Archive for November, 2013

Elements of housing data

Tuesday, November 26th, 2013

If you are in the real estate business, quite often friends and neighbors ask you ‘How’s the real estate market these days?’. There are many elements of a market place and many ways to gauge improvement or decline. Here are just a few:

1. New construction has several categories; Permits (prior to building a new home, the builder must take out a permit, usually from the county building department), starts (after the permit is issued you have a certain period of time to start the new house, usually up to two years), pending sales and closings. Each month these numbers are announced, along with revisions of prior months.

2. Residential resale homes have several categories. Inventory of properties for sale (this can be divided into pre-foreclosure, foreclosure, short sale, normal sale), pending sales and closings.

3. Home prices, which can move higher or lower each month. Price comparison to past sales, closing price compared to asking price, price compared to market price. Right now we are seeing most prices improve based on the S&P/Case Shiller index of 20 metropolitan areas.

Housing Data

TIC Report, a must read blog

Wednesday, November 20th, 2013

There are many reasons to own real estate. For the past five years,
low interest rates has been a large incentive. Since October, 2011,
we have been telling you that interest rates have bottomed;
http://blog.fsbo.com/2011/10/ .
In January, 2013, we reiterated this with the main reason being
foreigners would stop buying our government debt;
http://blog.fsbo.com/fsbocom-reiterates-interest-rates-have-bottomed/
http://blog.fsbo.com/why-mortgage-rates-are-going-up-in-2013/
In May 2013, we told you foreigners were slowing their
purchases of securities and increasing their purchases of  real estate;
http://blog.fsbo.com/foreigners-money-helps-the-real-estate-market/
In July 2013, we were pounding the table saying that
foreign buyers are changing their buying habits;
http://blog.fsbo.com/remember-10-years-ago/
In September 2013, we explained why the Federal Reserve would
start slowing their purchases of our debt. They did give us a
head fake, but make no mistake, it will happen;
http://blog.fsbo.com/do-you-know-what-qe-taper-means/
In September 2013, we also gave our 2014 Forecasts,
which absolutely talks about foreign investors changing their
buying habits;http://blog.fsbo.com/fsbo-forecasts-for-2014/
Now, the trend has started, see the chart below.
The TIC Report (Treasury International Capital report) provided
by the US Treasury Department, which measures foreign
purchases of U.S. financial assets, shows that foreign
investors are now Net Sellers of US Treasuries. Economic
improvement in Europe, US Government dysfunction with the
Federal Debt & Budget, and anticipating the Fed Taper are the
main reasons. Stay tuned for more info.
Net Foreign Purchases

I hear this from FSBO sellers

Tuesday, November 19th, 2013

- a buyer looked at my house and he wants to buy it. What do I do now?

-real estate agent says she has a buyer, but won’t bring them to my house. Why?

- my house is set up perfectly for me, how come no one wants to buy it?

- do I buy a house first, then put mine up for sale or vice versa?

- I need to take my home off the market while I am refinancing.

- do Open Houses work?

- what is a Flat Fee MLS listing?

- do I re-carpet or should I give the buyer a carpet allowance?

- What is a pre-qualification letter?

These questions and more are answered in the FSBO.com blog. Let me know if you have questions.

Selling your house is like having a wedding

Monday, November 11th, 2013

How is selling your house like having a wedding? Here are the similarities:

A. Preparation - for a wedding you prepare for months, sometimes years so on that wedding day, everything looks as perfect as possible. You want to make a great first impression for the quests. You want the entire event to flow and go smoothly. At the end of the day, you want everyone to be happy, happy, happy! Selling your house is the same effort. You prepare for months, sometimes years so your house looks great. Yes, I said years. If you need new carpet or paint, but you know you will be selling in two to three years, you need to hold off until putting the house on the market. Why would you paint or re-carpet now, then in two years  everything looks slightly used. You need to be ready for a smooth marketing, negotiation, sale and closing. I find most FSBO sellers don’t use an agent because their last sale did not go smooth. At closing, buyer and seller are happy, happy, happy!

B. Look your best - for that big day, you get a new suit, new dress, or rent the best looking one you can find. How many people get their haircut, do their nails, or try to lose weight, just before the wedding date. Oh, I’d say most. Same with your home sale. You want your house to look it’s best. A new suit or dress is like new paint and new carpet. A haircut is like trimming all bushes and trees, so people can see the actual house they are buying. Losing weight is like removing some furniture so the rooms look bigger.

C. The reception - with a wedding it is festive dancing, music and food. With a house, it is marketing with signage, brochures, Internet exposure, and Open Houses.

Both take a lot of work. Others have done it before you and now it is your turn.

Homeowners insurance policy is required

Tuesday, November 5th, 2013

Every homeowner with a mortgage has a clause in the mortgage contract that says you will have homeowners insurance policy on the property with the mortgage company as co-insured at all times. You have the right to pick the policy because you are paying for it. Either in escrow or in advance. When the annual bill comes in from the insurance company and you don’t pay it (policy has lapsed), the mortgage company buys it’s own (Forced Insurance). And you pay for it.  This new insurance policy can be 15- 25% higher then the original one and the mortgage company gets a kick back. This kick back is legal in states in which the state Insurance Regulators allow it. These regulators are either elected or hand picked by elected officials. When ever I hear the words ‘elected official’, I immediately think of “who benefits with one elected official over the other one’. In this case it is the Insurance Industry, so you know who gets their political donations. Plus the Insurance Industry has a large lobbyist group. While I don’t like to encourage the Federal Government to get involved with local problems, in this case, since the state regulators are helping the insurance industry not you, I am glad to hear something is happening. The Federal Housing Finance Agency is pushing forward a ‘ban’ on these activities nationwide. Fannie Mae has said they plan to stop doing business with mortgage companies that buy these expensive policies. This “kickback culture” needs to stop and if the state regulators aren’t doing it, then it’s good the Fed is stepping up the pressure. There are many lawsuits right now over this activity.

Fire Damage