly 20,000 jobs over the past two years. The area had 527,700 jobs in December 2007. Still, Raleigh-Cary trailed only two Texas metros in percentage job growth over the five-year stretch. Austin led the way with 14.2 percent growth, to 781,000 jobs. San Antonio was second at 10.6 percent, to 847,700.
The only other North Carolina metro with at least 750,000 residents, Charlotte, also gained jobs during the five years studies. The Queen City added 24,200 jobs, or 3.1 percent – to 811,600 – despite taking a major hit on the jobs front with the financial crisis and the shedding of thousands of banking jobs.
The Durham metropolitan area was not big enough to be included in the study.
Texas posted the strongest performance, with four of the top six metros in terms of percentage gain. Houston, No. 4 in percentage gain at 8.9 percent, was No. 1 in raw gain at 206,600 jobs added over the five-year stretch.
Texas and North Carolina fared better than most areas of the country during the five years ended in December 2009. Nearly two-thirds of the 67 major markets have fewer jobs now than they did in 2004.
Detroit has suffered the worst – no surprise, given the woes besetting domestic automakers. The Detroit area has lost 343,700 jobs during the past five years.
Los Angeles and Chicago have also suffered six-figure declines. A total of 200,700 jobs have slipped away from L.A. since 2004, and 173,300 have vanished from the Chicago area.
Detroit also ranks the worst in terms of percentages. One-sixth of Detroit’s jobs -- 16.5 percent -- have disappeared in the past half-decade. New Orleans, which was battered by Hurricanes Katrina and Rita early in the study period, has suffered a five-year loss of 14.9 percent.
Buyers are interested in getting info right away. Do you think from a customer's point of view they would prefer to drive by a house for sale and get:
a) a web link
b) a phone number they may or may not get a person
c) pick up a flyer
d) a phone number for a pre-recorded message
As agent what is working for you right now? As a potential customer which would you most prefer?
TriangleCurbsideConnect.com
Mortgage bond prices fell last week pushing mortgage interest rates higher. The bond market took a beating as stocks surged despite mixed data. Existing home sales in November rose a surprising 7.4%. However, revised gross domestic product figures showed the economy only grew 2.2%, which was weaker than the expected 2.8% mark. Personal income and outlays data came in weaker than expected helping a bit. Unfortunately, the thin trading conditions magnified the earlier losses and made it difficult to recover. For the week interest rates rose by about 1 3/8 discount points.The Treasury auctions will take center stage next week. If foreign demand falters we will likely see mortgage interest rates head higher. The bond market will close early Thursday in advance of the New Year's Holiday Friday. The shortened trading week may result in some market volatility coupled with thin trading conditions likely.
Consumer Confidence Index
The Conference Board releases the Consumer Confidence Index on the last Tuesday of every month. The report details the levels of confidence individual households have in the performance of the economy. The data is derived from a survey of 5,000 households nationwide. The survey polls consumer opinions on current business conditions, their jobs, their incomes, and their future spending plans.The consumer confidence index is significant in that it provides a precursor into consumers' willingness to spend in the months ahead. However, many analysts point out that willingness to spend does not always convert to actual expenditures.Despite economic uncertainty, liquidity issues, and housing market weakness, American consumers continue to spend. However, many analysts question whether consumers can continue to buoy the economy, especially amid rising unemployment and continued tight credit.This week's release will be eagerly anticipated. Look for any variation from estimates to cause mortgage interest rate volatility. Signs of eroding consumer confidence could lead to improvements in mortgage interest rates. However, stronger than expected figures could spike rates higher.With mortgage interest rates relatively low, capitalizing on current levels is recommended to protect against future volatility. Remember, mortgage interest rates tend to trend lower slowly, while increases tend to occur quickly. A cautious approach is necessary to protect from future market volatility.Provided by WR Starkey
RISMEDIA, November 24, 2009—(MCT)—
House shopping usually slows down in the winter, as people put their home searches on hold to trim the tree, buy presents to put under it and avoid the chilly weather. This winter, however, might be different, thanks to the extended—and expanded—first-time home-buyer tax credit.
“We’re going to see far more interest in the fourth quarter than we generally do because of the tax credit,” said Heather Fernandez, vice president of Trulia.com, a real estate search engine. Traffic surged on the site on Nov. 5, the day Congress approved the credit extension, she said.
The new law extends the tax credit for first-time home buyers and opens it up to some existing homeowners as well: The credit is now 10% of the home price, up to $8,000 for first-time buyers and up to $6,500 for repeat buyers. All buyers must have a binding contract on a house in place on or before April 30, 2010. The sale must close on or before June 30. 2010.
To be considered a first-time home buyer, an individual must not have owned a home in the past three years. And to be eligible, existing homeowners need to have lived in the same principal residence for five consecutive years during the eight-year period that ends when the new home is purchased. The credit is only for principal residences.
Income limits have risen as well. According to the IRS, the home buyer tax credit now phases out for individuals with modified adjusted gross incomes between $125,000 and $145,000, and between $225,000 and $245,000 for people filing joint returns.
The inclusion of move-up buyers might inspire homeowners to take action and list their house if they’ve been putting it off, said Carolyn Warren, a Seattle, Wash.-based mortgage broker and banker and author of the book Homebuyers Beware. “If somebody loves their home, it’s not going to entice them to sell. If they’ve had it on the back of their minds and really would like to move up, it might push them into doing it sooner than later,” Warren said.
The credit isn’t expected to have as large of an effect on move-up buyers as it has on first-time buyers, according to the Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions. The maximum tax credit is about 4% of the average purchase price for first-time buyers, but about 2% of the average purchase price for move-up buyers.
“We estimate that the first-time home buyer tax credit will result in a 10% increase in home sales from March through November of 2009,” said Thomas Popik, research director for Campbell Surveys, in a news release. “We’d expect the effect of the proposed tax credit for current homeowners to be about half as large—from December until the tax credit expiration in the spring of next year, it might be 5% of 3 million transactions, or about 150,000 incremental home sales. Incremental sales to first-time home buyers could be an additional 300,000, for a total of 450,000 incremental sales due to the tax credit extension.”
Tips for buyersInterested in buying a home and claiming the home-buyer tax credit? Below are five tips:
1. Don’t procrastinate. Start searching for a home now. Getting an early start will give you a better chance of finding the right house before the credit deadline. Before you start house hunting, get preapproved for a mortgage, said Eddie Fadel, a Miami-based mortgage banker, and do a realistic assessment of what you can afford. Buyers who have to sell an existing home should price it aggressively from the beginning to drum up interest and get a buyer as soon as possible.
2. Don’t count on another extension. The credit won’t be available forever, Fadel said. If you want to take advantage, be sure to make that spring deadline.
“This is a medication for the housing crisis. Once the patient—which is the housing market—cures, there will be no medication needed,” he said.
3. Mind the interest rates. Mortgage interest rates are low right now, but will likely rise next year. Higher rates will affect your monthly mortgage payments, thus the affordability of the house you are buying. Average rates on the 30-year fixed-rate mortgage have been hovering around 5%, but when the government stops buying large amounts of mortgage-backed securities, rates could rise.
4. Communicate with your lender. Throughout the process, make sure you’re communicating with your lender regularly; if there’s a piece of documentation you’re asked for, get it turned in as soon as possible, said Doug Heddings, a New York-based real estate agent with Charles Rutenberg Realty. Good communication is important in making sure the loan closes on time. And think twice before pursuing a short sale if you want to make the credit deadline. That’s where someone sells a home for less than what he or she owes on a mortgage, with permission of the lender. The process can be lengthy and unpredictable because the homeowner’s lender has to approve any deal, and can be complicated when there is a second mortgage associated with the property.
5. Don’t take shortcuts. Don’t forgo any of the steps you would normally take just to make the tax credit deadline. Make sure the house is a good fit for your needs and get a home inspection. Skipping steps could cost you in the long run.
Well I gotta say that this market is surely shaping up to be a whirlwind! Besides listing "Short Sales" how many of you are writing offers up on "short sales". I tell you I've been in this business a long time so i really don't need the practice any more!LOL Yeah, I guess when you do enough of these types of sales you know what to expect, but when I go to write an offer on a property that my clients want, I feel as though someone is scratching a chalkboard with nails when the listing agent on that property indicates she is gonna send in "ALL" offers to the bank. I'm like aren't you only gonna send the best one, "Oh no they want all of them". Well how many is that, oh TEN.....Okay is it just me or do other people feel that you give these Loss mitagators multiple choices and we've lost the war! I really can't beleive with all the classes available to us a agents that we still have agents that don't know how to do short sales ..... I guess I'm old fashioned but I feel we need to know how to do our job, so take some time to learn. The market is changing fast and we have to adapt with it. I use short sale genius and they are wonderful! The software alone is worth it, to keep track. I've recently become an Ambassador for Helping a Million Homeowners. My goal is to help these homeowners leave the home they have been living in with dignity. Come on people we are the professionals! I take my commitment to my clients seriously. Yeah . it's alittle crazy at times but I love it! when everything works out and they are released of that burden, come on, that's when we look at why wer'e doing what we do and SMILE!!
Hey everyone, Have an awesome day!!!
Yes, I said it.... I find no joy in taking listings. Instead, I find it extremely rewarding when I sell and close on houses. Like a bank, its primary focus is to make loans, not to hold inventory. Same applies to a Real estate agent. Over the years, I am trying to perfect my selling strategy, hence I employ the Systematic Home Selling strategy to all my homes. If 1 cannot meet all the criterias, I really could not take the listing.
The Systematic Market Approach to Home Selling employs these strategies:
(1) PricingI do not use a CMA - Comparative Market Approach. What I use is a pricing strategy very similar to what a home appraiser would use. I would give credit to all the upgrades and features (something that a Seller loves to hear, rather than Nope, your Board-on-board fence brings no added monetary value). Likewise, if a home lacks certain features and it could hurt. This pricing strategy takes over several hours to do. It studies Sold data and studying what this new listing needs to be priced at in order to be competitive based on its market availability.
(2) Internet MarketingIt is important to understand Internet Marketing and how capitalizing on different sites can capture more audiences for the Seller's home. Just having a website is NOT sufficient. Here in the Frisco TX area, our MLS automatically gets fed onto Realtor.com. However, based on my recent observations, buyers no longer use Realtor.com website as their primary search tool. My Systematic Market Approach utilizes Internet Marketing, websites, search engine optimization techniques and RSS syndications. Most Sellers do not understand the complexity of it but in the end, they know that I am out there on the World Wide Web for them.
(3) Home Preparation/ Staging
As part of the Systematic Market Approach to Home Selling, preparing the home for top-notch contract is essential. It includes staging. As an Accredited Staging Professional Realtor(R), I would come up with a Recommended staging list for home seller at the end of the listing interview. If the seller prefers to use a Professional Stager, a referral will be given to them. Staging is a part of a requirement that I would take the listing.
(4) Lifestyle Marketing
Every home has a story. My job is to tell the story and relate to Buyers on an emotional level. At the same time, I relate to Buyers on a personal level in terms of life conveniences. Hence, I not only market the home, I market the location. This by far has been the differentiator to my marketing strategy.
(5) Execeptional Photography Skills
They say that words speak a thousand words. With my passion for photography, I am able to translate that passion into my work - still photography and virtual tours.
(6) Other Details
(Credit given to Missy Caulk) I send a pre-listing interview prior to every the meeting. It helps me understand the willingness of client in preparing their home for sale, financial/ mortgage situation, and quite importantly, if they are planning to interview other Realtors(R).
(Credit given to Broker Bryant) I work on a 45-day listing. I understand that home selling can be stressful itself, and especially not knowing if the Realtor(R) would stick a sign in the yard, then disappear into Neverland. This 45-day listing is to show how I work and see if I could gain trust and confidence from my Seller clients. I reiterate to them that I may not guarantee selling the house in 45-days, but I want to earn their trust in 45 days. Sellers know the market and they do not expect miracle performances. What they want is an Agent who will be there for them, and guide them through this process.
Employing this Systematic Market Approach strategy has landed me contracts typically within 30 days - yes, in this market. Some with multiple offers. I do believe with all my heart that it works.
I have many people coming up and asking me about how things are going for me in real estate these days. Most of them are concerned, for they find it hard to believe anyone can survive in this volatile market. Many of them are just interested in learning any information they can about real estate or how our market is doing, which of course I am always happy to talk about.
But most ask me the same question...so...”Are you selling a lot of HUD and Foreclosure homes to your Buyers?? ”My response to this question is surprising even to me, “No, I am not selling a lot of HUD or foreclosed homes. “ (And believe me it is not for lack of showing them!) But how can this be??
Nearly every time I begin working with a new Buyer they request the same thing...”I am really looking for a HUD or Foreclosed home that I can get a good deal on and fix up.” They all see the media where they hear of Buyers finding their dream home for cents on the dollar, which even appear to be in quite good condition. What they don’t yet realize is that although this can and does happen it is most often the exception not the norm...until they begin looking that is.
Once we begin our viewing of these homes they start to see the sad and true reality of what the HUD and Foreclosure market really is. The vast majority of these homes are in great distress that will require many $1000.00’s of dollars and hours of hard work to bring them back to a livable condition. Once they take all this into consideration the bubble bursts! Their home buyer vision seems to shift and the request comes...”Can we take a look at some homes that are not HUDS or Foreclosures?”
Just as an example: I was recently showing a distressed home to a Buyer and when we began to walk into one of the kids bedrooms it smelled STRONGLY OF URINE! My Buyer didn’t even make it into the room and walked immediately right out of the house. He was done. When I contacted the listing agent to let her know what had occurred her response was, “Oh, I know...one of the older kids is a bed wetter and it’s JUST the mattress!” Now maybe I’m expecting a little too much, but personally, I would get that mattress OUT OF THERE. Distressed homes are difficult enough to sell but this could have quite easily been taken care of.
It is now when the Buyers notice that even though our market is loaded with HUD and Foreclosed homes there is also a good selection of homes available for sale that are not...and priced very well. Often when comparing these ”normal sale” homes (if there is such a thing as a normal sale these days) to the HUDS and Foreclosures, then taking into consideration the money, time and resources they will require just getting into to the home, it becomes quite overwhelming , the HUD and Foreclosed homes seem to just fall by the wayside.
Now, I am not saying there are not good deals out there in the HUD and Foreclosure Market only that it takes someone with a strong motivation, the time, the talent and the financial resources to take on these homes and many of our First Time Home Buyers are finding they are either not willing or capable of doing this ....and their vision shifts.
If you are a First Time Home Buyer is a HUD or Foreclosed Home is What You Really Want? You may just surprise yourself so be sure to keep your options open.
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