Archive for July, 2013

Remember 10 years ago

Wednesday, July 31st, 2013

If you owned a home 10 years ago, you saw the value drop in 2009 and 2010. Now the value has recovered to the 2003 price or higher.

If you owned a stock portfolio 10 years ago, you saw the value drop in 2009 and 2010. Now the value has recovered to the 2003 price or higher.

If you look at mortgage rates in 2003, they hovered around 6% on a 30 mortgage. In 2009 and 2010, you saw those rates go below 4%, then in 2011 and 2012 briefly go below 3%. Today, they are hovering around 4%. After watching real estate and stock values go back to the 2003 level, we believe the mortgage rates will do the same and soon. Main reason: buyers of our treasury bonds and mortgage backed securities will reverse their buying habits. The major buyers being the Federal Reserve, European investors and China. In addition, once these rates move higher and retirees that own bond/mortgage funds will sell. This will escalate the move in interest rates. Our feeling is that getting a mortgage rate below 5% is great and getting one below 6% is still good.

Funny how the headlines have changed

Tuesday, July 30th, 2013

Headlines in 2009 - 2011 were always: ‘Foreclosures are up’, ‘Home sales and Prices are down’ and ‘we have to save the banks’. Now, since early 2012, the headlines have been just the opposite: ‘Foreclosures are down’, ‘Home sales and Prices are up’ and ‘Banks are making record profits’. So what changed that caused this dramatic turn around. Was it the banks lowering mortgage rates so homes were more affordable? No, mortgage rates and home affordability has been at historic levels since 2008.  Was it the Federal Govt with special programs through Fannie Mae & Freddie Mac? No, both went into conservatorship (bankruptcy) in Sept 2008 and nothing has changed since. Was it the savers and wealthy investors that got tired of low returns on bonds and CD’s? YES. If you have seen the headlines since early 2012, it has been the investors paying cash to buy foreclosed property. They then pumped money into the economy by fixing up these properties. Our blog in May, 2009 outlines what was needed, it just took about three years to happen. We blogged in July 2010, that banks were making huge profits, but very little was trickling down to the average person wanting to buy or sell a house. And, we blogged in April, 2011, that these large investors were starting to pool their cash for the purpose of buying real estate. In the end, it was the banks benefiting from the investors, not the other way around.

Hedge funds paying cash to FSBO.com sellers

Tuesday, July 23rd, 2013

with inventories of foreclosure properties dropping and hedge fund buyers wanting to buy, we are receiving increased reports they are calling sellers who advertise on FSBO.com. They are offering full price, cash and no real estate broker commission. We have blogged for the past year that investors with hundreds of millions of dollars available want to buy single family residential property. Their plan is to rent out and wait 6-10 years before selling. This is why inventories are low. This is why sale prices have gone up. And this is why you need to have your property on FSBO.com. In the past we would be warning of scammers or crooks just trying to get your information and your money. Not right now. But, to be on the safe side, you should be using a closing attorney or title company to handle all contracts, details and the closing. You should also get local testimonials from other sellers that have sold to these hedge funds. Right now is a great time to be selling by owner, no commission and the buyers are paying cash.

Play book for the FSBO buyer

Thursday, July 18th, 2013

Mortgage rates are low and rents are going up. Time to buy, but how do I start? Here are the steps to buying a house from a FSBO seller:

1.Get Qualified: visit your mortgage company and get a pre approval letter. This maybe your first time, but they do this for a living. You will need a letter from them stating how much they will lend you.

2.Be prepared to put in an offer: you will need a blank contract/purchase agreement. You can get these online, office supply store, or the title company/closing attorney.

3.Title company/closing attorney: There are plenty of these companies around that will help guide you. In the end, they will host the closing. But before that, they can provide contracts, hold earnest money, and offer advice as to local customs/regulations.

4.Start shopping: search online, drive neighborhoods you are interested in, talk to friend/family that have recently purchased a home

5.You found a property you like: visit the property, check out the neighborhood, shopping, schools and your commute to work. If all looks good, put in your offer direct with the seller. They will either accept, reject or counter offer. This is the negotiation part.

6.the Offer: Make sure the offer contains: A. expiration date B.contingent upon: financing approval, appraisal, home inspection, etc.

7.After acceptance: turn contract over to the mortgage company, they will order the appraisal and get started. You need to order the home inspection.

8.One or the other will happen: Either you move toward closing because the financing, appraisal and home inspection were satisfactory or something did work out and the contract is cancelled.

9.At closing: very simple, the seller receives a check and you receive the keys. Along with a pile of documents you will need to sign for the mortgage company. Remember, in most cases the mortgage company is putting up more money then you are plus they do this for a living. If something is not right, they will be the first ones to tell you.

Buyer shows up at my door to buy

Wednesday, July 17th, 2013

Now what? You have a buyer that calls you or stops by your property. Inventories are low and they need to buy soon. Their agent has no properties, so they look at for sale by owner properties on the Internet, such as; www.FSBO.com and find your property. You need to be prepared. What does this mean? You, the seller, needs to have the following all lined up for the buyer: 1.Sales Contract 2.Title company/Closing Attorney 3.Mortgage company 4.Your move out date 5.What stays with the property 6.Property Disclosure form. I hear it all of the time from sellers. “I have someone that wants to buy my property and they do not know what to do”  So you need to.

It’s closing time ..

Monday, July 15th, 2013

and the sooner the better. For the past 90 days we have seen more properties go Under Contract than any spring time in the past five years. We are still waiting for most to close. Reason is: Higher sales prices. Many of these properties, especially bank and government owed have sold at or above asking price. New properties coming on the market are at higher asking price. We need the closings to happen for the appraisers to use. Any more delays in the closings will hurt future sales. It is in the best interest of the banks and government agencies that properties close to prevent another slow down of the Real Estate market. As I have been blogging for years, that bank and government owned properties are the problem and only they can fix it. Now is their time. Don’t mess it up.

Good news for home owners continue

Friday, July 12th, 2013

For the past five years most home owners have seen home values drop in their neighborhood. This has been caused by a flood of bank/government owned homes going on the market at low prices. The more foreclosures, the lower prices went. On top of that, buyers have been cautious to buy plus banks had stricter lending policies. Now for the past twelve months this trend has reversed. Latest news is that the number of foreclosed properties has dropped by 35% from a year ago. Investors continue to buy up foreclosed properties, even as the prices have moved up substantially. The future looks bright. Five years ago over 20 million homes were ‘underwater’ (mortgage amount was more then current value”, last year the number dropped to 13 million, and today, that number has dropped to 7 million. These underwater homeowners are potential foreclosure candidates. With less underwater, that means less will get foreclosed. This is what you want to hear if you own a home.