Nationwide median price falls 2.1% in January
Wednesday, February 28, 2007
Inman News
The rate of new single-family home sales in January was an estimated 20.1 percent below the rate for the same month last year, the U.S. Census Bureau and U.S. Department of Housing and Urban Development announced today.
Sales fell to a seasonally adjusted annual rate of 937,000 in January, which was about 16.6 percent below the revised December 2006 rate. This rate is a projection of a monthly sales total over a 12-month period, adjusted for seasonal fluctuations in sales activity.
Regionally, sales dropped an estimated 50.4 percent in the West, 11.2 percent in the South, 1.6 percent in the Northeast and rose 0.6 percent in the Midwest in January compared to January 2006.
The median sales price of new houses sold in January was $239,800, down 2.1 percent compared to January 2006, and the average sales price was $313,000, up 4 percent compared to January 2006.
The seasonally adjusted estimate of new houses for sale at the end of January was 536,000, which represents a supply of 6.8 months at the January sales rate. A supply of six months is generally considered to indicate a market that is in rough equilibrium while a supply greater than six months can indicate market that favors buyers.
An estimated 25 percent of home sales in January were priced from $150,000 to $199,999, compared with 21 percent in January 2006. And an estimated 11 percent of home sales were priced from $300,000 to $399,999 in January, compared with 17 percent in January 2006.
Statistics are estimated from sample surveys, the agencies noted, and are subject to sampling variability as well as nonsampling error. Changes in seasonally adjusted statistics can show irregular movement, according to the report, and it takes six months to establish a trend for new houses sold.
Preliminary new-home sales figures are subject to revision. The survey is primarily based on a sample of houses selected from building permits. A "sale" is defined as a deposit taken or sales agreement signed. On average, the preliminary seasonally adjusted estimate of total sales is revised about 3 percent.
Changes in sales price data reflect changes in the distribution of houses by region, size, and other factors, as well as changes in the prices of houses with identical characteristics, the agencies reported.
Wednesday, February 28, 2007
Tuesday, February 27, 2007
Freddie Mac to Tighten Loan Standards
Government-sponsored mortgage marketer Freddie Mac is the latest company to weigh in on the growing concern over lending to unqualified homebuyers, saying this week it's tightening its standards for buying mortgages held by such borrowers. The McLean (VA)-based company said it would start enforcing the new standards after Sept. 1, 2007.
For its part, Freddie Mac said that it would stop buying those mortgages that have "a high likelihood of excessive payment shock and possible foreclosure." Instead, the company plans to buy only subprime adjustable-rate mortgages, and securities backed by such loans, that have been qualified at the fully indexed and fully amortizing rate.
Freddie Mac also said it would limit the use of loans that don't require income verification or other documentation, and will recommend that lenders collect adequate escrow for taxes and insurance payments. Moreover, the company said it's developing new fixed-rate and hybrid adjustable-rate mortgages with the aim of giving lenders "more choices to offer subprime borrowers."
The firm said its new requirements cover mortgages known as 2/28 and 3/27 hybrid ARMs, which currently make up about three-quarters of the subprime market. Specifically, Freddie Mac said it will require that borrowers applying for these products be underwritten at the fully indexed and amortizing rate, as opposed to the initial "teaser" rate -- often several percentage points below the actual rate for most of the life of the loan.
The company also will limit use of low-documentation loans, so-called "no income verification" products in combination with the 2/28 and 3/27 hybrid ARMs. In addition, the company won't purchase "no income, no asset" documentation loans and will limit so-called "stated income, stated assets" products to borrowers whose incomes derive from hard-to-verify sources, such as self-employed persons and those who participate in the cash economy, the firm said in a press release.
For its part, Freddie Mac said that it would stop buying those mortgages that have "a high likelihood of excessive payment shock and possible foreclosure." Instead, the company plans to buy only subprime adjustable-rate mortgages, and securities backed by such loans, that have been qualified at the fully indexed and fully amortizing rate.
Freddie Mac also said it would limit the use of loans that don't require income verification or other documentation, and will recommend that lenders collect adequate escrow for taxes and insurance payments. Moreover, the company said it's developing new fixed-rate and hybrid adjustable-rate mortgages with the aim of giving lenders "more choices to offer subprime borrowers."
The firm said its new requirements cover mortgages known as 2/28 and 3/27 hybrid ARMs, which currently make up about three-quarters of the subprime market. Specifically, Freddie Mac said it will require that borrowers applying for these products be underwritten at the fully indexed and amortizing rate, as opposed to the initial "teaser" rate -- often several percentage points below the actual rate for most of the life of the loan.
The company also will limit use of low-documentation loans, so-called "no income verification" products in combination with the 2/28 and 3/27 hybrid ARMs. In addition, the company won't purchase "no income, no asset" documentation loans and will limit so-called "stated income, stated assets" products to borrowers whose incomes derive from hard-to-verify sources, such as self-employed persons and those who participate in the cash economy, the firm said in a press release.
Exceptional People - Built By Design or Accident?
Consider for a moment what it is that makes people exceptional.
Is it certain character traits such as strength, confidence, integrity, respect, charisma, a sense of humor or intelligence?
The ancient Greek philosopher Aristotle offered the following as exceptional qualities in man: courage, temperance, pride, good temper, friendliness, truthfulness and justice.
An how do people become exceptional?
Are these qualities genetically acquired? Do they depend upon a person's parents and the values taught through experiences at home? Or, were they acquired though other means?
We believe that we can develop the positive characteristics of exceptional people through sports.
Everyone is born with tremendous potential, and participation in sports is one of many ways that the young people of America can develop into contributing citizens. High school sports are an American tradition that can teach people fundamental life skills such as teamwork, respect, responsibility, good sportsmanship and integrity, among other positive values and attributes.
At times, it seems that our society often overlooks these positive attributes because of the media attention given to the negative actions of certain athletes, coaches and fans. We are all familiar with altercations between athletes and fans, other athletes' outlandish antics and attitudes exhibited time and time again, and some team rosters that resemble police blotters.
High school sports are an American tradition that is entrusted to us. They possess tremendous potential to influence the values of young people and through them, our society.
Buth hese things do not happen automatically. In fact, they have probably been taken for granted, lost in the growing list of expectations for education in this country. Some things should not be taken for granted about sports and their ability to mold exceptional people.
First, we are convinced that sports can educate, ant that they can educate in the virtues identified by Aristotle.
Because of this, sports can become a major contributor to the development of the total individual -- the mind, the body and the spirit of the person. But, it doesn't happen by itself anymore.
Every day, another child learns to dribble a basketball, another high school student learns a new playing rule, and another coach teaches his or her team patience or integrity. Through lessons learned on the court or on the field, students lean and grow into more well-rounded individuals.
Second, we believe that we are in a tremendous struggle to see that sport is used in this educational framework. If we lose that battle, we may actually become a detriment to the education of athletes, and our society as a whole.
Third, we believe that we possess the means to change the direction we are in, and reposition these experiences for the betterment of our society and this nation.
But it's not going to happen by itself anymore.
In order for sports to remain an educational tool, we must guide our young people with patience and passion so that they may grow into individuals of character who we can entrust with the future of this country. We are the educational leaders of this nation and we must take advantage of the positive impact we can have on America's youth.
Learning and common sense mean absolutely nothing without character development. Think about any intelligent person you know who has dealt with problems with alcohol or other addictions. It doesn't take brains to stay out of trouble; it takes values -- values that can be developed through sports participation. Consider the following statement made by Theodore Roosevelt:
"To educate a person in mind and not morals is to educate a menace to society," he said.
As a testament to Roosevelt's statement, witness the myriad people in our prison system who are very intelligent individuals -- a prime example of acquired intelligence being worthless without character development. Any development of ability in a person is counterproductive to our society without the development of character.
As athletic leaders, we set the standards and place that education-based athletics will occupy for the generations to follow. We are the guardians of high school sports and it is our responsibility to serve in that capacity to the best of our ability. In doing so, we must be certain that our coaches and advisors teach honesty, effor, fairness, sportsmanship, racial harmony, proper work ethic and dedication to purpose.
Contained within each of you is the ability to inspire, influence and enlighten the youth of America. Each of you knows someone who has had a mentor and has been positively impacted by someone possessing a patient attitude and a genuinely caring spirit. With perseverance, you can be that person who makes a tremendous difference in the lives of young people. If we all keep this goal in mind, we will indeed succeed.
Will you have the courage and determination to assume this great responsibility? The success or failure of this challenge will be determined by all of us, and our willingness to put forth the effort to do so. It will require the efforts of exceptional people. It's up to each of you -- because that is who you are.
[From NFHS Officials Quarterly, Spring 2007. Ray Kutylo has been a NFHS/SCAF certified sports official for ten years, and starts and referees swim meets for Southern California high schools and the Special Olympics]
Is it certain character traits such as strength, confidence, integrity, respect, charisma, a sense of humor or intelligence?
The ancient Greek philosopher Aristotle offered the following as exceptional qualities in man: courage, temperance, pride, good temper, friendliness, truthfulness and justice.
An how do people become exceptional?
Are these qualities genetically acquired? Do they depend upon a person's parents and the values taught through experiences at home? Or, were they acquired though other means?
We believe that we can develop the positive characteristics of exceptional people through sports.
Everyone is born with tremendous potential, and participation in sports is one of many ways that the young people of America can develop into contributing citizens. High school sports are an American tradition that can teach people fundamental life skills such as teamwork, respect, responsibility, good sportsmanship and integrity, among other positive values and attributes.
At times, it seems that our society often overlooks these positive attributes because of the media attention given to the negative actions of certain athletes, coaches and fans. We are all familiar with altercations between athletes and fans, other athletes' outlandish antics and attitudes exhibited time and time again, and some team rosters that resemble police blotters.
High school sports are an American tradition that is entrusted to us. They possess tremendous potential to influence the values of young people and through them, our society.
Buth hese things do not happen automatically. In fact, they have probably been taken for granted, lost in the growing list of expectations for education in this country. Some things should not be taken for granted about sports and their ability to mold exceptional people.
First, we are convinced that sports can educate, ant that they can educate in the virtues identified by Aristotle.
Because of this, sports can become a major contributor to the development of the total individual -- the mind, the body and the spirit of the person. But, it doesn't happen by itself anymore.
Every day, another child learns to dribble a basketball, another high school student learns a new playing rule, and another coach teaches his or her team patience or integrity. Through lessons learned on the court or on the field, students lean and grow into more well-rounded individuals.
Second, we believe that we are in a tremendous struggle to see that sport is used in this educational framework. If we lose that battle, we may actually become a detriment to the education of athletes, and our society as a whole.
Third, we believe that we possess the means to change the direction we are in, and reposition these experiences for the betterment of our society and this nation.
But it's not going to happen by itself anymore.
In order for sports to remain an educational tool, we must guide our young people with patience and passion so that they may grow into individuals of character who we can entrust with the future of this country. We are the educational leaders of this nation and we must take advantage of the positive impact we can have on America's youth.
Learning and common sense mean absolutely nothing without character development. Think about any intelligent person you know who has dealt with problems with alcohol or other addictions. It doesn't take brains to stay out of trouble; it takes values -- values that can be developed through sports participation. Consider the following statement made by Theodore Roosevelt:
"To educate a person in mind and not morals is to educate a menace to society," he said.
As a testament to Roosevelt's statement, witness the myriad people in our prison system who are very intelligent individuals -- a prime example of acquired intelligence being worthless without character development. Any development of ability in a person is counterproductive to our society without the development of character.
As athletic leaders, we set the standards and place that education-based athletics will occupy for the generations to follow. We are the guardians of high school sports and it is our responsibility to serve in that capacity to the best of our ability. In doing so, we must be certain that our coaches and advisors teach honesty, effor, fairness, sportsmanship, racial harmony, proper work ethic and dedication to purpose.
Contained within each of you is the ability to inspire, influence and enlighten the youth of America. Each of you knows someone who has had a mentor and has been positively impacted by someone possessing a patient attitude and a genuinely caring spirit. With perseverance, you can be that person who makes a tremendous difference in the lives of young people. If we all keep this goal in mind, we will indeed succeed.
Will you have the courage and determination to assume this great responsibility? The success or failure of this challenge will be determined by all of us, and our willingness to put forth the effort to do so. It will require the efforts of exceptional people. It's up to each of you -- because that is who you are.
[From NFHS Officials Quarterly, Spring 2007. Ray Kutylo has been a NFHS/SCAF certified sports official for ten years, and starts and referees swim meets for Southern California high schools and the Special Olympics]
Monday, February 26, 2007
Mortgage Prepayments v. Tax-Deferred Retirement Savings
Commentary by Douglas R. Andrew on
The Tradeoff between Mortgage Prepayments
and Tax-Deferred Retirement Savings
From the Working Papers of the Federal Reserve Bank of Chicago
By Gene Amromin, Jennifer Huang, and Clemens Sialm
(forwarded to me by Adam Ford of the Mortgage Advisors' Group)
One of our own federal banks—Chicago's Federal Reserve Bank—has determined that by accelerating mortgage payments instead of stashing money in tax-deferred accounts, more than one in three Americans are making the "wrong choice ," and are giving up potentially important arbitrage gains.
The mortgage overpayments, the Fed's recent report says, is a "mis-allocation" of funds that costs people $1.5-billion a year. If consumers changed their allocation by not sending excess payments to their mortgage company, and instead put that money in some form of tax-advantaged savings, they would reap a median gain of between 11 and 17 cents per dollar.
This is the very first time the Fed has compared these two kinds of "savings," write the authors. They conclude that "many households have significant amount of money" in both tax-favored and taxable accounts, but that a "large proportion" of American taxpayers apparently are not taking the smarter route to asset allocation, which would put substantially more money in their retirement savings.
I am delighted to see that the Fed's own experts now believe deductible mortgage interest can be an excellent choice for many taxpayers to use in structuring their retirement funding strategy, even though I do not agree with the report's narrow focus on only qualified plans such as IRAs and 401(k)s.
What's more, the paper says arbitrage is a "rather conservative" way of optimizing retirement wealth. Taxpayers gain when interest rates go up, since the newly invested amount earns higher rates than the mortgage debt costs. Should interest rates go down, taxpayers still come out ahead, because they are "likely to exercise their option to refinance," thus "reducing the downside risk of the arbitrage strategy."
The Fed report ends by saying that despite the risks (and remember—there are risks associated with all investment strategies), saving retirement money in a tax-deferred plan "has the additional benefit of providing a good hedge against the combination of housing price risk and liquidity risk."
Finally, the Fed says that taxpayers with incomes over $100,000 a year who use mortgage-deductible interest as part of an arbitrage strategy in retirement accounts would appear to have the most to gain, and the authors find it "puzzling" that more people who are in "better financial shape" than the average taxpayer don't take advantage of this kind of strategy.
I have no idea if the authors of this Federal Reserve paper have read my Missed Fortune books or have heard of me. But it is gratifying to see government experts themselves validate and support a key element of my wealth optimization program. If you would like to read the entire study, it is available at www.MissedFortune.com/ChicagoFedStudy as found in the "working papers" section of the Federal Reserve Bank of Chicago's Web site.
The study also points out that:
“46.1 percent of households are prepaying their mortgage by an average of $3,140 per year”
“only 49 percent of households relied on advice from professionals”
“having access to better financial information (financial advisor or personal education) substantially increases the likelihood of making the right choice”
The key reasons Americans make these mistakes are:
“not having resources to make decisions”
“greater emphasis on savings habits they ‘perceive’ as more liquid”
“limited information on the cost-benefit analysis”
“rational response to ‘institutional’ factors”
The actual quote from the abstract at the beginning of the report reads as follows:
“We show that a significant number of households can perform a tax arbitrage by cutting back on their additional mortgage payments and increasing their contributions to tax-deferred accounts. Using data from the Survey of Consumer Finances, we show that about 38% of U.S. households that are accelerating their mortgage payments instead of saving in tax-deferred accounts are making the wrong choice. For these households, reallocating their savings can yield a mean benefit of 11 to 17 cents per dollar, depending on the choice of investment assets in the tax deferred accounts. In the aggregate, these misallocated savings are costing U.S. households as much as 1.5 billion dollars per year…”
Download the Chicago Federal Reserve Study here
The Tradeoff between Mortgage Prepayments
and Tax-Deferred Retirement Savings
From the Working Papers of the Federal Reserve Bank of Chicago
By Gene Amromin, Jennifer Huang, and Clemens Sialm
(forwarded to me by Adam Ford of the Mortgage Advisors' Group)
One of our own federal banks—Chicago's Federal Reserve Bank—has determined that by accelerating mortgage payments instead of stashing money in tax-deferred accounts, more than one in three Americans are making the "wrong choice ," and are giving up potentially important arbitrage gains.
The mortgage overpayments, the Fed's recent report says, is a "mis-allocation" of funds that costs people $1.5-billion a year. If consumers changed their allocation by not sending excess payments to their mortgage company, and instead put that money in some form of tax-advantaged savings, they would reap a median gain of between 11 and 17 cents per dollar.
This is the very first time the Fed has compared these two kinds of "savings," write the authors. They conclude that "many households have significant amount of money" in both tax-favored and taxable accounts, but that a "large proportion" of American taxpayers apparently are not taking the smarter route to asset allocation, which would put substantially more money in their retirement savings.
I am delighted to see that the Fed's own experts now believe deductible mortgage interest can be an excellent choice for many taxpayers to use in structuring their retirement funding strategy, even though I do not agree with the report's narrow focus on only qualified plans such as IRAs and 401(k)s.
What's more, the paper says arbitrage is a "rather conservative" way of optimizing retirement wealth. Taxpayers gain when interest rates go up, since the newly invested amount earns higher rates than the mortgage debt costs. Should interest rates go down, taxpayers still come out ahead, because they are "likely to exercise their option to refinance," thus "reducing the downside risk of the arbitrage strategy."
The Fed report ends by saying that despite the risks (and remember—there are risks associated with all investment strategies), saving retirement money in a tax-deferred plan "has the additional benefit of providing a good hedge against the combination of housing price risk and liquidity risk."
Finally, the Fed says that taxpayers with incomes over $100,000 a year who use mortgage-deductible interest as part of an arbitrage strategy in retirement accounts would appear to have the most to gain, and the authors find it "puzzling" that more people who are in "better financial shape" than the average taxpayer don't take advantage of this kind of strategy.
I have no idea if the authors of this Federal Reserve paper have read my Missed Fortune books or have heard of me. But it is gratifying to see government experts themselves validate and support a key element of my wealth optimization program. If you would like to read the entire study, it is available at www.MissedFortune.com/ChicagoFedStudy as found in the "working papers" section of the Federal Reserve Bank of Chicago's Web site.
The study also points out that:
“46.1 percent of households are prepaying their mortgage by an average of $3,140 per year”
“only 49 percent of households relied on advice from professionals”
“having access to better financial information (financial advisor or personal education) substantially increases the likelihood of making the right choice”
The key reasons Americans make these mistakes are:
“not having resources to make decisions”
“greater emphasis on savings habits they ‘perceive’ as more liquid”
“limited information on the cost-benefit analysis”
“rational response to ‘institutional’ factors”
The actual quote from the abstract at the beginning of the report reads as follows:
“We show that a significant number of households can perform a tax arbitrage by cutting back on their additional mortgage payments and increasing their contributions to tax-deferred accounts. Using data from the Survey of Consumer Finances, we show that about 38% of U.S. households that are accelerating their mortgage payments instead of saving in tax-deferred accounts are making the wrong choice. For these households, reallocating their savings can yield a mean benefit of 11 to 17 cents per dollar, depending on the choice of investment assets in the tax deferred accounts. In the aggregate, these misallocated savings are costing U.S. households as much as 1.5 billion dollars per year…”
Download the Chicago Federal Reserve Study here
Friday, February 23, 2007
Are Open Houses Effective?
"Now the Open House serves as a showcase for the home, and highlights differences to the buyers who have many more options."
Are Open Houses Still Worth It?
Industry watchers evaluate the practicality of holding open houses in today's market
By John Voket
RISMEDIA, Jan. 16, 2007
In this age of "virtual tours," "talking houses," and
practically every real estate client using the Internet during some segment of their new home search, is the practice of hosting open houses becoming impractical? While precise figures on the exact number of home sales directly resulting from open house visits remain elusive, it is clear that real estate professionals and industry watchers from across the nation believe the "open house" still plays a vital role in the overall strategy of marketing homes for sale.
Sharon Luther, a Realtor, mediator, and member of the Professional Standards
Council, Bay East Association in Castro Valley, CA, bemoaned the lack of hard data to substantiate whether or not open houses serve any relevant purpose.
She suggested in the current market situations where time on the market is
increasing markedly and buyers are driving hard bargains, sellers want to see their Realtor "working."
"I think this may be one of the primary reasons why many agents are forced to hold homes open," Luther said. "But in this day and age, most people are hooked in (to considering certain homes) by the Internet, and almost everybody seriously looking to buy a home is pre-qualified, so many of the reasons why we used to hold open houses are no longer applicable."
Delores A. Conway, Director of the Casden Real Estate Economics Forecast at USC's Lusk Center believes that in a hot market a seller has a lot of power because houses don't stay available for long. "But in a slowing market, houses are staying on longer," she said. "Now the Open House serves as a showcase for the home, and highlights differences to the buyers who have many more options."
Conway believes if Realtors don't hold open houses, their clients will be at a
disadvantage. While she concedes that buyers are doing a lot more homework on the Internet, she said open houses still provide a lot more information than the Internet listing.
"Open houses are typically used in normal times, and the cost to hold them is
justified because of the competition in the market," Conway said. "While percentages of sales from open houses vary widely, some areas attribute a significantly higher number of sales (to the pratice)."
John Ansbach of RECON Intelligence Services agrees that in recent years, agents have been shying away from open houses as a networking and referral tool. "None of our clients are stopping it, but it is no longer the consumers' exclusive experience. While in the future, it might be challenging to prove their value in the larger scope of the overall transaction, I think today open houses still earn their keep," Ansbach said. "For a vast majority of professionals it is still a viable experience, and an exhibit of value to both the seller and the buyer."
According to a 2004 survey by the National Association of Realtors, 87 percent of home buyers found open houses very or somewhat useful in their home search. A 2003 NAR survey showed 72 percent of 3,000 buyers, "…drove by or viewed a house for sale as a result of an Internet search. While 46 percent walked through a house visited online.
Ann Garti, CEO of the Orange County Assoc. of Realtors said judging from the open house announcements in weekend papers in her region, she believes the practice still has purpose. "However, I have no way of knowing the amount of traffic generated," Garti said. She pointed out that Prudential Douglas Elliman do full page ads in the NY Times, and Weichert Realtors also use the full-page print advertisement to showcase open house opportunities extensively.
Ann Guiberson, President/CEO of Pinellas Realtor® Organization in Clearwater, Florida agrees with Garti. "There has been a huge up-tick in open houses; however for years my members have said they are not really effective in helping to sell the home" Guiberson said. "They do it because it makes the seller feel good, and sometimes the Realtor who sits on the open house gets some leads."
Guiberson observed that overall, the real estate industry seems to be returning a era where they are trying to, "go back to the basics. But at the same time, (the industry is) resurrecting tactics that were not especially effective in the last transitioning or buyers' market," she added.
As far as Sharon Luther is concerned, open houses in a world providing a wealth of other electronic options potential buyers can access from the comfort of their own home or desk heavily weigh against this "old school" marketing practice.
Ray's Opinion~~
Open houses can sometimes be effective. It depends on the house and its condition, location, market demand for the home, and price. Of course all of these factors are intertwined, and at the end it is really a judgement call.
While the primary consideration is getting the home sold for the most money in the quickest and most convenient timeframe for the seller, there are other important considerations. An open house will put the seller out of the house for an afternoon. If a trip to the movies or a sports event is planned, terrific. But often sellers are imposed upon when there is an open house scheduled, and if traffic through the open house is light or even non-existent, that is an irritant for the seller. It must also be acknowledged that sellers often spend a lot of time in preparation for an open house, with cleaning and straightening up so that the home shows its best.
If the home is vacant, these considerations are not in play, and subject to location, my team and I may opt to have many open houses.
I generally have at least one open house for each listing. For that open house I invite all of the neighbors to see the home either through door hangers or by direct mail. Neighbors are naturally curious, and many like to know what is going on with home sales in their area, but my reason for inviting the neighbors is to create some buzz about the house. Neighbors like the neighborhood, and they may have friends who are looking to buy a home in the neighborhood. I want them to be thinking about my sellers' home when they hear of someone who wants to buy a home.
I also may have a Sunday Home Tour that starts and ends with my sellers' home. Information on the Sunday Home Tour can be found at www.sundayhometour.net . Basically, I show six comparable homes on a Sunday afternoon. After all, nearly all buyers will want to see not just my seller's home, but some other homes also before they make the decision to buy. It is the rare buyer who sees only one home and says "This is it!" The Sunday Home Tour starts and ends with my listed home, and we spend ten minutes only in each home. One big benefit to the seller is that the family is not out of the house for the entire afternoon. Many times they can just take a walk around the neighborhood, then resume their day.
What most Realtors will not tell their clients is that the primary use of open houses is to get buyer clients, and statistically, it is fairly rare for a buyer to walk into an open house and actually end up buying that house. I try to up that statistic as much as possible, but the fact remains that the great majority of people who walk into an open house will not buy that house.
Open houses are just one part of the marketing effort that I plan for my listings. If you want your home sold, give me a call at 661-287-9164.
Are Open Houses Still Worth It?
Industry watchers evaluate the practicality of holding open houses in today's market
By John Voket
RISMEDIA, Jan. 16, 2007
In this age of "virtual tours," "talking houses," and
practically every real estate client using the Internet during some segment of their new home search, is the practice of hosting open houses becoming impractical? While precise figures on the exact number of home sales directly resulting from open house visits remain elusive, it is clear that real estate professionals and industry watchers from across the nation believe the "open house" still plays a vital role in the overall strategy of marketing homes for sale.
Sharon Luther, a Realtor, mediator, and member of the Professional Standards
Council, Bay East Association in Castro Valley, CA, bemoaned the lack of hard data to substantiate whether or not open houses serve any relevant purpose.
She suggested in the current market situations where time on the market is
increasing markedly and buyers are driving hard bargains, sellers want to see their Realtor "working."
"I think this may be one of the primary reasons why many agents are forced to hold homes open," Luther said. "But in this day and age, most people are hooked in (to considering certain homes) by the Internet, and almost everybody seriously looking to buy a home is pre-qualified, so many of the reasons why we used to hold open houses are no longer applicable."
Delores A. Conway, Director of the Casden Real Estate Economics Forecast at USC's Lusk Center believes that in a hot market a seller has a lot of power because houses don't stay available for long. "But in a slowing market, houses are staying on longer," she said. "Now the Open House serves as a showcase for the home, and highlights differences to the buyers who have many more options."
Conway believes if Realtors don't hold open houses, their clients will be at a
disadvantage. While she concedes that buyers are doing a lot more homework on the Internet, she said open houses still provide a lot more information than the Internet listing.
"Open houses are typically used in normal times, and the cost to hold them is
justified because of the competition in the market," Conway said. "While percentages of sales from open houses vary widely, some areas attribute a significantly higher number of sales (to the pratice)."
John Ansbach of RECON Intelligence Services agrees that in recent years, agents have been shying away from open houses as a networking and referral tool. "None of our clients are stopping it, but it is no longer the consumers' exclusive experience. While in the future, it might be challenging to prove their value in the larger scope of the overall transaction, I think today open houses still earn their keep," Ansbach said. "For a vast majority of professionals it is still a viable experience, and an exhibit of value to both the seller and the buyer."
According to a 2004 survey by the National Association of Realtors, 87 percent of home buyers found open houses very or somewhat useful in their home search. A 2003 NAR survey showed 72 percent of 3,000 buyers, "…drove by or viewed a house for sale as a result of an Internet search. While 46 percent walked through a house visited online.
Ann Garti, CEO of the Orange County Assoc. of Realtors said judging from the open house announcements in weekend papers in her region, she believes the practice still has purpose. "However, I have no way of knowing the amount of traffic generated," Garti said. She pointed out that Prudential Douglas Elliman do full page ads in the NY Times, and Weichert Realtors also use the full-page print advertisement to showcase open house opportunities extensively.
Ann Guiberson, President/CEO of Pinellas Realtor® Organization in Clearwater, Florida agrees with Garti. "There has been a huge up-tick in open houses; however for years my members have said they are not really effective in helping to sell the home" Guiberson said. "They do it because it makes the seller feel good, and sometimes the Realtor who sits on the open house gets some leads."
Guiberson observed that overall, the real estate industry seems to be returning a era where they are trying to, "go back to the basics. But at the same time, (the industry is) resurrecting tactics that were not especially effective in the last transitioning or buyers' market," she added.
As far as Sharon Luther is concerned, open houses in a world providing a wealth of other electronic options potential buyers can access from the comfort of their own home or desk heavily weigh against this "old school" marketing practice.
Ray's Opinion~~
Open houses can sometimes be effective. It depends on the house and its condition, location, market demand for the home, and price. Of course all of these factors are intertwined, and at the end it is really a judgement call.
While the primary consideration is getting the home sold for the most money in the quickest and most convenient timeframe for the seller, there are other important considerations. An open house will put the seller out of the house for an afternoon. If a trip to the movies or a sports event is planned, terrific. But often sellers are imposed upon when there is an open house scheduled, and if traffic through the open house is light or even non-existent, that is an irritant for the seller. It must also be acknowledged that sellers often spend a lot of time in preparation for an open house, with cleaning and straightening up so that the home shows its best.
If the home is vacant, these considerations are not in play, and subject to location, my team and I may opt to have many open houses.
I generally have at least one open house for each listing. For that open house I invite all of the neighbors to see the home either through door hangers or by direct mail. Neighbors are naturally curious, and many like to know what is going on with home sales in their area, but my reason for inviting the neighbors is to create some buzz about the house. Neighbors like the neighborhood, and they may have friends who are looking to buy a home in the neighborhood. I want them to be thinking about my sellers' home when they hear of someone who wants to buy a home.
I also may have a Sunday Home Tour that starts and ends with my sellers' home. Information on the Sunday Home Tour can be found at www.sundayhometour.net . Basically, I show six comparable homes on a Sunday afternoon. After all, nearly all buyers will want to see not just my seller's home, but some other homes also before they make the decision to buy. It is the rare buyer who sees only one home and says "This is it!" The Sunday Home Tour starts and ends with my listed home, and we spend ten minutes only in each home. One big benefit to the seller is that the family is not out of the house for the entire afternoon. Many times they can just take a walk around the neighborhood, then resume their day.
What most Realtors will not tell their clients is that the primary use of open houses is to get buyer clients, and statistically, it is fairly rare for a buyer to walk into an open house and actually end up buying that house. I try to up that statistic as much as possible, but the fact remains that the great majority of people who walk into an open house will not buy that house.
Open houses are just one part of the marketing effort that I plan for my listings. If you want your home sold, give me a call at 661-287-9164.
Thursday, February 22, 2007
Changes in MLS and The Real Blog
For my loyal readers, I apologize for not posting on the Blog lately. We have had some upgrades to the systems, and you know how that goes sometimes. The 'new and improved' systems have to go out for a shakedown cruise before taking passengers.
Specifically, our main database resource, CrisNet MLS is no more, and has been replaced by the SoCalMLS. The new functionality is similar to AV's Rapatonni system, and includes an extended area including all of the area south of Santa Clarita including the greater Los Angeles area plus Orange County. At this point, both Simi and Conejo Valley Assns. of Realtors have opted out of this extended MLS system, preferring to retain their small local MLS areas. Antelope Valley continues as before, with its own MLS system. I will remain a member of the Greater Antelope Valley Assn. of Realtors (GAVAR) in addition to my membership in the massive SoCalMLS system.
This Blog has some increased functionality, with the purchase of Blogger by Google. I have had some problems getting in here to post lately with the upgrade, but that problem seems to have been resolved.
I have initiated some new marketing efforts which some of you may notice, and have some exciting new listings coming along that are great homes! And the people that I am working with are terrific... and it is indeed an honor to be working with them!
More later...
Specifically, our main database resource, CrisNet MLS is no more, and has been replaced by the SoCalMLS. The new functionality is similar to AV's Rapatonni system, and includes an extended area including all of the area south of Santa Clarita including the greater Los Angeles area plus Orange County. At this point, both Simi and Conejo Valley Assns. of Realtors have opted out of this extended MLS system, preferring to retain their small local MLS areas. Antelope Valley continues as before, with its own MLS system. I will remain a member of the Greater Antelope Valley Assn. of Realtors (GAVAR) in addition to my membership in the massive SoCalMLS system.
This Blog has some increased functionality, with the purchase of Blogger by Google. I have had some problems getting in here to post lately with the upgrade, but that problem seems to have been resolved.
I have initiated some new marketing efforts which some of you may notice, and have some exciting new listings coming along that are great homes! And the people that I am working with are terrific... and it is indeed an honor to be working with them!
More later...
Thursday, February 08, 2007
Realtor Economist Has Rosy Outlook
The NAR usually looks at the housing market through rose-colored glasses, and this year's market forecast is pretty rosy. Despite local conditions that has shown better than a 30% drop in sales, record numbers of listings on the market leading up to the Christmas slowdown, a rise in foreclosure activity, and a (slight) drop in prices when measured within the individual neighborhoods; the national association continues to maintain that the so-called bottom has been reached and the future looks pretty good.
To be fair and balanced... there is an uptick in activity since the first of the year, but this may be a little pent-up demand from the normal holiday slowdown. The numbers of listings coming on the market has risen, but this also may be the result of normal post-holiday activity. Some buyers, groundhog-like, have poked their heads out of the hole but they saw their shadow in my opinion, and a longer winter in housing is indicated than the Realtor economist shows by his comments in the following article.
I am cautious by nature. That's what my clients like about me. There are buyer opportunities for serious buyers, and as always sellers should price in the land of reality and not in fantasyland.
~~ Ray
Realtor forecast calls for home-price growth below 2%
Wednesday, February 07, 2007
Inman News
Existing-home sales are expected to drop slightly this year compared to 2006, according to the latest National Association of Realtors housing market forecast, and to rise in 2008.
There were 6.48 million existing-home sales in 2006, which is the third-highest sales total on record. This year the association projects 6.48 million existing-home sales, followed by 6.64 million sales in 2008.
New-home sales, after reaching the fourth-highest level on record at 1.06 million in 2006, are projected to fall to 961,000 this year and then rise to 971,000 in 2008.
David Lereah, chief economist for the Realtor group, said in a statement, "After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing-home sales to gradually rise all this year and well into 2008. New-home sales should continue to slide, but we look for that sector to turn around later in the year."
While home sales "may appear weak in comparison with the record surge in 2005," Lereah said that sales "will be sustained at historically high levels."
Housing starts are expected to total 1.52 million in 2007, down from 1.8 million units in 2006, and then increase to 1.56 million next year, according to the forecast. "When new-home demand begins to catch up with supply, builders will slowly increase construction -- probably in the second half of this year," Lereah stated.
The 30-year fixed-rate mortgage is forecast to rise to 6.7 percent by the second half of the year. Freddie Mac reported the 30-year fixed rate at 6.14 percent in December, and it has been trending up since. "Mortgage interest rates remain favorable, and a gradual rise means potential buyers have some time to weigh purchase decisions," Lereah said. "When existing-home supplies become more balanced between buyers and sellers this spring, we'll see some modest price gains."
The national median existing-home price is expected to rise 1.9 percent to $226,200 in 2007, after rising 1.1 percent in 2006. The median new-home price is expected to increase 1.8 percent to $249,800 in 2007, and in 2008 existing-home prices are forecast to rise 3.2 percent while new-home prices are forecast to rise 3.4 percent.
The unemployment rate is expected to average 4.7 percent in 2007, compared with 4.6 percent in 2006. Inflation, as measured by the Consumer Price Index, is projected at 2 percent this year, down from 3.2 percent in 2006, while growth in the U.S. gross domestic product is expected to be 2.8 percent in 2007, down from 3.4 percent in 2006. Inflation-adjusted disposable personal income will probably rise 3.7 percent in 2007, up from a gain of 2.7 percent in 2006.
To be fair and balanced... there is an uptick in activity since the first of the year, but this may be a little pent-up demand from the normal holiday slowdown. The numbers of listings coming on the market has risen, but this also may be the result of normal post-holiday activity. Some buyers, groundhog-like, have poked their heads out of the hole but they saw their shadow in my opinion, and a longer winter in housing is indicated than the Realtor economist shows by his comments in the following article.
I am cautious by nature. That's what my clients like about me. There are buyer opportunities for serious buyers, and as always sellers should price in the land of reality and not in fantasyland.
~~ Ray
Realtor forecast calls for home-price growth below 2%
Wednesday, February 07, 2007
Inman News
Existing-home sales are expected to drop slightly this year compared to 2006, according to the latest National Association of Realtors housing market forecast, and to rise in 2008.
There were 6.48 million existing-home sales in 2006, which is the third-highest sales total on record. This year the association projects 6.48 million existing-home sales, followed by 6.64 million sales in 2008.
New-home sales, after reaching the fourth-highest level on record at 1.06 million in 2006, are projected to fall to 961,000 this year and then rise to 971,000 in 2008.
David Lereah, chief economist for the Realtor group, said in a statement, "After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing-home sales to gradually rise all this year and well into 2008. New-home sales should continue to slide, but we look for that sector to turn around later in the year."
While home sales "may appear weak in comparison with the record surge in 2005," Lereah said that sales "will be sustained at historically high levels."
Housing starts are expected to total 1.52 million in 2007, down from 1.8 million units in 2006, and then increase to 1.56 million next year, according to the forecast. "When new-home demand begins to catch up with supply, builders will slowly increase construction -- probably in the second half of this year," Lereah stated.
The 30-year fixed-rate mortgage is forecast to rise to 6.7 percent by the second half of the year. Freddie Mac reported the 30-year fixed rate at 6.14 percent in December, and it has been trending up since. "Mortgage interest rates remain favorable, and a gradual rise means potential buyers have some time to weigh purchase decisions," Lereah said. "When existing-home supplies become more balanced between buyers and sellers this spring, we'll see some modest price gains."
The national median existing-home price is expected to rise 1.9 percent to $226,200 in 2007, after rising 1.1 percent in 2006. The median new-home price is expected to increase 1.8 percent to $249,800 in 2007, and in 2008 existing-home prices are forecast to rise 3.2 percent while new-home prices are forecast to rise 3.4 percent.
The unemployment rate is expected to average 4.7 percent in 2007, compared with 4.6 percent in 2006. Inflation, as measured by the Consumer Price Index, is projected at 2 percent this year, down from 3.2 percent in 2006, while growth in the U.S. gross domestic product is expected to be 2.8 percent in 2007, down from 3.4 percent in 2006. Inflation-adjusted disposable personal income will probably rise 3.7 percent in 2007, up from a gain of 2.7 percent in 2006.
Tuesday, February 06, 2007
How Big Is The Foreclosure Discount?
How Big Is The Foreclosure Discount?
by Peter Miller
Here's a puzzle: If a lender sells a foreclosed home what kind of discount will be available to buyers? Is it possible that there will be no discount, some discount or a huge discount?
These are tough questions because if local markets are strong enough, there's no discount at all according to Christopher Cagan, Ph.D., director of research and analytics at First American Real Estate Solutions.
"In the booming years of 2004 and 2005, foreclosure rates reached historical lows," says Cagan in a new report, A Ripple, Not a Tidal Wave: Foreclosure Prevalence and Foreclosure Discount.
"Homeowners who found themselves in difficulties could almost always sell their residences quickly and at a good price, thus avoiding damage to one's credit rating and receiving the benefit of remaining equity after paying mortgage balances and commissions. In cases where a lender did have to foreclose on a property, it could usually be sold readily at market price, without having to offer a substantial discount to encourage the sale of the foreclosed property."
But the good times of 2004 and 2005 largely disappeared in 2006. Cagan, an economist, looked at 815,000 home sales in the first half of 2006 -- including almost 25,000 foreclosures -- and found evidence of significant foreclosure discounts.
In California, for example, Cagan found that the typical home sold for $494,000 while the median foreclosure price was $435,000 -- that's a difference of $59,000 or 13.5 percent.
There's no doubt that $59,000 is a lot of money but there's a catch: Cagan found that the big price differential between homes sold at market value and those sold through foreclosure was not the result of an apples-to-apples comparison. In practice Cagan found that lower-priced homes were foreclosed more frequently, so foreclosure sale prices appear lower than a comparison of like homes might show.
"On the whole," says Cagan, "the foreclosure properties sold for less than they had been valued for -- less than their value would have been had they been offered on the market as non-foreclosed properties. This is what he calls foreclosure discount. For instance, discounts had been almost absent in California in 2004 and 2005 when properties (foreclosed or not) could be sold almost immediately at excellent prices. In the first half of 2006 -- when homes could take several months to sell and price reductions were often required -- foreclosing lenders had an incentive to offer at least a small discount to move their properties quickly."
In other words, the foreclosure discount in California was not $59,000. It was something lower. How much lower? When Cagan compared foreclosed homes with properties of similar size, location and condition, he found a $25,000 price differential -- a property with a fair market value of $460,000 typically sold for just $435,000 through the foreclosure process -- a difference of 5.4 percent.
Nationwide, because the market was not generally as strong in the first half of 2006 as the California market, Cagan found a much steeper foreclosure discount.
"For the first half of 2006, the foreclosure discount evaluated on a national basis was 14.2 percent. On that very general level, this is the discount that lenders accepted (beyond the background rises and declines of the general market) in order to sell their foreclosure properties."
The national figure, however, may not apply to individual states and communities. Such factors as local economic trends and population growth impact foreclosure rates -- the lower the foreclosure rate the lower the foreclosure discount.
For instance, Cagan found that in the first six months of 2006 the foreclosure discount was 1.9 percent in Arizona but a whopping 27.8 percent in Missouri. In local areas, the foreclosure discount was just .5 percent in Brevard County on the east coast of Florida but 46.6 percent in the city of St. Louis. Sometimes the discounts differed enormously in nearby jurisdictions: The foreclosure discount was 20 percent in the city of Baltimore -- and just 10.7 percent in surrounding Baltimore County.
What does it all mean?
How a home is sold -- whether in the open market or by foreclosure -- can make a substantial difference in terms of the sale price.
A home sold by foreclosure is likely to be sold at a discount, but not always.
The size of the foreclosure discount varies by location. Generally, the better the local economy the smaller the foreclosure discount.
There may not be any foreclosure discount in communities that have a growing population, an expanding job base and strong real estate sales.
Owners facing foreclosure are better served selling homes directly rather than waiting for their properties to be auctioned off.
Lenders have a stake in avoiding foreclosure. Even with private mortgage insurance (MI), they can still face substantial losses, especially in slow markets. For this reason lenders would greatly prefer that owners sell in the open market and fully repay loans rather than having a property go to foreclosure.
The more homes on the marketplace through foreclosure, the greater the foreclosure discount. In particular, Cagan found that "in markets where foreclosures constitute 8 percent or more of total market sales, foreclosure discounts are likely to be particularly large -- often 20 percent or deeper."
"What the First American study demonstrates is that foreclosure discounts are real in many markets," says Jim Saccacio, Chairman and CEO at RealtyTrac.com, the leading online marketplace for foreclosure properties. "At the same time, it's plain that lenders, mortgage insurers and borrowers have a mutual interest in avoiding foreclosures and the losses they typically represent, especially in markets where foreclosures are common and discounts are deep."
~~ from RealtyTrac.com
by Peter Miller
Here's a puzzle: If a lender sells a foreclosed home what kind of discount will be available to buyers? Is it possible that there will be no discount, some discount or a huge discount?
These are tough questions because if local markets are strong enough, there's no discount at all according to Christopher Cagan, Ph.D., director of research and analytics at First American Real Estate Solutions.
"In the booming years of 2004 and 2005, foreclosure rates reached historical lows," says Cagan in a new report, A Ripple, Not a Tidal Wave: Foreclosure Prevalence and Foreclosure Discount.
"Homeowners who found themselves in difficulties could almost always sell their residences quickly and at a good price, thus avoiding damage to one's credit rating and receiving the benefit of remaining equity after paying mortgage balances and commissions. In cases where a lender did have to foreclose on a property, it could usually be sold readily at market price, without having to offer a substantial discount to encourage the sale of the foreclosed property."
But the good times of 2004 and 2005 largely disappeared in 2006. Cagan, an economist, looked at 815,000 home sales in the first half of 2006 -- including almost 25,000 foreclosures -- and found evidence of significant foreclosure discounts.
In California, for example, Cagan found that the typical home sold for $494,000 while the median foreclosure price was $435,000 -- that's a difference of $59,000 or 13.5 percent.
There's no doubt that $59,000 is a lot of money but there's a catch: Cagan found that the big price differential between homes sold at market value and those sold through foreclosure was not the result of an apples-to-apples comparison. In practice Cagan found that lower-priced homes were foreclosed more frequently, so foreclosure sale prices appear lower than a comparison of like homes might show.
"On the whole," says Cagan, "the foreclosure properties sold for less than they had been valued for -- less than their value would have been had they been offered on the market as non-foreclosed properties. This is what he calls foreclosure discount. For instance, discounts had been almost absent in California in 2004 and 2005 when properties (foreclosed or not) could be sold almost immediately at excellent prices. In the first half of 2006 -- when homes could take several months to sell and price reductions were often required -- foreclosing lenders had an incentive to offer at least a small discount to move their properties quickly."
In other words, the foreclosure discount in California was not $59,000. It was something lower. How much lower? When Cagan compared foreclosed homes with properties of similar size, location and condition, he found a $25,000 price differential -- a property with a fair market value of $460,000 typically sold for just $435,000 through the foreclosure process -- a difference of 5.4 percent.
Nationwide, because the market was not generally as strong in the first half of 2006 as the California market, Cagan found a much steeper foreclosure discount.
"For the first half of 2006, the foreclosure discount evaluated on a national basis was 14.2 percent. On that very general level, this is the discount that lenders accepted (beyond the background rises and declines of the general market) in order to sell their foreclosure properties."
The national figure, however, may not apply to individual states and communities. Such factors as local economic trends and population growth impact foreclosure rates -- the lower the foreclosure rate the lower the foreclosure discount.
For instance, Cagan found that in the first six months of 2006 the foreclosure discount was 1.9 percent in Arizona but a whopping 27.8 percent in Missouri. In local areas, the foreclosure discount was just .5 percent in Brevard County on the east coast of Florida but 46.6 percent in the city of St. Louis. Sometimes the discounts differed enormously in nearby jurisdictions: The foreclosure discount was 20 percent in the city of Baltimore -- and just 10.7 percent in surrounding Baltimore County.
What does it all mean?
How a home is sold -- whether in the open market or by foreclosure -- can make a substantial difference in terms of the sale price.
A home sold by foreclosure is likely to be sold at a discount, but not always.
The size of the foreclosure discount varies by location. Generally, the better the local economy the smaller the foreclosure discount.
There may not be any foreclosure discount in communities that have a growing population, an expanding job base and strong real estate sales.
Owners facing foreclosure are better served selling homes directly rather than waiting for their properties to be auctioned off.
Lenders have a stake in avoiding foreclosure. Even with private mortgage insurance (MI), they can still face substantial losses, especially in slow markets. For this reason lenders would greatly prefer that owners sell in the open market and fully repay loans rather than having a property go to foreclosure.
The more homes on the marketplace through foreclosure, the greater the foreclosure discount. In particular, Cagan found that "in markets where foreclosures constitute 8 percent or more of total market sales, foreclosure discounts are likely to be particularly large -- often 20 percent or deeper."
"What the First American study demonstrates is that foreclosure discounts are real in many markets," says Jim Saccacio, Chairman and CEO at RealtyTrac.com, the leading online marketplace for foreclosure properties. "At the same time, it's plain that lenders, mortgage insurers and borrowers have a mutual interest in avoiding foreclosures and the losses they typically represent, especially in markets where foreclosures are common and discounts are deep."
~~ from RealtyTrac.com
California Foreclosure Data Mixed
After claiming the top spot for the three previous months, California’s monthly foreclosure total fell to second place thanks to a sharp month-over-month drop in foreclosure activity. The state reported 12,623 properties entering some stage of foreclosure, a 34 percent decrease from the previous month but still up nearly 65 percent from December 2005.
Locally, distressed properties appear up, with more NODs and Trustee's Sales filed. While many sellers are able to cure the default or negotiate an agreement with the lender, the rate of distressed properties coming on the market appears to be on the upswing. One indication of this is the higher numbers of 'short sale' properties making their appearance on the MLS.
While we appreciate the stress that sellers undergo in the pre-foreclosure process, and always treat them with the respect they deserve, the fact of the matter is that when buyers appear for purchasing these pre-foreclosure properties, sellers who are unrepresented often get screwed by these sharks.
If you are a seller who has a notice of default your first call should be to me. Immediately. The more time there is before the home is actually forced to sale, the more options you have. Definitely don't be like the lady I talked with last week, who had waited until the Notice of Trustee's Sale was stapled to her front door. When I asked her if she had been in contact with the lender, she said no. Three weeks (and less, in this case!) from sale is not the point to be getting a Realtor experienced in foreclosures involved. Her only hope at that point was to listen to my advice, price the home way low for fast sale, and try to get the bank to delay the sale and let an escrow close with a short sale.
So you are wondering what happened with the lady? She listened to a novice Realtor who listed the property well over market value, since the lady thought that some fool would come down the street ready to bail her out of her bad financial decisions, and give her some walking away money.
Yes, my friends, there are idiots in the world. The bank will take this property back. We'll see it on the market later on as an REO.
As a buyer, you've got to be doing some work to make it to the 'A' list. Everyone is 'interested in buying a foreclosure for nothing.' If you are serious about it, give me a call. We will get going, but you won't be getting a treasure-trove of leads and information unless you and I are meeting and agreeing, and you talk seriously with a lender and get pre-approved (yes, pre-approved subject to identification of the property and the appraisal coming in -- with no other conditions). There's no fooling around, and don't be big-talking me. You will have to be ready to take action when the opportunity arrives. Think you can make the cut? Give me a call and let's get started.
Buying foreclosures aren't for everyone. To many people talk a good game but fold up and blow away in the end. And if that sentence offends you, foreclosures aren't for you. But for serious people, there is opportunity.
As for the sellers who are in foreclosure... We are really sorry that you got to this point. We really are. But buyers buy foreclosures and pre-foreclosures expecting a discount off market. And in this, a gently falling market, you may very well be upside-down between the note, the late payments, penalties and fees, and sales costs, including sales commission. Yes, commission. This is not a subsidized public service, this is the market. A fair commission is charged.
If you are a seller in foreclosure, give us a call (immediately... right? Nod your head!). We will do our very best for you and get you on your way to your future, where you will hopefully be a little more conservative on your risk-taking, or that you will have better fortune than what life has thown at you lately.
Let's make is a win, win and win.
Locally, distressed properties appear up, with more NODs and Trustee's Sales filed. While many sellers are able to cure the default or negotiate an agreement with the lender, the rate of distressed properties coming on the market appears to be on the upswing. One indication of this is the higher numbers of 'short sale' properties making their appearance on the MLS.
While we appreciate the stress that sellers undergo in the pre-foreclosure process, and always treat them with the respect they deserve, the fact of the matter is that when buyers appear for purchasing these pre-foreclosure properties, sellers who are unrepresented often get screwed by these sharks.
If you are a seller who has a notice of default your first call should be to me. Immediately. The more time there is before the home is actually forced to sale, the more options you have. Definitely don't be like the lady I talked with last week, who had waited until the Notice of Trustee's Sale was stapled to her front door. When I asked her if she had been in contact with the lender, she said no. Three weeks (and less, in this case!) from sale is not the point to be getting a Realtor experienced in foreclosures involved. Her only hope at that point was to listen to my advice, price the home way low for fast sale, and try to get the bank to delay the sale and let an escrow close with a short sale.
So you are wondering what happened with the lady? She listened to a novice Realtor who listed the property well over market value, since the lady thought that some fool would come down the street ready to bail her out of her bad financial decisions, and give her some walking away money.
Yes, my friends, there are idiots in the world. The bank will take this property back. We'll see it on the market later on as an REO.
As a buyer, you've got to be doing some work to make it to the 'A' list. Everyone is 'interested in buying a foreclosure for nothing.' If you are serious about it, give me a call. We will get going, but you won't be getting a treasure-trove of leads and information unless you and I are meeting and agreeing, and you talk seriously with a lender and get pre-approved (yes, pre-approved subject to identification of the property and the appraisal coming in -- with no other conditions). There's no fooling around, and don't be big-talking me. You will have to be ready to take action when the opportunity arrives. Think you can make the cut? Give me a call and let's get started.
Buying foreclosures aren't for everyone. To many people talk a good game but fold up and blow away in the end. And if that sentence offends you, foreclosures aren't for you. But for serious people, there is opportunity.
As for the sellers who are in foreclosure... We are really sorry that you got to this point. We really are. But buyers buy foreclosures and pre-foreclosures expecting a discount off market. And in this, a gently falling market, you may very well be upside-down between the note, the late payments, penalties and fees, and sales costs, including sales commission. Yes, commission. This is not a subsidized public service, this is the market. A fair commission is charged.
If you are a seller in foreclosure, give us a call (immediately... right? Nod your head!). We will do our very best for you and get you on your way to your future, where you will hopefully be a little more conservative on your risk-taking, or that you will have better fortune than what life has thown at you lately.
Let's make is a win, win and win.
Monday, February 05, 2007
10 Features That Can Help Sell a Home
Daily Real Estate News January 31, 2007
In this tough market even small things can help a home sell faster. Denver home inspector Alan Gould lists these 10 items that home buyers often want and, therefore, are worth marketing when you sell your home.
1. Outside electrical outlets — especially those installed high up for holiday lights.
2. Permanent grill with gas service.
3. Electrical service for a future hot tub or fountain.
4. Security lights.
5. Speaker wires that are installed throughout the house, especially if a diagram is available.
6. Exterior speakers — if they stay with the home.
7. Lawn sprinkler system (note whether it has been winterized).
8. Availability of drawings and permits for substantial renovation work.
9. Storage that is both obvious and hidden, including a crawl space with lights and any oversized closets.
10. Swing-out drawers in the kitchen pantry.
In this tough market even small things can help a home sell faster. Denver home inspector Alan Gould lists these 10 items that home buyers often want and, therefore, are worth marketing when you sell your home.
1. Outside electrical outlets — especially those installed high up for holiday lights.
2. Permanent grill with gas service.
3. Electrical service for a future hot tub or fountain.
4. Security lights.
5. Speaker wires that are installed throughout the house, especially if a diagram is available.
6. Exterior speakers — if they stay with the home.
7. Lawn sprinkler system (note whether it has been winterized).
8. Availability of drawings and permits for substantial renovation work.
9. Storage that is both obvious and hidden, including a crawl space with lights and any oversized closets.
10. Swing-out drawers in the kitchen pantry.
Friday, February 02, 2007
Local Realtor Assn. Whistles a Happy Tune
This week's Realtor Report from the Southland Regional Assn. of Realtors has a couple of articles about this past year's sales activity in the San Fernando and Santa Clarita Valleys that contained some interesting quotes from association officers.
San Fernando Valley
Members of the SRAR negotiated the sale of 9,832 single family homes and 3,658 condominiums during 2006, the Association reported. The SFR sales represented a 24.7% decline in sales from the 2005 figure. Likewise, condo sales were off 23.5% 2005 figures.
Despite the decrease in unit sales, the median price of a single family residence rose 6.4% to a record high of $605,917, and the median price of a condo rose 8.5% to a record $394,917.
According to Realtor Report, "The fact that prices not only held firm, but showed modest gains during a period of slowing sales refutes claims that the residential resale market is in recession. That, Realtors said, is good news for buyers, sellers, and the local economy."
Winnie Davis, the 2007 president of SRAR went on to say, "The price of homes in the San Fernando Valley during 2006 hit a point where buyers finally said, 'Enough. No More.' and that's a good thing. Buyers simply refused to continue engaging in bidding wars with multiple contenders who were scratching over an extremely limited inventory. Now the market is working its way through a readjustment period."
Davis continued, "Sellers must post realistic asking prices and buyers finally have a wider selection and more options, but savvy buyers know not to expect deep discounts. Realtors must really educate buyers and sellers about the realities of this new, balanced market."
The Realtor Report opined "In fact, unlike some parts of the country where prices also rose too high too fast, no one is predicting a major downturn in the local market or a collapse in prices."
In fact, the SRAR website contains a poll of local Realtors on their view of the next year in housing. Nearly a clear majority at 45% predict that 2007 will be worse than 2006, while 37% predict that it will be better. The balance think it will be about the same.
Santa Clarita Valley
Realtors sold a total of 3,746 homes in Santa Clarita in 2006, according to Realtor Report, with 2,531 single family residences with the difference in condominiums. This was 32.1% off the SFR pace in 2005 and 29.6% off the condo number of 2005. Like the San Fernando Valley statistics, the median prices rose nearly 7% over the year for both SFRs and condos.
According to Larry Gasinski, the 2007 president of the Santa Clarita division of SRAR, "Sales are slowing down not for a lack of demand, but because prices increased too high too fast. More buyers are coming out now as they realize that the feeding frenzy is over, the selection is wider, interest rates are still near historical lows and that sellers are setting realistic prices and are open to negotiation."
Jim Link, the Association's executive vice president, believes the market readjustment is nearly over and that activity will increase in coming weeks and months, according to the article. "Only a few sellers still cling to the false expectation of a 25% return and only a few buyers incorrectly think they can get steep discounts," Link said. "Everyone else understands that while the sellers market is over, what we have today is a balanced market that, even with a larger ino way suddenly puts buyers in control."
There was a total of 1,919 active listing in the SCV at the end of December, up 81.2% from a year ago, but off 12.1% from the November tally. At the current pace of sales, that represents a 6.9 month inventory, only slightly above the 5 or 6 month range regarded as a balanced market, but not large enough to sway negotiating leverage to buyers. At the peak of the sellers' market the inventory often was near zero or less than a one month supply.
"Properly priced homes are selling," Gasinski said. "Frankly, getting back to a normal market is a wonderful thing for everyone."
San Fernando Valley
Members of the SRAR negotiated the sale of 9,832 single family homes and 3,658 condominiums during 2006, the Association reported. The SFR sales represented a 24.7% decline in sales from the 2005 figure. Likewise, condo sales were off 23.5% 2005 figures.
Despite the decrease in unit sales, the median price of a single family residence rose 6.4% to a record high of $605,917, and the median price of a condo rose 8.5% to a record $394,917.
According to Realtor Report, "The fact that prices not only held firm, but showed modest gains during a period of slowing sales refutes claims that the residential resale market is in recession. That, Realtors said, is good news for buyers, sellers, and the local economy."
Winnie Davis, the 2007 president of SRAR went on to say, "The price of homes in the San Fernando Valley during 2006 hit a point where buyers finally said, 'Enough. No More.' and that's a good thing. Buyers simply refused to continue engaging in bidding wars with multiple contenders who were scratching over an extremely limited inventory. Now the market is working its way through a readjustment period."
Davis continued, "Sellers must post realistic asking prices and buyers finally have a wider selection and more options, but savvy buyers know not to expect deep discounts. Realtors must really educate buyers and sellers about the realities of this new, balanced market."
The Realtor Report opined "In fact, unlike some parts of the country where prices also rose too high too fast, no one is predicting a major downturn in the local market or a collapse in prices."
In fact, the SRAR website contains a poll of local Realtors on their view of the next year in housing. Nearly a clear majority at 45% predict that 2007 will be worse than 2006, while 37% predict that it will be better. The balance think it will be about the same.
Santa Clarita Valley
Realtors sold a total of 3,746 homes in Santa Clarita in 2006, according to Realtor Report, with 2,531 single family residences with the difference in condominiums. This was 32.1% off the SFR pace in 2005 and 29.6% off the condo number of 2005. Like the San Fernando Valley statistics, the median prices rose nearly 7% over the year for both SFRs and condos.
According to Larry Gasinski, the 2007 president of the Santa Clarita division of SRAR, "Sales are slowing down not for a lack of demand, but because prices increased too high too fast. More buyers are coming out now as they realize that the feeding frenzy is over, the selection is wider, interest rates are still near historical lows and that sellers are setting realistic prices and are open to negotiation."
Jim Link, the Association's executive vice president, believes the market readjustment is nearly over and that activity will increase in coming weeks and months, according to the article. "Only a few sellers still cling to the false expectation of a 25% return and only a few buyers incorrectly think they can get steep discounts," Link said. "Everyone else understands that while the sellers market is over, what we have today is a balanced market that, even with a larger ino way suddenly puts buyers in control."
There was a total of 1,919 active listing in the SCV at the end of December, up 81.2% from a year ago, but off 12.1% from the November tally. At the current pace of sales, that represents a 6.9 month inventory, only slightly above the 5 or 6 month range regarded as a balanced market, but not large enough to sway negotiating leverage to buyers. At the peak of the sellers' market the inventory often was near zero or less than a one month supply.
"Properly priced homes are selling," Gasinski said. "Frankly, getting back to a normal market is a wonderful thing for everyone."
Banks move earlier to curb foreclosures
As the number of borrowers falling behind on their mortgage payments climbs to the highest level in five years, the mortgage industry is trying new strategies to help bail them out. Much of the attention is on homeowners who in recent years took out adjustable-rate mortgages, a popular way to finance a home when interest rates were low. Now, with rates having moved up, many of these borrowers have recently sen, or soon will see, their mortgage rates adjust higher for the first time.
To head off problems, mortgage companies are reaching out to borrowers earlier. Bank of America Corp. is allowing some borrowers with ARMs to refinance into a different loan at no cost. Citigroup Inc.'s CitiMortgage unit is focusing extra attention on parts of California, Florida and New York where home prices have moved up sharply. It is also contacting delinquent borrowers within days after a missed payment, if it doesn't fit their normal bill-paying habits.
The rise in bad loans also is leading to a pick up in so-called short sales, in which a lender allows the property to be sold for less than the total amount due and often forgives the remaining debt. For the lender, the process can be shorter and less costly than foreclosing, especially in a declining market. For borrowers, it is a way to avoid having a foreclosure on their credit report.
from realtrends.com
To head off problems, mortgage companies are reaching out to borrowers earlier. Bank of America Corp. is allowing some borrowers with ARMs to refinance into a different loan at no cost. Citigroup Inc.'s CitiMortgage unit is focusing extra attention on parts of California, Florida and New York where home prices have moved up sharply. It is also contacting delinquent borrowers within days after a missed payment, if it doesn't fit their normal bill-paying habits.
The rise in bad loans also is leading to a pick up in so-called short sales, in which a lender allows the property to be sold for less than the total amount due and often forgives the remaining debt. For the lender, the process can be shorter and less costly than foreclosing, especially in a declining market. For borrowers, it is a way to avoid having a foreclosure on their credit report.
from realtrends.com
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