Don's Delaware Real Estate Tips

Home sales continue showing progress

2009-07-16T06:12:00.000-07:00

Pending (under contract) home sales show a sustained uptrend, rising for 4 consecutive months with very favorable housing affordability and a first-time buyer tax credit boosting activity, according to the latest survey.

The Pending Home Sales Index increased 0.1 percent to 90.7 from an upwardly revised reading of 90.6 in April, and is 6.7 percent higher than May 2008 when it was 85.0. The last time there were four consecutive monthly gains was in October 2004.

Lawrence Yun, NAR chief economist, cautions that there could be delays in the number of contracts that go to closing. “Closed existing-home sales have improved but are coming in lower than expected because some contracts are delayed or falling through from the application of new appraisal rules for many transactions,” he said.

“Rises in contract activity show buyers are becoming more active even as they face much more stringent loan underwriting standards. Speedy clarification of the appraisal rules could smooth a housing market recovery and support the overall economy.”

Now is the time

2009-03-29T06:34:00.000-07:00

A recent survey of households (78 percent) of potential first-time home buyers say now is a good time to buy a home, despite widespread concern about the economy. Out of the 1,000 prospective U.S. first-time home buyers surveyed in early March, 68 percent think now is a better time to buy than six months ago.

Prices are the driving motivation for potential first-time home buyers with more than 85 percent saying they consider current home prices affordable and 73 percent citing that taking advantage of current prices is a major factor in their decision to buy.

Current pricing, rates and incentives, such as the First Time Homebuyer Tax Credit, provide tremendous opportunities for first-time home buyers to get into the market.

When asked to rate the features that they look for when choosing a home, price is the primary consideration with 87 percent saying this feature is “very important,” followed closely by neighborhood safety (80 percent) and the condition of the home (71 percent).

Having enough money for a down payment is a top concern of potential first-time home buyers as nearly half (46 percent) said they are “very worried” about the issue. Most respondents (86 percent) are in the market for single family homes.

Housing Inventories Fall in January

2009-02-12T04:32:00.000-08:00

Housing Inventories Fall in 29 Major Markets The inventory of existing homes for sale in 29 major markets covered by ZipRealty declined an average of 2.5 percent in January 2009, compared to December 2008 and down 13 percent compared to January 2008.

This is a good sign, especially when considering that typically inventories rise in January after the holidays. In the last 25 years, the average increase in inventory in January has been 8.7 percent, according to Ivy Zelman, CEO of research firm Zelman & Associates.

Housing-market analysis Altos Research reached similar conclusions, saying that the listings in its 10-city composite index declined 3.3 percent in January compared to December 2008.

Source: The Wall Street Journal, James Hagerty (02/10/2009)

Look at those rates--are you ready to buy?

2009-01-19T13:38:00.000-08:00

Interest Rates under 5%-- The benchmark 30-year mortgage fell below 5% for the first time ever in Freddie Mac's weekly rate survey as economic weakness continued to push interest rates lower, the mortgage agency said Thursday.

The national average rate on the 30-year loan fell to 4.96% in the week ending Jan. 15, down from 5.01% a week ago. That is the lowest on record. Freddie Mac began its rate survey in 1971. A year ago the loan averaged 5.69%.

Interest rates for 30-year fixed rate mortgages fell for the 11th straight week to another record low, due in part to the slowing economy and government actions," said Frank Nothaft, Freddie Mac chief economist.

"Both the U.S. Treasury Department and the Federal Reserve have added over $ 100 billion in liquidity to the mortgage market since September 2008, which put downward pressure on interest rates for fixed-rate mortgages. The Federal Reserve may add up to an additional $570 billion more this year, based on its November 25, 2008 announcement, to further shore up mortgage lending and keep rates low."

Changing our mindset

2009-01-16T07:57:00.000-08:00

As humans, we naturally crave certainty, consistency, and stability in most aspects of our lives. Not only is it comforting for us, it's a large component of our capitalistic way of life. But it's also extremely fragile, and always the first casualty of turmoil, especially in the financial markets.

In 2008, one could argue that the biggest challenges were not just the credit crunch or pending global recession. It was fear; a sweeping lack of confidence that suddenly gripped everyone, from major financial companies and individual investors, to consumers and governments alike.

One result was not only the unprecedented financial turmoil that we all witnessed, but also an amazing opportunity for those who aren't afraid to face that fear as the real estate and mortgage markets begin to turn – and they will turn. Many believe they already have.

For instance, mortgage rates are currently the lowest they've been in a generation, while home prices have dropped significantly in most areas including Delaware. For new buyers and homeowners looking to save on monthly payments, this is great news. Homes you might not have been able to afford just 2 or 3 years ago may well be within your reach at a rate that makes much more sense than renting, in many instances.

What's more, the Federal Reserve, the Treasury Department, and even the Federal Deposit Insurance Corporation (FDIC) are using all of their tools to address the ailing economy, which many experts believe could lead to even lower rates in the near future.

For homeowners with enough equity, this means now may be the time to lock in a low rate. At the time of the writing of this article, the Mortgage Bankers Association reported that mortgage applications jumped 2.9 percent in one week in December, 77% of which were refinances with an average interest rate of 5.18% for a 30-year fixed and an average rate of 4.93% for a 15-year fixed mortgage.

If the experts are wrong and rates increase, you made a great deal. If the experts are right and rates continue to drop, just ask your mortgage professional about a "no closing cost loan". This type of loan allows borrowers to lock in today's low rate and to refinance again if the rates fall further. Just make sure there's no prepayment penalty if you're not going to stay in the home long enough to recoup your investment.

While it may not be the right time to try and flip a home for a quick profit, if you're planning on a longer-term investment, it makes a lot of sense to take advantage of this rare combination of discounted prices and lower rates – especially for first-time home buyers.

A glimmer of light...hopefully for 2009

2009-01-09T09:12:00.000-08:00

The nation’s foreclosure hemorrhage has finally slowed and 2009 should see a significant decline in foreclosures as buyers return, pushing home prices up and fueling a real estate recovery, according to the 2009 Outlook from ForeclosureS.com.

“Recovery is underway. Affordable is back in the housing market,” says Alexis McGee, real estate expert, educator, and president of ForeclosureS.com. “In 2009, housing will not only recover, but we’ll see buyers leap into this market in droves, depleting our housing oversupply, and actually put higher price pressures on the market.”

“With fixed mortgage rates around 5%, housing prices lower than they were 'pre-housing bubble', commodity prices lower, tax credits available for homebuyers, and the government eager to stimulate our economy, for the first time in years I can see prices rising again in 2009” adds McGee. “This is a great time to buy properties for investors -- to buy properties at wholesale prices below today’s already low prices -- rent them out for positive cash flow and then sell them for big profits in late 2009 once price appreciation kicks in.“

The latest U.S. Foreclosure Index by ForeclosureS.com shows a slight drop from 84,534 to 84,291 in the number of properties repossessed by lenders following foreclosure last month over October. These are REOs or lender-owned real estate. But that’s off nearly 21% from September’s 106,415 REO filings. (Year to date 12.6 of every 1,000 households nationwide have been lost to foreclosure.)

"Certainly some of the drop reflects growing results of government and private efforts to keep homeowners in their homes,” says McGee. “But the recovery takes shape when you factor in other things like what the National Association of Realtors calls ‘solid’ gains from a year ago in existing home sales in some key areas, and the fact that many of the same areas are seeing dropping home prices. Fewer foreclosure actions were initiated in the last quarter, too, according to the latest Mortgage Delinquency Survey from the Mortgage Bankers Association,” McGee adds.

“California is a great example of what’s happening now and what lies ahead for the housing sector. Long a leader in the subprime mortgage mess and rising numbers of foreclosures, the state’s foreclosures have slowed significantly,” says McGee.

The latest U.S. Foreclosure Index numbers show November REO filings in the state down to 15,978 in November, down 6.55% from October and off nearly 50% from September. Home prices there have come down, too, as much as 39.4% from the third quarter from a year ago in some areas like Riverside-San Bernardino-Ontario, according to National Association of Realtors numbers. That’s left many homeowners that bought their homes at high price points with upside down mortgages—they owe more than the value of the home. But it’s also made homes more affordable for plenty of other people. Solid and in many cases rising existing homes sales support that, adds McGee.

“I wish my crystal ball could pinpoint everything that’s going to happen with housing markets in the next 12 months, but there are just too many variables. What I can tell, though, is that hardest hit housing markets have already hit bottom and others will follow in 2009. Third-quarter National Association of Realtor numbers actually show existing home sales picking up in about 20 percent of the areas studied. And, given the uncertainty and volatility of the stock market combined with all time low interest rates, extremely affordable low priced homes, and all the choices out there, 2009 is an excellent time to buy real estate. Properties, especially foreclosed ones, will be highly discounted, lenders are motivated to work with buyers, and the opportunities are abound. The bottom line to keep in mind: What goes down absolutely positively will go back up again.

Who do YOU Believe?

2009-01-05T04:57:00.000-08:00

Tracking Home Prices - Different Measures; Different Approaches,
by NAR Research Staff

Since all real estate is local, interpreting changes in home prices at the national or metropolitan level can be difficult. This can be problematic for policy makers and market participants like home buyers, sellers, and REALTORS®. The first step is understanding what the various measures of house prices are, what those measures actually track, and how this information can be interpreted and used. Below is a summary describing four most closely watched home price indexes and discussing the major differences between them.

There are four major home price indexes that market participants follow:
· the National Association of REALTORS® Median Sales Price series
· the Case-Shiller Index group
· the Federal Housing Finance Agency (formerly OFHEO) Index
· the Freddie Mac Conventional Mortgage Home Price index

Of the series listed above, only NAR's is a pure median measure. The NAR Median Sales Price (which is not an index) tracks the sales price of the typical home where half of the homes sold at a higher and half sold at a lower price in a particular month.

Indexes track home prices with a level of abstraction since there are several ways that information about home prices can be aggregated to develop an index. Consequently, changes in the prices of homes in a particular neighborhood may differ from an index based on home sales from a larger or slightly different geographic area.

Each of the other measures is an index. Like all indexes, these indexes track house prices with a level of abstraction. Percent changes in the index figure mirror percent changes in the prices of houses; therefore, a single index figure may not be very meaningful. The weighted repeat sales technique-employed by all of the other major players attempts to address an issue arising in pure sales medians, namely, that the houses that sell one month are not the same houses that sell the following month. If these houses differ in quality, then a change in the median sales price of houses reflects the change in the quality of the home sold as well as any appreciation in value that would have accrued to a constant-quality house.

Researchers track and measure repeat sales to get past this limitation. For example, if a house sold in 1980 for $100,000, and it sold again in 2007 for $400,000, it would register as a repeat sale. Researchers would use its 300% appreciation over 27 years with information from other repeat sales to determine how much this same (and therefore "constant quality") home had appreciated in the most recent time period.
Unlike a median sales price, the repeat-sales methodology is very complex and requires an extremely large database of home sales transactions that limits its application to the nation or to large metropolitan areas.

The National Association of REALTORS® Median Sales Price (NAR's median sales price) data is a series of dollar figures released monthly at both the national and Census regional levels. In addition, NAR releases quarterly median home price data for more than 150 metropolitan areas. NAR reports the observed median sales prices based on closed sales transactions gathered from Multiple Listing Services (MLSs). NAR's median sales price data on existing homes are available at the Association's web site at http://www.realtor.org/research. Click on "home sales statistics" in the left hand navigation.

Case-Shiller
The Case-Shiller Index group consists of 20 regional (metro area) indexes and two composite indexes (a 10-region and a 20-region index). These indexes are reported monthly as 3-month moving averages and cover a period ending two months prior. This group also consists of a broader national index that is released quarterly.
Case-Shiller uses a weighted repeat sales methodology to measure price change. This type of index examines price changes for the same home based on the two most recent sales transactions. While this methodology helps to control for several factors that influence price, it requires the exclusion of many data points. For instance, Case-Shiller indexes exclude data from foreclosures as well as home sales transactions in the following states: Maine, Indiana, Wisconsin, North Dakota, South Dakota, South Carolina, West Virginia, Alabama, Mississippi, Idaho, Montana, Wyoming, and Alaska. Additionally, Case-Shiller gathers information on transactions from local government sources and therefore, information about sales transactions is subject to delay. Furthermore, the index is value-weighted: that means that high-priced homes have a greater impact on the index than do low-priced homes. Sales financed with conventional as well as jumbo and subprime loans are included in the index.
For more information about the Case-Shiller Index, visit www.homeprice.standardandpoors.com.

continued in future posts

How do Realtors earn their compensation

2008-12-31T05:04:00.000-08:00

A recent NAR study found that 81 percent of sellers used full-service brokerage, in which real estate agents provide a range of services that include managing most of the process of selling a home from listing to closing. Nine percent chose limited services, which may include discount brokerage, and 9 percent used minimal service, such as simply listing a property on a multiple listing service.

Like home buyers, home sellers rely on referrals and their previous experience when looking for a real estate agent. Thirty-eight percent of sellers were referred to a real estate agent by a friend, neighbor, or relative; 26 percent used an agent with whom they had worked before.

Sixty-seven percent of home sellers contacted only one agent before selecting one to assist with their home sale. While some sellers do contact more than one agent, the significant role of referrals in the selection process is one factor accounting for the large share of sellers contacting only one agent.

What do home sellers want from their real estate professionals? Primarily, sellers want agents to price their home competitively, market the property, find a buyer and sell within a specific time frame. Overall, 21 percent of sellers indicated that what they wanted most from their agent was help pricing their home competitively. Other important considerations were help selling the home within a specific time frame, help finding a buyer, and help marketing to potential buyers.

One of every five sellers wanted each of these services from their agents. As with home buyers, sellers' satisfaction with their real estate agent is high. Eighty-five percent of sellers would definitely or probably use their agent again or recommend their agent to others.

Selling a home in today's housing environment can indeed be challenging. Fortunately, home sellers can rely on the expertise and knowledge of real estate professionals to help.

Mortgage Applications Surge on Falling Rates

2008-12-23T05:06:00.000-08:00

Mortgage lenders are seeing a deluge of applications for refinancing as borrowing costs decline due to a recent cut in the federal funds rate by the Federal Reserve, and many are hiring temporary workers or reassigning employees to handle the swelling volume.

Some experts believe the jump in re-fis could signal a turning point in the market and reduce pressure on banks by the U.S. government to bolster lending following the distribution of millions of dollars in assistance. However, it remains uncertain how many borrowers will qualify for loans, how long it will take to process loans under new documentation and credit standards, and whether borrowers will back down in hopes that mortgage rates will fall further. Source: Wall Street Journal, Dan Fitzpatrick (12/22/08)

Is real estate still a good investment?

2008-12-22T06:50:00.000-08:00

We all can attest to how much media coverage is currently given the nation’s real estate industry. So much has been said, it sometimes seems that we’ve forgotten that we all need a place to live, and how we provide for that need hasn’t really changed much over time. Owning a home isn’t right for everyone or every situation, as it always has been. However, if one examines the rationale for when purchasing a home makes sense; that also hasn’t changed. Home needs are still there; family growth or reduction, upsizing or downsizing, relocation, vacation homes, etc.

Consider that mortgage rates and programs are still very attractive. The major change is that risky loans and companies who provided them have pretty well gone by the wayside.
Investing in one’s residence has always been one of the stable ways to build financial security. It is important though, to remember that the basic model has always involved holding the property for at least 5 years before attempting to sell for profit. The basic average appreciation rate of 3-6% per year has held for many years.

Nothing has changed. In today's world, investing in property is still a viable means to enhance a person’s financial portfolio. Throughout the last 50 years there have always been periods of slower or faster appreciation. The last 7 years has exhibited one such extreme growth and correction cycle. If you bought early during that period and held, you have achieved approximately the basically 4% per year appreciation (including the recent downturn). If you bought later and hold for the normal time you should also do fine.

The real problem has come to those trying to make quick profit and got caught in the down period of the last 2 years. Given the complexity of buying or selling in today’s market the best advice is to ask a real estate professional to assist from the beginning concept if possible.
When considering perhaps the largest investment in your future, it makes good sense to get professional help. By the way Realtors usually provide this service free of cost to buyers, and at low cost to sellers.

Will your home be ready when the market is?

2008-08-15T10:34:00.000-07:00

It's widely known that we're still in a buyer's market. Just as many experts predicted the housing market correction over the last 2 years, there is a growing consensus that in 6-9 months we could see a significant flattening or even modest upturn in market price and sales volume as inventories are beginning to dwindle.

If you've been thinking about upgrading, downsizing, relocating, etc., your home over the next year or so, there is a golden opportunity right now to prepare.

Examine your home, or better yet ask a real estate agent to assist (at no cost of course); discover what really needs to be done to make your home stand out when the time comes to put it on the market. Just as importantly, learn what not-to-do as well. Some improvements will add little or nothing to the market value of your home, or make it more appealing to the emerging boomer buyer market as buyer trends are constantly changing.

Have you been putting off painting, landscaping, kitchen and/or bathroom upgrades, roof, driveway sealing, drywall repairs, flooring etc? All these projects take time, and if the current market has taught us anything, it's that homes must be move-in ready, and up to date in order to sell in a timely fashion. So, don't wait til 3 weeks prior to listing your property before taking care of these important issues both inside and out.

Remember, "The home that has great curb appeal and is up to date in both kitchen & bathroom fixtures and appliances always selles the fastest", assuming its priced according to the market of course.

Silver lining to mult-iunit foreclosures

2008-07-31T05:06:00.000-07:00

How can Foreclosures Help the Homeless?
Due to an abundance of foreclosed homes and vacant buildings, social service agencies are now able to afford to buy these buildings and are using them to house the homeless. In turn, this has even caused the homeless population to shrink, according to recent studies.

In Denver, for instance, the homeless population has declined 36 percent because nonprofits have added 1,242 low-income units, many in buildings with facilities for treating addiction and healthcare.

“These are opportunities we haven’t seen in decades,” says Philip Mangano, executive director of the interagency council on homelessness.

Source: Newsweek, Matthew Philips

New interest in basements

2008-07-26T05:16:00.000-07:00

As more people are staying put in their homes, rather than selling and moving to a bigger place, the basement is becoming a more important living area. A recent survey says more people are remodeling this part of the home to make the most of every square inch of living space.

ServiceMagic.com, a company that connects home owners with pre-screened contractors, commissioned the survey. Results revealed that nationwide basement remodels rose 10 percent in the first six month of 2008 compared with the same period last year.The most popular uses for the space are spa-like bathroom retreats, children’s playrooms, workout areas, billiard rooms, and home offices.

With an average cost of $40 to $60 per square foot - or a base price of about $35,000 - basement remodels are far more economical than an addition, says Laura Sanchez, director of internal operations at McStain Neighborhoods, a home builder in Colorado.

Source: The Denver Post, Sheba R. Wheeler (07/17/2008)

Why "Energy Star Rated" for your home?

2008-07-09T04:31:00.000-07:00

Exerted from the US Gov't Energy Star web site:

A typical household spends about $1,900 a year on energy bills and contributes twice the amount of greenhouse gases to the environment as an average car. ENERGY STAR, the government-backed symbol for energy efficiency, can guide you in making your home more energy efficient, reducing high energy bills, improving comfort, and protecting the environment—whether you do it yourself or hire a qualified professional.

Improving energy efficiency with ENERGY STAR is also an important first step in the growing trend of “green remodeling.” That’s because the energy we use in our homes often comes from the burning of fossil fuels at power plants, which contributes to smog, acid rain, and global warming. So, the less energy we use in our homes, the less air pollution we generate.

What's involved becoming more Energy Star Rated?

Heat and Cool Efficiently- when replacing look for Energy Star rated systems.
Choose Energy Star appliances when initially purchasing or replacing.
Check Seal Air and Ductwork leaks.
Add more insulation in Attics (easiest and most cost effective to lower energy use).
Select high efficiency Hot Water Heater when replacing.
Select high efficiency windows/doors when replacing.
Replace lighting with florescent models.
Install a programmable thermostat.

Go to http://www.energystar.gov/index.cfm?fuseaction=home_energy_advisor.showGetInput for a free energy audit.

Why should "Going Green" matter to Home Sellers?

2008-06-26T04:17:00.000-07:00

Consumers are being forced to make changes in their lives and they are expecting the real estate industry to help them. They’re hearing ‘global warming,’ ‘glacier melting,’ ‘polar bear habitats,’ and they already know about rising gas prices and rising utility bills.

When they’re looking for housing, they are looking at many new factors. If there are two houses listed for about the same price, and one has a monthly utility bill of $280 and the other is $140, the consumer is going to want to know that difference and what’s accounting for that difference.

For years HUD, the Department of Energy, Bank of America, and Wachovia have had Energy Efficient Mortgages available, but most people don't know they’re out there; even mortgage brokers who have no idea that they’re available.

Also, in preparing a home for sale these days we need to consider a host of new issues:

If you need to paint that room, but be sure to use a paint that is low in toxins.
If the carpet needs to be replaced, be sure its low in toxins.”
If the Central Air/Heating or appliances need replaced make sure to use models that are Energy Star rated (especially hot water heaters & dishwashers).
If replacing plumbing fixture use low water usage units.
Are the windows and doors "low energy" units?
How do utility bills compare with similar homes?
Are window treatments consistent with saving energy?
Is there a programmable thermostat?

These are the kinds of features and items that will make a difference to buyers in the future. Whenever possible all repairs and/or renovations should include some or all the above considerations and documentation verifying same should be kept.

What's all this "Green" hype about

2008-06-17T06:11:00.000-07:00

We all see it on the news, read about it in the newspaper, see it on the Internet. Is "Going Green" the next big boom, Trend, or Fad, in the Building and Home Renovation industries?

Having been an avid recycler for a long time, I find this new interest in the environment refreshing. In an effort to help others be more aware about the next biggest change in our lives (my opinion), I will post several short articles intended to shed some light on the subject, and why it is so timely with today's $4/gallon gas prices and energy related products going sky high. Virtually, no one in our country is untouched by these events.

What is "Green" Let's start by defining what Green is: According to Wikipedia, the free encyclopedia,

"Green" building is the practice of increasing the efficiency with which buildings use resources such as energy, water, and materials; while reducing building impacts on human health and the environment, through better siting, design, construction, operation, maintenance, and removal — the complete building life cycle.

A similar concept is natural building, which is usually on a smaller scale and tends to focus on the use of natural materials that are available locally. Other commonly used terms include sustainable design and green architecture. The related concepts of sustainable development and sustainability are integral to green building.

Effective green building can lead to 1) reduced operating costs by increasing productivity and using less energy and water, 2) improved public and occupant health due to improved indoor air quality, and 3) reduced environmental impacts by, for example, lessening storm water runoff and the heat island effect. Practitioners of green building often seek to achieve not only ecological but aesthetic harmony between a structure and its surrounding natural and built environment, although the appearance and style of sustainable buildings is not necessarily distinguishable from their less sustainable counterparts.

Future posts will briefly describe how it will affect trends in real estate, and how we can all do more for our environment, and save $$$$ in utility bills at the same time.

Latest Boomer Home buying trends

2008-06-14T06:53:00.000-07:00

Baby Boomers already account for a large portion of home buyers today. It should come as no surprise, then, that Boomers may soon dominate trends in features and fixtures for new homes and even renovations.

A recent article in the Wall Street Journal explains, designers and architects are catering toward this fast-growing segment of the population. The influx of aging home buyers exhibit needs for wider halls and doorways for walkers and wheelchairs, and master suites and laundries on the ground floor so residents can avoid stairs (most builders offer 1st floor master models).

Now, the technology behind home appliances and fixtures is making all kinds of appliances and home electronics more senior-friendly. Some of the innovations appliance re-design include:

Stoves that monitor pots to prevent boiling over.
Adjustable typeface on appliance control panels.
Faucets that turn on and off with just a touch any where on the spout.
Dishwashers designed to be mounted at a more comfortable height.
Refrigerators with storage designed to reduce bending over (readily available now).
Adjustable volume/pitch of oven alarms.
There's even a toilet on the market with an electric-blue night light built in and a motorized heated seat cover that rises with the touch of a button.

These trends will certainly continue to evolve, as buyer average age advances and Boomer life style preferences emerge.

Why use a local lender vs. Internet nationwide firm

2008-06-12T07:02:00.000-07:00

First, simply put, buying a home in any market can be somewhat complex, and stressful for the inexperienced (or even the experienced) buyer. That's partly why it normally takes 30-45 days from time of contract signing to move-in. Thankfully, much of the activity is carried out behind-the-scenes by attorneys, lenders, etc.

Choosing the right professionals in the beginning is paramount, since much of the transaction involves the lender and associated contractors. Laws and regulations regarding property purchases vary significantly between states. The required documentation (often crucial in timing) varies widely as well. Late/wrong documents can delay or even prevent successful sales processing.

Since local office lender/brokers such as Chase, Wells Fargo, & in-house, offer competitive rates it's kind of a no-brainer as to why not use them. Since they operate daily in a specific area, they're always aware of local requirements (and recent changes) and documents. Hence they can offer smoother transactions and maximize the buyer's ability to get through the process with minimal risk and stress.

I've had clients have used out-of-town lenders in hopes of saving, only to find that there are hidden fees, and the overall cost for the loan to be as high or higher than that of a local lender.

Since, as Realtors, we don't get paid unless the deal goes through, its in our best interest as well, to suggest lenders with the skills and experience to secure a loan that is tailored to the buyer's needs.

Just as you choose a local Real Estate Agent to ensure proper area knowledge, you should work with a local lender for the same reasons. Ask your Realtor for a recommendation.

FHA loans are getting more popular

2008-06-12T06:12:00.000-07:00

As lenders toughen their standards, loans by backed the Federal Housing Administration (FHA)are increasingly popular. The number of FHA loans issued rose 126 percent in the first quarter of 2008, compared with the same period a year ago. Most of FHA's business now comes from refinancing.

The volume of FHA loans at Wells Fargo has increased 342 percent this year from the same time in 2007, says Greg Gwizdz, the company's national retail service manager. Helping increase business were live simulcasts for real estate professionals that the lender recently held in movie theaters nationwide touting the benefits of FHA loans. Only borrowers who can make at least a 3 percent down payment or have at least 3 percent equity in their homes and who can document their income can qualify for FHA loans.

Guy Cecala, publisher of Inside Mortgage Finance, says FHA paperwork remains daunting and the rates aren’t always the lowest. “But if your choice is vanilla ice cream or no ice cream, vanilla starts looking good," he says.

Source: The Washington Post, Dina ElBoghdady (06/10/08)

Sellers staying current with the market...ranking

2008-06-07T06:18:00.000-07:00

Everyone knows we continue to be in a Buyer's market, which is good if you're looking to purchase a home. For Seller's, there are a number of things to consider before planting the "For Sale" in the front yard, for which much has be written, including ranking.

Let's say, there at any one time, there may be 20-30 similar homes available in your area. You may not realize it, but all new listings are by nature quickly ranked by agents and perspective buyers. If your home makes the top 5 in that list the chances of your home selling quickly are greatly increased. If, however, you're at 10 or below it becomes very unlikely your home will sell early or if at all.

Furthermore, you might think that your ranking would automatically increase as higher ranking homes are sold. Not true; ranking doesn't really change as homes are sold since new listings come on the market every day. If you're 15 today, its likely you'll be 15 a month from now.

Prevention is always better than a cure. Increasing your ranking after-the-fact is hard to do, as lower ranking homes simply put get labeled as "house-worn" after the first few weeks and get a lot fewer reviews by online buyers and agents.

You might ask : How do I get in the top five in ranking? That part's really no mystery, go back to the basics:

1. Condition- every repair (roof, painting, landscaping, etc.) "MUST" be done before listing the property.

2. Price- It never makes sense to over price the property. Put the price right from the beginning. If possible have a Pre-listing appraisal (often can be discounted).

3. Staging-Listen to your professional real estate agent as to what buyers expect today. Remember the look of everyday living in a home is likely not the best look for selling. Over furnished rooms can, for example, make a room look small and less attractive. Kitchen cupboards should always be uncluttered.

In summary, nothing beats having your home priced and staged right for selling at the beginning of the selling process.

More in future posts.

Did you wonder how jobs affect housing

2008-05-06T04:47:00.000-07:00

Historically, one new home owner is created for every two new jobs in an area. That would imply that whenever 100 new jobs are created in your area there would be 50 more housing units needed.

It's easy to see why officials give so much priority to encouraging new businesses and ventures.

FHA loans may help ease mortgage crisis

2008-05-05T13:41:00.000-07:00

Potential home buyers may be hesitant as they start their hunt in today's market, but many quickly discover that their market is full of choices, sellers are becoming more willing to negotiate, and interest rates are still low.That's not to say there will be no setbacks. The hard part may come when they go shopping for a mortgage. Minnesota Mortgage Association President Tim Bendel said 100 percent financing has all but disappeared. He advises borrowers with good credit scores seeking a conventional loan to come to the table with at least a 5 percent down payment. Borrowers with credit scores below 700 may need a more significant 20 percent down payment.But there is help on that front. The answer for some buyers is a Federal Housing Administration (FHA) loan. Credit scores count less with FHA loans; the more important factor is whether the potential borrower has paid other bills on time, says Todd Johnson, CEO of Edina Realty Mortgage. FHA's government-backed loans require only 3 percent down and allow cosigners and gifts for down payments.Source: Star-Tribune, Kara McGuire (04/26/2008)

Higher FHA limits should help

2008-03-30T06:17:00.000-07:00

Thanks to the Economic Stimulus Act of 2008 that President Bush signed into law several weeks ago, the Federal Housing Administration (FHA) has temporarily increased its loan limits and can insure larger mortgages at more affordable rates in high cost areas of the country, HUD announced.
The new temporary loan limits, which range from $271,050 to $729,750, will give 240,000 more homeowners and buyers a safer, more affordable mortgage alternative for purchases and refinancing. The maximum amount of $729,750 will apply only to high-cost areas, such as New York, Los Angeles, San Francisco and Washington, D.C.

HUD also calculated new limits for Fannie Mae and Freddie Mac loans. FHA Commissioner/Assistant Secretary for Housing Brian Montgomery says, “Many families all over the U.S. will benefit from this access to credit, and increasing these loan limits will inject much-needed liquidity into the housing market.”

Curb appeal! The #1 item for quick home sales

2008-03-27T13:09:00.000-07:00

A survey of almost 500 real estate agents commissioned by JELD-WEN Windows & Doors indicates the increasing importance of curb appeal in selling a home.

According to the Real Estate Agent Community Trends survey, 82 percent of practitioners polled said buyers unimpressed with a home's exterior will not want to look inside. The results also found that 90 percent of respondents said a sale depends on first impressions of the front entry, while 91 percent said the home's exterior is just as important as what is inside.

Additionally, 75 percent of those surveyed said natural light is important; while the appearance of windows and doors and the presence of energy-efficient products were mentioned by 71 percent and 63 percent, respectively. Universal design features are gaining in popularity as well, according to 65 percent of agents.

Source: Building Online (03/18/08)

Buy now! Get ahead of the crowd

2008-03-25T05:48:00.000-07:00

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.9 percent to a seasonally adjusted annual rate of 5.03 million units in February from a pace of 4.89 million in January, but remain 23.8 percent below the 6.60 million-unit level in February 2007. The sales pace has been in a fairly narrow range since last September.Lawrence Yun, NAR chief economist, said the gain is encouraging. “We’re not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing,” he said.

“Buyers taking advantage of higher loan limits for both FHA and conventional mortgages will unleash some pent-up demand. As inventories are drawn down, prices in many markets should go positive later this year