Just Listed... Again
Our local market is slowing down, and many agents use a technique to get their listings noticed by buyers and other agents long after the home has been originally listed.
There are reports that real estate agents are in some cases pulling a property out of the MLS and then relisting it to the MLS to make it appear as though the property was just put on the market.
A property that sits on the market for a long time could lead some agents and consumers to question why the property has not sold, and some real estate Web sites allow consumers to view days on market for a given property.
So why wouldn't an agent and the seller want to give an old listing a fresh start by using this strategy, right?
This practice is not limited to our local market. The New Jersey Star-Ledger, which was granted access to MLS data by agents, reported "hundreds of examples" of relisting in Morris, Essex and Union counties.
The article quotes Judy Reeves, COO for NRT Inc., "We believe that this is not a seller disclosure issue or a question of ethics."
The Northwest Multiple Listing Service, a regional MLS in the state of Washington, has warned its members about the practice, and MLS-PIN in Massachusetts earlier this year changed property tracking in a way that prevents a reset in days on market, the newspaper reported.
Is this practice of removing properties from an MLS and relisting them to appear fresh misleading or is it just a clever marketing tool? Your comments?
–Glenn Roberts Jr., Inman News
Monday, October 30, 2006
Home-in-the-Box
Santa Clarita's answer to the need for affordable housing?
No, the boxy structure pictured here is actually temporary housing that is intended to lure teachers back to New Orleans.
The state of New Orleans, the Louisiana Recovery Authority, the city of New Orleans and the Federal Emergency Management Agency have partnered to offer 250 of these two-bedroom modular housing units, fully furnished and rent-free, for New Orleans-area teachers.
The units will be installed on school property at the Recovery School District and the Orleans Parish School Board sites.
"There has never been a better time for the best and brightest teachers to return to New Orleans," said Louisiana Gov. Kathleen Babineaux Blanco in a statement. "We are doing everything in our power to provide affordable housing so good teachers can return to the classroom, where New Orleans children need them most."
At $56,000 each, these units look like they will be the newest butt of jokes on big government solutions.
Home-Appraisal Red Flags
In a Cooling Housing Market
By Andrea Coombes
From MarketWatch
If you're a home buyer, you want to pay a fair price for the house. If you're a seller, you want to get the most you can. Both of you rely on an appraiser to get the home's value right.
Appraisals are a key part of just about any residential real-estate deal, but the world of appraisals is not without its scandals. Phony appraisals are often a problem in mortgage-fraud cases, where a group of scammers will pose as legitimate real-estate professionals, hiking up a property's price to turn a quick profit.
There's also the issue of inflated appraisals, where appraisers push up a home's value, often to appease lenders, mortgage brokers and real estate agents. That's a potential problem for buyers who may then end up owning a home worth less than they thought.
MORE
In a Cooling Housing Market
By Andrea Coombes
From MarketWatch
If you're a home buyer, you want to pay a fair price for the house. If you're a seller, you want to get the most you can. Both of you rely on an appraiser to get the home's value right.
Appraisals are a key part of just about any residential real-estate deal, but the world of appraisals is not without its scandals. Phony appraisals are often a problem in mortgage-fraud cases, where a group of scammers will pose as legitimate real-estate professionals, hiking up a property's price to turn a quick profit.
There's also the issue of inflated appraisals, where appraisers push up a home's value, often to appease lenders, mortgage brokers and real estate agents. That's a potential problem for buyers who may then end up owning a home worth less than they thought.
MORE
Even Grandpa Has Mortgage These Days
About a quarter of U.S. census respondents aged 70 and older reported having a mortgage in 2000, up from 19.9 percent in 1980. The number of census respondents in their 60s with a mortgage rose to 44.6 percent, from 34 percent two decades earlier.
While going into old age with a mortgage defies conventional wisdom, it may not be a bad thing.
Borrowers shouldn't necessarily be in a hurry to pay off their entire mortgage, so long as it has a fixed interest rate. "Being debt-free is an inherited ideal from older generations," says John Scherer, principal of Madison, Wis.-based Trinity Financial Planning. "That ideal, good in most respects, is misplaced in the context of an appreciating asset such as one's home."
Historical returns suggest investors will get more from their money by investing it rather than using it to pay off their mortgage in a lump sum, financial advisers say. The actual cost of mortgage payments should decrease with inflation, and mortgage interest also typically qualify homeowners for tax benefits.
--BusinessWeek Online, Marc Hogan (09/28/2006
About a quarter of U.S. census respondents aged 70 and older reported having a mortgage in 2000, up from 19.9 percent in 1980. The number of census respondents in their 60s with a mortgage rose to 44.6 percent, from 34 percent two decades earlier.
While going into old age with a mortgage defies conventional wisdom, it may not be a bad thing.
Borrowers shouldn't necessarily be in a hurry to pay off their entire mortgage, so long as it has a fixed interest rate. "Being debt-free is an inherited ideal from older generations," says John Scherer, principal of Madison, Wis.-based Trinity Financial Planning. "That ideal, good in most respects, is misplaced in the context of an appreciating asset such as one's home."
Historical returns suggest investors will get more from their money by investing it rather than using it to pay off their mortgage in a lump sum, financial advisers say. The actual cost of mortgage payments should decrease with inflation, and mortgage interest also typically qualify homeowners for tax benefits.
--BusinessWeek Online, Marc Hogan (09/28/2006
Whose Homes Are On The Market?
With all the news about housing lately, who is trying to sell a home in this market? After all, the conventional wisdom is that it is a lousy time to sell. Right?
I've taken some time to do an evaluation of home seller motivation, at least in our local market area. Some of these sellers are in multiple categories, so the breakdown by percentage adds up to more than 100%. Here are the results...
Move up sellers
The first of the sub-set of what I call opportunity sellers, the move-up seller sees an opportunity with the larger and more expensive homes in a market niche that has softened first, that have recently come down in price, and finds opportunity in the price differential between his or her existing home that is inadequate for one reason or another, and has worked the numbers and has rationally seen the reason for moving within this market to a better home that meets the individual or family needs. This sub-set of buyer may have changed circumstance, with marriage, a larger family, or better financial circumstances with a substantial raise in wage or job change. Often the move-up seller will want to check out the general price range and style of the target home type, and as long as the pricing of the sale home is in the lowest tier of sale competition, can do well in a move. Most folks who sell and then buy a replacement home are really in this category. When it makes sense, do the move.
Move down sellers
The move down buyer could either be an empty nester whose family composition has down-sized, or one who wants to throttle back mortgage payments with a more modest home. Either way, I regard this as a positive move and when this type of move is planned and executed, is a very good thing for the individual or family. The empty nester typically has had children who have moved out and have established themselves in stable work and relationships, with little or no chance for an emergency return. While some people rattle around in a home with too many bedrooms and a floorplan designed for family living long after the kids have left, many people and couples will take a rational approach and move to a home that better fits their new lifestyle. These sellers are usually older, but still have a lot of action left in them. At this point in their lives, their focus is more on themselves rather than the kids that have left. While very settled into their old home, why live in a home that no longer fits the lifestyle?
The other segment of the move down seller has had some change in financial circumstance or has bitten off more than they can chew in a large home or a high mortgage payment, and rather than abandon homeownership altogether and become a renter, makes the hard decision to scale back to a more affordable home. Some of these sellers will move from a pricey area to a more modestly priced area and will over the long run, do fine. This is a smaller segment of the sellers than the move up seller, but still significant.
Move out sellers
Changes in job location or a new job out of area or even out of state, retirement, or the desire to get out of the rat race and move somewhere far away give these sellers the motivation to take their accumulated equity out of this high-priced California market and go buy a huge home on the golf course or the mid-West or wherever they go, sometimes back to wherever they originally came from. This has been a long-standing course for so many people for so long. Wherever they go, they often find they can buy so much more for their money somewhere else that they often wonder why they waited so long. With many projecting that prices have leveled off, perhaps for years, there are a lot more people with this plan in mind than there has been for the past five or six years. It's a good plan, and as long as they price right on their sale they should do great. The move out seller is one of the opportunity sellers. This group is 30% or maybe more of the market.
Investor sellers
This group is divided into two groups: rational investor sellers and flipper sellers. Overall I would say this is about 40% of the market. With the leveling off of home prices appreciation year-to-year is slowing down, and there are many who think home prices may drop. In fact nationally there are figures out that home prices have dropped modestly already. Long-time readers of this blog know my views, and over the next few days I will have further comments based on the data. In any event, there are many investors who have gotten in the housing market over the past five years who are moving out of the housing market now. They have leveraged their mortgages to some great returns on investment over the past few years, and now many feel it is time to take the money off the table. There are lots of vacant homes on the market, with investor owners who want these homes sold. Of course, some of these investors have come late to the party, some of them were flippers who either made cosmetic upgrades and some with substantial remodeling, and who now want to sell and cash out. Price 'em realistically, and these folks will still come out ahead, albeit perhaps not with as much starry-eyed profit as they had hoped. Investor sellers can be opportunity sellers. Wait or price unrealistically, and you go into the next category. Some of these are realistically priced, some become distressed sellers, and some are deadwood sellers.
Distressed sellers
There are some people who think all sellers on the market today are desperate sellers. It's not reality. But there are some who think this. Those of us in the real estate business call the people who think this 'renters'. I'll probably write a piece about renters sometime soon, but for the moment let's look at the distressed sellers. There are always the traditional causes of distress sales such as death of the wage earner and inability to pay the mortgage, divorce and division of assets including the sale of the home, loss of job and income, or bad financial planning including a lack of awareness of the impact of rising interest rates on adjustable loans. Some of the investors mentioned above got in on a hope and a prayer and counted on rising prices to save them. That's not happening now. Some of these got a renter paying a high rent for a while, but they might have moved on and now the home is empty. Maybe bad timing is the cause, like buying a replacement home before selling and now with two mortgages it is breaking the personal bank. Some of these folks are just oblivious, behind in taxes, alimony, mortgage payments, and are frozen into inaction until the NOD appears and then the Sheriff comes one day and moves them into the street. There are lots of causes and reasons for distressed sellers, but the really dire stories aren't all that common. If sellers are feeling pressure, just price accordingly for the competition (at the lowest of the competition and give incentives to buy) and get out of the distress and get the home sold. I'm guessing about 10% of the market would be this category. Not a lot, but they are out there.
Deadwood sellers
This group are not really sellers. Sellers sell. These folks are 'testing the market' with homes that are priced too high to sell. As the market continues to soften, and reality starts to sink in, this type of 'seller' might bring down the price a little, but again, not enough to sell. The home doesn't get shown often, and sometimes not at all. These deadwood sellers blame everybody but themselves for the home not selling, starting with the Realtor first. They might reduce the price and follow the market down for a while, and then will take their home off the market before the holidays. Maybe they will come back to the market in the spring, maybe not. In the meantime they are just taking up space. If they don't want to price for today's market, and not for last year's market, why are they even bothering? I am reluctant to even call them sellers, because sellers sell. They have priced their homes so far out of bounds hoping for some idiot with a pile of money to burn. It's not going to happen, so what's the point? Take your home off the market and save us all some time. This type of seller makes up about 30% or more of the homes on the market.
Summary
There are lots of motivations for selling a home, and buyers always want to know what the seller motivation is. As a buyer, it makes sense. But buyers buy. If you are just curious but would never buy a particular house, who cares? But if you are actually considering a purchase on a particular home, then sure, persist in finding out what the motivation is. Otherwise it doesn't really matter does it? The reality is that most sellers do not want any potential buyer to know what the real motivation is and there is no index or registry where seller motivation is required to be noted. As Realtors, sometimes the seller's reason is can be found in the remarks, and when I represent the buyer I will let them know if I know. But more often, there are no remarks about motivation of the seller. If the buyer is interested in buying a property, I will find out everything I can, including quizzing the seller's agent, but sometimes the seller just doesn't want buyers to know.
Conversely, sellers sell. In this market, as in actuality all markets, price reflects motivation. Price the home too high and you won't sell. Price it to sell, and it will sell. Other indications of seller motivation include vacant property or a neglected look to the property that indicates financial distress. Incentives to purchase are increasingly a part of the market, including seller willingness to pay buyer's closing costs, carpet or paint allowance, and mortgage buydowns. With so much on the market, incentives to the agent to show and sell are increasing, including 3% (or more) commission to the selling office and bonuses to the selling agent. Yes, the 6% commission is back (split 50/50 between listing and selling brokers).
Can we agree on a truism? All buyers want to pay the lowest price possible. After all, we are talking some pretty big numbers when real estate is involved, and for many, it will be the largest purchase people ever make. And it is of course also true that sellers want the most money possible. In this market, the most money may not be what the sellers initially expect
With all the news about housing lately, who is trying to sell a home in this market? After all, the conventional wisdom is that it is a lousy time to sell. Right?
I've taken some time to do an evaluation of home seller motivation, at least in our local market area. Some of these sellers are in multiple categories, so the breakdown by percentage adds up to more than 100%. Here are the results...
Move up sellers
The first of the sub-set of what I call opportunity sellers, the move-up seller sees an opportunity with the larger and more expensive homes in a market niche that has softened first, that have recently come down in price, and finds opportunity in the price differential between his or her existing home that is inadequate for one reason or another, and has worked the numbers and has rationally seen the reason for moving within this market to a better home that meets the individual or family needs. This sub-set of buyer may have changed circumstance, with marriage, a larger family, or better financial circumstances with a substantial raise in wage or job change. Often the move-up seller will want to check out the general price range and style of the target home type, and as long as the pricing of the sale home is in the lowest tier of sale competition, can do well in a move. Most folks who sell and then buy a replacement home are really in this category. When it makes sense, do the move.
Move down sellers
The move down buyer could either be an empty nester whose family composition has down-sized, or one who wants to throttle back mortgage payments with a more modest home. Either way, I regard this as a positive move and when this type of move is planned and executed, is a very good thing for the individual or family. The empty nester typically has had children who have moved out and have established themselves in stable work and relationships, with little or no chance for an emergency return. While some people rattle around in a home with too many bedrooms and a floorplan designed for family living long after the kids have left, many people and couples will take a rational approach and move to a home that better fits their new lifestyle. These sellers are usually older, but still have a lot of action left in them. At this point in their lives, their focus is more on themselves rather than the kids that have left. While very settled into their old home, why live in a home that no longer fits the lifestyle?
The other segment of the move down seller has had some change in financial circumstance or has bitten off more than they can chew in a large home or a high mortgage payment, and rather than abandon homeownership altogether and become a renter, makes the hard decision to scale back to a more affordable home. Some of these sellers will move from a pricey area to a more modestly priced area and will over the long run, do fine. This is a smaller segment of the sellers than the move up seller, but still significant.
Move out sellers
Changes in job location or a new job out of area or even out of state, retirement, or the desire to get out of the rat race and move somewhere far away give these sellers the motivation to take their accumulated equity out of this high-priced California market and go buy a huge home on the golf course or the mid-West or wherever they go, sometimes back to wherever they originally came from. This has been a long-standing course for so many people for so long. Wherever they go, they often find they can buy so much more for their money somewhere else that they often wonder why they waited so long. With many projecting that prices have leveled off, perhaps for years, there are a lot more people with this plan in mind than there has been for the past five or six years. It's a good plan, and as long as they price right on their sale they should do great. The move out seller is one of the opportunity sellers. This group is 30% or maybe more of the market.
Investor sellers
This group is divided into two groups: rational investor sellers and flipper sellers. Overall I would say this is about 40% of the market. With the leveling off of home prices appreciation year-to-year is slowing down, and there are many who think home prices may drop. In fact nationally there are figures out that home prices have dropped modestly already. Long-time readers of this blog know my views, and over the next few days I will have further comments based on the data. In any event, there are many investors who have gotten in the housing market over the past five years who are moving out of the housing market now. They have leveraged their mortgages to some great returns on investment over the past few years, and now many feel it is time to take the money off the table. There are lots of vacant homes on the market, with investor owners who want these homes sold. Of course, some of these investors have come late to the party, some of them were flippers who either made cosmetic upgrades and some with substantial remodeling, and who now want to sell and cash out. Price 'em realistically, and these folks will still come out ahead, albeit perhaps not with as much starry-eyed profit as they had hoped. Investor sellers can be opportunity sellers. Wait or price unrealistically, and you go into the next category. Some of these are realistically priced, some become distressed sellers, and some are deadwood sellers.
Distressed sellers
There are some people who think all sellers on the market today are desperate sellers. It's not reality. But there are some who think this. Those of us in the real estate business call the people who think this 'renters'. I'll probably write a piece about renters sometime soon, but for the moment let's look at the distressed sellers. There are always the traditional causes of distress sales such as death of the wage earner and inability to pay the mortgage, divorce and division of assets including the sale of the home, loss of job and income, or bad financial planning including a lack of awareness of the impact of rising interest rates on adjustable loans. Some of the investors mentioned above got in on a hope and a prayer and counted on rising prices to save them. That's not happening now. Some of these got a renter paying a high rent for a while, but they might have moved on and now the home is empty. Maybe bad timing is the cause, like buying a replacement home before selling and now with two mortgages it is breaking the personal bank. Some of these folks are just oblivious, behind in taxes, alimony, mortgage payments, and are frozen into inaction until the NOD appears and then the Sheriff comes one day and moves them into the street. There are lots of causes and reasons for distressed sellers, but the really dire stories aren't all that common. If sellers are feeling pressure, just price accordingly for the competition (at the lowest of the competition and give incentives to buy) and get out of the distress and get the home sold. I'm guessing about 10% of the market would be this category. Not a lot, but they are out there.
Deadwood sellers
This group are not really sellers. Sellers sell. These folks are 'testing the market' with homes that are priced too high to sell. As the market continues to soften, and reality starts to sink in, this type of 'seller' might bring down the price a little, but again, not enough to sell. The home doesn't get shown often, and sometimes not at all. These deadwood sellers blame everybody but themselves for the home not selling, starting with the Realtor first. They might reduce the price and follow the market down for a while, and then will take their home off the market before the holidays. Maybe they will come back to the market in the spring, maybe not. In the meantime they are just taking up space. If they don't want to price for today's market, and not for last year's market, why are they even bothering? I am reluctant to even call them sellers, because sellers sell. They have priced their homes so far out of bounds hoping for some idiot with a pile of money to burn. It's not going to happen, so what's the point? Take your home off the market and save us all some time. This type of seller makes up about 30% or more of the homes on the market.
Summary
There are lots of motivations for selling a home, and buyers always want to know what the seller motivation is. As a buyer, it makes sense. But buyers buy. If you are just curious but would never buy a particular house, who cares? But if you are actually considering a purchase on a particular home, then sure, persist in finding out what the motivation is. Otherwise it doesn't really matter does it? The reality is that most sellers do not want any potential buyer to know what the real motivation is and there is no index or registry where seller motivation is required to be noted. As Realtors, sometimes the seller's reason is can be found in the remarks, and when I represent the buyer I will let them know if I know. But more often, there are no remarks about motivation of the seller. If the buyer is interested in buying a property, I will find out everything I can, including quizzing the seller's agent, but sometimes the seller just doesn't want buyers to know.
Conversely, sellers sell. In this market, as in actuality all markets, price reflects motivation. Price the home too high and you won't sell. Price it to sell, and it will sell. Other indications of seller motivation include vacant property or a neglected look to the property that indicates financial distress. Incentives to purchase are increasingly a part of the market, including seller willingness to pay buyer's closing costs, carpet or paint allowance, and mortgage buydowns. With so much on the market, incentives to the agent to show and sell are increasing, including 3% (or more) commission to the selling office and bonuses to the selling agent. Yes, the 6% commission is back (split 50/50 between listing and selling brokers).
Can we agree on a truism? All buyers want to pay the lowest price possible. After all, we are talking some pretty big numbers when real estate is involved, and for many, it will be the largest purchase people ever make. And it is of course also true that sellers want the most money possible. In this market, the most money may not be what the sellers initially expect
Tighter Standards Coming for Risky Mortgages
New guidelines for nontraditional mortgages will be released this fall, with the goal of clarifying loan terms and tightening standards. Kathryn Dick, deputy comptroller of the Office of the Comptroller of the Currency, told the Senate Banking Committee earlier this week that the OCC reviewed marketing materials for interest-only and payment-option adjustable-rate mortgages and discovered that lenders were stressing the low initial payments. Borrowers likely did not understand that their payments could rise dramatically down the road, she said. "There should be no equivocation about the risks of negative amortization and payment shock, if that's what the product entails," Dick said.
The guidelines — which are opposed by the banking industry because they would apply just to federally insured banks, potentially giving others a competitive edge — would force lenders to tighten underwriting standards by avoiding low-documentation loans in most instances and ensuring that borrowers will be able to afford the payments when they rise in the future.
New guidelines for nontraditional mortgages will be released this fall, with the goal of clarifying loan terms and tightening standards. Kathryn Dick, deputy comptroller of the Office of the Comptroller of the Currency, told the Senate Banking Committee earlier this week that the OCC reviewed marketing materials for interest-only and payment-option adjustable-rate mortgages and discovered that lenders were stressing the low initial payments. Borrowers likely did not understand that their payments could rise dramatically down the road, she said. "There should be no equivocation about the risks of negative amortization and payment shock, if that's what the product entails," Dick said.
The guidelines — which are opposed by the banking industry because they would apply just to federally insured banks, potentially giving others a competitive edge — would force lenders to tighten underwriting standards by avoiding low-documentation loans in most instances and ensuring that borrowers will be able to afford the payments when they rise in the future.
Buying or Selling in this Market
Selling Your House in a Down Market - 5 Tips - It's official. It's a buyer's market out there for home sellers. But homes are still selling, mostly by people who know the landscape has changed.
Lowballing in a Cooling Housing Market - Current market conditions will spur home sellers to consider lower offers, but don't expect them to panic, says Real Estate Adviser Steve McLinden.
Be Patient - Home Buyers Will Return - The market has chilled in many areas of the country but the current construction slowdown will create new demand down the road, says Steve McLinden.
Selling Your House in a Down Market - 5 Tips - It's official. It's a buyer's market out there for home sellers. But homes are still selling, mostly by people who know the landscape has changed.
Lowballing in a Cooling Housing Market - Current market conditions will spur home sellers to consider lower offers, but don't expect them to panic, says Real Estate Adviser Steve McLinden.
Be Patient - Home Buyers Will Return - The market has chilled in many areas of the country but the current construction slowdown will create new demand down the road, says Steve McLinden.
Tuesday, October 24, 2006
What is a Short Sale and How Does It Work?
Short sales are increasingly becoming a significant part of our local market. No, I am not talking about selling a pair of shorts, but the graphic does seem to fit with the title :)
A short sale, in basic terms means to sell below value. More specifically, in real estate, it is when the bank (or lienhlder) will allow the sale of a property and accept a payoff for less than what is owed on it.
Short sales are great when they are needed. They offer a homeowner the chance to get out from under a house that they may be "upside down" in. Many times, short sales are used when a negative market fluctuation hits an area. Like what is developing right now.
Imagine that an area that has had high appreciation for several years in a row. Yes, imagine it. Usually, out of state investors will fuel a high appreciation period, however, once an equlibrium is found, it may start to fluctuate the other way therefore creating problems for people that may have bought at the end of an upward appreciation. Sound like it could be a set-up for our local market area? I am seeing an increasing incidence of this type of situation, and have recently been involved in a short sale on behalf of one of my clients.
There are other conditions that may lead to short sales, but are not often found in our area, such as a lack of regular maintenance. The easiest way to put this is that the neighboring homeowners let their houses go to hell. Another would be a trailer park may have moved in across the entrance from a nice subdivision (doesn't happen often) , or a declining commercial area may have been rezoned industrial, therefore plummeting the value of local housing within the immediate area. Again, while these factors could possibly happen but usually don't in our local market area, the most common factor is an overall decline in market values.
The point is - there are many factors that may play a part in depreciating properties. To list them all could take all night, but the basic point of the matter is that property can and does depreciate from time-to-time and when it happens in California, 'shift happens'.
When your property is worth significantly less than what you owe on it, and you find that you need to move if you have a significant financial reversal or have a job transfer, you may need to ask the bank for assistance to be able to sell it. This is the basic of a short sale. Don't you wish it were that easy? Well, in truth, it can be.
The dark side of short sales is that sometimes people take advantage of this practice and are commonly referred to as equity thieves. They may use a short sale to devalue your home for the sole purpose of purchasing at a reduced rate and selling for a significant profit. If you are a consumer reading this - I highly suggest talking with a competent real estate professional (me!), attorney, and/or accountant if you are approached before signing anything to do with a short sale.
A short sale consists of only a few steps and a lot of paperwork. While there is no such thing as "standard commission splits" because of The Sherman Anti-Trust Act, you can expect agents specializing in short sales to charge commissions that are higher than what you may be quoted for listing a property because of the added paperwork and liability. I do have the experience to help you handle your short sale situation.
The steps of a short sale:
1. Initiation - In order to start a short-sale, you have to initiate it with the bank. If you wait until you have an offer on the table, you could be too late unless the purchaser is willing to wait at least 3-4 weeks (and often longer) for an answer on their offer. A good real estate agent should be able to calculate fair market value on a piece of property after first seeing the property. If you see that your market analysis and estimated seller's net proceeds is significantly lower than what you owe (I generally look around a $10k difference), we need to discuss the possibility of a short sale.
2. Motivation. The seller's motivation for sale is a significant part of the package. If you have a significant unanticipated problem such as loss of job, forced job transfer, divorce, death in the family, or other financial reversal, the odds of getting a short sale approved by the bank improve dramatically. If you see that the market has declined for your home and you do an analysis of your home and find that you owe more than it is worth and you think it is a bad thing and you want the bank to just eat it, and otherwise you are not in any financial distress... you just want to be cagey about it after working out some numbers and there is no real financial distress or serious need to sell, your mortgage holder will most likely not approve your request for a short sale. Live your life and be happy.
3. Calling the bank - The bank will undoubtedly route you through several different departments before you get in contact with the person you need to speak with. Tell whoever answers the phone that you would like to talk to someone about the company's policy on short sales - don't give up. Or save yourself some trouble and go direct. Ask for 'The Work Out Desk'. Yes, this term is actually used in our area and asking for it will immediately get you to the right person. When you finally get in contact with the person you need to speak with - BE PREPARED. You need to have the full names of everyone on title, social security numbers, dates of birth, and loan number(s). While in some areas of the country an intermediary such as a Realtor or your attorney can do this if you have given them written authorization to do it, in Southern California the principles need to contact the mortgage holder directly.
4. Getting Estimates - When speaking to the bank, you may need to give professional estimates. A Competitive Market Analysis (CMA) will give you an idea of market value - make sure you have comparables that are very similar and less than ½ mile from subject property. If there are repairs needed on the property it would help to have a contractors bid (two similar bids are helpful). The bank will most likely want these figures if you can provide them.
5. Preliminary Confirmation - A bank will never give you a "guarantee" but you may be able to give you a preliminary confirmation. This generally will consist of you asking if they think they can work it out and the banks asset department saying , we may be able to get it down in the $$ range and to check back later. If they say they cannot comment leave it alone - at least they know what you are doing and are now working off the same page. If you have cash assets be prepared to bring some money in to close escrow. You might get $1,000-$2,000 for moving expenses, but that is about all. The bank might even send you a check for a small amount just to get you out of the house.
6. Reality Bites - Chances are that the mortgage holder will not do anything on your request for a short sale approval until you have a bona-fide offer to purchase your property. Yes, that involves putting the home on the market at a competitive price and hoping that a patient buyer writes a somewhat realistic offer. Given that the listing agent will need to write the listing as 'subject to short sale approval by the mortgage holder', this in reality proves to be a significant deterrant to any prospective buyer. With a lot of homes to choose from, what buyer will willingly get involved in a short sale situation because lenders are notoriously slow in approving short sale requests. Realistically, the first buyer on a short sale property bails out, but the second buyer gets the benefit from having the process started. If you need to sell (and only those who need to sell should be involved in this process anyway), the process goes on as long as it needs to. Besides, if a short sale process were real convenient, everyone would be doing it. Thus, Reality Bites.
7. Getting an Offer - In your disclosure documents, you will need to disclose that the sale price of the home is contingent on successfully negotiating a short sale with the lienholder and that all offers should allow for a lengthy acceptance period. You as the seller will know that I am letting agents know this - I have had very little problems with people low-balling just because of this and when they do I explain to them the negative sides of a short sale to the seller which would prohibit them from taking anything less than fair market value (explained later).
8. Submitting offer to bank - Much like a foreclosure, a short sale must be negotiated through the bank. You will send them a copy of the offer with a proof of funds or loan approval letter with conditions, if any- this highly improves your chances of an acceptance if they know the buyer is qualified. We will submit the offer and ask for an answer as soon as possible so we don't lose the buyer.
9. Wait for answer from bank.
10. Call bank 3-4 days later - inquire about offer.
11. Wait for answer from bank.
12. Call 3-4 days later (we are now at day 6-7) Wait. Repeat. And repeat.
13. Call bank and let them know offer will expire soon.
14. Call bank the day before expiration of offer and let them know you may lose the buyer if they do not respond.
15. Lose the buyer.
16. Get phone call from bank - This will generally happen a day or two after the original contract period has passed (law of averages). If you get an accepted contract by bank, you must have the purchaser sign an addendum stating that they are willing to complete the transaction (since the bank took so long and their offer expired). Sometimes, you will get it before the time expired but the banks never do anything quickly :) . That is just the way it is.
17. Go to close as normal - You will be in contact with escrow and your Realtor (me!) and will close as normal. OK, it may not be really normal, but your Realtor (me!) will guide you through it.
Keep in mind that the bank may say no. Unfortunately there is not much you can do about it if this is the case. Remember 'The Golden Rule'? Not the 'do unto others...' version.
Most banks will say yes and this is why: If a bank has to foreclose, it costs them thousands of dollars and then they have to sell it for market value, often at a LOWER value than what you are offering because it is a foreclosure and often the owners tore the place up on their way out. If they sell it as a short sale, they skip foreclosure and generally net more.
Most banks will 1099 the sellers for the difference between the owed amount and the sale price. It is considered income which means it is taxable - make sure you as the seller with a short sale talk with a tax attorney or CPA. Remember Realtors are not attorneys or accountants and should not represent ourselves as such. Some banks may get a voluntary jugement signed by the sellers in order to do the short sale - again, have them talk to attorney or CPA about what this means to them.
I hope this answers most of your questions about "what is a short sale" or "how does one work". I know this was a long post but I tried to condense it as much as possible. This should at least give you a grasp of what it means and the basic process.
Short sales are increasingly becoming a significant part of our local market. No, I am not talking about selling a pair of shorts, but the graphic does seem to fit with the title :)
A short sale, in basic terms means to sell below value. More specifically, in real estate, it is when the bank (or lienhlder) will allow the sale of a property and accept a payoff for less than what is owed on it.
Short sales are great when they are needed. They offer a homeowner the chance to get out from under a house that they may be "upside down" in. Many times, short sales are used when a negative market fluctuation hits an area. Like what is developing right now.
Imagine that an area that has had high appreciation for several years in a row. Yes, imagine it. Usually, out of state investors will fuel a high appreciation period, however, once an equlibrium is found, it may start to fluctuate the other way therefore creating problems for people that may have bought at the end of an upward appreciation. Sound like it could be a set-up for our local market area? I am seeing an increasing incidence of this type of situation, and have recently been involved in a short sale on behalf of one of my clients.
There are other conditions that may lead to short sales, but are not often found in our area, such as a lack of regular maintenance. The easiest way to put this is that the neighboring homeowners let their houses go to hell. Another would be a trailer park may have moved in across the entrance from a nice subdivision (doesn't happen often) , or a declining commercial area may have been rezoned industrial, therefore plummeting the value of local housing within the immediate area. Again, while these factors could possibly happen but usually don't in our local market area, the most common factor is an overall decline in market values.
The point is - there are many factors that may play a part in depreciating properties. To list them all could take all night, but the basic point of the matter is that property can and does depreciate from time-to-time and when it happens in California, 'shift happens'.
When your property is worth significantly less than what you owe on it, and you find that you need to move if you have a significant financial reversal or have a job transfer, you may need to ask the bank for assistance to be able to sell it. This is the basic of a short sale. Don't you wish it were that easy? Well, in truth, it can be.
The dark side of short sales is that sometimes people take advantage of this practice and are commonly referred to as equity thieves. They may use a short sale to devalue your home for the sole purpose of purchasing at a reduced rate and selling for a significant profit. If you are a consumer reading this - I highly suggest talking with a competent real estate professional (me!), attorney, and/or accountant if you are approached before signing anything to do with a short sale.
A short sale consists of only a few steps and a lot of paperwork. While there is no such thing as "standard commission splits" because of The Sherman Anti-Trust Act, you can expect agents specializing in short sales to charge commissions that are higher than what you may be quoted for listing a property because of the added paperwork and liability. I do have the experience to help you handle your short sale situation.
The steps of a short sale:
1. Initiation - In order to start a short-sale, you have to initiate it with the bank. If you wait until you have an offer on the table, you could be too late unless the purchaser is willing to wait at least 3-4 weeks (and often longer) for an answer on their offer. A good real estate agent should be able to calculate fair market value on a piece of property after first seeing the property. If you see that your market analysis and estimated seller's net proceeds is significantly lower than what you owe (I generally look around a $10k difference), we need to discuss the possibility of a short sale.
2. Motivation. The seller's motivation for sale is a significant part of the package. If you have a significant unanticipated problem such as loss of job, forced job transfer, divorce, death in the family, or other financial reversal, the odds of getting a short sale approved by the bank improve dramatically. If you see that the market has declined for your home and you do an analysis of your home and find that you owe more than it is worth and you think it is a bad thing and you want the bank to just eat it, and otherwise you are not in any financial distress... you just want to be cagey about it after working out some numbers and there is no real financial distress or serious need to sell, your mortgage holder will most likely not approve your request for a short sale. Live your life and be happy.
3. Calling the bank - The bank will undoubtedly route you through several different departments before you get in contact with the person you need to speak with. Tell whoever answers the phone that you would like to talk to someone about the company's policy on short sales - don't give up. Or save yourself some trouble and go direct. Ask for 'The Work Out Desk'. Yes, this term is actually used in our area and asking for it will immediately get you to the right person. When you finally get in contact with the person you need to speak with - BE PREPARED. You need to have the full names of everyone on title, social security numbers, dates of birth, and loan number(s). While in some areas of the country an intermediary such as a Realtor or your attorney can do this if you have given them written authorization to do it, in Southern California the principles need to contact the mortgage holder directly.
4. Getting Estimates - When speaking to the bank, you may need to give professional estimates. A Competitive Market Analysis (CMA) will give you an idea of market value - make sure you have comparables that are very similar and less than ½ mile from subject property. If there are repairs needed on the property it would help to have a contractors bid (two similar bids are helpful). The bank will most likely want these figures if you can provide them.
5. Preliminary Confirmation - A bank will never give you a "guarantee" but you may be able to give you a preliminary confirmation. This generally will consist of you asking if they think they can work it out and the banks asset department saying , we may be able to get it down in the $$ range and to check back later. If they say they cannot comment leave it alone - at least they know what you are doing and are now working off the same page. If you have cash assets be prepared to bring some money in to close escrow. You might get $1,000-$2,000 for moving expenses, but that is about all. The bank might even send you a check for a small amount just to get you out of the house.
6. Reality Bites - Chances are that the mortgage holder will not do anything on your request for a short sale approval until you have a bona-fide offer to purchase your property. Yes, that involves putting the home on the market at a competitive price and hoping that a patient buyer writes a somewhat realistic offer. Given that the listing agent will need to write the listing as 'subject to short sale approval by the mortgage holder', this in reality proves to be a significant deterrant to any prospective buyer. With a lot of homes to choose from, what buyer will willingly get involved in a short sale situation because lenders are notoriously slow in approving short sale requests. Realistically, the first buyer on a short sale property bails out, but the second buyer gets the benefit from having the process started. If you need to sell (and only those who need to sell should be involved in this process anyway), the process goes on as long as it needs to. Besides, if a short sale process were real convenient, everyone would be doing it. Thus, Reality Bites.
7. Getting an Offer - In your disclosure documents, you will need to disclose that the sale price of the home is contingent on successfully negotiating a short sale with the lienholder and that all offers should allow for a lengthy acceptance period. You as the seller will know that I am letting agents know this - I have had very little problems with people low-balling just because of this and when they do I explain to them the negative sides of a short sale to the seller which would prohibit them from taking anything less than fair market value (explained later).
8. Submitting offer to bank - Much like a foreclosure, a short sale must be negotiated through the bank. You will send them a copy of the offer with a proof of funds or loan approval letter with conditions, if any- this highly improves your chances of an acceptance if they know the buyer is qualified. We will submit the offer and ask for an answer as soon as possible so we don't lose the buyer.
9. Wait for answer from bank.
10. Call bank 3-4 days later - inquire about offer.
11. Wait for answer from bank.
12. Call 3-4 days later (we are now at day 6-7) Wait. Repeat. And repeat.
13. Call bank and let them know offer will expire soon.
14. Call bank the day before expiration of offer and let them know you may lose the buyer if they do not respond.
15. Lose the buyer.
16. Get phone call from bank - This will generally happen a day or two after the original contract period has passed (law of averages). If you get an accepted contract by bank, you must have the purchaser sign an addendum stating that they are willing to complete the transaction (since the bank took so long and their offer expired). Sometimes, you will get it before the time expired but the banks never do anything quickly :) . That is just the way it is.
17. Go to close as normal - You will be in contact with escrow and your Realtor (me!) and will close as normal. OK, it may not be really normal, but your Realtor (me!) will guide you through it.
Keep in mind that the bank may say no. Unfortunately there is not much you can do about it if this is the case. Remember 'The Golden Rule'? Not the 'do unto others...' version.
Most banks will say yes and this is why: If a bank has to foreclose, it costs them thousands of dollars and then they have to sell it for market value, often at a LOWER value than what you are offering because it is a foreclosure and often the owners tore the place up on their way out. If they sell it as a short sale, they skip foreclosure and generally net more.
Most banks will 1099 the sellers for the difference between the owed amount and the sale price. It is considered income which means it is taxable - make sure you as the seller with a short sale talk with a tax attorney or CPA. Remember Realtors are not attorneys or accountants and should not represent ourselves as such. Some banks may get a voluntary jugement signed by the sellers in order to do the short sale - again, have them talk to attorney or CPA about what this means to them.
I hope this answers most of your questions about "what is a short sale" or "how does one work". I know this was a long post but I tried to condense it as much as possible. This should at least give you a grasp of what it means and the basic process.
Thursday, October 19, 2006
The Buyer's Market in the SCV
The real data on our local real estate market is pretty interesting, and I invite you to click on the links to the data that I always have in the column to the right. I've had a chance to do a brief analysis of the Santa Clarita and San Fernando Valley sales data for the month of September, and there are a couple of things that are just as apparent to me as they would be to you if you take a look.
We are in a buyer's market.
With the ratio of inventory to new sales now at 11 months this is definitely a buyer's market. Historical sales data indicates that a 6 to 8 month supply of inventory indicates a balanced market. Less than a 5 month supply of inventory would be a seller's market. At 11 months, there can be no doubt that we have gone through the transition to a buyer's market.
Home prices are holding steady.
Yes, despite media reports to the contrary, our local market remains generally steady, with neither rising prices nor falling prices in the aggregate. However, while appreciation is near zero from year to year, there has been a general downward trend which may tip into depreciation as we enter the fall and winter seasons. While the median price of closed sales has slipped modestly month-to-month, the average price has risen. In addition, the data indicates the percent of sales price to list price for the past month is at 100%, while the percent of sold price to original list price has risen to 96%. While a mixed bag of data shows change in the market, it does show a steadiness and normalization compared to past years. The next few months will be interesting.
What does this mean for buyers?
Buy. In a buyer's market with a lot of inventory and relatively low interest rates, start making offers. If you aren't that choosey about what you buy, try to pick off a weak seller. You never know what kind of deal you can get. Depending on seller motivation, what you get just might surprise you. Stay on the sidelines and you will never know. If you are real choosey, there is a lot of inventory to choose from and the home of your dreams is out there, and on the market. Take action. Call me.
What does this mean for sellers?
Price your home to sell. Be at the bottom price of comparable homes, not comfortably in the middle and definitely don't use the losing strategy of pricing high at the beginning. If you are a seller and aren't working with a buyer who comes in with an offer close to the sales comparable data for your home type, you are a fool. But you aren't a seller. If this describes you, do yourself and the rest of the market a favor. Take your home off the market. If you don't need to sell in this market and if you don't price your home to sell, you aren't really a seller. Stop fooling yourself. You aren't fooling the market.
What will the market look like in six months or a year?
Depends on interest rates and the supply of inventory and the rate of sales. People make projections which are sometimes right and sometimes wrong. Overall, the demographic pressures of demand for our area remain strong, and there are many who want to buy but a psychology of fear has entered the market. Instead of irrational exuberance of the past few years there is now an irrational pessimism that is unsupported by broader economic indicators. These swings in market psychology do have an effect on housing, just as any student of economics understands their affect on stock markets. The fear of loss among some potential buyers has put a significant brake on housing market activity. So I suppose the short answer to the above question is: I don't know. There are a lot of factors involved, and there certainly is not agreement among analysts.
The current data is always at The Real Blog
I stay on top of the current market data for our immediate market area. You can take a look at the Santa Clarita and San Fernando Valley data by clicking on the link in the right hand column under Best Real Estate Links.
Give me a call whether you are a prospective Buyer or Seller in this market, and let's get together.
The real data on our local real estate market is pretty interesting, and I invite you to click on the links to the data that I always have in the column to the right. I've had a chance to do a brief analysis of the Santa Clarita and San Fernando Valley sales data for the month of September, and there are a couple of things that are just as apparent to me as they would be to you if you take a look.
We are in a buyer's market.
With the ratio of inventory to new sales now at 11 months this is definitely a buyer's market. Historical sales data indicates that a 6 to 8 month supply of inventory indicates a balanced market. Less than a 5 month supply of inventory would be a seller's market. At 11 months, there can be no doubt that we have gone through the transition to a buyer's market.
Home prices are holding steady.
Yes, despite media reports to the contrary, our local market remains generally steady, with neither rising prices nor falling prices in the aggregate. However, while appreciation is near zero from year to year, there has been a general downward trend which may tip into depreciation as we enter the fall and winter seasons. While the median price of closed sales has slipped modestly month-to-month, the average price has risen. In addition, the data indicates the percent of sales price to list price for the past month is at 100%, while the percent of sold price to original list price has risen to 96%. While a mixed bag of data shows change in the market, it does show a steadiness and normalization compared to past years. The next few months will be interesting.
What does this mean for buyers?
Buy. In a buyer's market with a lot of inventory and relatively low interest rates, start making offers. If you aren't that choosey about what you buy, try to pick off a weak seller. You never know what kind of deal you can get. Depending on seller motivation, what you get just might surprise you. Stay on the sidelines and you will never know. If you are real choosey, there is a lot of inventory to choose from and the home of your dreams is out there, and on the market. Take action. Call me.
What does this mean for sellers?
Price your home to sell. Be at the bottom price of comparable homes, not comfortably in the middle and definitely don't use the losing strategy of pricing high at the beginning. If you are a seller and aren't working with a buyer who comes in with an offer close to the sales comparable data for your home type, you are a fool. But you aren't a seller. If this describes you, do yourself and the rest of the market a favor. Take your home off the market. If you don't need to sell in this market and if you don't price your home to sell, you aren't really a seller. Stop fooling yourself. You aren't fooling the market.
What will the market look like in six months or a year?
Depends on interest rates and the supply of inventory and the rate of sales. People make projections which are sometimes right and sometimes wrong. Overall, the demographic pressures of demand for our area remain strong, and there are many who want to buy but a psychology of fear has entered the market. Instead of irrational exuberance of the past few years there is now an irrational pessimism that is unsupported by broader economic indicators. These swings in market psychology do have an effect on housing, just as any student of economics understands their affect on stock markets. The fear of loss among some potential buyers has put a significant brake on housing market activity. So I suppose the short answer to the above question is: I don't know. There are a lot of factors involved, and there certainly is not agreement among analysts.
The current data is always at The Real Blog
I stay on top of the current market data for our immediate market area. You can take a look at the Santa Clarita and San Fernando Valley data by clicking on the link in the right hand column under Best Real Estate Links.
Give me a call whether you are a prospective Buyer or Seller in this market, and let's get together.
When there's this kind of temptation to make quick money, greed can't be far behind.
Insiders call it land flipping. Silent second. Straw buyers. Foreclosure fraud. Equity skimming. Air loans. If there's a thought to do it, there's a scheme attached to it.
"It's the fastest-growing white collar crime in the country," says California attorney Rachel Dollar, whose Web site, www.mortgagefraudblog.com, helps lenders across the country learn about who's doing what to whom. "There's 101,000 schemes. They come up with new ones all the time."
Some of these schemes come from get rich quick seminars. Some are from 'a friend of a friend.' Shady operators in the real estate business get tempted, either driven by greed or debt. A general slowdown in the business can have all kinds of effects.
Selling homes at inflated prices and giving cash back to the buyers so they could pocket the profits is one of the latest schemes to hit our local market. And when some desperate seller hears of it, temptation arises. But think about it. Money doesn't come in off the street. It comes from somewhere, and that someone is the lender who loans the money. So the seller leaves, and the buyer never makes a dimes worth of payment to the lender, and the house goes back to the bank. This scheme is lender fraud, and it is illegal. In fact, there are various federal offences involved which will land all parties in prison, including buyer, seller, appraiser, Realtor, and anyone else involved in the fraud.
If it sounds too good to be true, it probably is. And its incidence is increasing in our local market area.
Click HERE for a Wall Street Journal Online article on a mortgage fraud scheme that has devastated an entire town.
Insiders call it land flipping. Silent second. Straw buyers. Foreclosure fraud. Equity skimming. Air loans. If there's a thought to do it, there's a scheme attached to it.
"It's the fastest-growing white collar crime in the country," says California attorney Rachel Dollar, whose Web site, www.mortgagefraudblog.com, helps lenders across the country learn about who's doing what to whom. "There's 101,000 schemes. They come up with new ones all the time."
Some of these schemes come from get rich quick seminars. Some are from 'a friend of a friend.' Shady operators in the real estate business get tempted, either driven by greed or debt. A general slowdown in the business can have all kinds of effects.
Selling homes at inflated prices and giving cash back to the buyers so they could pocket the profits is one of the latest schemes to hit our local market. And when some desperate seller hears of it, temptation arises. But think about it. Money doesn't come in off the street. It comes from somewhere, and that someone is the lender who loans the money. So the seller leaves, and the buyer never makes a dimes worth of payment to the lender, and the house goes back to the bank. This scheme is lender fraud, and it is illegal. In fact, there are various federal offences involved which will land all parties in prison, including buyer, seller, appraiser, Realtor, and anyone else involved in the fraud.
If it sounds too good to be true, it probably is. And its incidence is increasing in our local market area.
Click HERE for a Wall Street Journal Online article on a mortgage fraud scheme that has devastated an entire town.
Burst Bubble Talk In The Blogs
The following is from one of the other Blogs that I follow.
While I don't subscribe to the conclusions for our local market, the discussion of the housing market does wobble between extremes. This is from 'Voodoo Debt and the Coming Recession' from the Contrarian Chronicles. What do you think??
~~Ray
A bubble's date with a wrecking ball
Proceeding to the front of the housing ATM food chain, I'd like to spend a moment on how folks' appetite for risk has been enabled by all of this mortgage exotica. There are several worthwhile quotes that I'll now share from The Campbell Real Estate Timing Letter, which has a good track record regarding that market. Some of these comments won't be news to readers, but it's nice to find other people who agree with me (as long as it isn't Time magazine), especially if they come at it from a slightly different vantage point.
Author Robert Campbell writes: "I always figured the deflation of the housing bubble would resemble a slow train wreck, but there is new evidence that makes me think the correction may occur more rapidly. This is because there is compelling evidence that a recession is dead ahead. … Now that housing prices are going sideways to down -- and incomes and jobs are still sagging -- this 'debt-fueled' artificial-life-support system for continued consumer spending (and an expanding U.S. economy) is running out of gas.
"In the long run, housing prices cannot continue compounding faster than incomes. We are now facing this economic reality. People cannot continue buying homes with creative, voodoo mortgage-loan financing -- that, in the end -- they can't afford. I don't know who has been more irresponsible, real estate agents, mortgage lenders, borrowers, or banking regulators -- but I do know that the lending standards for mortgage borrowing have dropped to a zero setting for the past five years. If people weren't in prison or earned more than the minimum wage, money essentially was free to all -- whether they could ever hope to pay it back or not."
No happy ending for housing Continuing on, he says: "The United States has experienced the greatest real estate boom in history, but the boom is now turning into a bust, and the aftermath is not going to be pretty. Present American folklore has it that a real estate decline does not have to affect the economy. That's like saying that it will rain, but you're not going to get wet.
"The coming recession is not only going to dispel that hope, but it's going to speed up the fall. … The sad fact is that we're living in a debt-fueled economy, as opposed to an income-fueled economy. Housing prices cannot continue to compound faster than incomes forever. This incredible rise in prices has been driven by artificial demand (ultra-low interest rates and ultra-loose credit), as opposed to real demand (rising incomes and rents)."
He concludes: "Loose mortgage loans that prolonged the boom will worsen the bust. Homebuyers are now going to pay the price for their 'buy now, worry later' spending spree. … With market manias, self-feeding greed on the way up turns into self-feeding fear on the way down. That time is near."
The following is from one of the other Blogs that I follow.
While I don't subscribe to the conclusions for our local market, the discussion of the housing market does wobble between extremes. This is from 'Voodoo Debt and the Coming Recession' from the Contrarian Chronicles. What do you think??
~~Ray
A bubble's date with a wrecking ball
Proceeding to the front of the housing ATM food chain, I'd like to spend a moment on how folks' appetite for risk has been enabled by all of this mortgage exotica. There are several worthwhile quotes that I'll now share from The Campbell Real Estate Timing Letter, which has a good track record regarding that market. Some of these comments won't be news to readers, but it's nice to find other people who agree with me (as long as it isn't Time magazine), especially if they come at it from a slightly different vantage point.
Author Robert Campbell writes: "I always figured the deflation of the housing bubble would resemble a slow train wreck, but there is new evidence that makes me think the correction may occur more rapidly. This is because there is compelling evidence that a recession is dead ahead. … Now that housing prices are going sideways to down -- and incomes and jobs are still sagging -- this 'debt-fueled' artificial-life-support system for continued consumer spending (and an expanding U.S. economy) is running out of gas.
"In the long run, housing prices cannot continue compounding faster than incomes. We are now facing this economic reality. People cannot continue buying homes with creative, voodoo mortgage-loan financing -- that, in the end -- they can't afford. I don't know who has been more irresponsible, real estate agents, mortgage lenders, borrowers, or banking regulators -- but I do know that the lending standards for mortgage borrowing have dropped to a zero setting for the past five years. If people weren't in prison or earned more than the minimum wage, money essentially was free to all -- whether they could ever hope to pay it back or not."
No happy ending for housing Continuing on, he says: "The United States has experienced the greatest real estate boom in history, but the boom is now turning into a bust, and the aftermath is not going to be pretty. Present American folklore has it that a real estate decline does not have to affect the economy. That's like saying that it will rain, but you're not going to get wet.
"The coming recession is not only going to dispel that hope, but it's going to speed up the fall. … The sad fact is that we're living in a debt-fueled economy, as opposed to an income-fueled economy. Housing prices cannot continue to compound faster than incomes forever. This incredible rise in prices has been driven by artificial demand (ultra-low interest rates and ultra-loose credit), as opposed to real demand (rising incomes and rents)."
He concludes: "Loose mortgage loans that prolonged the boom will worsen the bust. Homebuyers are now going to pay the price for their 'buy now, worry later' spending spree. … With market manias, self-feeding greed on the way up turns into self-feeding fear on the way down. That time is near."
Home Prices Decline Year to Year
Existing Homes' Median Price Falls
Summary: Home sales are down and, in the second sharpest decline in almost forty years, U.S. median home prices dropped 1.7% since last year. Some of the statistics issued by the National Association of Realtors: sales of existing homes were down 0.5% from July and 12.6% from last year; condo sales were down 3.5% from July and 14.5% from last year; single family home sales were down 12.3% from last year; condo prices fell 2.4% from last year; and inventory of unsold homes rose 1.5% last month to the biggest supply since April 1993. Thomas Lawler, former Fannie Mae economist notes "You've got a ways to go. You still have affordability issues in a lot of markets."
Full WSJ article >
Related links: National Association of Realtors Press Release • Home Prices Fall For First Time in Decade • Contrarians Moving Into Housing Stocks • Housing Weakness Poses Significant Risk to GDP and Stocks
Existing Homes' Median Price Falls
Summary: Home sales are down and, in the second sharpest decline in almost forty years, U.S. median home prices dropped 1.7% since last year. Some of the statistics issued by the National Association of Realtors: sales of existing homes were down 0.5% from July and 12.6% from last year; condo sales were down 3.5% from July and 14.5% from last year; single family home sales were down 12.3% from last year; condo prices fell 2.4% from last year; and inventory of unsold homes rose 1.5% last month to the biggest supply since April 1993. Thomas Lawler, former Fannie Mae economist notes "You've got a ways to go. You still have affordability issues in a lot of markets."
Full WSJ article >
Related links: National Association of Realtors Press Release • Home Prices Fall For First Time in Decade • Contrarians Moving Into Housing Stocks • Housing Weakness Poses Significant Risk to GDP and Stocks
Choose Wisely to Avoid Renovator Remorse
By Kara Swisher From The Wall Street Journal Online
The roof of my house is about to be ripped off and I hope I won't regret it someday.
While the roof wrecking is actually necessary -- it's old and leaky -- in a major renovation we are starting this month, I have been thinking about regrets I still harbor from an earlier one. At the time, I fell for a bunch of hot home trends that later didn't thrill me as much.
When renovating, perhaps the most important thing you can do is to avoid the lure of getting the latest and greatest stuff. A little self-control will save you money, improve resale value and eliminate simple daily frustrations that come with bad choices.
For entire article, click HERE
By Kara Swisher From The Wall Street Journal Online
The roof of my house is about to be ripped off and I hope I won't regret it someday.
While the roof wrecking is actually necessary -- it's old and leaky -- in a major renovation we are starting this month, I have been thinking about regrets I still harbor from an earlier one. At the time, I fell for a bunch of hot home trends that later didn't thrill me as much.
When renovating, perhaps the most important thing you can do is to avoid the lure of getting the latest and greatest stuff. A little self-control will save you money, improve resale value and eliminate simple daily frustrations that come with bad choices.
For entire article, click HERE
Exotic Mortgages Remain Popular
Despite Their Increasing Risks
By Rachel Koning Beals From Marketwatch
Call it the triumph of the exotic mortgages.
Such loan innovations allow home buyers to put little money down and make low monthly payments. They've also poured fuel on one of the hottest and longest housing booms in the nation's history.
But in the wake of the Federal Reserve's push to take away easy money, low interest rates and red-hot home prices have faded away. With them went the main conditions that made interest-only and other flexible mortgages worth their risks. So the consumer's love affair with such loans is drawing to a close now, right?
Wrong.
Far from just another financing fad, exotic mortgages have become such a fixture on the U.S. housing landscape that they've proven to be a key lever for many borrowers even as they have become a greater danger at the same time.
Click HERE for the entire article
Despite Their Increasing Risks
By Rachel Koning Beals From Marketwatch
Call it the triumph of the exotic mortgages.
Such loan innovations allow home buyers to put little money down and make low monthly payments. They've also poured fuel on one of the hottest and longest housing booms in the nation's history.
But in the wake of the Federal Reserve's push to take away easy money, low interest rates and red-hot home prices have faded away. With them went the main conditions that made interest-only and other flexible mortgages worth their risks. So the consumer's love affair with such loans is drawing to a close now, right?
Wrong.
Far from just another financing fad, exotic mortgages have become such a fixture on the U.S. housing landscape that they've proven to be a key lever for many borrowers even as they have become a greater danger at the same time.
Click HERE for the entire article
Large Price Increases Result
In Tax Hits for Home Sellers
By Tom Herman From The Wall Street Journal Online
A growing number of homeowners, riding the crest of the real-estate boom, are getting hit by an unpleasant surprise when they sell: a hefty tax bill.
This development stems from a 1997 law that Treasury Department officials said at the time would eliminate capital-gains taxes for nearly everyone selling their primary residence. Under that law, most married couples who file jointly can exclude as much as $500,000 of their gain. For most singles, the limit is $250,000.
But as home prices have surged, more people have been selling their home for bigger gains than the exclusion amount -- and thus are facing unexpectedly big tax bills, accountants and other tax professionals say. Besides getting hit by the top 15% rate on capital gains, some also are facing the loss of deductions, exemptions and credits. In some cases, they may even be drawn into the rapidly expanding web of the alternative minimum tax.
Many sellers are startled to hear they owe any tax at all because they didn't realize the 1997 law erased a popular provision that had allowed them to avoid taxes.
Click for entire article
~~~ If home price appreciation for the last few years has put you in this situation, give me a call today!
In Tax Hits for Home Sellers
By Tom Herman From The Wall Street Journal Online
A growing number of homeowners, riding the crest of the real-estate boom, are getting hit by an unpleasant surprise when they sell: a hefty tax bill.
This development stems from a 1997 law that Treasury Department officials said at the time would eliminate capital-gains taxes for nearly everyone selling their primary residence. Under that law, most married couples who file jointly can exclude as much as $500,000 of their gain. For most singles, the limit is $250,000.
But as home prices have surged, more people have been selling their home for bigger gains than the exclusion amount -- and thus are facing unexpectedly big tax bills, accountants and other tax professionals say. Besides getting hit by the top 15% rate on capital gains, some also are facing the loss of deductions, exemptions and credits. In some cases, they may even be drawn into the rapidly expanding web of the alternative minimum tax.
Many sellers are startled to hear they owe any tax at all because they didn't realize the 1997 law erased a popular provision that had allowed them to avoid taxes.
Click for entire article
~~~ If home price appreciation for the last few years has put you in this situation, give me a call today!
Some Listing Agents In Panic Mode
I've been able to read some of the commentary of a few of our local high-volume listing agents on their websites, and as expected their high overhead of carrying a lot of inventory is putting them in near-panic mode. High advertising costs just don't get covered when they have a lot of listings that aren't selling, and so some are advising their clients to drop prices drastically, on the order of 10%. Yep, agents with staffs and names easily recognized by the public are swallowing hard, letting some staff go, cutting back on advertising, and getting back to work.
They are grinding their sellers hard for price reductions, and not just incremental adjustments, but cuts to the bone. After all, they have got to make payroll and support the lifestyle.
Wait a minute. I've taken a look at the sales data, and there is nothing there that indicates the real situation is as dire as some of these agents have been describing. Could it be that they have 'bought the listing' when they came to agreement with the seller to sell the home? Uh, yeah. Pricing the home high just to get a signed contract is a habit of our recent fast appreciating market. In years past, if you took a listing that was priced too high, you would just have to wait a little longer for the market to catch up. When it sold, the agent was a hero and a genius. Now, in a stable market that is going into a seasonal slowdown, if your home on the market is priced too high and you won't come down to reality, you might as well take that overpriced turkey off the market. Buyers are looking for well-priced homes and deals, and there is so much on the market that they will just pass you by.
But seriously, homes that are priced right to begin with don't need a Big Story and a polished act. If the home is not getting shown the market is talking. If it is getting shown but doesn't have an offer, take a look at condition. Realtors with lots of listed inventory.... you know the ones... full page advertising everywhere and higher than high visibility, are really hurting right now and the inside the game commentary is pretty bad.
So when you want a Realtor who will give you the straight story based on the comparable sales data and not on a personal need to cover high overhead, give me a call. 'Positve Results With Service Second to None' isn't just a good slogan, it is how I actually run my business.
I've been able to read some of the commentary of a few of our local high-volume listing agents on their websites, and as expected their high overhead of carrying a lot of inventory is putting them in near-panic mode. High advertising costs just don't get covered when they have a lot of listings that aren't selling, and so some are advising their clients to drop prices drastically, on the order of 10%. Yep, agents with staffs and names easily recognized by the public are swallowing hard, letting some staff go, cutting back on advertising, and getting back to work.
They are grinding their sellers hard for price reductions, and not just incremental adjustments, but cuts to the bone. After all, they have got to make payroll and support the lifestyle.
Wait a minute. I've taken a look at the sales data, and there is nothing there that indicates the real situation is as dire as some of these agents have been describing. Could it be that they have 'bought the listing' when they came to agreement with the seller to sell the home? Uh, yeah. Pricing the home high just to get a signed contract is a habit of our recent fast appreciating market. In years past, if you took a listing that was priced too high, you would just have to wait a little longer for the market to catch up. When it sold, the agent was a hero and a genius. Now, in a stable market that is going into a seasonal slowdown, if your home on the market is priced too high and you won't come down to reality, you might as well take that overpriced turkey off the market. Buyers are looking for well-priced homes and deals, and there is so much on the market that they will just pass you by.
But seriously, homes that are priced right to begin with don't need a Big Story and a polished act. If the home is not getting shown the market is talking. If it is getting shown but doesn't have an offer, take a look at condition. Realtors with lots of listed inventory.... you know the ones... full page advertising everywhere and higher than high visibility, are really hurting right now and the inside the game commentary is pretty bad.
So when you want a Realtor who will give you the straight story based on the comparable sales data and not on a personal need to cover high overhead, give me a call. 'Positve Results With Service Second to None' isn't just a good slogan, it is how I actually run my business.
Beware of price inflation transactions
The following article comes via the California Department of Real Estate...
It has come to the DRE's attention that in recent months, there has been a number of purchase offers being negotiated throughout California that involve offers to purchase that significantly exceed the listing price. These purchase offers specify that the amount offered over the listing price be refunded to the buyer or to a third party at the close of escrow. While there are many variations to these purchase transactions, it is typical for these offers to be $70,000 to $100,000 over the listing price. The purchase agreements often have addendum directing these monies to be paid through escrow either to the buyer, or to a third party sometimes described as a repairman.
These transactions carry a high degree of risk of default and foreclosure for the lender because the buyer essentially has no money invested in a property that is most likely over encumbered. While there is not a specific provision in the Real Estate Law that prohibits an arrangement such as the one described, these transactions raise significant concern that the lenders funding the loans are not aware of the terms and are being defrauded. Real estate licensees should exercise caution when representing parties in these transactions. Diligent efforts should be made to ensure that the lenders who ultimately fund the loans are aware of the original listing price and of the fact that there is cash being rebated through escrow at the direction of the buyer. One method for accomplishing this is for the listing and/or selling agent to require as a condition of closing escrow that the lender sign an addendum acknowledging awareness that the property was sold for an amount over the actual listing price and that there are monies being refunded through escrow to the buyer or a third party.
Depending on the circumstances, real estate licensees who participate in these transactions subject themselves to potential disciplinary action under general statutes prohibiting participation in fraud or dishonest dealing. Also, the real estate appraisers involved in these transactions share in the risk of potential disciplinary action as their appraisals will be referred to the Office of Real Estate Appraisers to determine if the comparable sales used to justify the appraised value were valid. Morever, in addition to potential license discipline and civil liability, there is also the prospect of criminal prosecution under federal or state law for defrauding a lending institution, and this applies not only for the real estate licensees involved, but also for the appraiser as well as for the buyer and seller. When faced with the possibility of representing a buyer in one of these transactions, or when one of these offers is presented on a listed property, real estate licensees are well advised to take steps to ensure that the transaction terms are in the open for all parties to consider.
To avoid potential consequences at a later date, remember the old adage: When in doubt, disclose, disclose, disclose, and do it in writing. In addition, a licensee may be best advised to seek their own legal counsel prior to being involved.
[We do not participate in fraudulent transactions, and report to and cooperate with State and Federal authorities in bringing those who do to justice.]
The following article comes via the California Department of Real Estate...
It has come to the DRE's attention that in recent months, there has been a number of purchase offers being negotiated throughout California that involve offers to purchase that significantly exceed the listing price. These purchase offers specify that the amount offered over the listing price be refunded to the buyer or to a third party at the close of escrow. While there are many variations to these purchase transactions, it is typical for these offers to be $70,000 to $100,000 over the listing price. The purchase agreements often have addendum directing these monies to be paid through escrow either to the buyer, or to a third party sometimes described as a repairman.
These transactions carry a high degree of risk of default and foreclosure for the lender because the buyer essentially has no money invested in a property that is most likely over encumbered. While there is not a specific provision in the Real Estate Law that prohibits an arrangement such as the one described, these transactions raise significant concern that the lenders funding the loans are not aware of the terms and are being defrauded. Real estate licensees should exercise caution when representing parties in these transactions. Diligent efforts should be made to ensure that the lenders who ultimately fund the loans are aware of the original listing price and of the fact that there is cash being rebated through escrow at the direction of the buyer. One method for accomplishing this is for the listing and/or selling agent to require as a condition of closing escrow that the lender sign an addendum acknowledging awareness that the property was sold for an amount over the actual listing price and that there are monies being refunded through escrow to the buyer or a third party.
Depending on the circumstances, real estate licensees who participate in these transactions subject themselves to potential disciplinary action under general statutes prohibiting participation in fraud or dishonest dealing. Also, the real estate appraisers involved in these transactions share in the risk of potential disciplinary action as their appraisals will be referred to the Office of Real Estate Appraisers to determine if the comparable sales used to justify the appraised value were valid. Morever, in addition to potential license discipline and civil liability, there is also the prospect of criminal prosecution under federal or state law for defrauding a lending institution, and this applies not only for the real estate licensees involved, but also for the appraiser as well as for the buyer and seller. When faced with the possibility of representing a buyer in one of these transactions, or when one of these offers is presented on a listed property, real estate licensees are well advised to take steps to ensure that the transaction terms are in the open for all parties to consider.
To avoid potential consequences at a later date, remember the old adage: When in doubt, disclose, disclose, disclose, and do it in writing. In addition, a licensee may be best advised to seek their own legal counsel prior to being involved.
[We do not participate in fraudulent transactions, and report to and cooperate with State and Federal authorities in bringing those who do to justice.]
Re-Listing Distorts Market, Fools Buyers
Re-listing is a problem in our local market area, including the greater Los Angeles area, and the San Fernando, Antelope and Santa Clarita valleys. Free markets work best when information flows well between buyer and seller. Re-listing distorts market information, and is in effect a fraud upon the buyer. While the big listing agents may like this distortion, I think it hurts our market overall.
Daily Real Estate News October 2, 2006
No More Hiding Days on Market by Relisting
RE Infolink, the company that operates the multiple listing service for the five California counties that make up the Silicon Valley, has changed a policy to make relisting a home more difficult.Previously, all it took was paying a $25 fee to earn a new MLS number and hide the “days on market” figure. Now all homes on the MLS will display the correct days on market number unless they have been taken off the market for more than 30 days.The change was prompted by a recommendation this summer by the CALIFORNIA ASSOCIATION OF REALTORS®. Relisting can mislead consumers, and it also corrupts the integrity of data on the multiple listing service, says June Barlow, general counsel for the CAR. ``We're real persnickety about keeping the data clean,'' Barlow says.
Source: San Jose Mercury News, Sue McAllister (09/29/2006)
I have never liked the practice and while it is good to see that the Realtors up north have gotten a handle on the problem, it is disappointing that it is still tolerated down here.
One of the major indications of market activity is 'days on market'. When a property has been re-listed the DOM resets to zero. Averaged out, reset listings tend to distort the DOM figures shown in the MLS data which is posted and updated monthly on this Blog. Long-time readers here know that I have never pointed to the DOM figure as accurately reflecting anything in the market, and that was due to the specific reason of the practice of 're-listing'. Right now DOM is about 90 days or so, but the real figure is unknown due to this distortion.
The second figure that is distorted on the market data is the 'new listings' figure. As the market slows down, re-listings have gone up. Funny thing, so have new listings. Do you see where this could distort the numbers? While I haven't crunched numbers over just how many 'new listings' are in reality re-listed homes, I would guess that it is around 15%.
Finally, re-listing hides market swings in pricing in that a home that has been on the market for a while may go through multiple price reductions from the original price. The market data provided by the Southland Regional Association of Realtors (SRAR) that includes the San Fernando and Santa Clarita Valleys includes percentage of list price that a property sells for, as well as percentage of original list price that a property sells for. When a property gets re-listed at a new, lower price and then subsequently sells, the percent off of list price figure is distorted. It may well be that the relative stability of percent off of list price has some distotion due to re-listing.
As an aside, seller concessions to the buyer in the form of seller credits for buyers' closing costs have never been included in the data, but as real estate practice has been increasing over the last year plus. In the seller's market, these price and terms concessions were not a part of the deal. Now they nearly always are.
Realtor estate practice should not add to distortions in the housing market, nor should we be tolerant of any fraud on the buyer. I have been in contact with our Realtor association leadership urging a change in the policy for over a year.
~~Ray
Re-listing is a problem in our local market area, including the greater Los Angeles area, and the San Fernando, Antelope and Santa Clarita valleys. Free markets work best when information flows well between buyer and seller. Re-listing distorts market information, and is in effect a fraud upon the buyer. While the big listing agents may like this distortion, I think it hurts our market overall.
Daily Real Estate News October 2, 2006
No More Hiding Days on Market by Relisting
RE Infolink, the company that operates the multiple listing service for the five California counties that make up the Silicon Valley, has changed a policy to make relisting a home more difficult.Previously, all it took was paying a $25 fee to earn a new MLS number and hide the “days on market” figure. Now all homes on the MLS will display the correct days on market number unless they have been taken off the market for more than 30 days.The change was prompted by a recommendation this summer by the CALIFORNIA ASSOCIATION OF REALTORS®. Relisting can mislead consumers, and it also corrupts the integrity of data on the multiple listing service, says June Barlow, general counsel for the CAR. ``We're real persnickety about keeping the data clean,'' Barlow says.
Source: San Jose Mercury News, Sue McAllister (09/29/2006)
I have never liked the practice and while it is good to see that the Realtors up north have gotten a handle on the problem, it is disappointing that it is still tolerated down here.
One of the major indications of market activity is 'days on market'. When a property has been re-listed the DOM resets to zero. Averaged out, reset listings tend to distort the DOM figures shown in the MLS data which is posted and updated monthly on this Blog. Long-time readers here know that I have never pointed to the DOM figure as accurately reflecting anything in the market, and that was due to the specific reason of the practice of 're-listing'. Right now DOM is about 90 days or so, but the real figure is unknown due to this distortion.
The second figure that is distorted on the market data is the 'new listings' figure. As the market slows down, re-listings have gone up. Funny thing, so have new listings. Do you see where this could distort the numbers? While I haven't crunched numbers over just how many 'new listings' are in reality re-listed homes, I would guess that it is around 15%.
Finally, re-listing hides market swings in pricing in that a home that has been on the market for a while may go through multiple price reductions from the original price. The market data provided by the Southland Regional Association of Realtors (SRAR) that includes the San Fernando and Santa Clarita Valleys includes percentage of list price that a property sells for, as well as percentage of original list price that a property sells for. When a property gets re-listed at a new, lower price and then subsequently sells, the percent off of list price figure is distorted. It may well be that the relative stability of percent off of list price has some distotion due to re-listing.
As an aside, seller concessions to the buyer in the form of seller credits for buyers' closing costs have never been included in the data, but as real estate practice has been increasing over the last year plus. In the seller's market, these price and terms concessions were not a part of the deal. Now they nearly always are.
Realtor estate practice should not add to distortions in the housing market, nor should we be tolerant of any fraud on the buyer. I have been in contact with our Realtor association leadership urging a change in the policy for over a year.
~~Ray
"... as easy as pie..."
From HappyHair at WSJ BubbleBlog
"I will try and make this is easy as pie... When people invest they invest because they believe in the fundamentals... They sell when the fundamentals change for the worse... Thus if someone believes that IBM is a great investment and that person makes a purchase if a day later the stock drops 2% or advances 2% but the fundamentals did not change the owner will continue to hold on to the stock. People who purchase a home have a long time horizon... They see beyond a short time horizon unless the fundamentals change. For most bulls including myself, Bruce, Gbarney04, Vegas Gal, and countless others we all believe the fundamentals are still positive and as such we are owners and not renters. In 40 years my mortgage will be long retired. I and many others do not need to sell our homes and RAID the NEST EGG to put cash in the bank... I/we already have cash and other assets in the bank... So why are we not selling our homes as you did? Why? We are nurturing a long-term investment and it is because we believe in the fundamentals. If we were to REVERSE ENGINEER my point if I asked a homeowner in 1966 if they believed there home and the land it is on would be worth more in 40 years! With your knowledge of history and any record book I answered the fundamentals PARADIGM that many Bulls believe in. Time value of money or compounding is the high road that the bulls have selected it and for good reason... In fact in the 1950s a young reporter asked the most intelligent man on the planet and a then professor at Princeton University what was his single most admired concept in modern thinking. The young reporter was sure that the scientist would respond with e =mc squared or some other scientific hypothesis however the Professor scratched his head perhaps weighing all he knows and understands and much more then you and I ever will and responded... "Compounding!" Now if you think you are smarter then Albert Einstein well good luck chump... Read the article."
From HappyHair at WSJ BubbleBlog
"I will try and make this is easy as pie... When people invest they invest because they believe in the fundamentals... They sell when the fundamentals change for the worse... Thus if someone believes that IBM is a great investment and that person makes a purchase if a day later the stock drops 2% or advances 2% but the fundamentals did not change the owner will continue to hold on to the stock. People who purchase a home have a long time horizon... They see beyond a short time horizon unless the fundamentals change. For most bulls including myself, Bruce, Gbarney04, Vegas Gal, and countless others we all believe the fundamentals are still positive and as such we are owners and not renters. In 40 years my mortgage will be long retired. I and many others do not need to sell our homes and RAID the NEST EGG to put cash in the bank... I/we already have cash and other assets in the bank... So why are we not selling our homes as you did? Why? We are nurturing a long-term investment and it is because we believe in the fundamentals. If we were to REVERSE ENGINEER my point if I asked a homeowner in 1966 if they believed there home and the land it is on would be worth more in 40 years! With your knowledge of history and any record book I answered the fundamentals PARADIGM that many Bulls believe in. Time value of money or compounding is the high road that the bulls have selected it and for good reason... In fact in the 1950s a young reporter asked the most intelligent man on the planet and a then professor at Princeton University what was his single most admired concept in modern thinking. The young reporter was sure that the scientist would respond with e =mc squared or some other scientific hypothesis however the Professor scratched his head perhaps weighing all he knows and understands and much more then you and I ever will and responded... "Compounding!" Now if you think you are smarter then Albert Einstein well good luck chump... Read the article."
Report: LA Prices to Drop Less Than 5% Over Two Years
Yes, I comb the news on your behalf, and behind the screaming headlines one will find data that shows how stable our market is, despite the hype. Read the entire article and check out the chart at the bottom. I would expect that our suburban areas will maintain value. Besides everyone needs a place to live, plus renters get a puny tax benefit compared to owners. ~~Ray
Prices in 100 U.S. Cities ExpectedTo Decline for Next Few Years
By James R. Hagerty and Anjali Athavaley
From The Wall Street Journal Online
Home buyers have another reason to sit on their hands.
In the latest news from the slumping U.S. housing market, a report released this week says that median house prices are likely to decline more than 10% over the next few years in 20 metro areas, including Las Vegas, Tucson, Ariz., and Washington, D.C.
MORE
Yes, I comb the news on your behalf, and behind the screaming headlines one will find data that shows how stable our market is, despite the hype. Read the entire article and check out the chart at the bottom. I would expect that our suburban areas will maintain value. Besides everyone needs a place to live, plus renters get a puny tax benefit compared to owners. ~~Ray
Prices in 100 U.S. Cities ExpectedTo Decline for Next Few Years
By James R. Hagerty and Anjali Athavaley
From The Wall Street Journal Online
Home buyers have another reason to sit on their hands.
In the latest news from the slumping U.S. housing market, a report released this week says that median house prices are likely to decline more than 10% over the next few years in 20 metro areas, including Las Vegas, Tucson, Ariz., and Washington, D.C.
MORE
A View With No Room --
Products For Taking the Bedroom Outdoors
By Cheryl Lu-Lien Tan From The Wall Street Journal Online
For his new bedroom, Miami real-estate developer Jason Adams has picked out a bed frame and matching nightstand -- plus bamboo shades and citronella candles to ward off the bugs. That's because his sleeping quarters are going to be outdoors. "It's manicured camping," says Mr. Adams, who plans to set up his bed on the terrace of the vacation home he's building in the Bahamas. "What was the sleeping bag is now a very expensive and very comfortable lounger."
Having persuaded consumers to spend billions on outdoor "rooms," moving everything from living-room entertainment centers to full-blown kitchens into their backyards, some companies are betting Americans will go even further. This spring, they're pushing mattresses, daybeds and even night stands for outside slumber -- or, at the very least, a nap.
MORE
Products For Taking the Bedroom Outdoors
By Cheryl Lu-Lien Tan From The Wall Street Journal Online
For his new bedroom, Miami real-estate developer Jason Adams has picked out a bed frame and matching nightstand -- plus bamboo shades and citronella candles to ward off the bugs. That's because his sleeping quarters are going to be outdoors. "It's manicured camping," says Mr. Adams, who plans to set up his bed on the terrace of the vacation home he's building in the Bahamas. "What was the sleeping bag is now a very expensive and very comfortable lounger."
Having persuaded consumers to spend billions on outdoor "rooms," moving everything from living-room entertainment centers to full-blown kitchens into their backyards, some companies are betting Americans will go even further. This spring, they're pushing mattresses, daybeds and even night stands for outside slumber -- or, at the very least, a nap.
MORE
Wednesday, October 18, 2006
More Senior Resources:
Independent Living: Resources that can help seniors stay in their own home – Provides a variety of links with resources that can help seniors stay independent in their own homes, including Lifeline Medical Alert systems information and Senior Corps elder companion program. (Aging Solutions)
American Association for Home Care – Discusses important questions to ask when choosing a home health agency and presents vital Medicare benefit information. (American Association for Home Care)
Making Your Home Safe for Seniors: A Room-By-Room Assessment – Offers excellent tips for making a senior's home safe with a room by room assessment. (Our Senior Years, Caring for Elders)
ABLEDATA provides objective information on assistive technology and rehabilitation products available to consumers, organizations, professionals, and caregivers within the United States. Its audience includes seniors, in addition to the disability and rehabilitation communities. The government funded website, www.abledata.com, lists products alphabetically and is sponsored by the National Institute on Disability and Rehabilitation Research (NIDRR), part of the Office of Special Education and Rehabilitative Services (OSERS) of the U.S. Department of Education.
A very helpful checklist when choosing long-term care facilities can be found at www.carepathways.com/checklist-ccrc.cfm
"Every person-every man, woman and child-deserves to be treated with respect and with caring... no matter how young or how old- to be safe from harm by those who live with him, care for him, or come into daily contact with him."
~~ American Psychological Association
Independent Living: Resources that can help seniors stay in their own home – Provides a variety of links with resources that can help seniors stay independent in their own homes, including Lifeline Medical Alert systems information and Senior Corps elder companion program. (Aging Solutions)
American Association for Home Care – Discusses important questions to ask when choosing a home health agency and presents vital Medicare benefit information. (American Association for Home Care)
Making Your Home Safe for Seniors: A Room-By-Room Assessment – Offers excellent tips for making a senior's home safe with a room by room assessment. (Our Senior Years, Caring for Elders)
ABLEDATA provides objective information on assistive technology and rehabilitation products available to consumers, organizations, professionals, and caregivers within the United States. Its audience includes seniors, in addition to the disability and rehabilitation communities. The government funded website, www.abledata.com, lists products alphabetically and is sponsored by the National Institute on Disability and Rehabilitation Research (NIDRR), part of the Office of Special Education and Rehabilitative Services (OSERS) of the U.S. Department of Education.
A very helpful checklist when choosing long-term care facilities can be found at www.carepathways.com/checklist-ccrc.cfm
"Every person-every man, woman and child-deserves to be treated with respect and with caring... no matter how young or how old- to be safe from harm by those who live with him, care for him, or come into daily contact with him."
~~ American Psychological Association
REALTORS® with Special Training
Provide Help to Older Clients
Excerpt from the Los Angeles Times By SUZANNE STAVINOHA, Special Advertising Sections Writer
Article Link: http://www.latimes.com/extras/newhomes/senior/story_04.html
You’ve lived in your home for 30 years. Now, the kids have grown and moved away, the neighborhood is changing and you’d like to move to a smaller home where you can enjoy an active retirement. The problem is you’re not sure what your house is worth, you’re concerned about tax planning and you don’t know what your options are in terms of what or where to buy.
You might want to consider hiring a Seniors Real Estate Specialist (SRES).
In 1998, the California-based Senior Advantage Real Estate Council (SAREC) became a national program designed to focus on the needs of buyers and sellers 50 and older. The council offers a special designation — SRES — to identify real estate agents who have completed its education program. Basically, an SRES designee is trained to help seniors make wise decisions about selling the family home. He also offers knowledge about financing, buying or selling rental properties and managing capital gains. He also can explain current trends and opportunities for seniors in the housing market.
Provide Help to Older Clients
Excerpt from the Los Angeles Times By SUZANNE STAVINOHA, Special Advertising Sections Writer
Article Link: http://www.latimes.com/extras/newhomes/senior/story_04.html
You’ve lived in your home for 30 years. Now, the kids have grown and moved away, the neighborhood is changing and you’d like to move to a smaller home where you can enjoy an active retirement. The problem is you’re not sure what your house is worth, you’re concerned about tax planning and you don’t know what your options are in terms of what or where to buy.
You might want to consider hiring a Seniors Real Estate Specialist (SRES).
In 1998, the California-based Senior Advantage Real Estate Council (SAREC) became a national program designed to focus on the needs of buyers and sellers 50 and older. The council offers a special designation — SRES — to identify real estate agents who have completed its education program. Basically, an SRES designee is trained to help seniors make wise decisions about selling the family home. He also offers knowledge about financing, buying or selling rental properties and managing capital gains. He also can explain current trends and opportunities for seniors in the housing market.
See the entire article with the link above.
[Ray the Realtor is an SRES member]
Real Estate BS Detection Checklist
In this time of real estate transition, there are lots of promises and claims made by agents & brokers, sellers, buyers, and seminar scammers. Take a look at this list and protect yourself, after all, fore-warned is fore-armed.
~~ Ray
This is from two articles which were published in the January 1990 and July 1998 issues of John T. Reed’s Real Estate Investor’s Monthly newsletter. I have also added additional points since 1998. Copyright by John T. Reed. All rights reserved.
“The power of accurate observation is commonly called cynicism by those who have not got it.” ~~George Bernard Shaw
“The most essential gift for a good writer is a built-in, shockproof s*** detector.” ~~Ernest Hemingway
CLICK for entire article
In this time of real estate transition, there are lots of promises and claims made by agents & brokers, sellers, buyers, and seminar scammers. Take a look at this list and protect yourself, after all, fore-warned is fore-armed.
~~ Ray
This is from two articles which were published in the January 1990 and July 1998 issues of John T. Reed’s Real Estate Investor’s Monthly newsletter. I have also added additional points since 1998. Copyright by John T. Reed. All rights reserved.
“The power of accurate observation is commonly called cynicism by those who have not got it.” ~~George Bernard Shaw
“The most essential gift for a good writer is a built-in, shockproof s*** detector.” ~~Ernest Hemingway
CLICK for entire article
It's time to get ready for winter rains and chilly weather
Fall is in the air, which means that winter can't be too far behind. So before the cold weather arrives here's your annual checklist of things to do to get your home ready for the change of season.
INSIDE YOUR HOME
Check smoke detectors: Please don't neglect the smoke detectors any longer! Take some time right now to check the operation of detectors and to change the batteries. Battery-powered smoke detectors are inexpensive and very easy to install, so add one to each bedroom and make sure there is one in the hallway outside of the bedrooms, and centrally located on each level of the home as well.
Install a carbon monoxide detector:A fire is not the only danger you can face inside your home. As houses get closed up for winter, the chances of carbon monoxide poisoning from malfunctioning gas appliances increases substantially. If you have a furnace, fireplace, water heater or other appliance that is fueled by propane or natural gas, now is the ideal time to install a carbon monoxide detector. They're available inexpensively from many home centers and retailers of heating system supplies, they're an easy do-it-yourself installation, and they can truly be a lifesaver!
Clean furnace ducts: A surprising amount of dirt can accumulate inside your home's furnace ducts, which can decrease your furnace's efficiency and add unnecessary dust to the indoor air. Now is the time to have a professional duct cleaning service come out and take care of this for you. Have them check that your ducts are well-sealed also. There is no sense in heating an attic area, and it can cost you money!
Change your furnace filters: Now is also the time to change your furnace filter and you might consider spending a few extra dollars and install one with a higher efficiency rating then the standard inexpensive filters have. While you're changing the filter, consult the owner's manual for the furnace to see if any annual fix-ups of belts, pulleys and other components are necessary - follow all of the manufacturer safety instructions for shutting the power and fuel to the furnace before servicing. You may want to vacuum that cold air return area when you change the air filter.
Clean and inspect the fireplace: Last winter your fireplace was building up a layer of soot and creosote and you've no doubt forgotten all about that during the summer. Before you light the first log, clean the fireplace chimney or wood stove flue using brushes approved for the size and type of flue you have, or consider hiring a chimney sweep to take care of this task for you - most do a great job at a very reasonable price. Clean out the firebox, making sure you place the ashes in a fireproof container with a tight lid for proper disposal. If you have an airtight wood stove or fireplace insert, check the door-seal gasket, and clean the glass on the door.
OUTSIDE THE HOUSE
Check weather-stripping: When you have gaps around doors, windows or other areas that penetrate the exterior of your home, you waste expensive heated air from inside as well as allow annoying drafts to keep you from feeling comfortable. Fall is the time to check the weather-stripping around doors and windows, and replace any that are worn. Everything you need can be found at home centers and retailers who specialize in doors and windows. Now is also a good time to close up a few more air leaks by checking the condition of caulking around exterior door and window frames and other penetrations.
Check and clean gutters: Time to break out the ladder and clean your gutters of leaf and pine needle debris and check that the opening between the gutter and the downspout is unobstructed. Check the entire system for loose joints or other structural problems, and use a gutter sealant to seal any connections where leaks may be occurring. For any repairs or cleaning you don't want to undertake yourself, you can also consider the services of a professional gutter company. Make sure the downspouts direct water away from the foundation. Use splashblocks if needed.
Adjust exterior grade: Fall is also a great time to take a long look at the grade around your home, and make sure that everything slopes away from your foundation to avoid costly problems with ground water. Add, remove or adjust soil grades as necessary for good drainage. Clean area drains as necessary. Flush them out with a hose.
Check roof condition: The time before the rainy season arrives is much better to address roof problems than during a rainstorm! Avoid the cost of leaky roofs by sealing holes in the roof or replacing the roof altogether if necessary. Check the condition of mastic (that black stuff) around vent pipes, check all flashings, fix broken or missing shingles or tiles, clean valleys, and do other basic maintenance to the roof before the rains come.
Fall is in the air, which means that winter can't be too far behind. So before the cold weather arrives here's your annual checklist of things to do to get your home ready for the change of season.
INSIDE YOUR HOME
Check smoke detectors: Please don't neglect the smoke detectors any longer! Take some time right now to check the operation of detectors and to change the batteries. Battery-powered smoke detectors are inexpensive and very easy to install, so add one to each bedroom and make sure there is one in the hallway outside of the bedrooms, and centrally located on each level of the home as well.
Install a carbon monoxide detector:A fire is not the only danger you can face inside your home. As houses get closed up for winter, the chances of carbon monoxide poisoning from malfunctioning gas appliances increases substantially. If you have a furnace, fireplace, water heater or other appliance that is fueled by propane or natural gas, now is the ideal time to install a carbon monoxide detector. They're available inexpensively from many home centers and retailers of heating system supplies, they're an easy do-it-yourself installation, and they can truly be a lifesaver!
Clean furnace ducts: A surprising amount of dirt can accumulate inside your home's furnace ducts, which can decrease your furnace's efficiency and add unnecessary dust to the indoor air. Now is the time to have a professional duct cleaning service come out and take care of this for you. Have them check that your ducts are well-sealed also. There is no sense in heating an attic area, and it can cost you money!
Change your furnace filters: Now is also the time to change your furnace filter and you might consider spending a few extra dollars and install one with a higher efficiency rating then the standard inexpensive filters have. While you're changing the filter, consult the owner's manual for the furnace to see if any annual fix-ups of belts, pulleys and other components are necessary - follow all of the manufacturer safety instructions for shutting the power and fuel to the furnace before servicing. You may want to vacuum that cold air return area when you change the air filter.
Clean and inspect the fireplace: Last winter your fireplace was building up a layer of soot and creosote and you've no doubt forgotten all about that during the summer. Before you light the first log, clean the fireplace chimney or wood stove flue using brushes approved for the size and type of flue you have, or consider hiring a chimney sweep to take care of this task for you - most do a great job at a very reasonable price. Clean out the firebox, making sure you place the ashes in a fireproof container with a tight lid for proper disposal. If you have an airtight wood stove or fireplace insert, check the door-seal gasket, and clean the glass on the door.
OUTSIDE THE HOUSE
Check weather-stripping: When you have gaps around doors, windows or other areas that penetrate the exterior of your home, you waste expensive heated air from inside as well as allow annoying drafts to keep you from feeling comfortable. Fall is the time to check the weather-stripping around doors and windows, and replace any that are worn. Everything you need can be found at home centers and retailers who specialize in doors and windows. Now is also a good time to close up a few more air leaks by checking the condition of caulking around exterior door and window frames and other penetrations.
Check and clean gutters: Time to break out the ladder and clean your gutters of leaf and pine needle debris and check that the opening between the gutter and the downspout is unobstructed. Check the entire system for loose joints or other structural problems, and use a gutter sealant to seal any connections where leaks may be occurring. For any repairs or cleaning you don't want to undertake yourself, you can also consider the services of a professional gutter company. Make sure the downspouts direct water away from the foundation. Use splashblocks if needed.
Adjust exterior grade: Fall is also a great time to take a long look at the grade around your home, and make sure that everything slopes away from your foundation to avoid costly problems with ground water. Add, remove or adjust soil grades as necessary for good drainage. Clean area drains as necessary. Flush them out with a hose.
Check roof condition: The time before the rainy season arrives is much better to address roof problems than during a rainstorm! Avoid the cost of leaky roofs by sealing holes in the roof or replacing the roof altogether if necessary. Check the condition of mastic (that black stuff) around vent pipes, check all flashings, fix broken or missing shingles or tiles, clean valleys, and do other basic maintenance to the roof before the rains come.
See Ray Go to Jail for MDA on Nov 30
What? I'm going to jail??? Is this a joke???
I just got a call notifying me that I will be going to jail for the Muscular Dystrophy Association on November 30th. Do you want to cheer my jailors on, and urge them to keep me in the pokey for a long, long time? Or will you be one of those good friends who will cry and wail, and beg on my behalf for mercy? Come to Keller Williams VIP Properties at 27201 Tourney Road, Suite 115 in Valencia (just north of Kaiser) at noon on November 30th and watch me get handcuffed and hauled away in the paddy wagon! Cheer or cry, but Yep, I'm going to the Big House, the cooler, the clink, the stir and up the river! Handcuffed and hauled off to be locked up in the joint, in a small cell, really a dungeon of sorts, to serve my time until enough funds are raised.
You can help bail me out by pledging or donating to MDA. They also tell me that you can pledge money to help keep me in jail. Yikes! That fund just might exceed by many orders of magnitude funds that are donated to spring me to freedom!
Seriously, the MDA is a worthy organization, and these funds are used to send children stricken with muscular dystrophy to summer camp. I am really pleased and honored to be a part of this fundraising effort on behalf of kids with muscular dystrophy. The MDA organizes over 90 summer camps across the country every year.
Give me a call or send me an email at Ray@SCVhometeam.com and let me know how much you will pledge to get me out of jail, or to keep me in jail! The more you give, the faster that I'll be able to get out (or the more you give, the longer I'll have to stay). Confusing? Yes. Don't worry about it. Just take out your checkbook and start writing from your heart and send me a big check made out to 'MDA' and note the check 'summer camp'.
More information can be found at http://mda.org/clinics/camp/
What? I'm going to jail??? Is this a joke???
I just got a call notifying me that I will be going to jail for the Muscular Dystrophy Association on November 30th. Do you want to cheer my jailors on, and urge them to keep me in the pokey for a long, long time? Or will you be one of those good friends who will cry and wail, and beg on my behalf for mercy? Come to Keller Williams VIP Properties at 27201 Tourney Road, Suite 115 in Valencia (just north of Kaiser) at noon on November 30th and watch me get handcuffed and hauled away in the paddy wagon! Cheer or cry, but Yep, I'm going to the Big House, the cooler, the clink, the stir and up the river! Handcuffed and hauled off to be locked up in the joint, in a small cell, really a dungeon of sorts, to serve my time until enough funds are raised.
You can help bail me out by pledging or donating to MDA. They also tell me that you can pledge money to help keep me in jail. Yikes! That fund just might exceed by many orders of magnitude funds that are donated to spring me to freedom!
Seriously, the MDA is a worthy organization, and these funds are used to send children stricken with muscular dystrophy to summer camp. I am really pleased and honored to be a part of this fundraising effort on behalf of kids with muscular dystrophy. The MDA organizes over 90 summer camps across the country every year.
Give me a call or send me an email at Ray@SCVhometeam.com and let me know how much you will pledge to get me out of jail, or to keep me in jail! The more you give, the faster that I'll be able to get out (or the more you give, the longer I'll have to stay). Confusing? Yes. Don't worry about it. Just take out your checkbook and start writing from your heart and send me a big check made out to 'MDA' and note the check 'summer camp'.
More information can be found at http://mda.org/clinics/camp/
This is the inaugural post for The Real Blog on blogger.com, and I am excited to be here!
While I have been blogging for a long time, it has been at a provider site that is in decline. Blogger.com has a great reputation, and is tied to Google search.
So here I am!
In the next month or so I will be transferring articles over to this blog. Please comment as you will... it won't be the usual real estate stuff that you might be finding from your neighborhood Realtor. Sure, I'll be including links to real estate news and commentary from others on real estate trends, but what has differentiated me from the herd is a solid and real approach to real estate practice and advice. If you disagree with me, post a comment or thrash me for being mealy-mouthed. Sometimes I can get that way... after all, I hang around with a bunch of Realtors a lot of the time.
But I am dedicated to keeping the Real in real estate. I just call it like I see it.
And in the meantime, take a look at the archive!
http://blogs.delphiforums.com/n/blogs/blog.aspx?webtag=itsourmove
While I have been blogging for a long time, it has been at a provider site that is in decline. Blogger.com has a great reputation, and is tied to Google search.
So here I am!
In the next month or so I will be transferring articles over to this blog. Please comment as you will... it won't be the usual real estate stuff that you might be finding from your neighborhood Realtor. Sure, I'll be including links to real estate news and commentary from others on real estate trends, but what has differentiated me from the herd is a solid and real approach to real estate practice and advice. If you disagree with me, post a comment or thrash me for being mealy-mouthed. Sometimes I can get that way... after all, I hang around with a bunch of Realtors a lot of the time.
But I am dedicated to keeping the Real in real estate. I just call it like I see it.
And in the meantime, take a look at the archive!
http://blogs.delphiforums.com/n/blogs/blog.aspx?webtag=itsourmove
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