Factors Affecting real estate Value of your house

Property value assessment frequently appears just like a summary practice. To an average joe, it could even appear as though the so-known as pros who appraise houses are simply setting prices depending on how they think in regards to a property. However, there's a typical through which these evaluation professionals base their value presumptions on. You will find factors that determine the need for a house, and when you are searching to market your house, it might be to your advantage to be aware what these factors are.

The main component that determines the cost of the rentals are its location. If this involves property concerns, location is easily the most apparent qualifying criterion of worth. Location is essential for commercial qualities since it determines potential profit. The more busy the region, the greater the worthiness an industrial property may have.

This type of standard isn't only at commercial qualities. Real estate value of your house can also be based on its location. It's closeness to commercial institutions can increase the need for your house.

The nearby neighbourhood is another main factor in appraising your house. If you reside inside a clean and safe neighbourhood, it will likely be much simpler to market your house. In case your community has an optimistic status, the need for your house would certainly rise.

The important thing for you to get a great value for your house is understanding who your buyer is and what your buyer values. An elder couple might value a residential area's closeness to fireplace and police stations. Individuals with children might contemplate it essential that a house is near to good public schools and parks. Youthful couples might should you prefer a location that's near to malls and restaurants. You should look at many of these factors in your assessment of real estate value of your house. Prior to selling your house, make a listing of advantages your house likes because of its location.

Location is another thing in thinking about the need for a house, but it's only some of the factor you should look at. They physical qualities of your house are simply as vital. The number of square-meters does your house occupy? How would be the structural conditions from the walls? The number of rooms does your house have? It is possible to fire place? How healthy may be the grass around the lawn? Do you know the utility rates in your town? Each one of these concerns should be thought about when assessing real estate value of your house.

Finally, opt for the healthiness of real estate market. The optimum time to market your house is before a fiscal recession. Property values go lower using the market. Throughout an financial crisis, so many people are attempting to sell their houses. The supply of cheap deals makes selling difficult. With many different competition, people often sell houses below their market price. Selling your house throughout this time around might not be the very best decision and really should simply be done like a last measure.

However, a fiscal recession is the greatest time to purchase a residential or commercial property since it is at this time around when real estate worth of numerous qualities reaches their cheapest.

Regardless, whether you are purchasing or selling, the most crucial factor will be well-informed. The greater value factors you know about, the greater your choices is going to be. In real estate industry, understanding is energy and knowledge is easily the most reliable type of currency.

Predictions of Real Estate Market in 2012

In the early 2011, there was a prediction that the prices of properties will go down by as much as 20-30%. This is the reason why there are a lot of people who are looking for properties that are priced 30% lower than the market value. They believed that this is the only way for them to protect themselves from the downside market. At the end of 2011, there was report saying that the national market price went down by 2.1%.

The average market price refers to the average of all the prices of homes in the United States. Some states may have an increase in the prices, while some have lower than 2.1%. Nonetheless, it is still very far from the prediction in the early 2011 that the prices will go down by as much as 30%. It probably did in one or two states, but if this is the case, we can say that the market in the remaining states is above -2.1% for the whole year.

Now that we are in 2012, there are still a lot of people who are saying that the prices of real estate market will go down by as much as 30%. Actually, this is not something new for agents, since this predication became a tradition every year for years. The problem is that there are a lot of people who always believe in these predictions, and they will never buy something that is priced the same as the market value.

As I always say, if you are going to buy a property, always think that the price of properties won't change for years. It may go down for about 2% for this year and 3% next year, but it will definitely be back on track in the next few years. Only one thing is for sure; if you always believe in those kinds of predictions, you may never be able to have your own property, because you always wanted it to have a price lower than 30% of the market value.

If you want to know the current situation of the market in your state, it would be better if you are going to contact your trusted agent or Realtor. They have a more accurate record of the ups and downs of the market, and they can provide you with better advices compared to the predictions about the market crash, which only ruins the market as a whole.

Keep in mind that buying a property should be based on your intentions, your budget, and your need. If you want to buy and sell properties, then look for one; if you want to find a property that is within your budget, your real estate agent can provide you with a list; and if you need a home, buy a property regardless of the status of the real estate market. You are the one who will be dealing with your property, and everything in real estate is negotiable. Predictions are nothing, especially in real estate where predictions like this come at least every month.

The Foreclosure Clean Out Business Remains Strong Starting 2012

Since the housing crisis began, people have been wondering if now is the right time to start their own foreclosure clean out business. 2011 has been a great year for those looking to start their own businesses, and take advantage of a weak housing market. With so many foreclosures still happening, and many more to come, you couldn't ask for a better opportunity within the cleaning industry itself. Many foreclosure cleaning businesses are leading the top of the best new small business categories across many popular business magazines and websites. Now is the perfect time to start learning everything you need to know, and get started on your journey.

What's so great about this type of business is that you get to decide how much you want to work. Whether you're searching for something part time or full, the foreclosure clean out business can provide you with either one. Below we'll talk about a few reasons why cleaning foreclosed homes will remain a hot business to get yourself into. Once you're through reading, you should be able to decide what you're next step should be.

The cleaning industry will always be around. Whether you start cleaning out foreclosed homes, or move onto industrial buildings, there is always going to be a need for people to clean. Don't mistake this industry for something that won't last you well into the future. Many people have worked the cleaning industry their entire lives with stellar results. Not only that, but the foreclosure clean out business is currently growing at a significant pace. Don't miss your chance to join in on something that is still in its early stages. Within less than a year from now, you could be enjoying the fruits of your labor.

It's obvious that this is the right business for you to get into. Look around your neighborhood, and see all the homes sitting vacant. Banks and real estate agents need businesses like yours to come in and clean these properties on a regular basis before they can be presented to the public. You're job is to make them look attractive so that they can get the highest price for them on the market.

Banks are going to have many properties for you to work on. If you speak with current foreclosure clean out business owners they will tell you that the amount of work they have to choose from is vast. They decide what houses they want to work on, and how much they want to charge. It's an open market that is seeing no sign of slowing down anytime soon. With the shadow inventory that banks are holding onto, you can expect properties to be making the rounds far into the future. As a result, there will be a constant need for a business like the one we are describing.

Don't pass up your opportunity to get in on one of the fastest growing industries today. You don't have to worry whether the economy turns around, or if the housing market returns to normal because the cleaning industry will continue to be around regardless. As long as there are properties for sale or rent, you can bet that there will be a need for cleaning jobs. Expect the foreclosure clean out business to remain strong throughout 2012 and beyond.

Short Sales - Negotiating Below Listed Cost (Part 2)

You will find many people who're engaging in short sales simply because they no more be capable of purchase the mortgage, and becoming into short sales is the only method to save them. If you are planning to bargain for any property listed for brief purchase, you're essentially negotiating for something that's already on bargain. The key reason why short purchase qualities are listed less than the market price happens because who owns the home may wish to have purchasers who're keen to purchase the home in order to only have somebody that can cover the mortgage on their behalf.

Purchasing a house shouldn't be in line with the listed cost. If it's the following the market price, then its a good deal for you personally. Misconceptions that the need for property qualities will drop within the next six several weeks have there been in excess of 6 years, so you shouldn't utilize it like a reason to bargain the home. If you are planning to purchase a house, particularly in places like Vegas, individuals which are listed available will never be or are hardly ever in the above list the market price. They're selling qualities for that cost that's determined through the market, which may be the cost that somebody should pay.

Why is things worse is the fact that you will find those who are asking a real estate agent to convince them that it's truly the market price. After they discovered the representative is being truthful, they will not believe the agent, thinking that he's a salesperson looking to get his inventory removed. Misconceptions about purchasing a house shouldn't be used, as this may either get into "no deal" or "Personally i think bad". You are feeling good if you achieve it for any cost beneath the listed cost, and you need to bargain it. The vendor will feel below par when the property was offered for any cost less than the market price or than he wanted. What exactly happens? No deal!

What exactly is the greatest factor that can be done when purchasing a house? Never use misconceptions, awareness, values, along with other feelings when purchasing a house. A specific item is what you'll get. The listed cost does not mean anything, and you ought to never bargain having a property because its listed cost is greater than what you would like to pay for for this. It might be better for parties but for the industry if you are planning to cover a house, thinking the cost of real estate will stay the same for a long time it won't increase and it'll not go lower for reasons uknown you need to have.

shame on the GOP candidates

shame on the GOP candidates

"Shame on the Republican candidates for president. Shame on them for showing up at debate specifically targeting the US economy with not one credible, rational, even reputable notion of what to do about the nation's housing mess. It baffles the mind that this sector of the economy, responsible for about 18 percent of the nation's gross domestic product, is in freefall, and yet eight potential new leaders of this nation not only don't understand the problem but don't have a clue what to do about it. My favorite, and I write this with as much sarcasm as a computer keyboard will afford, is the argument that the Dodd-Frank financial reform bill is to blame for housing's current despair. Foreclosures, falling home prices, negative equity, nil consumer confidence, record low home building...yep, gotta be Dodd-Frank. 'If the Republican House next week would repeal Dodd-Frank and allow us to put pressure on the Senate to repeal Dodd-Frank, you would see the housing market start to improve overnight,' Speaker Newt Gingrich told the crowd in Michigan last night. His reasoning is that, 'It kills small banks, it kills small business.'

Increased regulation has certainly made the life of a banker today tougher, but the fact that there was zero regulation ten years ago allowed and encouraged reckless behavior on Wall Street. It created the supremely negligent subprime mortgage
trading bonanza that brought down big banks, little banks and homeowners alike...and threatened to take down the entire US economy. Were we to do nothing to change that? And Mr. Gingrich, if I may, how would repealing Dodd-Frank suddenly help the 4 million borrowers behind on their mortgages today and the 2.2 million in the foreclosure process today keep their homes? How would it put a bottom on home prices? Do you honestly believe that it would suddenly open the mortgage markets wide, allow banks to somehow fix all the troubled loans on their books and fuel a gigantic lending spree that would ignite home buying and selling again like the good old days? Is that even what we want? Let me just finish with Mr. Gingrich's last note, 'The banks are actually profiting more by foreclosing than encouraging short sales.' That's just flat out wrong.

To begin with what bank has ever profited from a foreclosure OR a short sale? Industry sources tell me that a short sale nets the bank on average 20 percent more than a foreclosure. Short sales speed up the time frame for disposal of the property as well, as foreclosures can take years to process. During that time, foreclosed borrowers can destroy the property, flushing cement down the toilet and stealing everything in the home that is and isn't nailed down. In a short sale, the homeowner lives in the home until the deal is done, and because they are not getting a huge hit to their credit and being kicked out by a sheriff's deputy, they generally don't destroy the house. In a short sale, the bank knows exactly what it's getting, unlike in a foreclosure when the bank has to take back the house in some unknown condition, market it and re-sell it at an unknown distressed price. 'Nuff said.

My second favorite argument is that it's all Fannie and Freddie's fault, and if we take them down, housing comes back in a flash. 'For these geniuses to give 10 of their top executives bonuses at $12 million and then have the guts to come to the American people and say, 'Give us another $13 billion to bail us out just for the quarter,' that's lunacy,' Rep. Michelle Bachmann argued on CNBC last night. 'We need to put them back into bankruptcy and get them out of business. They're destroying the housing market.' No question, Fannie Mae and Freddie Mac are bleeding money, costing the taxpayers billions already and potentially billions more in the near future. Something needs to be done to change that, but 'bankrupting' Fannie and Freddie would take down the US economy as we know it, and it boggles the mind that a person running for president wouldn't understand that. She in fact noted that Fannie and Freddie support the bulk of the mortgage market. That's true. Without them there would be no lending. Does she think the private market would just come running back in and give the nation's beleaguered borrowers 3.99 percent 30-year fixed across the board? Only Herman Cain seemed to get that. He argued that we need to fix unemployment first with his various proposals. 'Okay. After I did those three things that I outlined, then deal with Fannie Mae and Freddie Mac. You don't start solving a problem right in the middle of it. So we've got to do that first,' he reasoned.

Fixing unemployment was the only housing plan the candidates could offer. When CNBC's Maria Bartiromo asked Governor Mitt Romney, 'Not one of your 59 points in your economic plan mentions or addresses housing. Can you tell us why?' He responded, 'Yes, because it's not a housing plan. It's a jobs plan.' I don't love that answer, but at least I can respect it. 'Our friends in Washington today, they say, 'Oh, if we've got a problem in housing, let's let government play a bigger role.' That's the wrong way to go. Let markets work. Help people get back to work. Let them buy homes. You'll see home prices come back up if we allow this market to work,' argued Romney. There are plenty of analysts who agree that the market needs to work itself out, as painful as that may be to average Americans, many of whom are in line to lose their homes. Until the foreclosure mess runs its course, and all those homes are filled with borrowers who can afford them, home prices will not recover, plain and simple, goes the argument. I'm not saying here that the Obama Administration has done anything particular stellar to stimulate a housing recovery. A small refinance program for underwater borrowers isn't the cure-all, and forcing banks to write down mortgage principal is not politically nor technically feasible. But without some plan, this crisis could go on for a decade, like it did in Japan, as President Clinton noted recently in an interview. I'm not saying I have the answer, the great plan to fix our nation's housing crisis. But I'm not running for president."

Shadow inventory improves but still threatens housing recovery

Despite all those millions of distressed properties out on sale, depressing home prices even further, there is one glimmer of hope according Standard & Poor. According to the report the time it would take for banks to purge all of this so-called "shadow inventory" from the market (through foreclosure sales, mortgage modifications and other measures) shrunk to 47 months during the second quarter, a significant drop from the 52 months it estimated for the first quarter of this year. The report also found that the total dollar value of the loans on these properties -- known as non-agency loans because they are not backed by Fannie Mae, Freddie Mac or the Federal Housing Administration -- also fell to $405 billion at the end of June from $433 billion three months earlier. S&P said the decline was helped by stabilizing liquidation rates and by fewer borrowers falling behind on their mortgage payments as the economy slowly recovered during the quarter.

S&P estimates that there are still a total of between 4 million and 5 million homes, including those with agency-backed loans, in shadow inventory, an amount that continues to jeopardize the housing market's recovery. Nevertheless, Fannie and Freddie are looking to rid themselves of a large percentage the shadow inventory they do have -- and quickly. Earlier this month, the Federal Housing Finance Agency (FHFA), the Treasury Department and the U.S. Department of Housing and Urban Development were seeking suggestions on how to dispose all the repossessed homes now owned by Fannie Mae, Freddie Mac and the Federal Housing Administration in a way that would benefit local communities.

Refinance Applications Increase

Mortgage applications increased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending August 12, 2011. The Market Composite Index, a measure of mortgage loan application volume, increased 4.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3.6 percent compared with the previous week and was 13.5 percent lower than a year ago. The Refinance Index increased 8.0 percent from the previous week, but was 16.3 percent lower than the same week last year. The seasonally adjusted Purchase Index decreased 9.1 percent from one week earlier. The unadjusted Purchase Index decreased 10.1 percent compared with the previous week and was 1.1 percent lower than the same week one year ago.

“Unprecedented volatility in the stock market last week amid additional signs that the economy has slowed led to further drops in mortgage rates, with the 15-year rate teaching a new low for the MBA survey,” said Mike Fratantoni, MBA’s Vice President
of Research and Economics. Fratantoni continued, “The big differences in refinance volumes were likely driven by the decisions of some lenders not to drop rates last week, largely due to the need to manage their pipelines.” The four week moving average for the seasonally adjusted Market Index is up 6.9 percent. The four week moving average is down 2.2 percent for the seasonally adjusted Purchase Index, while this average is up 10.1 percent for the Refinance Index. The adjustable-rate mortgage
(ARM) share of activity decreased to 5.8 percent from 6.1 percent of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.32 percent from 4.37 percent. The 30-year fixed contract rate has decreased for three straight weeks and is at a new low
for this year.

Study Reveals Original Foreclosure-Related Documents Often Do Not Exist

Posted by Carole VanSickle on Tuesday, July 19th 2011

If a lender has not been paid in months or years and believes that they can convert a property to a performing investment, then they are going to have a very high interest in foreclosing. However, in many cases, if they had to use real, legitimate, original documents to carry out that process, it simply would never happen. Why? Because the originals simply do not exist[1]. Reuters calls this “one of the overlooked legacies of the housing boom,” and explains in a new report that “in the rush to make new home loans and sell them off as fast as possible…the original lenders…destroyed original documents or never turned them over as required.” As a result, promissory notes and mortgages frequently never made it to the end-buyer – or even just the next guy in line. This means that “many pension funds, insurance companies and hedge funds that invested in [investor] trusts never got formal title to the mortgages they had paid for.” And that means that when it comes time to foreclose, they may have no choice but to use doctored or replicated documents in order to do so. Analysts speculate that the reason that there has not been an audit or an investigation of this issue may be simply that “if the extent of the problem became known, the housing market might worsen.” For example, the country’s largest sub-prime lender (it collapsed in 2007) almost never endorsed promissory notes or assigned mortgages to the trusts that bought its mortgages, meaning that trusts may be out millions of dollars and a millions of homes could end up with clouds on their titles.

household shifts could affect recovery

"Every now and then you need to take a step back and put the housing market into perspective, take a break from all the monthly motions and commotions, stress and distress. Today I read a report that did just that. It takes a big-picture snapshot of how housing has fundamentally changed over the past several decades, which could have a big impact on its future as the industry rebuilds itself, literally and economically.

The report, from John Burns Real Estate Consulting's Chris Porter, is titled simply, Tremendous Demographic Shift.' And the numbers are pretty tremendous. 'The number of non-family households—people living alone or households that do not have any members related to the householder—has increased nearly five times in the last 50 years, from 7.9 million to 39.2 million. At the same time, the number of family households has increased by just 1.7 times, from 45.1 million to 77.5 million,' according to Porter. In addition, married couples have dropped to less than half of all US households from 75% in 1960. So let's think about the current housing stock, much of which is more than 50 years old. We've recently seen a downsizing trend for several reasons, namely the weak economy and builders constructing cheaper homes to meet the demand but also the environmental movement and the high cost of energy.

But this comes right after the 'McMansion' era when oversized homes were all the rage. Those homes, of course, still exist in vast quantities, despite the fact that there are, according to this report, fewer big family households and therefore less need for large square footage. We've also talked a lot about the surge in renting; we've blamed it on the housing crash, fear of buying into a depreciating market and the tight credit conditions that are pricing many potential buyers out.

Perhaps there's more to it than that as well. Perhaps with fewer large family households and less desire for a big space, smaller, full-service rental apartments are more desirable to a growing segment of the population. 'Family households are more likely to stretch for size over location. Non-family households are more likely to value location—proximity to work, entertainment, etc.—and then size. They are less willing to commute than a family household,' noted Porter. We also have to look at the growing population of Americans who intend to 'age in place,' that is, the baby boomers who are moving out of the big family homes but not into what we used to call 'retirement homes.' Now they're 'active adult communities,' with smaller one-story homes. That demographic, though, plays against a growing demographic of Hispanic Americans. The average Hispanic household is statistically larger than the national average.

So what should home builders and housing watchers take from all this?

Obviously there are and always will be large families in the suburbs who want to live in big houses. There will always be wealthy Americans who desire to live in spaces that far exceed their needs. But the shift in household size cannot simply be considered anecdotal. When you couple that shift with a much-changed mortgage market, one that prices so many more Americans out of larger, move-up homes, you have to be concerned about what happens to the stock of larger homes, old and new. Do we see huge price reductions as demand falters?

WSJ - mortgage rates flat

Mortgage rates changed little for a second straight week, according to the latest survey from Freddie Mac. Mortgage rates generally track Treasury yields, which move inversely to Treasury prices. Rates have slumped for months as yields on Treasury’s slid amid economic uncertainty. Freddie Mac Chief Economist Frank Nothaft pointed to more signs of a softening US housing market, including the Federal Reserve's policy-committee statement on Wednesday, which acknowledged continued weakness in the sector. "Although new construction on single-family homes ticked up in May from April, it was still below the overall pace set in 2010," Mr. Nothaft said. "Moreover, existing home sales fell 3.8% in May to the fewest since November 2010."

The 30-year fixed-rate mortgage was at 4.5% in the week ended Thursday, the same rate as in the previous week, though the rate was below last year's 4.69% average. The 30-year rate has fallen steadily since reaching the 2011 high of 5.05% in early February. Rates on 15-year fixed-rate mortgages edged up to 3.69% from 3.67% the previous week but were down from 3.13% a year earlier. Five-year Treasury-indexed hybrid adjustable-rate mortgages decreased to 3.25%, down from 3.27% last week and 3.84% a year earlier. One-year Treasury-indexed ARM rates ticked up to 2.99% from 2.97% the prior week, but still well below the prior year's 3.77% rate. To obtain the rates, 30-year and 15-year fixed-rate borrowers required an average payment of 0.8 point and 0.7 point, respectively. Five-year hybrid adjustable rate mortgages required a 0.6-point payment, while one-year adjustable-rate mortgages required a 0.5-point payment. A point is 1% of the mortgage amount, charged as prepaid interest.

don't let the numbers fool you

"Let me preface with an apology for the huge supply of numbers in this post, but if you can make it through them all, I think you will get the picture I'm drawing here. The so-called 'shadow inventory' of residential properties is falling, according to a new report from CoreLogic. This is the number of homes with seriously delinquent loans (90+ days), loans in the foreclosure process and bank-owned homes which are not yet listed for sale. The supply as of April 2011 declined to 1.7 million units, representing a five months' supply. This is down from 1.9 million units, also a five months' supply, from a year ago. 'The decline was due to fewer new delinquencies and the high level of distressed sales, which helped reduce the number of outstanding distressed loans,' according to the report.

Good news, no? Wait. There's more: 'In addition to the current shadow inventory, there are 2 million current negative equity loans that are more than 50% or $150,000 'upside down.' These current but underwater loans have increased risk of entering the shadow inventory if the owners' ability to pay is impaired while significantly underwater.' And then there's this other report from Lender Processing Services (LPS), which also reports a drop in newly delinquent loans, but gives the actual, mind-numbing numbers of loans in trouble:

- Number of properties that are 30+ days past due, but not in foreclosure: (A) 4,187,000

- Number of properties that are 90+ days delinquent, but not in foreclosure: 1,921,000

- Number of properties in foreclosure pre-sale inventory: (B) 2,164,000

- Number of properties that are 30+ days delinquent or in foreclosure: (A+B) 6,350,000

There are more than six million properties in distress, a third of those in foreclosure. According to yesterday's monthly home sales report from the National Association of Realtors, less than five million homes will sell this year, at the current sales pace. There are currently 3.72 million existing homes for sale, representing a 9.3 months supply; that does not include newly built homes nor does it include that six million number. This vast supply varies from state to state of course, but the overall effect is downward pressure on home prices nationally. I was interested to see a survey released today by Robert Shiller's MacroMarkets group (of the Case Shiller Home Price Indices). Every month he asks a group of 108 economists, real estate experts and investment strategists for their home price predictions. June's survey found the group's overall expectations have reached the lowest level since the survey started over a year ago, but, 'It is apparent that a significant majority of our panelists believe that the bottom for home prices arrived in the first quarter or will arrive sometime before year-end,' writes Shiller.

But wait, there's more: The group of 69 panelists who are currently forecasting a 2011 turning point predict less than two% average annual growth in nominal home prices over the five-year
period ending December 2015. Shiller added, 'If it were to materialize, such a scenario might be better described as a forecast of price stability rather than a rebound. A 2%-a-year home price increase will not inspire a lot of consumer confidence. Given prevailing inflation expectations, this
forecast implies virtually no change in real home values going forward.' So I'm faced with a national picture of over 6 million homes with distressed loans, a 9 month supply of existing homes, a smattering of new construction and no home price growth for at least the next four years. Should I buy?"

why should we care about foreclosures?

"Earlier this week, when we got the report of a bump up in sales
of newly constructed homes, I cautioned that the home builders
are still facing huge competition from distressed properties
(foreclosures and short sales). Today we have some new numbers
showing just how big and how widespread that competition is.
Foreclosed properties made up 28% of all home sales nationwide in
the first quarter of this year, according to RealtyTrac. That's
up slightly from Q4 of 2010, but not the record 29% we saw a year
ago. More than 107,000 bank-owned (REO) properties sold, which is
actually a drop from the previous quarter and a bigger drop (36%)
from a year ago. Foreclosed properties sold at a 35% discount to
their non-distressed counterparts.

So here we have fewer selling but making up a larger share of
total sales. That's not particularly healthy. We need to get more
of these properties sold, because as I showed you on the blog
Tuesday, there are hundreds of thousands of them and millions
more in the potential pipeline. This is not exactly news, but
every time I report it I get the argument back here on the blog
that these distressed sales are only happening in certain states
and don't affect the overall housing market. There is some truth
to that, at least the first part. I asked RealtyTrac to pull some
other numbers for me to show what I'm talking about. More than
three quarters of all distressed sales (78%) were in just ten
states. You can see the usual suspects, California, Florida,
Arizona, Nevada and much of the Mid-West. That's a problem for
the builders because so much of their most recent inventory is in
those states. But what about the rest of us? It begs two
questions: 1) If I don't live in these states, why should I care?
2) If the worst is only in a few states, then why are home prices
falling nationwide?

Here's RealtyTrac's Rick Sharga's explanation: 'The 10 states
include several of the states with the highest number of overall
home sales; driving prices down in California and Florida has
much more impact on national averages than fluctuating home
prices in Alaska and Wyoming. It's not all about geography.
While foreclosure sales obviously depress the price of homes
nearby, they also affect prices by limiting new home sales, which
typically help drive home prices up. But foreclosure sales are
only one of the factors behind falling home prices. Weak demand
is probably the biggest driver.'

And I contend that weak demand is driven by several factors, not
the least of which are credit and confidence. The banks are
looking at their overall book of business and the losses they're
still taking; the losses are concentrated in those states that
are continuing to suffer the most. Regardless, they spread that
pain nationwide in their lending standards, tightening up to the
point that many borrowers far far away from California can't get
a loan. Confidence, or lack thereof, is a bigger factor than we
often give it credit. Yes, the big bad media report all these
numbers, and yes, some of the worst of it is nowhere near where
you live, but you see and process it. It affects your confidence
and consequently how you act.

Housing demand is nowhere near where it should be, and the mix of
what is selling is all on the low end. Investors with cash and
first time home buyers are bargain hunting, and that pushes the
price average/median down in every market. As prices fall on real
sales, thousands of borrowers fall underwater on paper...on their
mortgages, and that puts them at higher risk of foreclosure.
'Residential home sales fell by 18% in Q1 2011 compared to Q4
2010 and by almost 32% from Q1 2010,' notes Sharga. Foreclosures
and distressed sales, even if they're not in your back yard or in
your state, affect your home's value because they affect the
overall demand for your home."

Obama tries to force mortgage deal

WSJ - Obama tries to force mortgage deal

The Obama administration is trying to push through a settlement over mortgage-servicing breakdowns that could force America's largest banks to pay for reductions in loan principal worth billions of dollars. Terms of the administration's proposal include a commitment from mortgage servicers to reduce the loan balances of troubled borrowers who owe more than their homes are worth, people familiar with the matter said. The cost of those writedowns won't be borne by investors who purchased mortgage-backed securities, these people said. If a unified settlement can be reached, some state attorneys general and federal agencies are pushing for banks to pay more than $20 billion in civil fines or to fund a comparable amount of loan modifications for distressed borrowers, these people said. But forging a comprehensive settlement may be difficult. A deal would have to win approval from federal regulators and state attorneys general, as well as some of the nation's largest mortgage ser
vicers, including Bank of America Corp., Wells Fargo & Co, and J.P. Morgan Chase & Co. Those banks declined to comment.

So far, most loan modifications have focused on shrinking monthly payments by lowering interest rates and extending loan terms. Banks, as well as mortgage giants Fannie Mae and Freddie Mac, have been shy to embrace principal reductions, in part due to concerns that many borrowers who can afford their loans will stop paying in the hope of being rewarded with a smaller loan. Several federal agencies have been scrutinizing the nation's largest banks over breakdowns in foreclosure procedures that erupted last fall. Last week, the Office of the Comptroller of the Currency said only a small number of borrowers had been improperly foreclosed upon. But the regulator raised concerns over inadequate staffing and weak controls over certain foreclosure processes.

A settlement must satisfy an unwieldy mix of authorities, including state attorneys general and regulators such as the newly formed Bureau of Consumer Financial Protection, who support heftier fines. They must also appease banking regulators, such as the OCC, that are concerned penalties could be too stiff. "Nothing has been finalized among the states, and it's our understanding that the federal agencies we are in discussions with have not finalized their positions," said a spokesman for Iowa Attorney General Tom Miller, who is spearheading a 50-state investigation of mortgage-servicing practices.

Existing homes sales up

Existing homes increased 2.7 percent to a seasonally adjusted annual rate of 5.36 million in January from a downwardly revised 5.22 million in December, and are 5.3 percent above the 5.09 million level in January 2010. This is the first time in seven months that sales activity was higher than a year earlier. A parallel NAR practitioner survey2 shows first-time buyers purchased 29 percent of homes in January, down from 33 percent in December and 40 percent in January 2010 when an extended tax credit was in place. Investors accounted for 23 percent of purchases in January, up from 20 percent in December and 17 percent in January 2010; the balance of sales were to repeat buyers. All-cash sales rose to 32 percent in January from 29 percent in December and 26 percent in January 2010. All-cash purchases are at the highest level since NAR started measuring these purchases monthly in October 2008, when they accounted for 15 percent of the market. The average of all-cash deals was
20 percent in 2009, rising to 28 percent last year.

The national median existing-home price3 for all housing types was $158,800 in January, down 3.7 percent from January 2010. Distressed homes edged up to a 37 percent market share in January from 36 percent in December; it was 38 percent in January 2010. Total housing inventory at the end of January fell 5.1 percent to 3.38 million existing homes available for sale, which represents a 7.6-month supply4 at the current sales pace, down from an 8.2-month supply in December. The inventory supply is at the lowest level since December 2009 when there was a 7.3-month supply. Single-family home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.69 million in January from 4.58 million in December, and are 4.9 percent higher than the 4.47 million level in January 2010. The median existing single-family home price was $159,400 in January, down 2.7 percent from a year ago.

Existing condominium and co-op sales increased 4.7 percent to a seasonally adjusted annual rate of 670,000 in January from 640,000 in December, and are 7.9 percent above the 621,000-unit pace one year ago. The median existing condo price5 was $154,900 in January, which is 10.2 percent below January 2010. Regionally, existing-home sales in the Northeast fell 4.6 percent to an annual pace of 830,000 in January from a spike in December and are 1.2 percent below January 2010.

The median price in the Northeast was $236,500, which is 4.0 percent below a year ago. Existing-home sales in the Midwest rose 1.8 percent in January to a level of 1.14 million and are 3.6 percent above a year ago. The median price in the Midwest was $126,300, which is 3.2 percent below January 2010. In the South, existing-home sales increased 3.6 percent to an annual pace of 2.02 million in January and are 8.0 percent higher than January 2010. The median price in the South was $136,600, down 2.1 percent from a year ago. Existing-home sales in the West rose 7.9 percent to an annual level of 1.37 million in January and are 7.0 percent above January 2010. The median price in the West was $193,200, down 5.7 percent from a year ago.

US Postal Service in trouble

US Postal Service in trouble

The US Postal Service (USPS), a self-supporting government agency that receives no tax dollars, said it suffered a loss of $329 million in the first quarter of federal fiscal year 2011. That compared with a loss of $297 million a year earlier. The agency has been suffering from an ongoing decline in mail volume, which has undercut revenues, while retiree health care costs have been straining its reserves. Excluding costs related to retiree benefits and adjustments to workers' compensation liability, the Postal Service said it had net income was $226 million in the first quarter, which ended Dec. 31. The agency said it will be forced to default on some of its financial obligations this year unless Congress changes a 2006 law requiring it to pay between $5.4 and $5.8 billion into its prepaid retiree health benefits each year. The Postal Service has taken a number of steps to increase revenue, including marketing initiatives and price increases. The agency raised rates an av
erage of 3.6% in January.

It is also perusing more dramatic changes. Last year, the USPS submitted a request to the Postal Regulatory Commission, which oversees the agency, to eliminate Saturday mail service. The commission has yet to respond to the request, but a spokesman said it is in the "final phase" of making its decision. The USPS has also cut back on hours to save money. The agency expects to eliminate 40 million work hours this fiscal year as part of a plan to save $2 billion. However, the service is currently negotiating new contracts with the American Postal Workers Union and the National Rural Letter Carriers Association, which will probably object to cutting hours. On the bright side, the Postal Service said improving economic conditions suggest the "worst of the precipitous volume decline during the recession is over." But mail volume continues to be anemic, rising only 1.5% in the first quarter as economic growth remains sluggish.

Revised Appraisal Guidelines Haunt Investors

Revised appraisal guidelines haunt investors
Posted on January 28, 2011

Just in case you haven’t run into it yet, our wise government – particularly the agencies that oversee mortgages – instituted more new guidelines in December that are just now starting to affect real estate investors. Effective Dec. 2010, in order to continue policing the mortgage industry, the Federal Reserve System engaged new policies for Automated Valuation Models on appraisals. (See http://www.federalreserve.gov/newsevents/press/bcreg/20101202a.htm) The newest guidelines require “interagency cooperation” in inputting data into the huge property database. These agencies include the Office of the Comptroller of the Currency (OCC), FDIC, Office of Thrift Supervision, Federal Reserve System, and the National Credit Union Administration. Further, the guideline goes one step further requiring actual visits to the property for a property condition report. Certainly, this inspection is needed in many circumstances. However, it does slow the process down by several more days and, on REO and foreclosure properties oft times, this can be the kiss of death.

How does this affect you? If you are a real estate investor that uses mortgage financing on potential rentals or flips, you may run into a new set of appraisal problems. Most affected are non-owner occupied loans, second mortgages, and lines of credit. If you’re one of those rare birds that still has a line of credit in place, it means when the bank is reviewing their collateral for the line, your ability to borrow may be reduced – sometimes drastically.

For potential new homebuyers, this doesn’t change things much. If it is an owner occupied property for a traditional or FHA first mortgage, lending institutions policies on appraisals are fairly close to the same as they were prior to December 2010. Some, however, have gone to the “two appraisal” rule. This means, to be safe, they are requiring two independent appraisals on each property. Whether they select one appraisal to go with, choose the lower of the two, or average the two varies with each institution.

Bottom line: In the near future, if you have been dependent on mortgages to purchase investment properties, you may want to adjust your business model. Several investors I know have already been shocked by hugely reduced values lenders are willing to do on investment properties. This is no fun when you’re expecting to have a closing. So, to be safe, do one of two things: (1) Use property you already own to collateralize lines of credit. Realize there must be plenty of equity available to do this smoothly; or (2) Even if you do fewer transactions, simply pay cash. Whether this is your own funds or those of an angel investor doesn’t matter. Paying cash is and has always been the path of least resistance. All others to the back of the line.

Homebuyer Traffic Tumbled in May as First-Time Homebuyer Shopping Stalled

Homebuyer traffic nationwide tumbled in May, according to the latest
Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market
Conditions. Most of the decline was attributable to first-time homebuyers who
sharply reduced their home shopping last month.
The survey's first-time homebuyer traffic index, which measures home shopping activity on a scale of 1 to 100, registered an anemic 35.1 in May. This was down from an index of 63.5 in April. Since September 2009, the index had never been below 50, which represents a flat, or neutral, condition in home purchase activity.
“The decline of first-time homebuyer traffic is undoubtedly related to the expiration of the federal homebuyer tax credit,” stated Thomas Popik, research
director for Campbell Surveys. “Homebuyers had until April 30 to sign a purchase and sale agreement and receive the credit. Once we entered the month of May, the government stimulus disappeared.”
Thanks to its own tax break, California fared better than the country overall in
terms of first-time homebuyer activity, the survey found. The California index for first-time homebuyer traffic jumped to 63.1 in April, but still managed to stay relatively flat in May at 49.4, California enacted its own $10,000 credit for first-time homebuyers on May 1, the day after expiration of the federal tax credit.
Real estate agents responding to the survey commented on the decrease in homebuyer traffic in May, which ultimately will produce fewer closed transactions later in the summer. “The expiration of the tax credit caused a significant decline in buyer activity in May, with buyers who didn't get a suitable house in time for the tax credit opting to wait and see what happens to prices without the vailability of thell/Inside Mortgage tax credit. I expect to see a significant decrease in July's closed transactions,” commented an agent in Arizona.
“We have noticed a substantial decrease in activity since April 30th. There are a lot less Purchase and Sales Agreements being typed and other agents are complaining it's slow again,” stated an agent in Massachusetts. “I got no signed purchase agreements in May. I think the number of closed transactions in July will be very low,” added an agent in Indiana.
Traffic among current homeowners seeking to upsize or downsize also softened in the month of May, but to a lesser degree, the latest survey found. The nationwide index for current homebuyer traffic registered 45.5 in May, down from 55.2 in April. Expiration of the homebuyer tax credit for current homeowners was less of a factor because the tax credit dollar incentive was lower, both on an absolute basis and on a percent of transaction basis.
Interestingly, the proportion of closed transactions for first-time homebuyers also declined in May, furthering a trend first observed in April. In March, first-time homebuyers accounted for 48.2% of home purchases; by April their proportion had declined to 43.4%.
The trend continued in May, with first-time homebuyers accounting for 42.0% of home purchases. This decline is surprising since first-time homebuyers have until the end of June to close transactions and receive the federal tax credit.
A significant number of agents responding to the survey believe that transactions will rebound as homebuyers waiting out the end of the tax credit come back into a housing market that has fewer people bidding up the price of properties. “We saw a drop in activity for 3-4 weeks and now it is back to a more normal summer market. I anticipate that it will continue to increase and pick up after school gets out,” stated an agent in Minnesota.
“The first-time homebuyer tax credit, originally due to expire last November and then extended through the first half of 2010, appears to have depleted the pool of willing buyers earlier than expected,” commented Popik. “Whether this depletion is temporary or whether the market will rebound won’t be known until we measure traffic in June and July.”

Gaining More From Short Sale

The Process on real estate short-selling varies from one State to the other. However, the purpose of purchasing and short sale for agents or Investors does not. The reason that agents and investors play the real estate game is for the potential of gain. The chance to invest in a market on their own. Like a stock broker to stock, the average man can become the next real estate guru

The real estate business can be a lucrative investment for anybody. Knowing the ins and outs of the business will enable a higher rate of success and greater amount of financial gains. This can be a big disappointment for most people who involve themselves in this business without much research on the proper and legal proceedings that are involved in the real estate business. Even with the complicated process on short sales in real estate, it is still known to be among the very good ways of gaining real estate wealth. With the profitability of getting involved in the short sale business, secrets have been discovered and practiced by experts in the real estate's short sale sector.

Since the competition is huge in this very promising business, most of these secrets are hidden and not often shared openly to other agents. For a rookie, seeing all the frustration and headache the pre-foreclosure and short sale process brings can be intimidating. You may reach the brink of giving up on and admitting to failure and raising the white flag in real estate selling. However, you may be giving up a future of pleasure and financial enjoyment. This does not need to be the case; we have developed tools for you for your continuous venture in real estate.

You have vested a lot already, from the education, licensing and financial investments from the buying, to the legal process and renovations. This is not a great time for you to give up. We do not want you to give up, either. There are people like us that are not selfish on the information, we also want you to be successful and learn the expert way of the trade.

Inflated initial investment and expensive renovations and repair of the procured pre-foreclosed property will mean that you will end with a lower profit. Mis-management of the essential parts of buying and selling real estate in this market can be any real estate investor’s downfall. Not having an exit strategy in place prior to buying the home is another downfall of the real estate agent or investor. However having a system in place, financing with Creative Alternative Options is one of the many keys to the gates of wisdom.